Pre-Annual Meeting Q&A

Thank you to all the homeowners that submitted questions prior to the annual meeting. The various boards divided the questions among the board members and our responses are below.

Operating Budget/Dues Questions:

1. How are the homeowners associations' dues spent monthly and is there is a cautious saving of what is not used? (Lee Petros) Please refer to the Association budget that you recently received for the breakdown of dues expenditures. Each invoice for services is reviewed and discussed to ensure that the services were fairly priced, actually received, and completed before the payable is processed.

2. Who is tracking records of all the budgetary items? (Susan Smith) PMG IS TRACKING THESE AS PART OF THEIR CONTRACTUAL OBLIGATIONS THEY ARE PAID FOR, WITH BOARD OVERSIGHT. THIS FUNCTION WILL PASS TO THE NEW MANAGEMENT COMPANY. AN ACCOUNTING FIRM HAS BEEN RETAINED TO AUDIT THE ASSOCIATION HURRICANE ACCOUNTS PRIOR TO TURNOVER AS WELL AS TO PROVIDE AUDIT SERVICES FOR 2009. PMG PROVIDED FINANCIAL STATEMENTS TO THE BOARDS ON A WEEKLY OR SEMI-WEEKLY BASIS FOR REVIEW.

3. Why did the board raise the dues this year when we have only half of the facilities and staff operating? See Question #4

4. Why are we paying for HOA DUES when our unit, the facility and amenities budgeted are not even useable and haven't been useable since September 13, 2008 and not projected to be usable until June 09? (Joe Castillo) All three associations have basic services that must continue in order to keep the property functioning during the reconstruction efforts. All services that can be done without have been stopped/placed on hold for the months they will not be used and are reflected on the 2009 budget. In addition, because the reconstruction schedule has not been finalized at this point, the board made assumptions as to when those services would be brought back online. In the event that services are brought back on later than anticipated, the board will make adjustments to the budget.

5. Why isn’t the budget a six month budget if the facilities will not be usable until June 09? (Elizabeth Heckathorn) See Question 4

6. Why isn't the developer paying a higher than 21% POA and 36% Baywater Condo Assoc. of the funds needed to operate the 2009 proposed budget when they own 70%-80% of the undeveloped lots? (Joe Castillo) Currently, the developer only owns 1 Bay Water Condominium unit that is incorporated into the POA and the Condo Association and 41 lots in Tranquil Shores that is incorporated into the POA. At this time, Tranquil Shores has not been officially accepted by the POA since the required improvements have not been completed. This equates to the developer’s interest in the POA equally 7% and 1% in the Bay Water Condominium Association. The remaining land that is owned by the developer is raw land that has not been platted or incorporated into any of association at this time. The upkeep of the raw land or unplatted sections is not maintained with association funds.

7. Why are utilities like water being budgeted for twelve months when most of the buildings are not habitable and no one is there to use the water? (Tom McKinley) The budget does take into account the lack of use, but since there is not an exact start up date and there may be some increase we based those cost on last years totals so we would have a realistic 12 month projection.

8. Why are the condo special assessment prorated by the sq. footage of a unit instead of split equally among all owners? (Elizabeth Heckathorn) The condo special assessment was split in proportion to each owner’s respective undivided interest in the Common Elements of the building (structure and lot it sits on). Each owner’s interest is calculated by the amount of sq. ft. as a percentage of the overall sq. ft. of the entire building. Section 11.2 of the CCRs for the condominium associations outlines that this is how it is to be calculated. The Board is restricted by the rules and regulations outlined in the CCRs and the Bylaws.

9. What is the porter service and why does it cost $4000 a month? (Tom McKinley) That is the charge for cleaning the hallways, garages and common areas of every building once a week. The monthly cost per building is $400.00.

10. Why is the Telephone line item expense in the Bay Water Condo budget listed at $1500 a month? (Lee Petros) This is based on 3 lines at $50 each times 10 buildings, which equals $1,500.00 a month. The same calculation is used for the Villas budget using 18 buildings. The 3 lines are for the elevator emergency phone, fire alarm monitoring service, and elevator monitoring service.

