Mountaintop Lodge and Parking Facility Information

April 26, 2011 Members of the Lake Naomi Club, During the past three years the Club has been developing a comprehensive Strategic Plan.

The current draft plan will be finalized after the Membership is surveyed in the Fall. A significant part of the Strategic Plan involves identifying the types of facilities the Club requires in order to meet the goals of the Plan. A Long Range Facilities Master Plan is also in the development stages.

Two opportunities have arisen where the Club can not wait for the completion of the Strategic Plan. Both have been identified and discussed over the years by the Club’s Committees and Boards and both are part of the Long Range Facilities Master Plan as well as the Draft Strategic Plan.

The first opportunity arose when the owners of the stone house across from the LN Clubhouse approached the Club about selling a portion of their property as a means for the Club to address the parking needs for Club Beach and the LN Clubhouse. This 102 foot wide parcel of land would permit the Club to construct a much needed 57 vehicle parking facility to accommodate the Club’s 1596 Members and help resolve a significant safety concern.

The second opportunity is the acquisition and reopening of the Mountaintop Lodge located on a four acre commercially zoned property on Route 940 adjoining Lake Naomi. Since the abrupt closing of the Lodge over 28 months ago, the Club has been monitoring this property and working with the bank/mortgage holder to negotiate a bargain sale. The Club’s interest in the Lodge is to add another great amenity, provide a marketing tool for the Club and secure the Club’s boundaries. The Lodge would permit the Club to cater Member weddings and special functions during the summer months. The Lodge would also meet the Club’s staff housing needs resulting in a savings of $40,000 per year. The four detached suites would be available to Club Members during the summer months to house their overflow guests and to offer real estate agencies a quality location to house prospective property owners. From October through April the Lodge would be operated as a bed and breakfast with the goal of introducing guests to Lake Naomi – Timber Trails.

Members will be happy to know that the Club can acquire and build the new parking facility and acquire and reopen the Mountaintop Lodge without any additional Member assessment.

Although the Club will borrow the funds to pay for both projects, there will be no additional charges to our current Members because of savings in the existing loan for the Community Center, fees paid by New Members as part of the Community Center/Capital Enhancement Assessment, savings on housing for the seasonal/international staff and revenues generated by the operation of the Lodge.

Enclosed with this mailing is a Question and Answer Sheet regarding both projects. Should you have additional questions, please do not hesitate to email General Manager Robert Jones at rjones@LakeNaomiClub.com or you can call him at 570, 646-9191, Extension 112. Additional information on the proposed projects, including detailed financial information, is available in the Members section of the Club’s website at www.LakeNaomiClub.com.

The Club will hold two Informational Coffees on these important projects. The first Informational Coffee will be held on Wednesday Evening, May 4th beginning at 7:00 PM. The second Informational Coffee will be held on Saturday Morning, May 7th beginning at 10:00 AM. Both Informational Coffees will be held at the Lake Naomi Clubhouse.

Now we turn to the people to whom we all report, you the Members. It is your decision as to whether or not Lake Naomi-Timber Trails will acquire land and build a new parking facility for Club Beach and the LN Clubhouse and will acquire and reopen the Mountaintop Lodge. Let your voice be heard. Be sure to exercise your right to vote on these two important proposals.

Your ballots (two per Membership) are enclosed. All ballots must be returned (postmarked) by Friday, May 20th in the special envelopes provided. The Board of Trustees believes firmly that the parking facility and Mountaintop Lodge acquisition are important to the future of Lake Naomi-Timber Trails and urges you to join us and other Members in voting YES for these projects.

LAKE NAOMI CLUB BOARD OF TRUSTEES Jim Hyatt, President Brian Drum Steve Harker Anna McAleer Connell McGill Bob Mills Brian Snyder

PS: The Club expects to have the results of the vote certified by the close of business on Friday, June 3rd. The Club will email the results to Members registered with the Club once the results are received.

Miller Family Property 10 Acres

Proposed Parking Facility Mountaintop Lodge 4 Acres

Location • Located on Route 940 and zoned as commercial property.

• Borders two Lake Naomi property lines – Split Rock Lane and Naomi Place.

• Only one property away from the Club.

• Lodge property is four acres.

Lodge property is four acres

Description of Lodge

•Lodge was built in 1928.

