Havasu Shores RV Resort

Lake Havasu City, Arizona 200 Site RV Resort Co-op Project

May, 2012

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Summary of Proposal We propose to develop a 200 site cooperative RV resort in Lake Havasu City, Arizona.

The resort will be built as a top rated RV resort. We will develop the project on behalf

of the cooperative.

The cooperative is a non-profit entity owned and managed by the members with each

member granted a 99 year lease for a specific lot. The entity is governed by by-laws and

a cooperative board. Cooperative memberships (ownership) can be sold/transferred

just as deeded RV lots can be sold.

We are part of the team that developed, managed and marketed Havasu RV Resort, a

successful 398 site deeded lot ownership property which should be sold out by 2013.

The projected cost to purchase the 19.3 acre parcel and construct the resort including

200 lots and amenities is $5.786 million or $29,000 per lot. Included in this cost are:

Land purchase price of $1,230,000, based on a March 2011 appraisal

Construction costs estimated at $3,719,000 for sites, clubhouse and all amenities

Construction management fee @15% of construction costs - $558,000 (included in

selling price).

Marketing, selling, document and legal fee @ approximately 5% purchase price -

$279,000 or $1,395 per lot (included in price).

The project can be completed in a one year time-frame. 2

The Land The 19.2 acre parcel is located on the corner of Chenoweth and

Victoria Farms Road, within the city limits, visible from AZ Highway 95, and within one block of Havasu RV Resort.

It is valued at $1,230,000 or $64,063 per acre based on a recent appraisal.

Municipal water and sewer are available at the property.

The property is currently zoned M-1P which is the zoning required for RV Parks.

Additionally, it is an opportune time to build as land costs are at 2003 prices and construction costs are low.

Entitlements will take approximately 120 days to complete.

The land is on an elevated plateau and has a spectacular view of Lake Havasu to the southwest.

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Satellite View of Plat

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Why a Co-op?

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No developer entity involved.

Formed, owned and managed by the co-op members at inception.

Keeps the cost per member low as there are no financing costs to cover. Additionally, developers typically need to sell deeded lots at 2x all-in costs to make a profit over the sales absorption time period.

There are numerous successful models for the cooperative structure – Escapee’s has 10 cooperative parks including SKP Saguaro in Benson, Arizona.

Ownership is transferable/saleable – the same as a deeded RV lot.

Maintenance fees can be much lower than those of a deeded lot RV resort.

Real estate taxes are not assessed on individual lots but rather on the whole property and included in maintenance fees.

What is an RV Park Co-op?

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A non-profit cooperative corporation is formed with articles of incorporation and incorporated in the

state where the property is located.

By-laws are created which are rules to govern the entity. An initial board is formed to govern the property

and subsequently elected according to the by-laws.

Both the articles and by-laws are recorded with the county.

“Members” each own a share of the entity and have voting rights. This is very similar to stock ownership

and should not be confused with traditional campground “memberships”.

When a membership is purchased, a 99 year proprietary lease (with automatic renewal) is executed at the

same time which gives the member the rights to occupy a specific RV lot. The lease is recorded with

Mohave county.

A member has the rights to use the common facilities.

Members are responsible for their pro-rata share of the operating costs of the co-op, usually referred to as

maintenance fees.

Depending on specifics of the by-laws, members can put their lots into a rental pool when they are not

using them.

An individual, LLC, corporation or trust can own the membership.

The membership and lease is transferable/salable at any point and can be inherited upon the owners

death.

Lots may be improved according to the by-laws and architectural guidelines.

How does the RV Resort get built?

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Non-binding commitments from 200 interested members must be obtained in order to proceed. A refundable

$500 deposit is required.

A committee of interested members is formed to help with oversight of the project.

By-laws, architectural guidelines and proprietary lease documents are drafted & made available to the committee

for fine-tuning.

All lots will be priced at $29,000. Buyers who want a standard cement pad/patio will pay an extra $3,000. Lot

reservations are on a first come, first served basis.

When there are 200 commitments, each member will deposit the full purchase price into an escrow account.

The non-profit cooperative entity is formed. Articles of Incorporation and By-Laws are recorded.

All members execute their membership purchase agreement and proprietary lease agreements. The lease is

recorded with Mohave County.

The purchase of the land is completed and construction starts. A bank handles and verifies all disbursements from

the escrow account.

Tony Caputo will act as the construction manager for a 15% fee (already included in the purchase price), paid over

the course of construction. Three bids will be obtained for each construction line item with the lowest bid

awarded the work. All sub-contractors will be required to have insurance and sign lien waivers at payoff.

David Simms will act as the marketing, selling and document/legal coordinator and will help with the initial

management of the resort for the first three months. A fee would be assessed at the closing of each membership

to cover the cost. - $1,395 per lot or about 5% (already included in the purchase price).

Both Tony and David will become co-op members.

Economics

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Membership leases are $29,000. Buyers who want a standard cement pad/patio will pay an extra $3,000. Concrete slabs can often be in the way of utilities when building a Casitas or Park Model. There are no closing or additional costs.

These prices compare VERY favorably to Havasu RV Resort where the lowest unimproved lot price at $47,900.

Having a membership is much more cost effective than renting over time.

Maintenance fees are expected to be $65 or less per month, assuming a volunteer model for labor and management of the resort. (See projected operating costs, page 9)

Members pay for their own electricity, cable, phone and Wi-Fi.

Real estate taxes are only assessed on the entire property. The members pro-rata share is included in the maintenance fees.

Lot improvements may be made in accordance with by-laws and architectural guidelines.

