RML Sale - Case Closed????
By Margie and the Board???

Apparently, Margie and the Board have decided to close the case on selling RML...not matter how much sense it makes for all owners that RML be sold ASAP.  Below is my email sent to her and the Board and Employee Joe.  Margie's announcement of Case Closed is included at the very bottom.

Date: Sat, 10 Mar 2007 18:24:59 -0500

To Margie and the rest of the current Board,

I was surprised at the contents of your email.  It does not accurately describe the meeting I remember attending on February 10th.  What I recall from the RML Committee meeting that I went to is that most everyone wanted to see the valuation that the Board had promised owners back in November of last year.  The Board was derelict in its performance and obligation to the owners to get this appraisal done when promised and hence, most members of the Committee requested to see this valuation before they made a recommendation to sell. 

This lack of promised performance by the Board was even more exacerbated by Employee Joe's lack of responsiveness in providing critically needed information to the Committee, much of which we have YET to receive.  Employee Joe chose, apparently, to individually refuse requests made by both me as a Committee member and Luther Parker, Committee Head.  Requests directed to you, as president, were also ignored and have yet to be responded to.  The duty and responsibility of timely communications with your constituency comes with being president.  In the absence of strong Board leadership, it appears to me, and others, that Employee Joe is attempting to wrongly assume dictatorial rights over all owners that are inappropriate, obnoxious, vile and self-serving for his own personal agenda and financial gain. 

Employee Joe is just that...an employee...NOT an owner and NOT on the Board....and is attempting to assert authority he does not have.

It also appears from your email that you and the current Board are now NOT willing to sell RML, irrespective of price....in your words, "The board's current stand is that RML was never for sale, Joe's offer was being looked at, Joe withdrew his offer, case closed." 

I submit that this would be a violation of the Board's fiduciary responsibility to all owners...and that immediate steps to sell RML should be taken in order to properly benefit ALL owners. 

Employee Joe

It sounds to me that the Board had been bullied or coaxed by Employee Joe not to sell...since, in my opinion, he, and he alone, is the only one who has anything to lose from the HOA selling RML.  (By the way, he strongly asserted in his appearance before the RML Committee meeting that it would absolutely be in the best interests of all owners for RML to be sold.)

Even though he continues to desperately block access to payroll records in violation of the by-laws, my calculations indicate that, between what he receives:

•  As General Manager
•  As head of RML
•  For his share of Deer Ridge real estate brokerage commissions
•  Employee Joe makes over $120,000 a year off of our little 84 unit condo association, not counting his executive level perks and benefits.  Not bad - considering all the time he spends on the golf course, instead of at Deer Ridge.
•  The above also does not include any additional, undisclosed, inappropriate financial gain that might conceivably and, of course, hypothetically, be enjoyed from this triad of positions that are fraught with a multitude of potential MAJOR conflicts of interest...a triple conflict of interest that the Board and ownership should solve immediately.

If RML sells to someone besides Employee Joe, he will be the one to lose now that it is clear to him that he can no longer steal RML from the owners for only a paltry $10,000 down on a meager total price of $100,000.  ( Details at www.DeerRidgeOwners.com/joesgyp.htm )  As a consequence, it should be pretty clear to all concerned that Employee Joe will probably do everything he possibly can to either delay or stop any RML sale...no matter how beneficial it may be for the owners.  Hence, I urge the Board to be very careful at listening to any advice from Employee Joe about anything that remotely relates to RML.

Selling RML for What It Is Worth

If you look at the attached Pro / Con List regarding the sale of RML, it is overwhelmingly obviously that the owners are MUCH better off with RML sold.  ( Please also see www.DeerRidgeOwners.com/procon.htm ) If you look at the attached valuation analysis, you can see the underlying reasons and financial details that cause me to think that RML could be sold for $1.2 million.  (Please also see www.DeerRidgeOwners.com/analysis.htm )

If RML is sold for $1.2 million and $200,000 is retained for reserves, that means that $1 million could be distributed to ALL owners at Deer Ridge.  This represents almost $12,000 for each and every owner. 

 

How can the Board NOT be interested in pursuing this???

My guess is that a vast majority if not everyone, but Employee Joe, would vote to accept this offer if we got one (the good news is that Employee Joe is just that - an employee who won't get a vote.)  How much we would actually net on a sale depends on how well RML is marketed and the extent of interest we can generate in the local marketplace.  To see the right way to sell the company, please refer to the attached Marketing Plan for the RML Sale.  ( Please also see the same information at www.DeerRidgeOwners.com/marketingrml.htm )

The Actual Selling Price of RML

The actual selling price would depend on the above, but even if we only sold RML for HALF of what I think it is worth, i.e., selling it for only $600,000, this would still give us almost $200,000 for reserves for Deer Ridge and give every owner a windfall of almost $5,000 each. My guess is that a vast majority if not everyone, but Employee Joe, would vote to accept this offer also. 

