September 22, 2003

Dear Fellow Mesquite Country Club Owner,

My name is Mel Covetta. I have owned a condo at Mesquite Country Club for 4 years. I am very concerned about the validity of the recent vote directed by our HOA board.

You may recall that last fall our board informed us of a pending “insurance crisis”. We were told that if we failed to act quickly to revise our governing CC&Rs, our insurance costs would go up "a minimum of 200%" or that we would "run the risk of not being able to obtain insurance." The only other item mentioned in that September, 2002 letter dealt with the possible use of a foreclosed condo as an on-site office.

Did you know that when you were asked to send in your vote to avert this "crisis” that you were also voting on other issues, including to restrict your (and any subsequent owner's) right to rent out your condo? Could this restriction adversely impact your property value and reduce the pool of potential purchasers when the time comes for you to sell it? Did you buy your condo because MCC had the look and feel of a resort destination? Do resorts provide refuge for vacationers for periods of a few days to a few months at a time?

Mesquite Country Club was designed and built primarily as a resort destination. As a consequence, approximately 85% of its owners live elsewhere. Many MCC units were purchased with the knowledge that offsetting revenue could be generated via short term vacation rentals.

This fact has materially contributed to the sales and record appreciation within the complex. And, whether or not you choose to rent your condo, you have benefited from this fact.

The reason that we didn't know that we were voting to cut off potential rental income for weekends and Holidays was that we simply were not told about it in any of the summaries relating to the proposed CC&Rs. It was not mentioned in the September letter. It was not mentioned in the MESQUITO newsletter included with the ballot. That document summarized the reasons to change the CC&Rs as follows: "to clarify maintenance responsibilities, permit the use of a unit for an HOA office, establish architectural guidelines, and permit the Association to provide 'bare walls' insurance coverage." According to our HOA office, those two documents, and a copy of the revised CC&Rs, were all of the information provided to the owners prior to the recent vote.

You can review copies of those two summary documents on the Internet. I could have taken the day off and sat down with a magnifying glass and read the nearly half-inch thick copy of the proposed CC&R revisions that the HOA sent us. However, I would not have discovered all of the changes unless I performed a line-by-line comparison with the original version which I could not locate. I made the naïve assumption that our elected Board had fully summarized the important issues that we were being asked to vote on.

I do not understand why we were not fully informed by our board. I would hope that a truly representative board would openly point out all of the issues prior to asking for a vote.

I would hope that our board would encourage and promote the concept of informed owners debating and then voting on critical issues affecting our community. I would hope that our board would have enough confidence in us to trust us to vote responsibly once we are informed.

The vast majority of MCC owners do not live at Mesquite full time. The rest of the owners who establish their primary residence at MCC have had disproportionate control of our board. The board sets the agenda and decides how to spend our HOA money. The board decides how much information to give the rest of us prior to asking for a vote.

I have talked with some MCC owners. We are concerned that the Board may have intentionally withheld disclosure of the modified short-term rental restriction from the membership in the ballot summaries knowing that this was a controversial issue which could prevent passage of the proposed CC&Rs. We feel that if the Board intended to summarize the new CC&Rs, it should have been complete in that summary and not have left important issues out.

We need a representative governing board of directors. We need a board that treats us as intelligent adults capable of making informed decisions regarding how to manage our substantial real estate investments. We need a board that shares with us the fact that our HOA has spent nearly $20,000 in legal fees associated with the CC&R revision and other related work. Why aren't legal services a line item in our budget? And, what is the rationale on the line item of nearly $200,000 per year for “non-exclusive” right to use the clubhouse for meetings?

It appears to me that our board has promoted a basic change to our property rights without any open discussion on the issue. They have raised our HOA dues and directed special assessments.

They have authorized the removal of attractive trees and bougainvillea after promising not to.

They have been unhelpful in the removal of unsavory long-term tenants who have arguably caused problems of a greater magnitude than all of the weekend visitors combined. And, the HOA office's responsiveness, under their guidance, is questionable.

There are at least two reasons to contact our board today: We need to rescind the recent “vote” which was clearly tainted. And, there is the very real probability that one or more owner groups will elect to sue our HOA. This could result in legal fees creating a need for special assessments.

Why should you and I be punished for the questionable actions of a handful of board members? We need to stop this situation now before it gets out of hand. Please help by completing and returning the enclosed form. We need to send our Board a clear message before the next election. They need to know that we want to be governed by representatives using principles of full and fair disclosure and discussion on all important issues affecting MCC. We should not have to tolerate unnecessary legal fees creating the need for additional assessments. We are capable of making informed decisions if pertinent information is made available to us in a timely manner.

Protect your investment. Your money is involved. Shouldn't you be too?