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June 23, 2010 It has been a few months since your last update. We have regularly asked the Trustee for updated information as to the status of the sale, but the answer always comes back the same - "Montauk is close to completing the financing to close the sale". We have been hearing this since last September when Montauk initially made its offer. Montauk has never put up any non-refundable money to indicate they are a serious buyer. At this point there are few, if any, people left who believe that Montauk will ever close, at least with respect to the deal that was approved by the court on December 30, 2009 for $49.5 million. In April the Trustee technically voided the Montauk deal but left the door open for Montauk to still complete its purchase based on the original agreed terms if they would actually close the deal, but 2 1/2 more months have gone by and Montauk has not done so. The Trustee is currently pursuing other interested parties, but this puts us back a full year to where things stood when the Trustee first took control in March of 2009. In May, as the result of pressure put on him by some of the creditors, the Trustee filed an auction plan with the court which was approved. This was done as a contingency in case other sales efforts do not prove successful, as has been the case. However, the creditors have not been able to agree among themselves as to how the sales proceeds from an auction will be allocated among the various collateral properties, so no progress has been made with regard to actually scheduling an auction. According to the Trustee, the earliest an auction might occur at this stage is September or October. Therefore the Trustee continues to pursue other sales opportunities. Since all of the temporary financing that was made available to the Trustee was based on Montauk actually closing its purchase in January as was approved by the court, the Trustee exhausted all funds available to him months ago. Electricity was turned off in all Club properties several months ago due to the inability to pay utility bills. The only Club/Resort amenity still being maintained is the Melrose golf course from revenue contributed voluntarily by Club members and from monies taken in by "day trippers" coming over from Hilton Head for a round of golf. Last year the Bloody Point course was being mowed regularly even though it was not being maintained in playable condition, but at least it looked presentable. This year, due to the lack of funds, no work has been done on the Bloody Point course or the surrounding Resort-owned properties, so everything has "gone to seed" and is an eyesore at this point. In spite of the negative news regarding the Club/Resort there are good things happening on Daufuskie, and those of us who live here full-time or who spend a lot of time here still love it as much as ever. A new Sustainable Living farm has been started, headed up by the tireless efforts of Pat Beichler, a truly unique and remarkable woman. Many volunteers have come forward to help Pat in this effort. Over the past week three baby goats were born at the farm from the two mother goats now living there. Also, baby chicks were born to Fred and Ginger, the turkeys living there. Back in 2009 the Dirt Road Diner was opened along Haig Point Road and has become a popular breakfast and lunch stop for both local islanders and tourists. Also since some time in 2009 Daufuskie has an ice cream truck selling both novelty ice cream products as well as pints of Ben & Jerry's ice cream!!! The overall economy is in a slow recovery period and real estate activity is gradually improving. As indicated above, the Melrose golf course is still being maintained and is in excellent condition, thanks to the efforts of Patrick Ford and a very small team of hard-working individuals. This team deserves our sincere appreciation for their efforts. Patrick has asked me to forward to you the attached announcement of the July 3rd Firecracker Open Benefit Tournament. In addition to being a fun day on the beautiful Melrose course, as is always the case, this tournament will also help provide funds to keep the Melrose course open and in good condition until a sale of the Resort is completed. We encourage everyone to come to Daufuskie for the July 4th holiday and to participate in this and the other planned activities over that weekend, including a beach party with live music and fireworks at the public beach and the annual golf-cart parade, among other events. Regards to all, Rich Silver, for The Melrose Club, Inc. Board 2010 Firecracker Open Benefit Tournament Format: 4 Person team Scramble Where: Melrose Golf Course When: 9:30 Shotgun Start Saturday July 3rd Entry: $35 per person 80% of the teams Handicap Tees: Men will play from the White Tees. Ladies will play from the Red tees. Anyone over the age of 70 and under the age of 14 may play from the Red tees. In a scramble, each player tees off on each hole. The best of the tee shots is selected and all players play their second shots from that spot. The best of the second shots is determined, then all play their third shots from that spot, and so on until the ball is holed Please call the Golf Shop at 843-785-5029 to make your teams Mulligans will be available @ $10 each All proceeds will go to keeping the Melrose Golf Course Open!! Resort Update The situation at the Resort remains unchanged. Montauk Resorts, LLC, has not completed its financing arrangements for the $49.5 million purchase price but we are told that this still is in process. In the meantime, a bid of $30 million has been received from Covenant Equity Management and Wingate Capital and due diligence is taking place. Robert Onorato, Trustee, is confident that a sale to one of these groups may be consummated before July. Many people have asked about the availability of amenities at Melrose this summer. The golf course is open and there is enough play to provide revenue to cover minimum staffing and maintenance. The Inn, Beach Club and pools remain closed. The pools will not re-open until a sale had been completed and comprehensive insurance is in place. However, Daufuskie still is a wonderful place to spend your vacation. The beach is one of the loveliest and least populated on the East Coast and great local food is available at the Daufuskie Crab Company, the Dirt Road Diner and Marshside Mamma’s. The General Store, located in the Island House, offers basic groceries but will purchase anything you want on Hilton Head and bring it to the island for you. If you have any questions, please send them to us through the Contact Us page.
Here is a message from Rich Silver, Chairman, Members Advisory Committee. MCI is the Melrose Club Inc. and Montauk is the potential buyer.
At a hearing on Thursday, January 28th, the bankruptcy court approved a settlement among MCI, the trustee, and Montauk that will hopefully enable the Montauk closing to proceed. However, the closing is still subject to completion of Montauk's financing arrangements which we are now informed may take as much as several more weeks. Pursuant to the settlement, MCI will receive $1million from the closing proceeds, which will help defray attorney's fees and expenses. While we are pleased that the court approved the settlement agreement, we are obviously discouraged by the continuing delays in Montauk's completion of its financing arrangements. I will send periodic updates as things move forward. Regards, Rich Silver
There will be no ferry service from Salty Fare to the Melrose Dock after January 29 until the sale of the resort is finalized. A group of island residents is trying to raise money through advance ticket sales so the boat can continue to run. Updates on this effort will be posted here.
Freeport Marina provides boat service from the Broad Creek Marina, located at 1 Simmons Road, off Marshland Road, to Freeport Marina on Daufuskie. Schedule and fare information may be obtained by calling 843-785-8242.