•Bed and Breakfast for 12 years under o yea s u de the management of Merilee Baxter and Colin MacKay. •8,714 square feet.

8 714 f t

Elegant dining with stone fire place.

•Elegant dining with stone fire place

•Porch, deck and lawn P h d k dl area for outside functions. functions

18 total rooms

•14 rooms in main lodge.

• 4 cottages in back of lodge. lodge

Cottages with Jacuzzi Suites Cottages with Jacuzzi Suites

Traditional Room #1 Traditional Room #1

Two Bedroom Suite – Room #5

Ki S it Room #8 King Suite ‐ R #8

Grand Jacuzzi Suite – Room #C1

Condition of Lodge Structure is sound.

Structure is sound.

Septic system replaced five years ago.

Roof will need to be replaced in 5 plus years Roof will need to be replaced in 5 plus years.

Windows are new.

Central air new in sections of lodge Back rooms Central air new in sections of lodge. Back rooms have window units.

• Needs plumbing and electrical work due to Needs plumbing and electrical work due to vandalism. Have a not to exceed contract price to repair. p

• • • • •

Condition of Lodge (cont.)

• Landscaping needs major attention.

• Fence needs to be painted.

• Interior paint needs to be t h d touched up and carpets d t cleaned.

• Kitchen equipment in Kitchen equipment in working order.

Overall the Lodge is set up for turn‐key with most required furniture and fixtures.

Benefits to the Club fi h l b • Club Club has opportunity to help preserve history of has opportunity to help preserve history of Pocono Pines.

• Marketing tool for the Community.

Marketing tool for the Community • Great way to market the Club in the off season.

• Control boundaries that border Split Rock Lane and Naomi Place.

• Seasonal outlet for Members’ functions (New Amenity).

Benefits to the Club (cont.)

• Additional Additional space for Members’ family space for Members’ famil reunions and Members’ weddings.

• Seasonal Coffee / Pastry Shop. / • Summer housing for international/seasonal interns.

• Additional parking for Club on busy holidays p g y y (July 4th).

Operation Schedule October through April • Operate as full Bed and Breakfast.

• Corporate Retreats.

M th May through September hS t b • Second and third floors house staff (savings of $40k a y year to Club’s operations budget). p g ) • Four cottages in back used for Members’ guests and marketing.

• First floor used for coffee/pastry shop with limited First floor used for coffee/pastry shop with limited acoustic entertainment.

• Members’ banquets and special functions.

Since the Lodge will be added as a Club “amenity” many of the costs associated with running an independent Bed and Breakfast would not be duplicated.

•Accounting Services •Maintenance Staff •Food and Beverage g

•Snowplowing •Housekeeping

Mountain Top Lodge Preliminary Plan of Operation The attached revenue/expense statement is a projection of the following information.

Revenue The first source of revenue will be generated by the lodging facilities.

Lodging revenue will be generated from the rental of fourteen (14) rooms and four (4) cottages. During the period of May 1st through September 30th the fourteen (14) rooms will house the international and college staff brought in to work at the amenities and will not generate revenue, but would reduce our rental housing costs during this period ($40k). During the same period the four (4) cottages will be rented out at an assumed occupancy rate of 30%. During the period of October 1st through April 30th the fourteen (14) rooms will be rented at an assumed occupancy rate of 30% while the four (4) cottages will be rented at an assumed occupancy rate of 25%.

The purchase of the Lodge would also allow the Club to sell the Mt Pocono condo with a market value of $80,000.

The second source of revenue is the food and beverage operation. Private events and a Coffee House are the two concepts that are envisioned as revenue sources from the food and beverage operation. The private events are broken down into two categories; Member and Outside. Member events are private, non-Club sponsored events (i.e. weddings, private parties) while outside events are breakfast/lunch meetings held by local businesses. These functions can be held throughout the calendar year. The concept of the Coffee / Pastry House is that it would operate from May 1st through Labor Day. The operation would serve non-alcoholic beverages and traditional Coffee House type food items. The Coffee House would also offer entertainment once a week for the teen crowd. The entertainment would consist of acoustical bands, generally one or two piece. The cost of the entertainment would be offset by a small cover charge.

Club Beach / Lake Naomi Club Beach / Lake Naomi Clubhouse Parking Facility

• Club Beach and the Lake Naomi Clubhouse are two heavily used Club amenities with limited parking.