Below is a table that shows the cash distribution to each and every owner assuming the sale price shown and that we keep back $200,000 for reserves:

 $    1,200,000.00  $    11,905
 $    1,100,000.00  $    10,714
 $    1,000,000.00  $      9,524
 $       900,000.00  $      8,333
 $       800,000.00  $      7,143
 $       700,000.00  $      5,952
 $       600,000.00  $      4,762
 $       500,000.00  $      3,571
 $       400,000.00  $      2,381
 $       300,000.00  $      1,190
 $       200,000.00  $           -  

Even if we only sold RML for $200,000 and didn't distribute anything to owners, we would still have the $200,000 for reserves which would keep all owners from having future assessments equal to nearly $2,400 EACH....on top of ALL the benefits from selling that are listed on the Pro / Con List.

With this kind of potential benefit to both Deer Ridge and ALL owners, how can you, with your fiduciary responsibility as Board members, still say, "Case closed"???

No Need for Outside Valuation

Much has been made about getting an outside valuation of RML.  This was frankly only important to make sure that Employee Joe did not steal the company from the owners with his absurd offer he made where the HOA only got $10,000 at closing.  For me, with my very extensive background in real estate and property management, know the valuation based on the attached analysis.

Nevertheless, and In fact, the market, and the offers we actually receive from that market, will tell us the real valuation of RML and what it is REALLY worth...again, assuming it is marketed properly.  The only risk is offering RML for sale at $1.2 million and, in reality, it is worth a lot more than that.  Even then, if we received multiple, simultaneous offers, we could create a bidding war...again, letting the market establish the true value of the company. 

Hence, we should put RML on the market at $1.2 million and see what offers we get.  If we get none, then nothing is lost.  If we sell RML for anything between $200,000 and $1.2 million, I believe that our Pro / Con List shows that it would be foolish not to take the best offer if it is from a company that passes our due diligence.

RML Has Declining Value

As RML continues to lose units under management, it is also losing value in the marketplace since its income stream continues to diminish.   At sometime in the near future, as more and more Deer Ridge owners choose NOT to use RML for a whole LOT of reasons, RML will become a major cash flow burden requiring assessments FROM all owners and we will have lost our opportunity to maximize our proceeds from any sale TO benefit all owners.

Hence, NOW is the time to sell...BEFORE RML becomes a liability to the owners instead of an asset that can be liquidated to the benefit of ALL owners.

Annual Meeting Agenda

If you and the Board choose not to immediately move forward with a sale of RML as described above, I request that this issue be placed on the agenda for the Annual Meeting next month with at least 45 minutes of discussion time for all attending owners and newly elected Board members to participate so we ALL can decide for ourselves if RML should be placed on the market for sale.

Robert
A-202
www.DeerRidgeOwners.com

PS:  Margie, please note that our email distribution is now already up to about 40% of all units at Deer Ridge and growing.  Hence, the courtesy of a reply to all points would be greatly appreciated since so many of your constituency want clear, unambiguous answers from their elected Board.  Too many emails to you and the Board go unanswered and it is your duty and responsibility to fully and completely respond.

cc:  www.DeerRidgeOwners.com



At 02:53 PM 3/8/2007, Mickmargie@cs.com wrote:

First and foremost, we want to say THANK YOU for your participation on the committee to address the question to sell or not sell RML.
Tom Reise, a board member, volunteered to serve as the board's laison. Luther Parker, an owner and participant in RML, agreed to facilitate/chair the committee. We have received summary reports from both Tom and Luther. We are pleased to report that both reports were most complimentary of your contributions to this study. In summary, we understand the conclusion was a vote not to sell RML. Additionally, the committee suggested a need for further study. Specifically, does the value of RML prove to be an attractive business for us to sell at this time. We understand due to lack of adequate information, namely an independent appraisal of the worth of RML, Luther called for a straw vote and 4 of the 5 committee members voted not to sell.
Since your meeting, Joe Thomas has officially withdrawn his offer to purchase. The board's current stand is that RML was never for sale, Joe's offer was being looked at, Joe withdrew his offer, case closed...  We have thanked Joe for his offer and his efforts on our behalf.  Once again, our thanks to each of you. Fortunately, RML did well in 2006 and were looking forward to an even better 2007.
Respectfully,

GGRC and RML  Board of Directors