Jaunuary 18, 2010 To: Daufuskie Island Resort and Breathe Spa Club Members Daufuskie Island Property Owners, Oceanfront Residence Club, Other Concerned Parties From: Robert C. Onorato, Trustee Since we are close to successfully concluding the Daufuskie Island Properties, Inc. Chapter 11 bankruptcy action I am writing you directly with the most current update. As you may already know, on December 30, 2010 Judge John E.Waites of the U.S. Bankruptcy court approved the sale of substantially all the assets of the bankrupt Daufuskie Island Resort & Breathe Spa to Montauk Resorts, LLC of North Carolina. On January 7, 2010 he signed the official order, in the process making the sale free and clear of any and all liens and encumbrances. At this point the purchaser is awaiting the issuance of title insurance, which hopefully should be in place following a 14-day waiting period stemming from the signing of the order. While it is still possible that last minute claims, appeals or other actions will be filed, we are of the belief that any additional issues that might arise can be resolved. The bottom line: at some point early in this new year a new day will have dawned for Daufuskie Island. We have come a very long way. In late March, 2009 I was appointed Trustee by the U.S.Bankruptcy Court to bring order to the various resort assets and to resolve numerous creditor claims.Through it all my team has been guided by a simple but very profound message: Daufuskie should be one island, with one club, served by one navy. We are on the cusp of making that a reality. Assuming all goes as planned, Daufuskie Island’s future is bright. Montauk Resorts, LLC, has secured funding for the $49.5 million assets purchase price and subsequent property improvements and resort operations completely independent of the property being purchased. In other words, all funding is coming from private and institutional sources without collateralizing any Daufuskie assets. This means that in all likelihood there will never again be a threat to Daufuskie Island development such as that represented by the current bankruptcy or earlier notable failures. A sustainable Daufuskie Island growth model is a boon to everyone. The guiding force behind Montauk Resorts, a gentleman named Mike Bass, sees the success of Daufuskie Island as his legacy. He is committed to its growth and is already well on his way to building a professional, highly dedicated team to see the effort through. Although it is still too early to acknowledge everyone involved, in the immediate moment I fully understand that not everyone will be satisfied, that not all needs have been met nor all claims satisfied. In response, I can only say that bringing this matter as far along as it has come has resulted from a joint effort of many people who have sacrificed individual needs for a common good. Thank you again for your cooperation. Watch for updates December 30, 2009
The following is an excerpt from a message to members from Rich Silver
Chairman, Members Advisory Committee, who also is a member of the Board of the Melrose Club, Inc. (MCI)
After two 30 day delays, there was a hearing today in the Federal Bankruptcy Court to rule on the Trustee's motion to approve the sale of the DIP assets to Montauk Resorts. The judge did, in fact, rule in favor of allowing the sale to proceed. Although there was some concern expressed by attorneys for some of the parties as to Montauk's ability and intent to complete the transaction, Montauk has indicated to the Trustee that it does intend to do so, and that it expects to close the deal by no later than January 15th. Properties to be acquired by Montauk in the proposed transaction include all of the Club/Resort's holdings in Melrose, Bloody Point and Melrose Landing, as well as the Eigelberger Tract. Montauk has also indicated that it intends to attempt to acquire the Salty Fare Embarkation Center on Hilton Head that DIP had previously sold in 2007.
The MCI Board would like to congratulate the Trustee, Mr. Bob Onorato, and thank him for his efforts to both maintain the assets as best as possible with limited funds over the past 9 months and to find a single buyer for all of the assets. We would also like to thank Mr. Russ Brown of RBC Enterprises who has acted as marketing agent for the Trustee and who was instrumental in bringing in Montauk. We look forward to a successful closing within a couple of weeks, and to the beginning of a new era on Daufuskie. MCI has worked cooperatively with the Trustee over a number of months to try to help facilitate a successful sale to a single buyer. According to what the Trustee has told us during our meetings with him, it is Montauk's intent to invest significant additional monies to fix up and reopen the core amenities of the Club, although this will not happen overnight. Montauk's plans include seawall repairs and beach renourishment as well as some road repairs. They intend to clean up and fix up the Inn so that it can be reopened (hopefully by the summer), to have the Beach Club pools open for the summer, and to hopefully resume a food & beverage operation as soon as is practicable, presumably starting with Jack's in the Melrose Clubhouse. Not included in Montauk's near-term plans is the reopening of the Bloody Point golf course due to the high cost of operating a second course in an environment of greatly reduced demand. August 20, 2009
The following is an excerpt from a message to members from Rich Silver
Chairman, Members Advisory Committee, who also is a member of the Board of the Melrose Club, Inc. (MCI)
In addition to some previously submitted Letters of Intent or Letters of Interest by a couple of interested parties, the Trustee has informed us that he expects to have a contract within a couple of weeks with another interested party. This prospective buyer of the Club, if and when a signed contract is submitted, will then go through a "due diligence" period before agreeing to complete the proposed transaction. At the moment, MCI knows very little about this party, but the Trustee has assured us that once the signed contract is submitted, MCI will have a "seat at the table" to learn more about them and to participate in negotiations regarding the proposed transaction. Because this is within a bankruptcy proceeding, we are also told that other interested parties can still submit offers even after this contract is in place and negotiations regarding its execution are taking place. June 20, 2009
Message from Rich Silver, Chairman, Members Advisory Committee
As a follow up to the email I forwarded to members on Thursday from one of our fellow members regarding cottage rentals, I received a phone call Friday from Jack Harris. Jack is the person mentioned in that email that is now involved in making the DIP-owned cottages available for rental again. Following is the information Jack shared with me and asked me to provide to members (and others) regarding those cottages:
There are a total of 7 DIP-owned cottages (the unrefurbished ones) that Jack is now freshening up to make available for rentals. These 7 cottages provide a total of 13 two-bedroom rental units. Three of the cottages are on the 2nd row and 4 of the cottages are on the ocean row. Jack expects to have them ready for rentals by July 1st. The rental rates for this summer are as follows:
2nd row units (two bedroom) - retail renters - $1500 per week
Island Passport and Charter Club members - $1350 per week
Full members - $1200 per week
Ocean row units (two bedroom) - retail renters - $1800 per week
Island Passport and Charter Club members - $1650 per week
Full members - $1500 per week
Anyone interested in booking a rental or in obtaining additional information can contact Jack directly at 843-683-2003 or by email at harris3890@bellsouth.net
I also learned yesterday that after some unexpected delays in getting the Beach Club dining facility reopened, DHEC certifications were finally obtained, and food and liquor licenses should be issued very shortly. In the meantime, the pools were reopened around Memorial Day weekend, and limited food service has been available at the Beach Club from the outdoor grille (burgers, dogs, etc.). A more complete offering will be available by the end of the month now that the approvals are coming through to open the kitchen. In addition, the liquor license is expected to also cover Jack's, so that the bar in Jack's can be reopened. I understand that in addition to drinks being available at the bar, there will be some limited food items available as well, such as sandwiches. Lastly, I understand that a lease is being worked out for the General Store with a new operator, so that may reopen in the not-too-distant future.
Members have previously been informed of upcoming activities for the July 4th holiday weekend. The Firecracker Open golf tournament is scheduled for July 3rd, there will be the annual decorated golf cart parade on the 4th, followed by a barbeque provided by Bill Thompson, the new operator of the Beach Club dining facility. Details of the barbeque will be provided when available.
I was informed this morning that there is a problem with the telephone system at the Melrose Golf pro shop. The number to call is 341-8675 for tee times, but there is apparently no voice mail service working at the moment, so if no one answers, there is no way to leave a message. They hope to have the problem corrected by Monday.