• The sale of the property across from the Clubhouse is the first opportunity the Club has had to address this concern.

• The Club currently has a total of 124 parking spaces to serve , j almost 1,600 Member Families. 48 in the lot adjacent to the Clubhouse, 17 across from the Clubhouse and 59 in the overflow lot.

• The new parking facility would increase the total number of parking spaces to 181, a 47% increase.

• Long Range Planning Committee has identified the need for additional parking at Club Beach and the Clubhouse for many years. years • Additional handicap spots would be created adjacent to the current handicap spots immediately across from the Lake Naomi Clubhouse.

• With the addition of the Boat House Café and the Duster Bar, the parking will only become more of a challenge and more of the parking will only become more of a challenge and more of a safety issue.

• The new parking facility would add additional convenience and safety for Club Members, including an additional crosswalk.

Mountain Top Lodge Projected Revenue/Expense Revenue Lodging:

# of Rooms / Cottages 14 4 4

Time Period Oct 1‐Apr 30 May 1‐Sept 30 Oct 1‐Apr 30

Total Available Days Annual % of of Rental Rental 30.00% 2968 30.00% 612 25.00% 848

Rental Days 890.4 183.6 212

Average Rate $ 125 $ 175 $ 175

Total Room Rental Revenue $ 111,300 32,130 37,100

Hotel/Sales Tax (Collected from Guests & Remitted to Appropriate Governing Body - expense below)

Annual Revenue / Expense

$ 180,530 $ 16,248

Food & Beverage: Events:

# of Events 15 25

Average Cost Per Total F&B COG ‐ 28% to Total F&B Revenue Banquet Revenue 35% Net of COG $ 4,000 $ 60,000 $ 21,000 39,000 $ 400 $ 10,000 $ 2,800 7,200

Jan 1‐Dec 31 Jan 1‐Dec 31

COG ‐ 35% 46,200 COG ‐ 28%

Coffee House:

# of Covers per Day 20

Total # of Average Time Period Annual Covers Cover May 1‐Labor Day 2560 $ 6

$ 15,360

COG ‐ 28% $ 4,301

Total F&B Revenue Net of COG 11,059

11,059

Entertainment Cover Charge:

# of Events 15

May 1‐Labor Day

Total # of Patrons 900

Cost of Total Cover Cover Entertainment Entertainmen Revenue/(Loss) Net of COE Charge Revenue t $ 5 $ 4,500 $ 5,250 (750) Total Revenue

(750) $ 253,287

Expense Payroll & Related Utilities Marketing Insurance Office Expense Licenses & Permits Kitchen Supplies Linens Bank Fees Repairs & Maintenance Income Taxes Hotel/Sales Tax Real Estate Taxes

$ 90,664 44,820 5,000 10,000 2,802 600 2,802 10,814 1,901 12,000 ‐ 16,248 7,000 Total Expense

Condo Fees Taxes

$ 1,620 813

$ 2,433

$ 204,651

Operating income Add savings from Elimination of staff housing Add savings from condo expenses

$ 48,636 40,000 2,433

Total Annual Cash Flow Available

$ 91,069

(see below)

Lake Naomi Club Proposal to Purchase and Renovate Two Projects Summary: - There does NOT need to be any additional Member assessment to pay for these projects.

- Our bank will lend us the funds necessary to purchase and renovate both projects.

- This loan plus the existing Community Center loan will be repaid from existing sources in 2022 (with Lodge revenue) well before its current due date in 2028 and 2027 (without Lodge revenue).

Funding Requirements: Parking Lot Property Purchase Price Site Development Contingency Total

$375,000 275,000 25,000 $675,000

Purchase Price Repairs, closing costs and contingency Total

$550,000 145,000 $695,000

Mountain Top Lodge

Total

$1,370,000

Proposed Funding: Existing loan net of cash on hand in account Add funds required from above Less assumed net proceeds from sale of condo (see Note 2) Total loan after purchase

$1,272,000 1,370,000 (45,000) $2,597,000

Existing loan terms: Interest rate Due date Amortization period

5%-7% until 2018 6%-8% until 2028 1/31/2028 20 years

Sources to repay loan: - Existing annual payers and 5-payment plan Members paying the Community Center assessment - New Members paying the full Community Center assessment - Revenues from the Lodge and savings in staff housing Notes: 1. These projections use the existing loan terms and the maximum interest rate throughout the loan term.

