1 Frequently Asked Questions Cordillera Transition Corporation

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					                          Frequently Asked Questions
                        Cordillera Transition Corporation
                               December 17, 2010


Acronym Notes:
CCAC refers to the Cordillera Club Advisory Committee
CPOA refers to the various Cordillera Property Owners Association
       Boards including the CVCPOA in the Valley
Club refers to the Cordillera Golf Club
Club Owners refers to the Wilhelm Family Partnership
CMD refers to the various Cordillera Metro District Association
       Boards including the CVCMD in the Valley
CTC refers to the Cordillera Transition Corporation
POA refers to the various Cordillera Property Owners Associations
WFP refers to the Wilhelm family Partnership

For convenience the CTC has organized these likely questions into the following
subject areas alphabetically:
    Accounting Review
    Advice and Counsel
    Bank Loan Status
    Club Operations
    Club Purchase or Sale
    Communications
    Community Future
    CTC Board
    Dues and Dues Escrow Agreement
    Finance and Administration
    Metro District Bond Issue
    Non-Gold Amenities

Accounting Review
1. What did the CTC find in its review of the Club’s financial books and records?

       Please see the “Accounting Review” letter from the CTC under separate cover
       for a summary of the review done by the accountants hired by the CTC to
       review the Club’s records. Without extraordinary income from Premier
       Membership sales and cash infusions from David Wilhelm, the Club would
       have shown a $10.7MM cash loss since the Wilhelm Family Partnership
       acquired the Club in June 2009. Losses reported are due to a combination of
       operations, debt service, and marketing costs for new membership sales that
       outweigh actual revenues. The 2011 budget shows an expense reduction of
       $6MM on a budget of $13MM. Much of that expense reduction may be in golf



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       operations. The CTC does not have that detail or how that may affect the
       “members’ overall Club experience” in 2011.

Advice and Counsel
  1. Who assisted the CTC in providing information for these FAQs?

       The CTC has been fortunate to have the following persons and firms to assist
       in providing information to the CTC on legal and accounting issues, and we
       thank them:
            Randy Addison of Addison Law, a Dallas based firm specializing in
              transactional legal representation to the golf, hospitality and real
              estate industries. Recent engagements include: Desert Mountain,
              Bonita Bay and Amelia Island.
            Michael Hofmann and Robyn Stowell of Holmes, Robert and Owen,
              LLP, a law firm located in Denver, other U.S. cities and internationally
              for over 100 years with 230 attorneys on staff. Mr. Hofmann
              specializes in complex commercial litigation; Ms. Stowell specializes in
              golf course and master planned communities, real estate development
              and land use.
            Matt Wester of Hein & Associates, LLP, a 30-year old CPA firm with
              locations in Denver and other U.S. cities. Mr. Wester, a CPA partner,
              specializes in forensic accounting in cases of litigation and economic
              damages.
            In addition we thank our homeowners who have given many long
              hours pro bono advising and consulting with the CTC on legal and
              accounting issues: Dennis Meir (legal, bankruptcy specialty), Lois Van
              Deusen (legal, real estate specialty), and Walter Copeland (accounting,
              merger and acquisition specialty).

Bank Loan Status
   1. What is the status of the Club’s bank loan?

       The performance and status of the loan is a private relationship between the
       lender and borrower. The CTC is not aware of any default on the loan facility
       or any restructuring of the agreement. Alpine Bank has reviewed and signed
       the Dues Escrow Agreement and is assumed to be fully informed on the Club
       situation.

Club Operations
   1. Isn’t it impossible to operate 3.5 golf courses with our current membership
      levels?

        The Club facilities for up to 1085 golf members were constructed primarily
        to sell real estate. Since then both the real estate and golf markets have
        undergone substantial changes. The Club has less than 600 golf members



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        today, so changes to the Club’s operations are certainly required. Many
        variables determine the financial strength of a club such as initiation fees,
        dues levels, levels of services offered, underlying cost structure, levels of
        outside play, club access, and new member recruitment plans. All these
        variables should be examined to determine financial viability.

        At Cordillera there may be significant opportunities to share and reduce
        costs with community organizations and the Lodge. The CTC feels the past
        level of expenditures at the Club present numerous opportunities for cost
        savings in areas that do not impact member services. There may be
        opportunities to have non-golf assets used by a wider base of community
        members to lower costs or find new revenue sources. There may be
        opportunities to attract new members locally and from key cities through
        creative usage programs that enhance the Club’s dues stream. All these and
        other possibilities need careful exploration with community stakeholders.