Regards to all,
Rich Silver
June 4, 2009
Excerpts from a letter Rich Silver sent to members .
As previously mentioned, the Melrose golf course was reopened a number of weeks ago, and is in excellent condition. The Sunday morning members' "skins game" was resumed a couple of weeks ago, and after a stretch of rain, the weather over the past week has been spectacular. The swimming pools at Melrose are being used, but due to some legal and licensing issues it will probably be another two weeks before the Beach Club restaurant is open.
We had a wonderful turnout for the Memorial Day weekend barbeque at the Beach Club, with approximately 90 people attending. We had very short notice that we could even have an event, and the new Beach Club operator, Bill Thompson, had just 48 hours from the time I first met him over the phone to plan it and make it happen. Those who could make it were very appreciative of Bill's efforts. I just spoke to Bill regarding July 4th weekend, and he indicated that he will work with us to plan our usual annual barbeque event for that weekend. There will most likely be a golf tournament or event for that weekend too. More details will be provided later, but we hope to see many of you over the holidays and over the summer. Because golf and pool facilities have reopened, Bob Onorato, the court-appointed Trustee, has indicated that he will commence collecting dues again as of June 1st, at the same levels that were in effect in January and February ($200/month for full members, $120/month for Charter members and $60/month for Island Passport members). Dues for now, as was the case in January and February, does not include ferry or ground transportation services. Statements will be sent out on behalf of the Trustee in the coming week or two, and will include instructions as to whom payments should be made and where payments should be sent. Both the Members' Advisory Committee and the Board of Directors of The Melrose Club, Inc. unanimously approved the Trustee's proposal to commence dues collection as of June 1st. The Trustee has limited funds to work with during this interim period, and the dues collected will help ensure that the Melrose golf course and pools can be maintained in very good condition and remain open. Ferry service is available through the Freeport Marina/Broad Creek Marina service. The phone number at Freeport Marina is 843-342-8687. You can obtain schedule information by either calling that number or checking the website for Freeport Marina (http://www.thehiltonhead-daufuskieconnection.com/), but calling is probably the safest way to check because the website may not always be up-to-date. Ground transportation services are available through Daufuskie Island Land Transportation at 843-816-2505. May 22, 2009
Hello again to fellow Club members -
As recently reported, the Melrose golf course reopened two weeks ago, and as of today the pools at the Beach Club are open. In addition, the new operator of the Beach Club facilities is close to being able to start providing a food & beverage service, and may be able to offer something on a limited basis over the holiday weekend.
As a way of introduction and welcoming Club members, property owners and guests back to the facilities, the Beach Club operator has agreed to provide a pulled-pork barbeque with all the fixings on the Beach Club lawn on Sunday afternoon beginning at 5:00 pm. Please see the attached flyer (thanks Sara Deitch!!). You will note that a discounted price is being offered to all Club members. Soft drinks will be provided, but because the new liquor license has not been issued yet, you will have to bring your own alcoholic beverages.
Last Sunday, following the reopening of the Melrose course earlier in the week, members reconvened the Sunday morning 'skins' game. This will become a regular Sunday morning ritual, as in the past.
We are excited to see facilities and services being restored, and we continue to work cooperatively with the Trustee to help facilitate a sale of the entire Club/Resort to a good buyer.
For those of you who will be on Daufuskie this weekend, I hope to see you at the Sunday barbeque and I hope to see some of you on the golf course Sunday morning.
Best regards for a safe and enjoyable holiday weekend,
Rich Silver
In RE: Daufuskie Island Properties, Inc Robert C. Onorato District of South Carolina Case NO. 09-00389-JW Trustee By Appointment Of The United States Trustee CHAPTER 11 To: Daufuskie Island Resort and Breathe Spa Club Members Daufuskie Island Property Owners Oceanfront Residence Club Other Concerned Parties From: Robert C. Onorato Trustee Daufuskie Island Properties, Inc. Chapter 11 Bankruptcy Date: May 8, 2009 RE: OPENING OF MELROSE GOLF COURSEIt is with considerable pleasure that I am able to announce that Melrose golf course operations will resume effective May 11, 2009. Plans call for a “soft opening” that includes homeowners, spa members, Melrose Club members, guests, Haig Point members, and other Daufuskie Island residents, although every effort will be made to bring public play onto the course as soon as possible.
Clearing the way for this action was an authorization I received this past Wednesday, May 6, from the United States Bankruptcy Court, District of South Carolina, to borrow up to $1 million from Beach First National Bank of Myrtle Beach, SC which may be supplemented by an additional loan of up to $500,000 from a second source as necessary. In addition to the opening of the golf course the funding will be used to pay a variety of aging debts and current bills as well as the operation of resort assets involved in the bankruptcy until a sale of assets can be realized. When I was named Trustee six weeks ago I made it clear there was a pressing need to restore stability to resort operations while pursuing an equitable resolution for the creditors involved. I also pointed out that while there are many needs and conflicting interests, collaboration was in everyone’s best interests. It is important for you to understand that this success was a direct result of cooperation among Daufuskie groups over the past six weeks. The more we work together, the more all parties will benefit. Hopefully this first step in bringing back the golf operation convinces everyone that cooperation is not only the best course, but the only course. I am encouraged. You should be as well. As Trustee I have arranged for the operation of the Melrose Golf Course by CGL of Savannah, Inc., an affiliated company to The Club Group, Ltd. based on Hilton Head Island, SC. Principals include Mark King, president of both entities and Alan Cale, CGL of Savannah chief operating officer. 575 William Hilton Parkway · Hilton Head Island, SC · 29928 Page Two CGL of Savannah will manage the Melrose Golf Course, the clubhouse and related golf operations. Although more details will be forthcoming, homeowners and members will pay only cart fees of $35 per person for 18 holes. Public play will be at an introductory rate of $75 through June that includes a golf cart, greens fee and ferry and land transportation. Light food and beverage service will be available, with seating inside and outside the clubhouse and on the verandas.
Hopefully the golf course opening should help galvanize the rental market on Daufuskie, including the approximately 35 rental units that are part of the bankruptcy action.
Ferryboats will continue to make the circuit between the Broad Creek Marina and the Melrose Landing, although alternate arrangements that will increase capacity are currently being reviewed. Once again, cooperation is essential for success. You may also be interested to learn that other commercial operations are jockeying for position in what they see as a high potential resort opportunity. One restaurant group, Bobby Joe’s with an on-going operation at the Dataw Marina, has sent a letter of intent to open a facility at the Melrose Beach Club. Plans call for a full restaurant, Tiki bar, gift shop, management of the existing general store and oversight of the pool and related facilities. I plan to make a decision on that shortly. After things being too dark for too long, it’s nice to see this sort of first steps activity. I would strongly urge you to work with your leadership and with me to continue on this path. If we follow it intelligently and cooperatively, everyone will benefit. I plan to write you at regular intervals with updates as the action continues. Thank you for your help so far. Sincerely, Robert C. Onorato Trustee Daufuskie Island Properties, LLC Chapter 11 Bankruptcy Case No. 09-00389-jw
March 30, 2009 Letter to Resort Club Members
Hello members -
As I mentioned in my last communication to you 9 days ago, a court-appointed Chapter 11 Trustee has taken over operation of the Club/Resort in place of the Dixons. Mr. Bob Onorato, the Trustee, met with several members of the Board of The Melrose Club, Inc., as representatives of all members, last Thursday.