2. When the Lodge is purchased, the Club intends to sell its condominium unit and use the proceeds as additional contingency for repair of the Lodge.

Lake Naomi Club Parking Facility Q & A Below is a list of questions that have been asked since the Club began exploring the possibility of acquiring land across from the Clubhouse to construct a new 57 vehicle parking facility for Club Beach and the Lake Naomi Clubhouse at a cost not to exceed $675,000: 1.

How many parking spaces does the Club currently have for Club Beach and the Lake Naomi Clubhouse?

A total of 124 to serve almost 1,600 Member Families. 48 in the lot adjacent to the Clubhouse, 17 across from the Clubhouse and 59 in the overflow lot. The new parking facility would increase the total number of parking spaces to 181, a 47% increase.

2.

Will the new parking facility for Club Beach and the Lake Naomi Clubhouse free up additional space for handicap parking spots?

If the new parking facility is completed, additional handicap spots will be created adjacent to the current handicap spots immediately across from the Lake Naomi Clubhouse.

3.

Has the Club explored other options?

Yes. The Club previously researched the concept of constructing a parking garage on the existing overflow parking lot. Costs are estimated at $18,000 per parking spot to build a standard concrete parking garage. The overflow parking lot is zoned residential and is in a high traffic area, thus the Club would need to attempt to disguise the facility to look like a house. The Club would also need to replace the current 59 parking spaces it would lose in the overflow lot due to the construction of the parking garage. These 59 spaces would add $1,062,000 to the total cost. Thus the total estimated cost to construct a parking garage to replace the existing 59 spots and add 57 new spots would be $2,088,000.

4.

Is additional parking needed on other than some Fridays, Saturdays and Sundays in the summer?

Yes. While the weekends are the heaviest times of use at Club Beach and the Lake Naomi Clubhouse, parking is also needed Mondays for Pasta Night, Tuesdays for Barbeques and Wednesdays for theme nights. With the addition of the Boat House Café and the Duster Bar, the parking will only become more of a challenge and more of a safety issue.

5.

Is this going to strain our financial resources and prevent us from doing other higher priority projects?

No. The Financial plan proposed to pay for this project will not prevent the Club from completing other projects on the Long Range Planning Facilities List.

6.

Have the parking concerns for Club Beach / Clubhouse been on the Long Range Planning Committee’s facility plans?

Yes. The Long Range Planning Committee has identified the need for additional parking at Club Beach and the Clubhouse for many years. The potential sale of the property across from the Clubhouse is the first opportunity the Club has had to address this concern.

7.

Why the rush? I thought we were going to wait for the survey and the completion of the Strategic Plan.

The lack of parking at Club Beach and the Lake Naomi Clubhouse has produced a serious safety issue. This opportunity came up to address this safety concern and that is why the Club is coming to the Members at this time for approval.

8.

Will the new parking facility help with the opening of the new Boat House Café and Club Beach Duster Bar? The Club has been overwhelmed with the excitement from the Membership about the new Boat House Café and Club Beach Duster Bar. With all the excitement, the new parking facility is essential for the safe operation of Club Beach and the Lake Naomi Clubhouse.

9.

If the Clubhouse is expanded or replaced in the future, will it remain at this location?

Yes. The location is critical to the success of the Clubhouse. It will remain at this location and the new parking facility will play a key role in any future expansion or replacement of the Clubhouse.

10.

Has the Club considered shuttling Members to and from the Club Beach / Clubhouse?

Yes. When the shuttle bus service was started the Club tried to get Members to use this service for other than Kids Klub, Evening Recreation Programs and Special Events. It was not well received.

Members prefer to come and go at their own leisure and not be bound by a shuttle service.

11.

Has the Club researched Valet Parking?

Yes. The Club’s Liability Insurance cost would increase substantially and there would still be the challenge of not having the extra parking spaces available for this service to work.

12.

Does adding the new parking facility add any safety issues to the Membership?

No. Actually it is more of a safety issue not to provide additional parking spaces at this facility. The new parking facility would add additional convenience and safety for Club Members, including an additional crosswalk.

13.