Projected Operating Costs

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POOL SUPPLIES 7,500.00$

PROFESSIONAL FEES 7,500.00$

OTHER TAXES 1,000.00$

PROPERTY TAXES 40,000.00$

REPAIRS AND MAINTENANCE 5,000.00$

TELEPHONE 4,800.00$

TRASH REMOVAL 4,500.00$

ELECTRICITY COMMON AREA 25,000.00$

SEWER & WATER 26,000.00$

PROPANE 20,000.00$

CAPITAL RESERVE 36,000.00$

TOTAL 189,300.00$

COST PER LOT 200 946.50$

COST PER MONTH 12 78.88$

INCOME ITEMS

LAUNDRY 12,000.00$

RO WATER 6,000.00$

WI FI 15,000.00$

TOTAL 33,000.00$

INCOME PER MONTH 12 2,750.00$

INCOME PER LOT 200 13.75$

ACTUAL DUES PER MONTH 65.13$

Lease Versus Buy

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Buying is much more cost effective than renting over time.

Example –Assume a 6 month stay in Lake Havasu City each year.

Renting: RV lot for six months per year in Lake Havasu City will cost $650 per month or

$3,900 a year.

Owning: Annual maintenance fees will run about $780 annually at the cooperative.

Savings: $3,900 - $780 = $3,120 annual savings by owning.

Electric costs would be the same for renting or owning (occupy for six months).

The initial purchase price of $29,000 is paid for over 9.3 years with the annual savings ($29,000

purchase price / $3,120 savings = 9.3 years).

This does not take into account rental income opportunities when your lot is not

occupied by you for the other 6 months of the year.

You also have an asset that can be sold at any time and recover the initial purchase price.

Cooperative Versus Area Lot Ownership Parks

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Name Havasu Coop Havasu RV

Resort

Yuma Palms Riverview

RV Resort

City, State Lake Havasu

City, AZ

Lake Havasu

City, AZ

Yuma, AZ Bullhead City,

AZ

Woodall’s Rating Build to a 5W 5W 5W 5W

Key Amenities Large format

clubhouse, pool

2 clubhouses,

2 pools

Community

center, pool

Clubhouse, 2

pools 9 hole

par 3 golf

course

Total # of Lots 200 398 453 697

Low price for bare lot

with hookups and

cement pad

$29,000

$32,000 w/pad

$47,500 $82,000 $56,000

Annual Fes $780 $1,500 NA NA

Annual RE Taxes 0 $300+ $300 + $300 +

Proposed Site Layout

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Resort Clubhouse Design

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The resort will be designed as a top rated RV resort,

targeting a Woodall’s rating of 5W.

The clubhouse and landscaping will be designed in a

southwest architectural style.

The cooperative committee will have input into the final

design as long as it remains within budget constraints.

Demographic Background Information

Starting January 1, 2011, 10,000 people per day will be reaching retirement age and this will continue for the next nineteen years. This should produce the largest customer base this industry has ever seen.

The severe recession has caused many baby boomers to re-examine their retirement plans and look for lower cost alternatives for vacation or retirement opportunities.

The U.S. Government is looking to reduce the federal guarantees of the mortgage market with the likely effect of increasing mortgage rates and higher down payment requirements, making retirement and vacation homes more costly and out of reach for many.

Arizona is at the top of the list for the retiring Snowbird population and Lake Havasu City has been a very popular destination.

The RV industry is recovering and RV’ers remain committed to the lifestyle.

Park Model RV’s offer a cost effective alternative to those who do not own an RV.

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Biographies

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Tony Caputo:

Tony was the President of Tony Caputo Builders, Inc. and the original developer of Havasu RV Resort, an upscale 169 unit project in Lake Havasu City,

Arizona. The resort was purchased in 2005 by Leisure Concepts Management (LCM) and Tony was subsequently hired to provide the design, engineering and

development of Phases II and III which added another 229 sites to the project along with a 10,000 square foot clubhouse, swimming pool and recreation area.

Tony was also retained by LCM to provide design and construction oversight of expansion and renovation projects for Galveston Bay RV Resort and Ocala Sun

RV Resort in 2007 and 2008.

Tony currently works as a consultant with Horizon RV Resorts, an RV resort management and consulting company based in California. Tony specializes in

resort site design and construction management.

Prior to his involvement in RV resorts, Tony built approximately 250 homes in Lake Havasu City, Arizona from 1994 to 2004.

Prior to 1994, Tony had an extensive career in the electrical engineering and construction industry in California. He was the founder and owner of Calectric

Co., Inc., a full service electrical contracting and engineering company, with annual sales of $10 million. Tony has also acted as a consultant for Electrend,

Inc., heading up the engineering team that designed and engineered the Citi Corp Plaza in Los Angeles.

Tony attended Pasadena City College and studied Electrical Theory, Code, and Engineering & Design.

Tony grew up in the Los Angeles area, is a long-time RV enthusiast (he owns a Class A Motor Coach) and continues to be involved in land investment and

development projects.

David Simms:

David Simms is the former President of Leisure Concepts Management, an RV resort development and management company. In his 10 years of experience in

the RV resort industry, David has been instrumental in the evaluation and acquisition of 8 RV Resort properties and has evaluated the feasibility of close to 100

properties. In addition to acquisitions, David’s core duties included operational management and oversight of sales and marketing.

Disclaimers

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This overview is for informational purposes and is not an offer to

sell or solicitation of any offer to buy any membership in the RV

Resort Cooperative. The securities laws in Arizona do not apply to

cooperatives and to the extent that any federal securities laws may

apply to interests in a cooperative, they are exempt from

registration. The membership in the RV Resort Cooperative has

not been registered with or approved by any state securities

agency or the U.S. Securities and Exchange Commission. No

money or other consideration is being solicited or will be accepted

by way of this overview. Any offering or solicitation will be made

only to prospective members pursuant to receipt of additional

documentation, all of which should be read in its entirety.