Those of us who were at Thursday's meeting came away with very positive feelings. We believe that Mr. Onorato has a good understanding of what needs to be done to first bring the Club's facilities back into good condition and then to begin to renew operations of at least some of the facilities that are currently shut down. The Trustee immediately retained a new security company to ensure that all of the facilities in Melrose, Bloody Point and Melrose Landing are safeguarded. He has already commenced discussions to get a ferry service operational, and is aware that Club members, Residence Club owners, owners of properties that are offered on the rental market, and other interested parties are all anxious to see the Melrose golf course, the pool complex and at least one food & beverage venue opened as soon as possible.
It appears that even the most optimistic view suggests that it may be at least a month before the Melrose golf course can be reopened. Mr. Onorato explained to us the process he must go through in order to obtain the bankruptcy court's approval to spend monies, and even before he can approach the court with a plan he must first complete negotiations with the two lenders that expressed a willingness to lend money to the entity. Once the loans are in place, the Trustee will then request sufficient funds to perform necessary maintenance on the golf course, the pool complex and the restaurants, among other things, to get them into a condition that will allow for them to be reopened. In addition, Mr. Onorato fully appreciates the urgency to have repair work performed on the bulkhead (seawall) along the golf course, and will include monies for that in his request from the court. He also understands the need to allocate some funds to maintain the Bloody Point golf course, even though there may be no plans to reopen it in the near future.
During the meeting we discussed member dues and the membership plan. Mr. Onorato suggested that we come back to him with what we would like to see as a plan or plans. He said we should start with a clean slate and craft a plan that would be saleable to current members and to future members, and that might convince some members who had resigned to reinstate their memberships. To that end, I ask that any current or former member who has ideas and suggestions as to what a new plan would look like, including what an appropriate level of dues might be for each class of membership (assuming a plan provides for more than one class), to please forward your thoughts to me. We have many diverse views among our membership and it will be impossible to make everyone happy, but we want to try to incorporate as many features as possible.
Since it will probably take at least a month to craft a new plan and present it to the Trustee, and since it may take at least a month to commence operations of even some of the Club's facilities, we are assuming for the moment that no dues will be payable for March and April. As indicated in my previous email, members should not send any money in for dues until I provide instructions as to how much to pay and to whom to send it.
Those of us who are closest to all of the activity are feeling very optimistic about the future. There is still a lot to be done on the legal front, and there may be many more months of less than full service along with some stress, but we believe that we are now heading in the right direction. We want to work cooperatively with the Trustee and others to make the Club & Resort (and the whole island) the wonderful place that we know it can and will be.
It was good to see many of you at the annual Melrose and Bloody Point POA meetings this weekend.
Regards,
Rich Silver
March 18, 2009
Hello to all Club Members -
There have been some significant developments in the past week regarding DIP's bankruptcy, the status of the 1996 Transfer Agreement (1996 TA) and the operations of the Club/Resort. In hearings in front of the bankruptcy Judge over the past couple of weeks, DIP attempted to have the 1996 TA "rejected" as an executory "contract right". The Judge, however, ruled that at least a portion of the 1996 TA is a property right that is not subject to rejection and denied DIP's Motion to Reject. While not a final decision on all matters pertaining to the 1996 TA, this was a major first victory and validation of the Club members' position regarding the property rights under the 1996 TA. As a result of this ruling, the one lender that was willing to lend DIP monies to keep operating is no longer willing to make that loan since this lender would not be able to be given a priority claim on any collateral due to the members' property interests. The non-Dixon related secured and unsecured creditors banded together and filed a motion to have the Dixons replaced by a court-appointed Chapter 11 Trustee to oversee the day to day operations/disposition of the Club/Resort going forward while all of the legal issues are resolved. The Trustee Motion was granted by the Court on March 17th.
We heard that the Club/Resort was totally shut down on Tuesday, March 17 in anticipation of the Court's ruling on the Motion to appoint a Trustee to take over. Our attorneys are in contact with the lenders to recommend a trustee and to discuss terms for limited operations financing. One or more of the existing secured creditors has agreed to lend additional monies, with the consent and subordination of The Melrose Club, Inc. (the legal entity representing the members' interests), in order for at least a minimal level of operations to remain in place under the Trustee. There will be a brief period (we are not sure how long) during which there are no operations at all, starting now. Hopefully, a Trustee will be appointed immediately and that Trustee can take over very quickly and ensure that at least minimal operations are resumed. This will hopefully include at least having the Melrose golf course reopened as well as at least one food venue. This is basically all that has been operational for the past several months anyway. Hopefully, something can be arranged with the current independent operators that had taken over marine and ground transportation from DIP, and we did hear yesterday that the operator of ground transportation is still offering services. While marine transportation is shut down from Salty Fare to Melrose, ferry service is operating from Broad Creek Marina on Hilton Head to Freeport Marina on Daufuskie. Those members who are eligible to obtain county passes are able to purchase ferry tickets on that service at a significantly reduced price With regard to Club dues, we believe that a number of you have not yet paid any monthly dues for 2009 even at the greatly reduced levels, and some of you may even still owe some dues for 2008. We encourage all of you to bring your dues up to date and to maintain your membership going forward with the Trustee. However, we suggest that you hold off sending any money in right now - we need to find out how and to whom dues should be paid once the Trustee takes over. The Trustee will need as much revenue as possible to keep even minimal operations going while overseeing the ultimate resolution of the DIP Bankrupt Estate. Lastly, we must once again ask for contributions to the members' legal fund. A number of members have yet to contribute to this fund, and we have incurred significant legal expenses to get to where we are. We have won some key victories with the Judge's ruling to deny DIP's attempt to reject the 1996 TA and with the ruling to replace the Dixons with a Trustee. The legal battles are far from over, and we need full member participation toward these efforts. Checks should be made payable to The Melrose Club, Inc. and mailed to Rich Silver at 67 Fuskie Lane, Daufuskie Island, SC 29915. Thanks for your help and continued support of the Club, Rich Silver, for the Daufuskie Island Club Members' Advisory Committee February 9, 2009
Hello again to our fellow Club members -
We recently provided an update to you in which we explained the current conditions on Daufuskie, informed you of the Chapter 11 bankruptcy filing by DIP, and described the attempt by the Board of Governors, with the guidance of the Advisory Committee, to negotiate a temporary membership plan for 2009 that reflects these factors. While Tim Foley had assured the Board of Governors at least three times that ownership had agreed to the terms of the proposed membership plan, as you saw in the February 3rd letter from Tim Foley and Susan Jones, ownership apparently reneged on its agreement. Shortly after the issuance of that letter to members, Bob Stright, Chairman of the Board of Governors, informed Tim Foley that he had resigned from the Board.