11. According to the budget, PW is estimating 10% uncollected assessments, is PW going to write these uncollected dues off? (Susan Smith) THIS IS ESTIMATION AS THIS IS A NEW BUDGET ITEM WHICH MAY NEED TO BE ADJUSTED EITHER HIGHER OR LOWER. WE WILL NOT WRITE THESE UNCOLLECTED DUES OFF UNLESS THEY ARE DISCHARGED IN BANKRUPTCY PROCEEDINGS. THE OUTSTANDING FEES ARE A COLLECTIBLE DEBT DUE AND OWING TO THE POA OR THE BOARDS SO LIENS ARE BEING FILED ON THE PROPERTIES IN GALVESTON COUNTY AND COLLECTION SUITS WILL BE FILED AGAINST EACH OWNER PERSONALLY AND DOMESTICATED IN THE OWNERS' RESIDENT STATE TO BE LIENS PLACED AGAINST PERSONAL ASSETS.

12. If uncollected dues are being written off, is TerraMesa making that up from the deficit funding? (Joe Castillo) TerraMesa’s deficit funding covers the difference between the income received by the association and its expenses. Since the income stated for owners’ assessments in 2009 is reduced by a 10% delinquency rate it impacts the income received thus increasing the amount of deficit funding needed. Therefore, it can be said that a portion of the deficit funding is used to offset the anticipated delinquencies for 2009 as shown in the budget.

13. Why does the budget show elevator maintenance beginning in April 09 if they are not working and it could take 3-6 months to get them fixed? (Elizabeth Heckathorn) Currently the board does not have a firm date on the estimated time frame of the elevator repairs. However, this cost has to be accounted for once the elevators are up and running. Therefore, the board made a decision back in Nov.-Dec. 08 to budget for this expense starting in April. Currently this service is on hold with the service provider and will be brought back online as elevators are repaired. If the funds are not needed the Board will readjust the budget.

14. Will the cost of maintaining and monitoring the elevators coincide with when the elevators get fixed (i.e. we will not pay for maintenance and monitoring until the elevator is working and only for the elevators that are working)? (Elizabeth Heckathorn) Yes, the elevator maintenance service will not be used or paid for until elevators are brought back online.

15. Why was there a 20% increase in the POA dues and was it approved by the board? (Mark Dolan) POA dues increased 20% to account for cost increases incurred over the past three years. POA dues have not increased since inception of the Association. The only dues that have increased are the Club dues.

16. If the board approved the 20% increase why wasn’t there any explanation to the Owners? (Mark Dolan) The POA board approved the increased dues. Any dues increase for the various Associations must be approved by the respective board.

17. According to the budget, 20,750.00 is spent on landscaping charges for the POA, what area does this cover? (Neerja Bhardwaj) This is the monthly expense for maintenance of Common Areas within the Pointe West POA. Common areas include the greens and landscaping around the a Entry Oval, Ocean Club, Beach Club, and Baywater Villas, Summer Shores, Baywater Estates, Cottages, and areas of Termini Road.

18. If expenses for the management, maintenance, landscape is less expensive to operate on the bayside villas than the beachside villa, why are the dues the same? (Tom McKinley) The dues are roughly based on dividing the totals by the # of buildings and units. There are just twice the # of units on the beach side, but since they are separate association there are slight differences in final #’s.

19. Have there been rebates and payment reductions by vendors; such as Comcast, Exterminator, landscape, etc.? (Elizabeth Heckathorn) Certain services providers (i.e. Schindler, ThyssenKrupp, HomeTeam Pest Defense, Porter, Southcross, Beach Cleaning and Allied Waste) were notified to place there services on hold and stop billing until further notice. The board has reflected this in the 2009 with the anticipation to bring the majority of these services back online in April. However, if the reconstruction schedule dictates otherwise then they may be suspended further. Other services such as Cable, Electrical and Water are calculated on consumption not negotiated contracts and cost saving due to lack of use will be reflected in their billing.

20. If there have been rebates and payment reductions by vendor, why are the dues being increased? (Elizabeth Heckathorn) Yes, see question 20. Refer to 2009 Operating Budgets for all three associations which outlines the income needed to support the expenses that each association anticipates incurring in 2009.

