PelicanNews
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PelicanNews
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PELICAN TAPRC The following Board members attended: Jeff Pray, Fran Williams, Tom Hoshall, Jerry Luke and Judy Young. Representing the management company from Royal Resorts were: Richard Corso, Rodrigo Gamboa, and Luis Cabrera. Our legal counsel also attended: Frank Roozen and Len Matsunaga. 1. MARINA PROJECT Excavation on the Marina Project started on March 14, 2006, and is 80% completed. The first of the three buildings, which comprises 43 units, is 50% complete. Construction on the model villa started on March 6, 2006 and ended on June 9. The model villa is exactly the same size as the villas being constructed. Currently the Resort is working on decoration details in the demo villa, as well as furniture and appliances. The building permit was granted on June 8, 2006. Renovation on the Sales Office started on April 7, 2006 and ended on June 26, 2006. There will be two sales offices, one for the Marina Project and one for re-sales. Royal Resorts reviewed 12 designs before deciding on the current building plan, in order to obtain a building permit from the government. The Project cost is still approximately US$25 million. The additional cost for furniture and finishes should be approximately US$3 million. It will take 90 weeks to build the Marina Project. The date for expected occupancy for the first phase is November 1, 2007. In the next three months a total of US$6 million will be paid on the project. The lower level of the parking in Marina will be used for storage for some of the building supplies. The construction site is closed and locked when construction work is not being done. Alpha and Labor Issues - The employees in the sales office were given an explanation of reasons for the new Alpha structure for the sales department. All but one member of the sales staff have decided to move to the new company. Currently there are six sales people on staff. Financial Reports - The term loan for 2006 was US$5 million of which US$2.5 million was used for operations and US$2.5 million was used for construction. There is also a subsequent loan for construction. Contracts with Vendors - The Resort has a standardized contract for vendors at Pelican. The maximum term of a contract is three years. There are no automatic renewals. Fly and Buy Program – The sales department would like to initiate a Fly and Buy program where prospective buyers for the Marina Project would be able to rent a villa for half the current cost of the maintenance fee on a foreclosed villa. These are villas where the AMF will not have been paid. The program will bring in added revenue until these units are sold. Motion: To approve the usage of company (Pelican) controlled units for a fee of half of the AMF enabling the Sales Department to use villas for sales to prospective buyers in the Fly and Buy Program. Occupancy Adjustment – This program is for space available at Pelican for the cost of the maintenance fee and time share tax for owners that cannot use their newly purchased Marina Residence villa on the interval they are to occupy. Motion: To allow a buyer of the Marina Project with more than a 12 month delivery date to rent a villa, whereby the new buyer pays 100 % of AMF plus time share tax, and no administration fee will be withheld from Pelican on company held units. 2. RESPONSE TO ALTERED VIEWS The Board is continually updating responses to questions from owners. There are plans for a presentation on the Pelican Resort web site. 3. LEGAL UPDATE There will be an announcement on the web site that PROC has settled all legal issues with the Richs. Once the announcement has been made, PROC has fulfilled its obligations under the settlement agreement with the Richs. There is a non-disclosure clause in the agreement. Voting Rights for the Marina Project - Under Membership Rules and Regulations for the Marina Project, no one has voting rights until 2020. Attorney in Fact -There were two documents to be signed by the Board to give two people from ISCO and four on island at Pelican the authority to sign membership agreements. 4. FOOD AND BEVERAGE REPORT The Red Piano has started service at the beach bar on a limited basis, until the bar is rebuilt. There are plans for a new bar, but it will take about three months to select a design and build the structure. Los Gauchos - The cover over the Bistro section of the restaurant is to be maintained by the restaurant but it is the Resort’s responsibility to replace it. The cost to replace the canvas would probably be approximately US$25,000. The Board agreed that the awning needs to be replaced. FINANCIAL REPORTS 5. AMF Balance The unpaid balance on the 2006 AMF as of May 31 is US$673,036. The Resort foreclosed on 250 units this year. The total unpaid balance including the previous years is US$1.788 million. 6. Quantum Loan The possibility of paying back the current operating loan in 2007 rather than in 2006 was discussed. The Resort is ahead of the master plan. Royal Resorts, the management company, has anticipated borrowing for five more years. We have begun to balance our budget with the 20% increase but the Resort must pay back the deficit from previous years. The Resort will need to pay off a loan each year and then borrow again until our debt is paid off. In 2005 an amount of US$5 million was borrowed, US$2.5 million for operations and US$2.5 million for the start up costs for the Marina Project. The loan was intended to be paid in August. Since we need another $2.3 million, this year, it has been agreed with Quantum to only pay the interest for the next year. The Resort then will have to pay back the loan in stated amounts. 7. AUDIT SERVICES QUOTATION The Board and Royal Resorts received a quote from PriceWaterhouseCoopers for their services as auditors for the Resort. The cost of PriceWaterhouseCoopers is higher than Ernst & Young. Ernst & Young will continue to be retained. 8. PROFIT TAX Fiscal Unity: Pelican received advice from our local fiscal advisor concerning tax planning through use of a fiscal unity in order to minimize tax payments. Due to the fact that the Pelican companies do not have the same fiscal benefits and structure, a fiscal unity is not possible. There is need to change the policy of capitalizing expenses. The following motions were passed: Motion: The amount of expense to be capitalized will be increased to US$5,000 from US$1,000. The Resort will go back retroactively as far as possible. Motion: To change our representative from Ernst &Young for tax advice to Bergman Bloem & Bergman. Motion: PROC will engage Bergman Bloem & Bergman to further investigate the fiscal unity structure. 9. PCIP Status PCIP - Balance was US$3.1 million as of May 2006 out of a target balance of US$4 million. We need to generate the US$900,000 shortfall in the program. By allowing owners to invest in the program with a credit card the Resort receives less money as the credit card company deducts approximately 3% in fees. This is a significant amount on large investments. However, investments dropped when the Resort stopped accepting credit cards for the PCIP. Motion: It was moved that the PCIP will accept credit cards. The money is to be spent on projects that the Board approves. 10. REMODELING OF UNITS The 2006 budget contemplates 20 villas for remodelling. 10 villas have been remodeled as of May 31, 2006. New contracts have been written to emphasize the quality of the jobs and materials, the delivery time, and a warranty for no less than one year. There is a villa upgrade plan for drapes and bedspreads. Armando Millet and Maggie Aloyola from Cancun are currently at the Resort to assist in a long term global plan for the Resort. The capital expenses for 2006 are US$600,000. The amount of US$60,000 that was set aside for the elevators could be used elsewhere this year. 11. COMMUNICATION MATERIAL The magazine “Pelican Resort News” was launched in February 2006. From that date a new edition has been released on a monthly basis at no cost to Pelican Resort. These editions have shown basic information of the Resort and topics of general interest for our visitors. In the near future, the editions will have many more articles about the Resort, St. Maarten and neighboring islands. We are currently at edition # 6 (July 2006). 12. OTHER ISSUES Occupancy - The Resort occupancy runs around 80%. For the first half of the year, it was around 90% and for the second half it is around 70%. The Board and Royal discussed the issue concerning an owner notifying the Resort that they are not coming. We need to promote this. A notice will be put in the newsletter that it is important to notify the Resort when an owner is not planning on using their week. The information will also be in the Pelican Resort News magazine, the AGM booklet and a notation printed on the bill. Front Desk – A new system should be in operation soon. Meeting adjourned at 7:30 PM. Judy Young, Secretary |
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