        The CTC has engaged the services of well-qualified industry and local
        experts to understand industry best practices. These experts have helped
        other clubs solve similar challenges many times before. The CTC is confident
        a plan can be developed for a financially viable Club at Cordillera with
        attractive amenities and services including our current courses based on
        this expert input. The development of this plan will take approximately 90
        days from the time it seems clear that a purchase of the Club is feasible. The
        CTC plans to explore the key issues with members in a series of meetings
        and surveys. Members will be openly queried about the trade-offs between
        key variables and the pros and cons of each. Members could then decide on
        how the Club could be run.

        If, after all this analysis, the plan seems risky and not financially viable, the
        CTC will not hesitate to so state. If the plan seems sound, the CTC will also so
        indicate. With that information the community stakeholders can make
        informed decisions.

   2.   What is the CTC’s relationship to the Club’s Finance Committee?

        There is no relationship between the CTC and the Club’s Finance Committee.

Club Purchase or Sale
1. Has there been any discussion between the Club Owners and the CTC about the
   sale of the Club?

        The CTC has been in frequent contact with the Club Owners and their
        attorney to resolve many issues such as the Dues Disbursement/Escrow
        Agreement and accounting questions. During this time, the WFP made a
        number of verbal offers, ranging from a buyout of $22.2 million (assumption
        of the $12.7 million bank debt plus $9.6 million to the WFP), to splitting the


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        Valley Club away from the rest of Cordillera for $16.2 million (assumption of
        the $12.7 million in debt plus $3.5 million to the WFP), to a joint venture
        between the members and the WFP. At a meeting on October 28 between
        the CTC and the WFP, the CTC indicated that none of those scenarios were,
        in our view, financially viable. The CTC subsequently received a written
        offer letter from the WFP on November 19, outlining three alternatives.

        A meeting was scheduled for December 9 between our attorney and their
        attorney to explore other possibilities but was cancelled by the WFP on
        November 24 and WFP requested that the CTC provide a written response
        to their offer. Since then, the WFP and the CTC have been focused on
        finalizing the release of the Dues Escrow and Disbursement Agreement,
        addressing the accounting questions, providing the cash in/cash out
        statements, and releasing the dues increase letter and service level
        documents.

        On December 17, 2010, the CTC sent a Letter of Discussion to the WFP
        requesting a non-binding meeting to explore four key business items central
        to any acquisition of the Club facilities. The Club Owner has responded
        expressing an interest in meeting with the CTC.

2. In the December 10 CTC Letter of Discussion, what do you mean by the Club’s
   existing obligations of approximately $100 million?

        When a candidate joined the Club, the candidate paid a membership
        initiation deposit that would be refunded after thirty years. Currently,
        according to information provided by WFP, this Club liability starts to
        become due in the early 2020s and is in excess of $100 million. The CTC
        believes that the resolution of this liability is critical to any sale of the Club.
        This liability can be resolved in one of two ways: 1) a prepackaged
        bankruptcy by the Club which would eliminate this liability, or 2) a
        negotiated deal with the members for a discount of that liability.

3. What is your strategy to solve the Club’s challenges?

   a) Gather Input from Outside Experts & Community Members
         i. To help the CTC understand successful club operations, two outside
            consulting firms have been retained to advise us on valuations,
            financial projections, service levels, marketing, and operational
            considerations. These experts have worked on hundreds of club and
            community challenges similar to those at Cordillera.
        ii. The CTC has also been studying and discussing the experiences of
            other clubs and communities, learning from their valuable experience
            and advice.
       iii. The CTC has been listening to community stakeholder concerns,
            suggestions, and desires. Input is being gathered from all categories of


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              Club members, property owners who are not Club members, the local
              governing organizations, and the surrounding community. Future
              meetings and input gathering sessions are planned to understand
              stakeholder wishes.
   b) Know Stakeholder Legal Rights
      The CTC has retained the best counsel available. Our lead attorney is
      acknowledged to be one of the finest in the club field having been involved in
      over 1,200 club acquisitions. Our local counsel is one of the oldest and finest
      firms in Colorado with considerable experience in the challenges Cordillera
      faces.
   c) Develop a Winning Stakeholder Strategy
      Develop an attractive, cogent plan for a possible change in control of the Club
      based on a sound business and financial plan after examining various
      scenarios for the ownership and operation of the Club’s facilities within the
      context of the desired community vision.
   d) Help to Facilitate the Stakeholder Decision-Making Process
      Assist community members, Club members, and the local governing
      organizations, as they may wish, in the negotiation, approval, and
      implementation of that plan, operating fairly and openly with all the
      stakeholders.

