2008 Maintenance Summary Final 01

Long Caye Belize - Property Maintenance Summary

General Maintenance Organization Update: Common Property Maintenance work is an important and a constant activity on Long Caye. Property maintenance services on Long Caye are comprised of those functions necessary for the effective upkeep of the common areas and assets on Long Caye. In delivering these maintenance services, we strive to ensure compliance with Belize Law and the Long Caye Belize Eco-Guidelines. We want a safe and healthy workplace for our employees, contractors and other stakeholders, while trying to preserve and extend the value and life of the property and assets we maintain. All maintenance work performed on the Caye can be broken into two categories: planned and unplanned. Planned maintenance is proactive in nature and performed in accordance with an established program. Its intent is to respond to normally occurring events and reduce the probability of failure or degradation in performance of tools and other assets. Unplanned maintenance is generally reactive in nature and performed in response to conditions precedent, and/or the failure or wear of an asset due to weather conditions or other unexpected factors. The Eco-Guidelines carry the core of sustainability for all our activity on the Caye. The performance of our maintenance services is no exception to these guiding principles. Appropriate property maintenance requires: 1) access to physical property for the purposes of carrying out the work, 2) the necessary equipment, labor (as well as the transportation, storage and maintenance of that equipment and labor), 3) office labor and space for the general administrative activity related to Maintenance activity, and 4) adequate health and safety assurance in the delivery of the Maintenance Services. While the commercial and residential building activity has been slow on Long Caye, maintenance services have continued for everyone. We did not bill for services in 2008 to follow up on our promise to establish the POA framework and deliver financial reporting first. This report marks that fulfillment, and the billing for all past due and current maintenance fees up to and including 2009 will shortly follow to all parcel owners. Long Caye remains an early stage development project: in fact, while about 60% of the sold parcels have access, fewer than 2% of the available parcels have been built upon by their owners. Because of this low participation, the owner/developer Long Caye Belize (PIL) continues to provide all of the ongoing services of the maintenance organization. All owners benefit from our constant presence and activity on Long Caye. With the arrival of greater development maturity, saturation of ownership, built homes and commercial establishments, the maintenance function will be handed off to a formally established Property Owners Association. Until then PIL can deliver maintenance services in the most efficient and cost effective manner. PIL already has the logistics, equipment, tools, vehicles, offices and other facilities and materials used on a daily basis to perform the maintenance function. To fully segregate the maintenance services from all of PIL’s other ongoing activities on Long Caye and in Belize would be inefficient, extraordinarily cost-prohibitive and unfair to the current parcel owners. The combined arrangement currently allows for far more economical delivery of the services, as our activities on Long Caye and on the mainland are complimentary. Typically, a 75-85% build-out of the parcels (a traditional hurdle for developments) is the time a developer would expect to turn over its operation of the maintenance organization to the POA. We expect that the Long Caye Community Association will likely operate independently at an earlier place in the growth cycle of this development than an association would in a more traditional one. It is clear we are not a traditional development. Long Caye Belize/PIL is likely to continue these services at least until the end of 2009, and likely further. Meanwhile, the Property Owners Association entity has been established and is being prepared for this eventual transition away from the developer. For now, the association will have the bulk of its services provided by the developer; eventually it will be 1

Long Caye Belize - Property Maintenance Summary independent. We have updated our financial reporting and formally established accounting, deposit and payment capability for the POA. Historical financial statements for 2006 – 2008 have been prepared by the Accountancy at Mulherin and Associates of Braintree, MA (www.ecratchit.com) and are attached to this report. In 2009 reporting will be more regular and sophisticated as we complete the setup with Mulherin and Associates. PIL attended a recent meeting with some parcel owners in CA, and the idea of having parcel owner participate in maintenance committee activities was discussed. We think it’s a good idea, so we have invited the parcel owners who attended that meeting to work out a process to appoint a representative to participate in the maintenance committee. We look forward to having a new, involved voice on the team.