21. Why did owners not receive 2008 year end financials in there Annual Meeting packet in preparation for the February 7th meeting? (Joe Castillo) Year end financials will be available at the Annual Meeting. The Board does not receive year end financials from the property manager until the 20th of the following month (January 20, 2009). Once received, the board must go thru a process of verifying for accuracy and in some cases revisions to the year end financials. Due to this, financials were not ready in time to send prior to the meeting. Given the current situation, the board felt that it could not delay the annual meeting any longer due to the need to communicate the status of our community.

22. What is the status of the delinquent dues? (Susan Smith) DELINQUENT DUES ARE BEING WITH PURSUED BY COUNSEL BEGINNING WITH THE HIGHER DOLLAR OUTSTANDING ACCOUNTS OR THOSE OWNERS WITH MULTIPLE ACCOUNTS WHO CHOOSE NOT TO MAKE THEIR PAYMENTS. THE PROCESS IS PMG FIRST CONTACTS THE OWNERS WITH A REQUEST FOR PAYMENT LETTER; IF NO RESPONSE, THEN THE ACCOUNTS ARE REFERRED TO COUNSEL WHO SENDS A DEMAND LETTER. IF STILL NO RESPONSE, THEN LIENS ARE THEN PURSUED AND FILED AGAINST THE PROPERTY FIRST, AND MOST RECENTLY, INDIVIDUAL COLLECTION SUITS ARE BEING FILED.

IN ADDITION, NINETY TWO DELINQUENT ACCOUNTS HAVE LIENS PLACED ON THEIR PROPERTY, EIGHT DELINQUENT ACCOUNTS ARE UNDER A REPAYMENT PLAN; NINE ACCOUNTS ARE INVOLVED IN VARIOUS STAGES OF BANKRUPTCY PROCEEDINGS; NINE LAWSUITS FOR PERSONAL JUDGMENT HAVE BEEN FILED; AND FOURTEEN ACCOUNTS HAVE BEEN SENT DEMAND LETTERS BY THE ATTORNEYS WITH POTENTIAL FOR FILING OF COLLECTION SUITS IN WHICH PERSONAL JUDGMENTS CAN BE OBTAINED. ADDITIONAL ACCOUNTS UNDER CONSIDERATION FOR AGGRESSIVE ACTION.

AS STATED IN THE PAST, THE BOARDS WILL CONSIDER ANY REQUESTS FOR A WORKOUT ON DELINQUENCIES ON A CONFIDENTIAL BASIS.

IN ADDITION, THE BOARDS HAVE DISCUSSED WITH AN OWNER ATTORNEY THE OPTION OF REVISING THE BYLAWS TO ALLOW OUR HOA LIENS TO BECOME A FIRST PRIORITY LIEN, BUT THIS WOULD NECESSITATE REQUESTING LENDERS ON A GOING FORWARD BASIS TO SUBORDINATE THEIR MORTGAGE LIENS TO THE HOA LIENS WHICH MAY BE PROBLEMATIC.

Insurance Questions:

1. When will we receive a copy of the current evidence of Condo/flood insurance for Building #10? (Elizabeth Heckathorn) The policy was renewed in January 09 and the association has not received its new Certificate of Insurance or Declaration as of yet. We have requested the updated information and anticipate having it by Feb. 7.

2. What happens to the insurance money that is not used? In other words the work is completed under budget, what happens to the rest of the money? Will we be able to audit the contract vs the checks paid Cotton for reconstruction? (Elizabeth Heckathorn) Section 11.2 of the Condominium CCRs states, if there is a surplus of funds after repair and reconstruction is completed, or if the Owners and Eligible Mortgagees vote not to proceed with reconstruction or repair as set forth herein, such funds attributable to the damaged Common Elements shall be used to restore the damaged area to a condition compatible with the remainder of the Condominium, the insurance proceeds attributable to Units and Limited Common Elements that are not rebuilt shall be distributed to the Owners of those Units and the Owners of the Units to which those Limited Common Elements were assigned, or to their mortgagees, as their interests may appear, and the remainder of the proceeds shall be distributed to all Owners as their interests may appear.