4. Are there other parties interested in buying the Club?
         As of this time, the CTC does not know of any parties interested in buying
         the Club. However, WFP has advised it has received inquiries.

5. How can we be sure the CTC won’t overpay for the Club?
        The CTC cannot make any binding offer without the approval of the
        membership or community organizations. To gain that approval, the CTC
        will have to be transparent and work closely with the membership and
        Cordillera community in the development of such an offer.

        The CTC understands that any offer will have to be one that allows the Club
        to be stable and financially viable, competitive with other alternatives, and
        attractive enough that the vast majority of the members and community will
        approve.

6. What is the WFP Wind Rose Collection?
        Wind Rose is “a collection of distinguished private clubs” according to its
        website: www.WindRose.com. The site lists Mayacama, Cordillera, Roaring
        Fork, and Scottsdale as the locations. We understand that the deadline for
        the WFP purchase of the Club at Scottsdale was 12-15-10 and that the
        acquisition did not occur.
        The site states, “Premier Membership includes a generational membership
        for the entire family at the Club at Cordillera and grants the designated
        member and (sic) affiliate membership inside the Wind Rose Collection.
        Premier Lodging includes full golf and Lodging Club privileges for the entire


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       family at Cordillera, Mayacama, and Scottsdale. Accommodations at the
       various clubs are a mix of one, two, and four bedroom units and each
       member is guaranteed 90 days a year, divided as he or she pleases amongst
       each destination.”

       Recent announcements indicate the Scottsdale plans have not materialized.

Communications
  1. Why am I not getting the CTC Newsletters?

       To ensure you are on our distribution list, please send us an email at
       Communications@CordilleraCTC.com. We will confirm that you are on our
       mailing list.

       If you are on our distribution list, it is possible that our newsletters are
       getting caught up in your e-mail’s spam filters. Please check your “Junk Mail”
       folder to see if they are accidentally being delivered there.

       After that action if you still are not receiving our e-mails, you can access all
       of our Newsletters—as well as all of the latest news—under the “Library of
       Information” tab at www.CordilleraCTC.com.

Community Future
  1. What are we “transitioning to” as a community?

       The various community-governing organizations are addressing this
       “Cordillera Vision” question through work led by volunteer Bruce
       Baumgartner. The CTC is involved in this work through David Bentley, one
       of our board members. The CTC encourages all community members to get
       involved and express your views in this important work.

CTC Board
   1. How does the CTC go about its work?

      The CTC board meets every week to 10 days for several hours. Our work is
      collaborative and values-based with the whole board voting on all key
      decisions. Most of the day-to-day work is done through our committees: Club
      Operations, Communications, Finance & Administration, Legal, Non-Golf
      Assets, and Strategic Options. The committee chairpersons present their
      recommendations to the board at each meeting for a vote. The committees
      meet as often as necessary. Many of the committees take advantage of
      volunteer work from many Cordillera owners, as well as paid, expert counsel.

   2. What have you accomplished for the money you’ve spent?
      Since our launch in early October, the CTC board has:



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           Been set-up as an independent, non-profit corporation able to take
            action on behalf of all community stakeholders. The board now has
            Articles of Incorporation, Bylaws, Governance Guidelines, committee
            Charters, financial controls and reports, and D&O insurance.
           Included three new members who are not golf club members.
           Continued to gather information on the effect of golf clubs on property
            values.
           Continued to gather information on how other communities handle
            similar challenges.
           Engaged expert counsel to understand Club members’ rights.
           Met several times with the Club owners to discuss and negotiate
            major issues and future Club ownership.
           Executed a dues escrow agreement to provide for independent
            accounting oversight of members’ dues.
           Convinced the Club owners to release information about the 2011
            Club operations at the time the dues bills are sent.
           Executed a professional review of the Club’s financials from 2009-
            through October 2010.
           Drafted financial models for future Club operations under a variety of
            member and dues scenarios.
           Communicated to stakeholders through a Newsletter, hotline, website,
            peer-to-peer outreach, and planned small group and Town Hall
            meetings.
           Responded to all inquiries and briefed appropriate stakeholders.