The 2009 membership plan as offered by ownership does call for a significant reduction in dues in recognition of reduced services and the separation from member dues of marine and land transportation, for which members must now pay directly to the respective private providers. The key difference between the final plan offered and the plan proposed and verbally agreed to is the land transportation component. The final plan sets the dues at the same levels agreed to with the Board of Governors (with the Advisory Committee's consent). However, the proposed plan had required ownership to fund land transportation out of members' dues. The Board of Governors had informed ownership that dues would have to be lowered further if land transportation was not included. Ownership, in contradiction of its own verbal agreement, decided to exclude land transportation without lowering dues further.
The reaction of those members who have chosen to communicate their thoughts has been unanimous. Every member who has commented is outraged at yet another reversal by ownership, and more importantly, at what has been offered as a plan. Members believe that even the significantly reduced levels of dues are excessive for the services and amenities being offered, and that although the Melrose golf course is open, there really is no Club at all operating at the moment and therefore no dues should be paid until there is a restoration of services.
The Advisory Committee and the Board of Directors of The Melrose Club, Inc. have spent a great deal of time communicating amongst themselves and consulting with outside counsel over the past week regarding the dues and benefits issues. While the primary focus of our pending litigation is the preservation of the club as a whole for the ongoing benefit of members going forward, we are well aware of the dissatisfaction by members of the current level of amenities and inaccessibility of the club. Our attorneys have advised us that the only way to pay dues into an escrow fund and receive absolute protection from being terminated by present ownership would be to commence, and prevail upon a preliminary motion in another lawsuit. As legal fees continue to grow in pending actions, including both our original lawsuit and DIP's bankruptcy filing, it would be imprudent to commit funds to a third action at this time. The Board of Governors and the Advisory Committee working together were able to obtain a substantial reduction in dues for 2009. While we agree with those members who have contacted us to say that even these reduced dues are too high, we have no immediate way to delay their payment without possible termination of memberships by DIP. Please see the attached letter from DIP's attorney in response to the letter sent by our attorney regarding the dues issues. In each of our pending actions our attorneys intend to take up the issues of dues payment with the court, and we hope that there will be a more satisfactory resolution to this matter in the future.
Accordingly, the Advisory Committee is recommending that members pay dues under the plan offered in the February 3rd letter for at least two or three months. We encourage members to hang in there during this period until we have a better feel for how things may play out as a result of our lawsuit and DIP's bankruptcy proceedings. If necessary, we can revisit the concept of escrowing dues in a few months, depending on whether or not there is a restoration of at least some additional services and amenities.
Importantly, our attorney is advising that all members attach the following written statement to their dues payments:
Payment of these monthly dues is being made under protest, and with a reservation of rights, and shall not constitute a waiver or limitation of any rights, remedies or privileges I may have as a member in good standing of the Daufuskie Island Club & Resort, pursuant to various membership agreements or club owner representations.
On an unrelated note, it has been reported by some members that dues for January (and maybe February now) were charged to members' credit cards at a monthly rate based on the original dues statements that were mailed out in early December, which reflected an 8% increase over 2008 rates. Members should check their credit card statements as well as their monthly member spending-account statements to ensure that there are no inappropriate charges to their accounts. Members should contact Susan Jones directly to correct or reverse any unauthorized charges.
Regards to all,
Daufuskie Island Club Members' Advisory Committee
January 31, 2009 Hello to our fellow Club members -
In our last update to you we included a copy of a letter sent by outside counsel to DIP's counsel regarding dues and benefits for 2009. In our cover note we mentioned the "constant rumors about a bankruptcy filing". Shortly after our last communication to you, on January 20 DIP filed for bankruptcy protection under Chapter 11 of the Federal Bankruptcy laws. Because a number of members have already asked for a copy of the filing, we have attached it to this communication.
As you have been made aware by DIP, Club ownership has been working with the Board of Governors to try to develop a temporary membership plan for 2009. The member-elected Advisory Committee has provided advice and assistance to the Board of Governors to help create this plan. It was the hope of all groups involved to have a plan in place by the end of January. A key element of this proposed plan is a substantial reduction in dues, which may, at the option of a member, be payable on a monthly basis. The dues reduction is reflective of two significant factors:
1) During the period covered by the plan, members will pay for ferry service directly to whichever entity may be operating the ferries from time to time. It is believed that many members should be eligible to participate in the County voucher program through which the County subsidizes the ferry operator, allowing the rider to purchase tickets at significantly reduced prices (e.g., a round-trip voucher for a non-resident property owner is currently $14 , for a resident property owner it is $6, and for a senior citizen (60 or over) resident it is $4. Any member who either resides on Daufuskie or owns property on Daufuskie is eligible to participate in this program. In order to participate each member must obtain a photo ID card from Palmetto Breeze in Bluffton. To make an appointment to obtain your ID cards you must call Ms. Rory Barksdale at 843-757-5782.
2) There has been a significant reduction in services and amenities available to members for which, in the committee's opinion, a dues reduction is warranted. Despite DIP's suggestions that these reductions are "normal seasonal reductions", the reality is that there is very little operating at the Club/Resort, in stark contrast to prior winters when just the Beach Club restaurant was closed. There are literally just a handful of employees left to provide any services. Bloody Point is totally shut down (golf course, club house & proshop, tennis courts, pool) with significant doubt among committee members that these will re-open in the spring, and with great concern of the committee that the golf course will 'go to seed' due to lack of maintenance. The Beach Club is shut down, including not only the restaurant but the heated pool & hot-spa and the fitness center. It is hoped that the Beach Club will be able to re-open when the warmer weather arrives. More importantly, Jack's restaurant has been shut leaving just the Inn Lounge as the only place to eat any meals, with a very limited menu and reduced staff. It is hoped that Jack's will re-open in the spring. The SPA was closed in Bloody Point and the only opportunity to receive SPA services (now at the Inn) is to book a reservation in advance and hope that a SPA services provider, most or all of whom have apparently been laid off, is available for the requested service. The General Store has been closed and a 'gift shop' has been opened in the Inn offering virtually no food or groceries other than a few snacks. We understand based upon communication from various members that many reservation requests for rooms at the Inn have been turned down, and it is not known if the Club/Resort intends to start accepting reservations at any time in the near future.
Most disturbing of all has been the ferry situation. Since early November the Club/Resort has attempted to restrict member rides to one specific run in each direction, which the committee believes is inconsistent with our membership rights and privileges. In November a new operator (Daufuskie Ferry Co.) took over under a lease arrangement. This operator ceased operations a couple of weeks ago due to extreme financial difficulties including the apparent inability to obtain the necessary insurance on the boats. Palmetto Ferry Co. (a creditor listed in the bankruptcy filing which is owed $180,000) has been filling in on an emergency basis with very limited service. In fact, at the moment it is literally impossible to leave Daufuskie and return on the same day without making private arrangements.