3. Due the fault of the development not getting the right kind of insurance, isn't someone responsible and to be held accountable for the loss of income owners have suffered who rent their place and can not even begin to book for the future.? We have no idea when it will be habitable and back to normal. (Joe Castillo) The development does not purchase the insurance policies but rather each associations purchases its respective insurance policies as required by the CCRs. Section of the CCRs states:

(a) To the extent reasonably available at reasonable cost, the Association’s insurance policy may, but shall not be required to, cover any of the following types of property contained within a Unit, regardless of ownership:
(i) fixtures, improvements and alterations that are part of the building or
structure; and
(ii) appliances, such as those used for refrigerating, ventilating, heating/
cooking, dishwashing, laundering, security or housekeeping.
If such insurance is not reasonably available, the Association’s insurance policy may exclude improvements and betterments made by or on behalf of the individual Owners and may also exclude the finished surfaces of perimeter and partition walls, floors and ceilings within the Unit (i.e., paint, wallpaper, paneling, other wall covering, tile, carpet and any floor covering), but each Owner shall have the right to obtain additional coverage for such improvements, betterments or personal property at such Owner’s expense.

At the time that the Condo Associations purchased their policies they decided to purchase a policy that extended to all items within the units except for personal belonging (i.e. furniture, clothing, bric-a-brac) which was in excess of what was required for the association to carry per the CCRs.

4. I also heard that construction has stopped due to no insurance funds from the 2nd tier carrier, is this true? (Tom McKinley) The tear out is complete and we are finalizing bids on the rebuild, plus trying to negotiate are next payment but by no means has the process stopped.

5. What is the status of the second layer of insurance proceeds? If they don’t come through by the end of Jan, what is the back-up plan? The association is working with the second layer of insurance. If the second layer of insurance does not come through the associations will begin looking at additional loan options through private banks.

6. Is there a detailed accounting to date of how insurance funds have been spent both for common grounds and individual condos? (Lee Petros) Yes, all expense documents have been processed and retained by PMG. A spreadsheet will be available at the Annual Meeting. The board is in the process of engaging a CPA firm to perform an audit on past revenues and expenditures and to process future insurance fund revenues and reconstruction expenditures.

Hurricane Assessment Questions:

1. What is the Special Assessment paying for? How are you getting banks that have foreclosed or received the keys from homeowners because the property is now worth half of what they paid for it pay HOA dues? (Tom McKinley) The assessment covers the wind deductible, flood deductible, IRC’s fee, and condo landscaping. We are attaching liens to all property owners including banks if they do not pay.

2. What happens to the condos of the people who have not paid their assessment for the deductible or any arrear assessments? (Susan Smith) SEE ANSWER TO #23 ABOVE. IN ACCORDANCE WITH TEXAS LAW, ALL UNITS WILL BE REPAIRED WITH THE INSURANCE PROCEEDS; HOWEVER, THOSE DELINQUENT ACCOUNTS WILL BE REPAIRED LAST. IN ADDITION, AS SET FORTH IN THE ASSOCIATION DOCUMENTS, THE BOARD HAS THE OPTION OF DECLINING THE DELINQUENT OWNERS ACCESS TO THE BEACH CLUB AMENITIES. ALSO, WATER AND CABLE MAY BE SHUT OFF TO THE DELINQUENT OWNERS' UNITS, AND IF THE DELINQUENT OWNERS' UNIT IS IN A RENTAL PROGRAM, THERE IS AN ASSIGNMENT OF RENTS OFFSET WHICH CAN BE EXERCISED AND ALL RENTAL PAYMENT PROCEEDS CAN BE ATTACHED FOR PAYMENT TO THE ASSOCIATIONS INSTEAD OF PAYABLE TO THE OWNERS DIRECTLY.

3. Since the landscape/common areas are used by owners (villas) as a whole, why is the prorata share split by sq. footage of the unit? (Elizabeth Heckathorn) The condo special assessment was split in proportion to each owner’s respective undivided interest in the Common Elements of the building (structure and lot it sits on). Each owner’s interest is calculated by the amount of sq. ft. as a percentage of the overall sq. ft. of the entire building. Section 11.2 of the CCRs for the condominium associations outlines that this is how it is to be calculated. The Board is restricted by the rules and regulations outlined in the CCRs and the Bylaws.

Reconstruction Questions:

1. What transpired with the cost of rebuilding of the ramps and landscaping? (Neerja Bhardwaj) Ramps: Three firms specializing in costal permitting and construction were contacted for bids. From these, a local company Shelmark Engineering has been contracted to assess the condition of walkovers and provide engineer drawings needed to repair them so they are safe and within the City of Galveston and General Land Office guidelines. The repair process will be in two phases. Phase I will include repair of the three public and the Beach Club walkovers. This will allow vehicular traffic to be blocked on the beach. Phase II will include the repair of the remainder of the dune walkovers.