  3. Are you representing all classes of Club members such as Premiers, Charters,
     Signature, Social, non-property owners, etc?

     Yes, as well as non-club members who are property owners.

Dues and Dues Escrow Agreement

  1. What is the purpose of the Dues Disbursement and Escrow Agreement?
     The Dues Disbursement and Escrow Agreement (the “Dues Escrow
     Agreement”) was requested by members who wished to ensure that their
     dues money would be staying in the Club at Cordillera to pay for Club
     expenses and would not be diverted to other WFP entities or other
     properties. The CTC worked diligently with all parties to complete this
     agreement. Parties to the agreement include the Club, the CTC, Alpine Bank
     and McMahan & Associates, CPA. It provides for all the 2011 membership
     dues to go directly into an account that will be monitored by McMahan &
     Associates, an accounting firm that will act as the Independent Reviewer,
     subject to the terms in the Dues Escrow Agreement.




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      The Dues Disbursement and Escrow Agreement provides only for the review
      of revenue generated from members’ dues. The Club projected total budget
      revenue by the Club in 2011 is $13MM, of which only $8MM is from
      members’ dues. 2011 dues will be held in an escrow account and all
      disbursements from the account will be subject to review by the Independent
      Reviewer. The Independent Reviewer will receive a listing of all
      disbursements and will have the right to examine any invoices or related
      information to any disbursement for further “testing” purposes.

      In the spirit of financial transparency, the CTC has requested that the Club
      provide to the members a 2011 monthly financial statements from the WFP
      on the Cordillera Golf Club. The Club Owners have refused to provide any
      actual statements to the membership.

2. Will my dues money be protected in the Dues Escrow account?

      The Dues Escrow procedure will monitor the use of member dues for the
      purpose of confirming that they are used for Cordillera Club expenses. There
      are also provisions in the Dues Escrow Agreement that Alpine Bank only has
      rights to the designated payments to the Bank set forth in the Dues Escrow
      Agreement and cannot sweep that account in the Event of a Default by the
      Club on its debt from Alpine Bank.

      However, the Dues Escrow does not provide for any return of dues to the
      members if service levels are reduced, if golf courses are closed, or if the Club
      does not open any amenities in 2011.

3. Why is the Club raising dues?

      The WFP advised the CTC that it needs to stem financial losses. New
      membership sales have not materialized as the Club had expected. Therefore,
      in addition to raising dues, the WFP has advised the CTC that it will also be
      cutting approximately $6MM (36%) in expenditures in 2011 compared to
      2010, out of a $13MM total budget. The CTC does not have detail on how this
      expense reduction will affect the “members’ experience” in 2011. The Club
      projects a breakeven budget in 2011 with 589 golf members and 79 social
      members paying dues and with 3 ½ golf courses and all the social and
      recreational amenities being open.

4. Why can’t I pay my dues on a monthly basis?

      The CTC requested that this be allowed, but the WFP did not agree. Dues
      have always been paid annually in the beginning of the year because
      expenses create uneven, seasonal cash flow issues and are not evenly
      distributed across all months.



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5. How many golf courses will be open in 2011 and what other amenities will I, as a
   member, have access to?

       The CTC does not know and has no control over this issue.

6. If I am worried that some golf courses or amenities will not be open in 2011,
   should I pay my dues?

       The CTC cannot advise members what to do. We do not manage the Club and
       do not provide specific advice, including legal advice. What we can do is
       provide information that has been provided to CTC on which you can make
       your own individual decisions. The Membership Plan states “Members of the
       Club will be entitled to use the Club Facilities in accordance with their
       respective category of membership.” For example, Premier Members and
       Signature Golf Members are entitled to use all courses and all facilities. It also
       provides “The Company or its agents or representatives shall operate and
       manage, or cause to be operated and managed, the Club Facilities...”

       If members feel insecure and believe that they may not have the access that
       the Club has agreed to provide in the Membership Plan, they can ask the
       owners of the Cordillera Golf Club, for a written assurance that they will have
       access to these courses and/or amenities prior to paying their dues. This
       applies to all categories of membership. If the Club fails to perform the Club’s
       obligation to provide the Club facilities, the members may have certain rights
       and remedies available to them. The CTC is reviewing those rights and
       remedies.