What are the Club’s plans for the existing overflow lot?

The Club will be seeking funds through the 2012 Capital Enhancement Budget to square off and pave the existing overflow parking lot like the Clubhouse main parking lot.

14.

Why doesn’t the Club do these projects together?

The Club needs to be very careful of the size of overall projects as combining projects could require a much more involved (and costly) permitting process. Also the Club does not have the funds budgeted to improve the existing overflow parking lot in 2011.

15.

Why should this project take priority over renovating the golf clubhouse which has been in the planning stages for years?

The only reason this would take priority over the Golf Center Building is the opportunity is now and the Club would lose this opportunity. The Golf Center is the number one project on the Long Range Planning Facilities List once the Membership Survey is completed.

16.

Are we confident that we can get all the necessary permits/approvals to develop the parking facility?

Tobyhanna Township approved the plans and permits on March 14, 2011. The Club sought appropriate approval from the Township before going to the Committees, Board of Governors and Members in order that an accurate cost estimate of land development costs could be presented.

Lake Naomi Club Mountaintop Lodge Q & A Below is a list of questions that have been asked since the Club began exploring the possibility of acquiring and reopening the Mountaintop Lodge on Route 940 at a cost not to exceed $695,000: A. What year was the Mountaintop Lodge built and how long was it run as a bed and breakfast?

The Lodge was built in 1928 and played a significant part in the history of Pocono Pines. The Lodge was operated as a B&B under Merilee Baxter and Colin Mackay for 12 years, closing in December of 2008.

B. What are the current conditions of the Lodge after being closed for 28 months?

Overall the Lodge is in good shape. There was some plumbing and electrical damage due to vandalism and the Club has firm estimates of $15,000 to fix these damages. The structure is sound, the septic system was replaced five years ago and the windows are new. All the kitchen equipment is in good working order. Overall the Lodge is set up for a turn-key with most of the required furnishings and fixtures included in the purchase. The Club has provided contingency funding for unforeseen circumstances as part of the not to exceed price.

C. What would be the operating schedule for the Mountaintop Lodge?

From October through April the Lodge would operate as a full Bed and Breakfast with a focus on securing corporate retreats through the Membership as well as seeking visitors who would become potential future Club Members. From May through September a portion of the Lodge would house the international staff while the four cottage suites in the back of the Lodge would be used for Members’ guests and marketing of the Club. The first floor would be used for a coffee house / pastry shop with limited acoustical entertainment for Members’ enjoyment. The main focus during the summer months would offer the Club the ability to secure Member weddings and special family outdoor functions.

D. What is the food service intended at the Lodge?

The food service would be a coffee house / pastry shop at the Lodge. Also the Club loses a large amount of potential revenue from the Members who want to hold a wedding or special function at the Club during the summer months. The Club cannot close the main Clubhouse in the summer months to the Membership. The Club would have the opportunity to serve these Members with the addition of the Lodge.

E. Will the Club be able to use some of the year round employees to service the Lodge?

Yes, many of the costs associated with running an independent Bed and Breakfast would be covered by the Club’s already existing year round staff. For example the accounting staff, maintenance staff, housekeeping and some food and beverage staff would be utilized in running a successful operation.

How is the Club planning on paying for these two projects?

These projects would be funded by adding to the existing Community Center loan. The additional debt would be serviced from four sources:  Savings on the existing loan for the Community Center which resulted from lower interest rates and higher than projected Membership.



New Members. From 2011 on new Members are paying the full Community Center/Capital Enhancement assessment.



Savings on housing for the seasonal/international staff. Much of the seasonal/international staff would be housed at the Lodge.



Revenues generated by the operation of the Lodge.

 Should you have additional questions, please do not hesitate to email General Manager Robert Jones at rjones@LakeNaomiClub.com or you can call him at 570,646-9191, Extension 112.

 Additional information on the proposed projects, including detailed financial information, is available in the Members section of the Club’s website at www.LakeNaomiClub.com.

 Two Informational Coffees on these important projects will be held at the Lake Naomi Clubhouse: Wednesday Evening, May 4th beginning at 7:00 PM Saturday Morning, May 7th beginning at 10:00 AM

 All ballots must be returned (postmarked) by Friday, May 20th.

 Be sure to exercise your right to vote on these two important proposals.