In the opinion of the committee, the extent of the reductions in services and amenities falls well short of "normal winter service", despite suggestions by DIP to the contrary. Accordingly, the Board of Governors, with the assistance of the Advisory Committee, proposed a revised membership plan that reflects the current state of affairs. It was proposed that dues for a full membership be reduced from $5900 ($492/month) in 2008 to $2400 ($200/month), dues for Island Passport members be reduced from $1760 ($147/month) to $720 ($60/month) and dues for Charter Club members be reduced from $3520 ($293/month) to $1440 ($120/month). This proposal specifically stated that other than members paying directly for ferry service to the ferry provider all other provisions of the 2008 membership benefit package remain unchanged and specifically provided that ownership continue to provide land transportation services as part of the membership plan.
The Board of Governors informed the Committee that Tim Foley provided repeated assurances to the Board of Governors that the proposed plan had been approved by ownership and that this approval would be delivered back in writing. However, we have now learned that a significant revision was made by ownership to the previously agreed upon terms. DIP decided that members would have to pay directly for ground transportation services (which they have now leased out the operation of to a separate company) without any additional reduction in dues. The Committee believes that this revised term is unacceptable to members and the Board of Governors has been so informed.
The plan as proposed and verbally approved calls for January and February dues to be paid by February 15th and on the 15th of each month thereafter for the current calendar month. We are still hopeful that DIP will honor its verbal agreement and either lower dues further to compensate for the elimination of ground transportation services in the membership plan or accept the plan as originally agreed to with ground transportation included in the plan for the dues levels indicated. Otherwise, many members are prepared to either withhold dues or escrow dues as indicated in the letter sent by outside counsel two weeks ago.
The last communication to members from the Club indicated dues would be due by February 1st. However, DIP has indicated that dues will not become due until February 15th. We will keep you informed of further developments with regard to dues and benefits for 2009.
Daufuskie Island Club Members' Advisory Committee
January 21, 2009 Daufuskie Island Properties filed for Chapter 11 bankruptcy yesterday, January 20. The POA Board will monitor this legal action to determine how it may affect property owners and will report any meaningful information to you.
December 15, 2008 The Melrose Property Owners' Association, Inc. has received notification that Daufuskie Island Properties Inc. has dismissed the countersuit against the POA without prejudice which means that they do not give up the right to refile the lawsuit.
December 5, 2008 Dear Members: Since our last update, we requested Daufuskie Island Properties ("DIP") and the Dixons to agree to non-binding mediation of our disputes with a neutral third party to help the parties resolve the litigation. Unfortunately, the other side was not agreeable to this process. We have advised them that we are still open to mediate at any time. We prefer a negotiated settlement to litigation. Last week, DIP filed counterclaims against The Melrose Club, Inc. In addition, Gayle and Bill Dixon and DIP sued the Melrose Property Owners Association ("Melrose POA"), the Melrose POA web manager, and the individual Melrose Club Board of Directors. The grounds for the suit against the Melrose POA include the updates to Member letters you have been receiving. These letters were attached as an Exhibit to the suit. The Dixon and DIP allegations relating to these update letters were that, among other things, they somehow resulted in slander of title and wrongful interference with prospective contractual relations. The Melrose POA and the web manager were alleged to be liable, in part, for posting these Member updates on the Melrose POA website. The individual Board Members of The Melrose Club, Inc. were sued for abuse of process, wrongful interference with prospective contractual relations and slander of title. Based on discussions with our counsel, we believe that we have meritorious defenses to all of the claims that the Dixons and DIP have asserted.
DIP has recently sent out 2009 dues notices and many Members have asked about the Member benefits for 2009. The Club Members' Advisory Committee is dealing with this issue and is sending a letter to management requesting an explanation of benefits. Also, we had a great initial response from members who have contributed to the legal fund but we have not heard from some of you. We need the support of the entire Membership to protect the rights of the Club and its Members. Please send your contributions payable to The Melrose Club, Inc. and mail to Rich Silver, 67 Fuskie Lane, Daufuskie Island, SC 29915.
Sincerely submitted, Melrose Club, Inc. Board of Directors
Nino Di Iullo November 18, 2008 Dear Members: A meeting was held on Thursday, November 13th, with Bill and Gayle Dixon, Tim Foley and Rence Jones concerning the Melrose Club's dispute with Daufuskie Island Properties ("DIP"). The purpose of the meeting was to attempt to resolve the pending litigation or to, at least, get a settlement framework for this complex situation. In a spirit of good faith, the Melrose Club agreed with the Dixons' request to release a cottage so the sale could be closed. We regret, however that little other progress was made at the meeting. Due to agreeing for the release of the cottage, the Dixon’s were asked by our negotiating team to remove the restriction they imposed on the members which would restore our ability to ride any boat as was part of their 2008 membership benefit plan. As of today, The Dixons have not changed their new policy. The Dixons are still interested in other possible transactions. The Board will evaluate any good candidate and we will not object to the transaction with adequate protection for the Members. The Board has requested DIP's permission to speak directly with the proposed Ferry operator to address Members' use and future protection. A new matter concerning Salty Fare came to our attention since the Member meeting on November 8th. We received an email from the attorney for the current owners of Salty Fare that stated the "tenant was in default and may soon lose the right to reacquire the property through the option agreement." It appears, however, from the Dixons and further information that DIP is not in default. But this raises the troubling question that the law suit addresses - what happens to Salty Fare if DIP does go into default? The Board intends to continue to explore every avenue that will resolve this dispute on a "win-win" basis. At the same time, we believe it is prudent to prepare for difficult times over the next six to twelve months. Sincerely submitted, Melrose Club, Inc. Board of Directors Nino Diullio
November 11, 2008
Dear Members:
We would like to report briefly on the meetings that were held this past weekend. On Friday evening, a meeting of members was held to hear a presentation by Daufuskie Island Properties of their proposed plans for the future and their current financial situation. Approximately one hundred people were in attendance. Many questions were asked and lively discussions ensued during the three and a half hour meetring.
The Melrose Property Owners Association sponsored an information meeting on Saturday morning which was attended by all the members and property owners who were in residence. Again, we had over one hundred attend. Members of the Melrose Club Inc. (MCI) board explained the history of the Melrose Club and its transition from a private club to a resort owned first by a division of Club Corporation of America (CCA) and then by Daufuskie Island Properties (DIP).
The key point is that in 1996 the members of the Melrose Club owned all of the assets. When the Club's assets were transferred to CCA, the Transfer Agreement protected the members' rights in connection with the Melrose Club operations and facilities.
After lengthy informed discussion, a sense of the meeting was taken. The attendees voted overwhelmingly to support the Melrose Club Inc. Board in their efforts to protect the Melrose Club and the pre-1996 and post-1996 members' rights. The MCI Board met in private session just after the meeting and the Board will ask to meet with the Dixons as soon as the end of this week to begin discussion to quickly resolve this difficult situation. We would like to express our gratitude to the many members who could not attend the meetings and sent e-mails expressing their encouragement and support for our actions.