       Again, Members need to make their own individual decisions based on the
       information they receive.


7. Has the WFP identified anything in the membership documents that permits
   them to withdraw facilities and services?

       No.

8. What might the WFP do if I don’t pay my dues?

       The Club Membership Plan states: If an account is 25 days past due, then
       charging and usage privileges may be suspended. If an account is 55 days
       past due, then the Club may suspend the member until the account is brought
       current. If an account is 90 days past due, then the membership account may
       be revoked, the Club may use legal remedies to collect the account, and
       memberships shall not be placed on the applicable Sellers Waiting List. See
       page 18 of the Membership Plan, dated July 31, 2009, for exact wording.



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9. Can the WFP keep my initiation deposit if I don’t pay my dues and the Club
   subsequently revokes my membership?

       No. See page 19 of the Membership Plan, dated July 31, 2009. “Revocation
       shall in no way affect repayment of the Membership Deposit…”

10. What happens if I pay my dues into Escrow and subsequently there is a
    reduction in the number of courses or other amenities that are open?

       The WFP has not committed to return member dues if golf courses or
       amenities are not accessible to members.

11. What if I have resigned my membership and I am still paying dues for a period of
    time as required in the Membership Plan?

       Because you have the right of access to the Club amenities according to your
       previous category of membership while you are paying your dues, you can
       ask for a written assurance from the Club that you will have access to those
       amenities before paying your dues.


Finance & Administration
   1. How much has the CTC spent so far by major category?

       Through December 15, 2010 the CTC has paid expenses totaling
       approximately $93,000. The major categories were legal fees of $63,000,
       D&O insurance of $15,000, and accounting/consulting fees of $12,000. The
       majority of expenses are related to the Dues Escrow and forensic accounting
       efforts.

   2. How much do you think the CTC effort will ultimately cost?

       It is difficult to accurately assess what the ultimate cost may be. Much
       depends on the positions taken by the WFP. The original CCAC report, based
       on the experience at other clubs and communities, showed a range of
       $250,000 to $1,000,000 and more. The CTC is prudently managing expenses
       and is sensitive to serving the community without incurring unnecessary
       costs. Expense control and reporting procedures have been adopted. The
       largest expense items have been and are expected to continue to be legal and
       consulting services. It is still the objective of the CTC that any money spent
       will be reimbursed by the parties benefitting from the ultimate solutions.

   3. How will you get the Club members who are not property owners to
      contribute to your funding?




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      The CTC is sending contribution requests to each non-POA Club member
      based on an equitable division of the funds needed. Regular accounting of
      this effort will be provided to the CPOA.


Metro District Bond Issues
  1. Now that the Metro Districts’ ballot issues have passed, will the bonds be
       issued?

       There are no plans to issue these bonds at this time. The CVCMD would hold
       a second election about these measures if and when the bonds were to be
       issued. These ballot provisions were proposed as last resort alternatives if
       other options were not available.

Non-Golf Amenities
  1. Are you planning to saddle the property owners with the cost of these
     recreational amenities?

      These amenities, such as the Summit Athletic Club, the tennis courts, and the
      pools at the Valley Club and the Trailhead Club, are a valued part of the
      Cordillera lifestyle that have been only available to Club members. It may be
      desirable for the community to control these assets, giving everyone in the
      community access on some equitable basis. Or, the Club owners may prefer
      to continue to hold those assets to protect the value of the Club. Ultimately,
      the Club owners, the POAs, and the Metro Districts will make these decisions.

   2. How could the CPOA or the Metro District take over these amenities without
      raising our taxes and assessments?

      If the Club owners wished to divest these assets, and if the community
      desired to take them over, there are several ways to fund them as illustrated
      by other communities. For example, the cost to operate the amenities,
      including a capital reserve, could be funded by an opt-in plan available to all
      community members. Community members interested in using the facilities
      would opt-in at a price designed to cover the costs. User charges could be
      lowered by allowing outsider access on some controlled basis.

   3. What are the advantages of the Club owning these amenities vs. community
      ownership?

      If the Club owned them, it would make the Club more attractive to new
      members thus enhancing the dues stream. If the community owned them, it
      could make them accessible to more people without requiring Club
      membership. For example, a second homeowner who is only here a limited
      amount of time may justify participating in an opt-in plan to be able to use



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the pool or the Summit Athletic Club versus the commitment to be a Club
Social member.




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