March 25, 2008
TO: All Unit Owners of Rubidell Resort Condominium Association, Inc.
In an attempt to resolve ongoing financial difficulties at Rubidell Resort Condominium, your Board of Directors has been attempting to negotiate the terms of a $1,000,000 loan to be guaranteed by the federal government through the Rural Development Agency of the United States Department of Agriculture, with the assistance of U.S. Senator Russ Feingold of Wisconsin. The loan would be made through a local bank but is available to us only because of the federal loan guaranty. Also, because of the federal guaranty, interest rates on this loan would be substantially below our current interest rate on borrowed funds. This is a one-time opportunity to obtain a federally guaranteed loan, and we have no assurance such funding would be available at any time in the future.
As many of you know, the Board’s ability to borrow money, or pay for structural alterations, capital additions to or capital improvements to the common elements or units is limited to $50,000.00 without the prior approval of the voting members having at least 2/3 of the total votes outstanding.
The Board has scheduled a meeting of the unit owners for the 19th day of April, 2008, at 11:00 o’clock a.m., for the purpose of voting on the proposed loan and expenditures for capital improvements. Because we do not anticipate being able to obtain anything close to 2/3 of the unit owners to appear in person, we are enclosing with this letter a Proxy from the unit owners to the Board of Directors or others to vote on these proposals. Given the time of year that is the only way we think we will have the necessary representation from 2/3 of the unit owners. Unfortunately, if we would delay the vote to a time when the weather is better and attendance in person might be greater, it will then be too late to start the work necessary in time for this camping season.
Most of the funds will be used to refinance existing longer-term debt and bring existing accounts payable current. Longer-term indebtedness consists of a $280,000.00 mortgage, a $50,500.00 existing line of credit and an $83,000.00 loan used to purchase nine premium camping trailers, for a total longer-term indebtedness of approximately $413,500.00. The $83,000.00 owed for premium travel trailer purchases we believe to be a wise longer-term investment, as they generate approximately $45,000.00 a year in income and should pay for themselves in less than two years.
We currently owe about $210,000.00 in accounts payable, including real estate taxes and other bills which have accumulated over the past several years, as far back as 2004.
An additional $150,000.00 will be spent for capital repairs or replacements which are needed either to operate the existing facilities or to make up for deferred maintenance over the years. This includes work on the water park, replacement of 35 year old restaurant equipment, new flooring, and roofing.
The Board also proposes to provide a necessary fix to the Association’s financial difficulties by using the remaining $226,500.00 to create at least 38 new condo lots on vacant land, to consolidate the UDI Block to form 50 new condo lots, and to remove and replace tennis and basketball courts to a more convenient location. The Board feels that completion of these new projects would create net sales proceeds of approximately $500,000.00 to the Association over and above the costs of creating these new sites, as well as provide additional continuing income from the new sites. The Board feels that there is a market for these new condo lots, which would be developed over a period of time, even during the current real estate market.
Thus, of the amount proposed to be borrowed approximately $376,500.00 would be for structural alterations, capital additions to or capital improvements. The balance of $623,500.00 would be to refinance existing indebtedness, including bringing $210,000.00 in outstanding bills current, and refinancing longer-term debt over time at a fixed rate, as opposed to the current higher rates when such debt is continually rolled over.
The only alternative available to the Board in order to keep the campground operating, much less pay for improvements, is to substantially increase assessments and dues to pay what is necessary on a short-term basis. We ask that you look at this proposal from a businesslike point of view, which is how it has been approached by your Board, and how the Board has come up with this proposed solution.
Because these proposals for borrowing and capital expenditures require 2/3 of the total votes outstanding, and not simply 2/3 of those who show up at the meeting, if you fail to appear at the meeting to vote or provide your Proxy to someone who will appear on your behalf at the meeting, your failure to act will in effect be a vote against these proposals.
If you have any further questions concerning these proposals, you may contact a Board member or telephone the General Manager, Dan Gundrum, at 1-920-261-7505, Extension 11.
Very truly yours,
BOARD OF DIRECTORS,
RUBIDELL RESORT CONDOMINIUM
ASSOCIATON, INC.
By: ______________________________