Sincerely submitted,
Melrose Club Inc. Board of Directors
Nino Diullio Mitch Evans Peter Fox Katy Hall Wilson MacEwen J. D. Oberklein Rich Silver Tony Simonelli Don Taylor November 3, 2008 We were willing to work with DIP on the Melrose Inn transaction. The Dixons and their attorney agreed at our meeting with them on October 16th to send copies of the pertinent provisions of the Melrose Inn Agreement concerning Member rights/assurances. Dixon's attorney sent a letter stating that this material would be sent under separate cover. We received nothing and our attorney followed up but still received nothing. When our attorney spoke with the Dixon's attorney about another meeting, the attorney said that he would check with his client. We have had no response. We are ready and willing to meet with the Dixons or anyone they want us to meet. The Member concerns that we are raising, for the most part, are what we would expect any purchaser/lessee to have in their contracts. We would anticipate that any purchaser/lessee of the Melrose Inn, golf course, tennis center, beach club, etc. would want to know where and how people are going to get to and from the facilities. What facilities will be available? Who is responsible for the sea wall to keep the gazebo and the golf course from falling into the ocean? What happens if the golf course is not maintained for use by guests at the Inn? What about the beach club and the beach? How will the maintenance facilities be available to purchasers/lessees for maintenance and storage areas? Where does the 1996 Transfer Agreement requirement for the owner to fund operating deficits fit into the DIP agreements and plans? The Melrose Club believes these are valid concerns and cannot be viewed in a vacuum. These are issues that are being addressed in the law suit. We also believe that there can be a "win-win" resolution. We encourage you to attend the meeting with ownership on November 7th and the Member meeting located at the Island House on Saturday, November 8th at 10:00 AM. Sincerely submitted, Melrose Club Inc. Board of Directors Nino Diullio
Dear Property Owner:
It has been a month since we wrote to you about our concerns with the Dixons’ plans to sell some of the Melrose assets and we would like to report what has occurred since then.
The Board of Directors of the Melrose Club, Inc. engaged as counsel Alex Beard, the attorney who represented the Members in 1996 when Club Corporation of America purchased the Club. A law suit has been filed against Daufuskie Island Properties, Inc.(DIP) to prevent them from selling or transferring assets in violation of the 1996 Transfer Agreement. A meeting was held on October 16 to begin discussion of the issues. In attendance were Melrose Club board members and representatives of DIP and their attorneys. Contrary to some of the rumors floating around, the meeting was cordial and very business like. DIP thought that they could settle on an agreement that day but the Melrose Club board members were not prepared to agree to any settlement without a long term agreement on member benefits.
Following that meeting a letter from Tim Foley was sent to members, which is enclosed for your information. Also enclosed is a letter from the Melrose Club Board to members.
If you are not a Club member, you probably are wondering why we are sending you all this information. The reason is that the actions proposed by DIP not only will have a significant negative impact on the Club members, but also will have a negative impact on property values. The results of the questionnaire that was sent to you last year showed that a number of people consider their property at Melrose as an investment for the future.
The members of the Board of Directors of the Melrose POA believe that it is our responsibility to do what is necessary to try to protect your interests. Therefore, we have provided some initial funding for this law suit. The Members Advisory Board is soliciting donations and the Melrose Club Board has some limited funds available.
In addition to the meeting that the Dixons have scheduled for November 7, the POA has scheduled a meeting to be held at 11:00 a.m. on November 8 to provide an opportunity for property owners and Club members to have an open discussion. If you are unable to attend, please send any questions you may have to us through the Contact Us page on the web site, Melrose-POA.com,.or in writing to the GW Services address. A report will be posted on the POA/Club News page on our site following the meeting.
With best regards,
Mitch Evans President
P.S If you have not sent us your e-mail address please do so we may communicate quickly with you.
October 22, 2008 WHAT ARE THE CLUB MEMBERS' RIGHTS? Daufuskie Island Properties ("DIP") believes that your rights are at their sufferance. They say they can cut your present Ferry transportation rights to two times per day at 7:00 a.m. and 6:00 p.m. They believe they can control the Members by threatening to "fully suspend all Membership privileges." The Melrose Club Board believes both the old Members and new Members have substantial rights under the 1996 Transfer Agreement and that DIP has substantial obligations. These different interpretations of the rights and obligations under the 1996 Transfer Agreement are one of the questions for the Court to determine in the pending lawsuit. The elimination of additional rights the Members negotiated and paid for 2008 is another issue that will need to be protected if DIP goes through with its threats. In 1996, the members transferred all of the assets of The Melrose Club to CCA, Club Corporation of America. These assets included Salty Fare embarkation, The Melrose Inn, Melrose Landing, The Melrose Clubhouse, the Sportsman’s Lodge and Equestrian Center, the tennis courts, the Melrose Golf Course, the Beach Club, etc. (the "Assets"). The reasoning was that the best chance for long term viability of the Club for the Members was to transfer the Assets to a new operator with extensive experience in the club/resort management field. In return for transferring these very valuable assets, The Melrose Club, Inc. Board of Directors negotiated a "Transfer Agreement" that outlined the obligations that CCA and any subsequent owner would have to the Membership, both old and new Members. The Transfer Agreement was designed to continue the Club and its Assets for the Members' use and enjoyment and to assure that the ownership and control of the Club properties would be an experienced club operator with a quality reputation in the resort industry. The Transfer Agreement provides a number of protections for Members. The Agreement states that the owner covenants to (i) operate the New Club from the Real Property in a manner materially consistent with the operations of the Club as it is currently operated; (ii) maintain the Assets in good condition; and (iii) fund and pay all operational deficits. The Transfer Agreement further provides that the Purchaser shall not, without the Club's express prior written consent, transfer or agree to transfer, in any manner, all or substantially all of the Assets, except to person(s) with certain net worth requirements and a person who has experience and a quality reputation in the club and resort industries. It appears from DIP's letter that they intend to transfer (a lease is a transfer) all or substantially all of The Melrose Club Assets. This is another issue to be determined by the lawsuit. The Transfer Agreement also states that the Purchaser may sell portions of the Assets in the ordinary course of business, provided that the sale does not materially impact the facilities provided to the Members or the operation of the Club. DIP has already sold Salty Fare and has announced plans to sell other Club core assets. First, The Melrose Club does not believe the sale of Salty Fare can be considered to be in the ordinary course of business. Second, The Melrose Club feels that the sale of Salty Fare does have a material impact on the facilities provided to the Members and it impacts the operation of the Club. What if the new owners of Salty Fare go bankrupt, etc.? What if ferry operations stop originating out of Salty Fare? How are the Members protected? DIP does not think the above language in the 1996 Transfer Agreement applies to Salty Fare. The Melrose Club thinks it is precisely what the 1996 Transfer Agreement was intended to protect. This is another issue in the lawsuit. Our objective is and always has been to preserve Members' rights and benefits for now and the future. We were never able to receive any tangible assurances from the ownership that that would be the case. We have asked questions such as if the various pieces are sold, who will be responsible for such things as beach renourishment and fixing the crumbling seawall on the 17th and 18th holes of the Melrose Course? Who will pave the roads? Will everyone be pointing fingers at each other and indicating that the other is responsible? We did not ask the Dixons' to renourish the beach. We asked who will be responsible for the renourishment of the beach once the Club is split into pieces. We are not necessarily against any of their plans. We simply want to assure Member rights going forward. We asked them several times during the meeting to tell us what the global plan was for Member benefits. We received no answer. They indicated that they will allow access, but as you see in Mr. Foley's letter, access may mean only ferry times that they determine. Please understand the Board did not want to file suit. The Dixons refused to meet with us or consider any of our concerns relating to the Transfer Agreement, that they accepted when they purchased the Club from CCA, until the lawsuit was filed. The Transfer Agreement is the entirety of what the Members have as a result of the transfer of all of our previously owned valuable assets to CCA and now DIP. As seen by the actions after the meeting and as indicated in the Foley letter, ownership feels they have the freedom to do whatever they want regarding the Membership. The pending lawsuit is intended to provide the Members with certainty going forward that their membership has value and that they will receive the rights and benefits that were negotiated under the 1996 Transfer Agreement. The Melrose POA Board of Directors is in full accord with the necessity for this litigation. Thank you for your understanding. The Melrose Club, Inc. Board of Directors Below is a letter from Rich Silver, Chairman, Members' Advisory Comittee, sent to all current Club members October 8: Hello to all of our Members -
It's been a long time since I have provided an update and I have received many requests from Members asking what is going on. One reason for the long delay in communications is that there is now more information regarding Daufuskie Island Properties' (DIP) attempts to transfer various assets that comprise The Club. The other reason is that there has been a lot of work involving a handful of involved Club Members with outside counsel to determine the appropriate course of action to take in order to protect Club property and Members' rights under the 1996 Transfer Agreement and other documents. Following is a brief update on where we think things stand based on what we know or have heard.
