Conservatory Property Owners Association Annual Meeting – Bobby Ginn Addresses Owners Concerns

Relations between the Ginn Company and property owners have improved.

November 10, 2007 – Palm Coast, FL – The annual meeting of the Conservatory Home Owners Association (HOA) was held on Wednesday, November 7th. Property owners have recently expressed concern over the state of the real estate market and its effect on their investment in the Conservatory as well as a feeling that the Ginn Company has not done enough to help. Property owners concerns were aired and addressed by Ginn executives and the nearly completed clubhouse was showcased. The result appears to be a lessening of rhetoric and reduction in angst. This is best summarized in the following communication sent by Craig Straky, Team Leader of Hammock Luxury Properties, a division of Hammock Dunes Real Estate Co. Craig addressed his communication, dated November 8th, to his customers and other Hammock Beach property owners.

By Craig Straky (11/8):

The annual Conservatory HOA meeting was held yesterday at the Club at Hammock Beach from 10:00am until about 12:00pm.  The monthly Hammock Beach member’s social was held at the Conservatory Clubhouse from 4:00pm to 6:00pm last night.  From my perspective, yesterday’s events were extremely positive and I believe they represent a new beginning for the marketing and sale of property within the Conservatory.  Relationships between the Home Owners and the Ginn Co. have significantly improved with both sides moving closer together.  We are not completely there, however, there was a realization yesterday that we are all on the same team with a common interest, the success of the Conservatory.  The feedback from the Members of Hammock Beach was unanimous with regard to the beauty and grandeur of the Clubhouse.  I would estimate that the event was attended by 300-500 people.  At the meeting, the President of the HOA, the President of Ginn Lifestyles and 3 of the 4 preferred builders spoke.  Each owner had the opportunity to speak for 3 minutes.  Bobby Ginn also attended the meeting and spoke for about 20 minutes.  Find below relevant points:

General HOA Meeting Points:

• Attended by approximately 100 people, 102 owners attended personally or by proxy
• President of Ginn Lifestyle Group commented that he was embarrassed the relationship had deteriorated and made sincere commitments to continue to improve the relationship between Ginn HOA and the Conservatory property owners
• He also stated that it is critical that we maintain the community to the original vision to ensure it’s success
• He believes the success of the Conservatory will be driven by rooftops and encouraged everyone to support this initiative
• 42% of owners are 90 days or later on HOA payments
• A further reduction of approximately $180,000 over the approved budget from 10 days ago will be approved as a result of the Clubhouse taking a share in the security and landscape costs, quarterly dues will be reduced to $576, $676, $777 or $877 depending on lot size
• Mellissa Shane reported that 3 lots have been foreclosed upon, 5 are in foreclosure, 5 lot resales since the launch of the community
• Almost everyone that spoke commented that the negative comments, emails and discussions of lawsuits have killed or delayed homes from being built, they encouraged everyone to take a more constructive, team based approach to making improvements
• Other owners commented that it was critical to work together and it was important to have the Ginn Co. as a partner
• A handful of owners commented that they ‘just want a fair shake’ with regard to the HOA dues, they want to maintain the beauty of the community but they want to ensure they are getting the best possible value for their dollar
• The Clubhouse is scheduled to officially open on March 22nd, 2008
• There were no motions to remove the Ginn Co. employees from the Board  

Bobby Ginn Points:

• Nothing more important to him than the owners and members, resort business is second
• Apologized for the oversight of the Clubhouse not being a participant in the HOA, he has corrected it
• He announced that they are moving the PGA event that was held at Tesoro last week to the Conservatory in October of 2008
• It brought 45,000 people to Tesoro and they sold 8 properties last week
• He has worked with the Yale and Harvard endowment funds and Lupert Adler. They have put more equity into the company in the past 90 days than the last 10 years. The focus is on getting the world-class amenities complete because that is the attraction to buyers
• He took responsibility for moving the tournament to the Ocean Course last year, he said it was the right decision because the Conservatory was not ready
• He acknowledged that the market is down but 1300 people a day are moving to Florida
• He commented that he developed the Lifestyle Group to ensure the communities were maintained to the Standards of the original vision
• He further commented that if the property owners were not happy, he would support them voting the Ginn employees off the board
• He also commented that a small minority should not outweigh a large majority
• His comments were sincere and very well received by all in attendance  

My recommendation is to support the current board of 5, 2 of which are Conservatory property owners.  The addition of Justin and Robert has ensured accountability and full visibility.  It would be a mistake to not have the Ginn Co. as a continued full partner in the management of the community.  Once again, the clubhouse is absolutely stunning and I believe it will be the catalyst to the sale of properties in the Conservatory.  With that said, overall market prices in Florida and Flagler County are down 30 to 50% since 2005.  There have been no resales this year and there are no pending sales.  When properties begin to sell, they will sell at depreciated levels from your original purchase.  This is consistent with other Hammock Beach properties that were purchased in 2005.  From a marketing perspective, our company has executed some exciting initiatives which will be detailed in a subsequent email.  I have also added 3 members to my team that will be marketing and selling your property.  I will provide a summary of market listings, marketing initiatives and team developments in the near future.