Landscaping: Four bids on landscape replacement have been received and are being reviewed. The vendor providing the most cost effective bid will be chosen.


2. Why doesn’t the Beach Club bear at least part of the cost of the Beach Club walkover? Is there an agreement which requires the POA to solely bear this responsibility? (Joe Castillo) The Club only owes the Beach Club facility and the land it sits on which is defined by the boundaries of the elevated slab. The walkover that connects to the Beach Club is owned by the POA and therefore must be maintained and replaced by the POA.

3. Why is the POA responsible for the public dune walkovers? Did we agree to maintain them in perpetuity or is this the City’s responsibility? (Joe Castillo) The City of Galveston is the owner of the public dune walkovers but has an agreement with the POA for maintenance. This agreement states that it is the POA’s responsibility to maintain these walkovers and the public parking lots.

4. What is the final cost for the dune walk over’s and schedule for repair? (Mark Dolan) Final dune walkover repairs are not final. As noted previously, we have engaged an engineering firm to develop the rebuild plan which will be done in Phases. Phase I which is underway includes the detailed engineer assessment and a board-by-board, post-by-post assessment. Upon completion of the assessment we will immediately let the contract for reconstructing the first 4 walkovers. Phase I is estimated at $252,134 and this amount is incorporated in the first assessment. Phase II will be reconstruction of the remaining 5 walkovers and such costs are estimated to be $232,000. Prior to the engineering study it is difficult to establish a firm deadline. Our initial target date to begin reconstruction is 3 weeks.

5. If funding for the reconstruction continues to be delayed, can owners do some of the reconstruction work themselves (such as hanging drywall, etc)? Could the reconstruction manager provide a list of materials that we would need to use so that the condo is restored to original condition? No, see posting on blog dated February 4, 2009.

6. The units with exterior sheetrock on the balcony ceilings sustained much more damage than the units with Hardiplank. Is it possible to have all balcony ceilings rebuilt with Hardiplank even if the additional cost would not be covered by insurance? If not all ceilings, perhaps just replacing with Hardiplank on the 3rd Floor units would mitigate future roof damage and the related water intrusion. It is possible that the owners would vote for an assessment for this purpose? I’m concerned that if we simply replace the damage with sheetrock we will have a similar loss in the next hurricane. (Elizabeth Heckathorn) The insurance company can not force the condominium association to replace the damaged material with like material. However, the insurance company will only pay for replacing the damaged portion with like material. The cost difference between using the existing material versus the hardiplank would be a cost that would have to be borne by the association. If the membership decides that it is in the best interest of the association to replace the existing patio coverings with hardiplank then the difference in cost would have to be assessed to all members/owners. The boards have received a bid for replacing the entire patio and corridor covering with hardiplank and are reviewing the cost associated with doing so.

7. Does it matter to the insurance company (in the rates charged) whether the reconstruction is Hardiplank or sheetrock. (Elizabeth Heckathorn) See response to question 6.

8. Does the association intend to protest property tax assessed values, assuming they will be above market (considering the non-usability of the property) at January 1 or should each owner individually undertake this effort? If the association does not want to do this at its expense, would it serve as an organizer for those owners who wish to spend the money on this effort? Does the association or Terra Mesa have a conflict on this issue such as a tax increment financing district being present or some similar agreement? (Susan Smith) We have spoken with Don Kenney with the Galveston County Appraisal District about the overall property valuation reduction due to Ike. He has been to Pointe West and was surprised at how much we have done compared to Seascape and other resorts on the Island. The Appraisal District will consider an overall property reduction for Pointe West, if we can get power of attorneys from the condo owners which is how most of the condos work on the Island. They will also consider the individual homeowners as well, if this is the approach we want to use. Of course, individual owners always have the ability to proceed on their own, but if we try to do this for the whole resort, it could be very beneficial for the all the owners. And of course, last but not least, the common areas such as the Beach Club,etc. Mr. Kenney said that the Appraisal District is in discussions about property values in Galveston as a whole but is still deciding how to benchmark the values. They are looking at using some sort of a national hurricane standard and have also discussed using the 2004 values as a starting point and go from there. Since our resort was valued beginning in 2006, they will probably have to start with those 2006 numbers. He requested that we call him back in April once they figure out what they are going to do. They are willing to discuss an overall resort reduction with the Board and we discussed the insurance adjusters reports, etc. which will be needed in order to start the process. We did invite him to the February 7th meeting but he declined since they really don't know what to tell us yet.