Island Maintenance Update: As always, Long Caye is in fantastic, pristine condition. It is the extraordinary remote, unique and beautiful island we all know. Our low/no impact operations philosophy works. In 2008 we had some flooding from rain (not nearly as bad as conditions got in the mainland of Belize), but did not have any significant hurricane or storm damage. It is very comforting and encouraging to know that no fundamental damage has happened either to paths, boardwalk, our buildings or other private buildings on the caye that have been built under our supervision. Our design philosophy works, too. We hope this is encouragement to the 60+% of owners who have immediate buildable access to their parcels. We have made multiple improvements to the Welcome Center. There is a new satellite dish and wireless internet for the general area. We have installed a solar panel, new batteries and upgraded the inverter and electrical in the building, too. The bathrooms have been improved. We have a TV/DVD system and growing and movie library, for the evenings. (Feel free to donate and tapes or DVD’s on your next visit!) We also encourage people to leave books behind as we have a good beginning of an amateur naturalist’s reference library as well as a burgeoning free library of fiction, periodicals and local press. Outdoor lighting, fans and decorative landscaping have also been installed around the Welcome Center, public beach and Pier area. Natural pest management has always been a priority related to participation and access. As they grow, so will our management plan. In anticipation of growth we have sought guidance from a world-class entomologist to help develop best practice pest management plan that will honor and maintain our environmental standards. More details will be available on this soon, as we will be interested in comment. For additional environmental pest management, a GIS mapping specialist, (and parcel owner) Drew Stephens, has started drainage pattern studies around the Caye. Through strategic, sustainable management of surface water flow we can reduce standing water breeding environments for mosquitoes and other pests. In turn, a reduced population means eliminating the need for extra spraying. More on this as this project as it develops as well. We are fortunate to have very loyal, reliable and experienced Maintenance staff on the Caye. Francisco Pacheco, Maintenance Supervisor on the Caye, has been working for us for over four years. Francisco knows the Caye, and his responsibilities up and down. His familiarity with the Coast Guard who visit the Caye along with the friendships and trust he has with the local fisherman are invaluable. Elias is his “mate” and has been on the Caye for more than two years. Both have good computer skills and send frequent emails to management, including pictures and updates of activities.

2

Long Caye Belize - Property Maintenance Summary

Summary of Maintenance Responsibilities and Activities The following list summarizes maintenance priorities and specific work domains addressed on Long Caye. Health and Safety in the Workplace: Maintaining a safe and healthy work environment is as important as sustaining the ecological environment on the Caye. While the EcoGuidelines by nature eliminate many of the innate risks and complexities in traditional development, we are always active in our consideration of issues relevant to the maintenance of health and safety standards. We regularly assess the condition of our maintenance assets (tools, boats, vehicles, processes) with an eye toward ongoing improvement of safety, cost-effectiveness and environmental sustainability. Like most work, our duties on Long Caye involve certain risks, including management of additional hazards inherent on a remote island. We now have helicopter evacuation capability on the Caye in case of medical emergency. It’s comforting to know we could transport a worker, visitor or homeowner to a hospital in less time than it would take from many other spots in Belize. Administrative Maintenance Activity: All maintenance work is supported by administrative activity both on the Caye and in the mainland office. This includes general logistics, payroll, legal, accounting and professional services, transportation scheduling, weather issues, communications, etc… Security: Periodic check of beaches, boats, vehicles, work areas, buildings, perimeter and docks for unusual activity. Staff on the Caye try to keep a knowledge of people currently on the island as well as their general activities. Building Maintenance: General upkeep of Welcome Center and other public structures on the Caye. Cleaning, painting, fixtures, toilets, wood treatment, windows, gutters, roofing, planking, vegetation, termite and weatherproofing treatment, leaks, and fasteners. Pier Maintenance: Wood weatherization treatment, plank replacement, replacement, painting, termite treatment, general cleaning and upkeep.

nail

Road Maintenance: Ensure access for dry roads, root clearing, debris clearing, trimming and grading as needed. Boardwalk Maintenance: Wood weatherization treatment, post and plank replacement, nail replacement, termite treatment, general cleaning and upkeep. Beach Maintenance: Pickup of non-biodegradable material and all trash on beaches, trash collection and removal to Belize City. Pest Management: Monitoring weather and water levels, spraying and spot mediation, distributing deterrents, reporting, expert visits, consulting, and termite nest removal. Per our notification above – we are in the process of building our pest management regime with outside expertise. Transportation and Operations Equipment Maintenance: Auto, boat, tractor, ATV and tool purchases, upkeep, cleaning, repair and replacement. Garbage Pickup, Consolidation, Sorting and Removal: Collection of garbage on the Caye, sorting, and monitored transportation back to Belize for responsible disposal. Maintenance Reporting: Information form workers to Management, updates on conditions, weather, work progress, and general activity. Equipment Purchasing and Maintenance: The Maintenance Organization must constantly repair and maintain the equipment it uses. From power and hand tools to 3

Long Caye Belize - Property Maintenance Summary the ATV, ladders and consumables, we must keep a minimal parts inventory and be prepared for typical failure and end of life issues with all the equipment we use.