9. What efforts are being made to provide better and more timely updated information to the owners? The blog is good but it is not updated often enough. Remember, we each have a significant financial commitment and an emotional attachment to Pointe West. All board members have access to the blog posting website and provide updates as changes occur within the community.

10. We have already lost potential income on our condo, due to can not rent, can't sell and we are getting requests for rentals forthcoming. When will the villas/bldgs. and club/sunset pool be ready for use? (Lee Petros) If your unit had no damage, the villas will be able to be occupied once all life safety repairs (i.e. sprinkler, alarms) have been completed. Those units with damage will not be habitable until the reconstruction on that unit is complete. The schedule will be provided by Matt Prince.

11. When will unit be able to be occupied/ rented? (Lee Petros) Refer to Question #10.

12. What is the status of the small business loan and how will this be spent? The Villas Condominium Association received an offer from the SBA for a loan amount of $197K. The Bay Water Condominium Association was denied a loan from the SBA. The board is reviewing the details of the offer and has not made a decision regarding accepting the loan.

13. What is the schedule and the order of repair for the interior condo repairs? (Lee Petros) Matt Prince is preparing the schedule. The order of repair will be: (1) those units being occupied full time, (2) those units that are current on their dues and assessments, and (3) the buildings with the least amount of damage – this will permit more owners to occupy their units in a timely manner.

14. Will repairs to both condo associations (Ocean and Bay) be done at the same time? Yes.

15. Internal repairs are taken a LOT longer to get funded. In the interest of time, can the home owner repair his own unit and then submit expenses for reimbursement? (Susan Smith) NO, THIS IS NOT OPTION. PLEASE REFER TO THE HURRICANE BLOG POSTING OF 02.04.09 WHICH REFERS TO ARTICLE 13 "PROHIBITION OF DAMAGE, NUISANCE AND NOISE, 3RD PARAGRAPH, WHICH STATES "No Owner shall do any work which, in the reasonable opinion of the Board or its designee, would jeopardize the soundness or safety of the Condominium or any structure created thereon, would reduce the value thereof, or would impair any easement or other interest in real property thereto, without in every such case the unanimous, prior written consent of all members of the Association and their Mortgagees." REPAIRS WILL BE MADE TO THE UNIT AS TO THE ORIGINAL TURNOVER CONDITION. ANY UNIT UPGRADES WILL NOT BE COVERED BY THE ASSOCIATION AS THIS WOULD BE COVERED BY YOUR PERSONAL INSURANCE POLICY COVERAGE RELATING TO THE "WALLS IN".

16. Describe the process for the rehab of the condo units, for example, electrical, wallboard, painting, placement of furniture, etc, and, how many buildings can be worked on at the same time. How much skilled labor is available for the project? (Joe Castillo) Reconstruction crews will be split across both associations, the bay and ocean side, so that multiple buildings will be undergoing reconstruction at the same time. Within these crews you will have sub-groups that will focus on the interior and exterior at the same time.

17. When all the dust settles and people have issues with furniture, things, etc, damaged/missing during the moving process, how is that going to be handled? (Elizabeth Heckathorn) Owners will need to address these issues directly with the General Contractor.

18. When will elevators be up and running? (Joe Castillo) It is undetermined at this time. The insurance company is still reviewing bids submitted by the board. In addition, the insurance company has their own expert to evaluate the damage and estimated cost to repair. Until this review has been completed a consensus on the cost of damages can not be reached, therefore, holding up the reconstruction start.

19. Status of elevator repairs - will warranty repair costs be used to reduce the amount of out of pocket expenses? (Joe Castillo) Yes, this will apply to the elevators on Pointe West Drive that where in the process of a ThyssenKrupp warranty claim/repair.

20. Will certificates be available to home owners for units stating no damage and no mold present? (Elizabeth Heckathorn) If your unit did not incur any damage a certificate of mold clearance will not be issued since no remediation took place in these units. Unit owner that experienced damage in their unit will receive a certificate after build back has been completed.