Delinquency and Enforcement: Average payment delinquency rates for parcel owners from 2006, 2007 and 2008 are over 40%. This is not a sustainable situation. All parcel owners, according to the EcoGuidelines, must make annual payment of their maintenance dues. We will begin aggressively collecting Maintenance Fees immediately. Efforts will be made to help people catch up with their bills through online and credit card payments and perhaps quarterly billing. We will use all means available to us to enforce payment from those who are not paying. We are confident that those of you who are paying would like those who are not to begin paying immediately. Given the significant deficit the developer (PIL) is currently covering in the expenses, we feel it is important to begin building financial sustainability into the maintenance organization for the future.

A Financial Summary for 2006, 2007 and 2008 prepared by Mulherin and Associates follows this page.

4

Long Caye Belize - Property Maintenance Summary Maintenance Expense Summary The following chart shows Maintenance expenses for 2006, 2007 and 2008 in Belize (BZ) Dollars. (prepared by Mulherin and Associates, Braintree, MA) Jan - Dec 06

Jan - Dec 07

Jan - Dec 08

TOTAL

Billed Maintenance 4021 - Maintenance Due Incom e 4020 · Maintenance Total Incom e

$

154,666.64

$

158,316.68

$

162,250.00

$

475,233.32

$ $

101,750.00 101,750.00

$ $

106,765.99 106,765.99

$ $

65,791.66 65,791.66

$ $

274,307.65 274,307.65

Expense 5010 · Payroll Expenses 5015 · Salaries 5016 · Adm inistrative Salaries 5017 · Other Salaries Total 5015 · Salaries

$ $ $

20,505.80 65,194.59 85,700.39

$ $ $

12,114.35 57,849.15 69,963.50

$ $ $

14,701.09 66,776.30 81,477.39

$ $ $

47,321.24 189,820.04 237,141.28

$ $ $

2,024.40 10,071.00 12,095.40

$ $ $

2,246.88 9,969.28 12,216.16

$ $ $

2,951.16 8,751.08 11,702.24

$ $ $

7,222.44 28,791.36 36,013.80

Total 5010 · Payroll Expenses

$

97,795.79

$

82,179.66

$

93,179.63

$

273,155.08

6010 · Operating Expenses 6015 · Repairs & Maintenance 6016 · Motor Vehicle 6015 · Repairs & Maintenance - Other Total 6015 · Repairs & Maintenance

$ $ $

484.37 265.60 749.97

$ $ $

1,876.95 300.00 2,176.95

$ $ $

1,863.25 1,587.44 3,450.69

$ $ $

4,224.57 2,153.04 6,377.61

6020 · Insurance 6025 · Grounds Maintenance 6030 · Food Supplies 6035 · Operating Supplies 6040 · Building Maintenance Supplies Total 6010 · Operating Expenses

$ $ $ $ $ $

454.43 113.00 10,894.89 20,477.72 2,248.58 34,938.59

$ $ $ $ $ $

137.80 13,274.49 12,466.68 2,271.12 30,327.04

$ $ $ $ $ $

129.19 405.00 14,311.90 15,681.32 2,279.56 36,257.66

$ $ $ $ $ $

721.42 518.00 38,481.28 48,625.72 6,799.26 101,523.29

6060 · Professional Fees 6062 · Consulting Total 6060 · Professional Fees

$ $

24,828.25 24,828.25

$ $

22,595.04 22,595.04

$ $

24,494.75 24,494.75

$ $

71,918.04 71,918.04

6070 · Rent & Utilities 6075 · Utilities 6076 · Electricity 6077 · Internet 6078 · Telephone 6079 · Water 6075 · Utilities - Other Total 6075 · Utilities

$ $ $ $ $ $

1,566.54 687.78 890.83 210.82 1,995.37 5,351.34

$ $ $ $ $ $

1,337.63 693.00 896.55 121.25 1,295.02 4,343.45

$ $ $ $ $ $

575.13 693.00 1,764.78 282.60 3,315.51

$ $ $ $ $ $

3,479.30 2,073.78 3,552.16 614.67 3,290.39 13,010.30

6085 · Rent Total 6070 · Rent & Utilities

$ $

2,700.00 8,051.34

$ $

2,700.00 7,043.45

$ $

2,700.00 6,015.51

$ $

8,100.00 21,110.30

6090 · Office Expense 6092 · Bank Service Charges 6093 · General 6094 · Postage & Courier 6095 · Freight Total 6090 · Office Expense