21. How do we obtain a copy of the mold remediation certificate for our condo unit? (Elizabeth Heckathorn) See question 20.

22. Are the refrigerators in the units being taken out and replaced by the resort? I have gotten mixed answers. I would like to know because ours was full of food in the freezer at the time of the storm and would certainly need replacing. (Susan Smith) THIS IS TO BE DETERMINED ON A UNIT-BY-UNIT BASIS. SOME FRIGS WILL OBVIOUSLY BE IN BETTER CONDITION THAN OTHERS. MATT PRINCE, THE RECONSTRUCTION MANAGER, CAN ASSIST WITH THIS DETERMINATION.

23. What is the status of the certificate of occupancy for our units? I heard that it is still in place which should mean I can stay in my unit. (Elizabeth Heckathorn) The certificate of occupancy was issued by the City of Galveston after the initial construction was complete on each building. The City of Galveston has not revoked the certificate of occupancy.

24. My unit has power and water - is there any reason why I cannot stay in my unit overnight now -regardless of whether I have damage or not - living with a wall out should be my problem? (Tom McKinley) Some units are ready to be occupied but some units and buildings have water issues besides your unit. Please check with the construction manager on if your unit is okay to be occupied.

25. If my unit is repaired/not damaged and I have water and power now - can I rent it out now? If not, when and why not now? (Tom McKinley) Yes, you should be able to rent but you would need to assume liability.

26. Explain in layman terms what exactly the damage report is being used for? (Elizabeth/Joe) The IRC damage reports were prepared by our public adjuster that outlined the damages that they felt incurred to the units based on moisture readings taken after the storm for each unit. This initial report was used to establish and substantiate the associations’ claim. A revised report was prepared after our public adjuster walked each unit with the insurance adjuster. During this walk the insurance adjust agreed to the repairs as outlined in the second report with the understanding that as reconstruction progresses certain damages might need to be adjusted via a supplemental report.

27. Why are the damage reports replacing or repairing things that are not damaged? (Elizabeth/Joe) The association and the insurance company will not replace anything that has not been damaged. If you feel that this is the case with your particular unit please notify the construction manager to discuss your situation.

28. When is the water/sewer going to back on? (Lee Petros) As of Monday, February 02, 2009, the repairs to the pumps have been complete for all the Villas. The first nine have access to water. Galveston city inspectors have been scheduled to inspect the pumps for the Ocean and Baywater Villas. Once approved by the city, water can be restored. An update on this is planned to be announced before the Annual Meeting.

29. When will the repair schedule of all units published? The board is currently working on a schedule with the General Contractor and anticipates having it finalized in the next several weeks.

30. When will the fences come down? (Tom McKinley) On most buildings, fences should be down when reconstruction starts.

31. What is happening with construction work to commence on exterior of bldgs? Debris is still on patios (which is not that difficult to remove) and the longer the ceilings are out of the patios the more damage can occur from animals and elements. (Susan Smith) THE OUTSIDE BUILDING ENVELOPES WILL BE REPAIRED AT THE SAME TIME AS THE INTERIOR REFURBISHMENTS WILL BE DONE BUILDING BY BUILDING IN ACCORDANCE WITH THE RECONSTRUCTION SCHEDULE. BALCONIES WERE INITIALLY SHRINK WRAPPED FOR PROTECTION.

Developer Questions:

1. Mr. Castillo will you please schedule an appointment with Mr. Macfarlan and explain we are reaching a point of diminishing returns? He must take an active roll and either front the money to make repairs NOW, or file litigation against the insurance company. THE TIME FOR ACTION IN NOW! I realize that there are much more pressing matters for the majority of property owners, but we have only a piece of dirt (no structure) for which we paid an exorbitant amount and continue to pay an ever increasing monthly amount as well as inflated property taxes but for which we get zero benefit at this time. We never make it to PW (because we have nowhere to stay) and never use the pool or clubhouse or restaurant or whatever. We bought this lot only because a marina was going to be adjacent to it - and the marina was imminent. Our intention was to build a house on the lot as soon as the marina was built. It has continued to be imminent for at least 3 years now. I continue to believe the marina will increase the value of the development considerably. Long preamble for the simple question: what are TM’s intentions now, relative to the proposed (promised?) marina? (Joe Castillo) Refer to letter mailed out by developer in early February.