$ $ $ $ $

1,165.54 248.32 197.68 1,611.54

$ $ $ $ $

1,052.88 673.16 1,726.04

$ $ $ $ $

1,873.43 825.00 419.67 1,694.43 4,812.53

$ $ $ $ $

4,091.85 1,073.32 1,290.51 1,694.43 8,150.11

7000 · Travel Expense 7001 · Travel 7002 · Transportation 7003 · Fuel, Oil, Lube Total 7000 · Travel Expense

$ $ $ $

156.25 15,528.75 1,036.36 16,721.36

$ $ $ $

31,099.95 1,720.82 32,820.77

$ $ $ $

23,625.57 3,053.87 26,679.44

$ $ $ $

156.25 70,254.27 5,811.05 76,221.57

$

183,946.87

$

176,692.00

$

191,439.52

$

552,078.39

$ $ $

(82,196.87) $ 52,916.64 $ (29,280.23) $

5020 · Taxes & Burdens 5021 · Social Security Expense 5020 · Taxes & Burdens - Other Total 5020 · Taxes & Burdens

Total Expense Net Incom e Outstanding Maint. Fees Uncollected: Adjusted Net Incom e After Collection:

5

(69,926.01) $ (125,647.86) $ (277,770.74) 51,550.69 $ 96,458.34 $ 200,925.67 (18,375.32) $ (29,189.52) $ (76,845.07)

Long Caye Belize - Property Maintenance Summary

Summary of Maintenance Expense Categories with Descriptions: Expense related to Maintenance Activity 5010 · Payroll Expenses 5015 · Salaries 5016 · Adm inistrative Salaries 5017 · Other Salaries Total 5015 · Salaries 5020 · Taxes & Burdens 5021 · Social Security Expense 5020 · Taxes & Burdens - Other Total 5020 · Taxes & Burdens Total 5010 · Payroll Expenses 6010 · Operating Expenses 6015 · Repairs & Maintenance 6016 · Motor Vehicle 6015 · Repairs & Maint. - Other Total 6015 · Repairs & Maintenance 6020 · Insurance 6025 · Grounds Maintenance 6030 · Food Supplies 6035 · Operating Supplies 6040 · Building Maintenance Supplies Total 6010 · Operating Expenses 6060 · Professional Fees 6062 · Consulting Total 6060 · Professional Fees 6070 · Rent & Utilities 6075 · Utilities 6076 · Electricity 6077 · Internet 6078 · Telephone 6079 · Water 6075 · Utilities - Other Total 6075 · Utilities 6085 · Rent Total 6070 · Rent & Utilities 6090 · Office Expense 6092 · Bank Service Charges 6093 · General 6094 · Postage & Courier 6095 · Freight Total 6090 · Office Expense 7000 · Travel Expense 7001 · Travel 7002 · Transportation 7003 · Fuel, Oil, Lube Total 7000 · Travel Expense

Description of Expense

Portion of Belize Operations Manager (Rob Trujillo) Salary Portion of Island Manager and Crew of 2-3, plus occaisional extra labor

Legally required by the Gov't of Belize - Indexed to Salaries Expense Legally required by the Gov't of Belize - Indexed to Salaries Expense

Portion of Repair cost for Auto and ATV and other Vehicle expenses Portion of Repars for Tools, Appliances, other equipment Portion of Auto Insurance Portion of Seeds, Plants and Landscaping Portion of Food Cost for Crew on Caye - does not include transportation Portion of General Consumables: Tools, Wood, Material Supplies, Nails, Pest Treatment, Various, etc.. Portion of Bulding Maintenance Materials: Sealant, Stain, Paint, Thatching, Roofing

Portion of Legal, Back Office, Accounting and Related Consulting Fees Each category is the portion the cost paid attributed to Maintenance Activity see 6070 see 6070 see 6070 see 6070 see 6070 see 6070

Portion attributed to Maintenance Activity Portion of Office Supplies, Equipment and Consumables, etc… Portion attributed to Maintenance Activity Portion attributed to Maintenance Activity - international shipping, customs duties, etc..

Portion attributed to Maintenance Activity Portion attributed to Maintenance Activity - moving crew and supplies Portion of non-transportation related fuel for Maintenance (on land and on Caye)

6