2. Is Terramesa covering the expense of repair of the Pointe West water tower? (Joe Castillo) Yes, TerraMesa has agreed to repair the Main Entry Monument at its own expense.

3. In my opinion the board members, especially the owner / volunteers have done an excellent job and this is not where our problem lies. When Dean Macfarlan mailed out the brochure for his Texas properties he signed the enclosed letter "Head of the Terramesa Family". It is time for him to act like the head of the family. His silence has spoken volumes. With the current increases in fees a 3 bedroom villa at Pointe West will cost approximately 36K to 40K per year to own and operate, considering the cost of the investment and all operating expenses. Owners will not continue to pay $40K per year for an asset with no benefits. You can not occupy, rent, or sell your unit. This will cause more foreclosures and then fees to be higher. This is the same as investment tax credit. Every time ITC has been lowered, the government made more money because more people invested in long term capital gains. Of course, when raised income actually went down. (Joe Castillo) Refer to letter mailed out by developer in early February.

4. At the last POA meeting an owner inquired about the status/progress of the marina. Joe Castillo responded that Terramesa hired (or was about to hire) a consultant to coordinate everything (permits, cost estimates, contractors etc) needed to move forward with the project. How has this progressed and what is the current status? (Joe Castillo) Refer to letter mailed out by developer in early February.

5. Why was the marina dropped from the current master development plan? This would have added substantial utility and value to the development. For me, and I’m sure for some others, this was a significant part of our investment decision since as our children and grandchildren grew older it would add boating to the available activities. (Joe Castillo) Refer to letter mailed out by developer in early February.

6. What is the future of this development and what can be expected from Terra Mesa to get this development back on track? (Joe Castillo) Refer to letter mailed out by developer in early February.

Club Questions (Natthan answers all):

1. Why are we paying a Club Membership fee (Line item #56150) when the staff has been cut back and the bar isn't open, the restaurant is only open, I believe, 4 days? Seasonal hours of operation are in place. We have adjusted the hours accordingly since 2007.

2. Why isn't the Club Membership budget cut in half until it's at full service in June of this year. The club has been in operation since early October 08. There are limited items that are currently being replaced/repaired due to Ike's impact. Currently BBQ grills are the only items that are non operational.

3. Has there been an attempt to try and beef up security at the beach club so that ONLY bona fide users will get to use the facilities when they become available? We will continue to work with our security company to monitor the gates with man power/additional staffing this year. Installing an automated locking system is in excess of $25K.

4. What are the plans for the use of the beach club/pool/amenities by non owners/renters? Will there be a usage fee? How will that all work? For the time being we have decided not implement a club fee. Those options are still being explored. We want to ensure a seamless transition if and when the program is implemented.

5. What is resort doing about getting ready for upcoming rental season/ long term rentals?Currently we are marketing the TM resorts. We are working with a production company, Helicona press who will be filming a kayak fishing show towards the end of February. PW will be the featured property. We have scripted ads ready to move forward with local advertising along with internet based searches.

6. Is the lock key code we were given during repairs still valid? How do we obtain new codes when available? Access codes are only set for 30 days for the individual home owners. Once a rental guest receives a new code for your home yours will be re-set. New codes can requested from the front desk staff.

7. What is the status of the Beach club dues? I am getting rental inquiries and need to know if I need to raise my rates. We have not planned for an increase of club dues at this time.

8. Will the beach chairs that were on the beach come back - will water be at the end of the walk over by summer? We are focusing on replacing all items that were lost in IKE. Our focus will be replacing and repairing items that directly impact the use of the BC and BW pool sites as a priority. We have tracked all items that were lost and we are working on a plan to schedule the replace items.

9. When will beach club bar (topsiders I think it is called) be up and running? Topsiders will have limited hours until June. We are looking at Friday & Saturdays starting in April. Depending on what spring break looks like we will adjust the hours accordingly.

10. We lost one cabana to the storm - why were they not taken down and secured - will it be replaced - will we get more cabanas? The lost cabana arrived last week and will be installed in the coming weeks.

11. Will the club provide more lounge chairs for peak season - during peak time hard to get a space to sit/lay down? We currently have bids for additional pool chairs.