With respect to the sale of the Inn, this is still scheduled for a closing this fall with due-diligence work still being carried out by the potential acquirer, now described as "Melrose Resort Development Group, the development arm of Admiral Holdings." I have recently been informed that a transaction has occurred resulting in the transfer of marine transportation services (along with The Club's 3 boats) to a different entity, and that this entity also has a signed letter-of-intent to acquire Melrose Landing. We also learned that Salty Fare was transferred out of the name of DIP in early 2007. As I have reported in the past, there apparently have been many discussions with other entities regarding the possible transfers (through purchase, lease, etc.) of many of The Club's other properties or services.
Our recent attempts to meet with ownership to understand and express our concerns regarding actual and contemplated transactions have not been successful. Accordingly, in order to protect the assets and rights of The Club and its Members under the 1996 Transfer Agreement, we filed suit on September 25. The suit challenges the transfer of Salty Fare and current pending transactions along with other possible violations of the 1996 Transfer Agreement and other documents. I can provide via email a copy of the suit to any Member who requests it.
One thing that is new is that the owners have begun what I will call a propaganda campaign via the launch of a new website www.daufuskiemagic.com, which most of you were recently notified of by Susan Jones with a cover letter from Tim Foley. I believe that this is a self-serving campaign designed to attempt to convince the Members that the owners have our best interests in mind and/or to try to 'divide and conquer' us by pitting certain groups of us against others. There is a direct attempt to discourage Members from contributing to our legal fund by making assertions as to who would benefit if our legal attempts to protect the assets of The Club are successful. We believe that all Members will benefit if we are successful in enforcing The Club's rights and protections as delineated in the 1996 Transfer Agreement and other documents.
We need the support of the entire membership to protect the assets and rights of The Club and its Members. Checks have been arriving regularly from the membership, but there are still many who have not contributed, and we need your support too. It is not fair to allow some of the Members to carry the burden for all of our Members. Please send your contributions as follows:
Payable to : The Melrose Club, Inc. Mail to: Rich Silver, 67 Fuskie Lane, Daufuskie Island, SC 29915
If any of you are on the Island at any time and want to drop off a check, call me at 843-341-9252 and we can meet somewhere.
Regards to all,
Rich Silver, Chairman Members' Advisory Committee
Background information: In 1996, the Melrose Club Board sold Melrose to Club Corporation of America (CCA). That sales agreement, known as the ‘96 Transfer Agreement, spelled out certain responsibilities for the new owner and any subsequent owners. The Board of Directors of the Melrose Club still is a legal entity and has added to its membership Mitch Evans, President of the Melrose POA, Tony Simonelli, President of the Bloody Point POA, and Rich Silver, President of the Members Board.
Since the Dixons purchased the Resort from CCA, we have seen decreases in services, member benefits, and the overall operation of a once beautiful club and resort. The Dixon’s have let the roads, cottages and Inn rooms deteriorate and have done nothing to shore up the very significant beach erosion at Melrose, which is threatening the fairway and green of the 18th hole. They also have sold cottages and Salty Fare and have put up for sale the Inn, the Equestrian Center and Sportsman’s Lodge, the Melrose Landing and the boats.
Many members believe that these actions are in violation of the ‘96 Transfer Agreement. Therefore, the Melrose Club, Inc. led by their board has filed a law suit in Beaufort County to prevent these sales transactions from going forward.
The Melrose POA and our property values are very tied into the success of the resort & club operations. Our board feels strongly that they will back up the efforts of the club members to resolve all issues with the Dixons. We feel that if Dixon wants to sell out, he needs to sell the entire property to ONE entity who will continue to honor the ’96 Transfer agreement.
September 25, 2008 Dear Property Owner: There soon may be significant changes at Melrose and the Board of the Property Owners Association would like to bring this news to you on a timely basis. Therefore, we have added a new page to our web site, Melrose-POA.com, which is entitled POA/Club News. We encourage you to visit the web site often and also to send us your e-mail address, which you can do on the Contact Us page. In addition to posting news on the site, we will e-mail news to those for whom we have addresses. As part of its long range development plan, Daufuskie Island Properties (DIP), owned by Gayle and Bill Dixon, has put up for sale the Melrose Inn, the Melrose Landing and boats, and the Sportsman’s Lodge and equestrian facilities. We are told that there are parties interested in buying each of these. The Dixons already have sold Salty Fare and many of the cottages. The Members Board, an elected group of Daufuskie Island Resort Members, is of the opinion that these sales are in violation of the 1996 Agreement to sell the Melrose facilities to Club Corp of America and those terms continue to apply to any subsequent owners. The Members Board is pursuing legal counsel to determine these rights and to protect them.
The Melrose POA Board recognizes that any such sales could have a negative effect on our property owners and, therefore, is working closely with the Members Board and is providing the initial funding for legal expenses. Not all of our property owners are Club members, who have received some information from that Board as well as from the Resort. Our web site now will post current available information for all to access.
The Board of Directors will meet at Melrose on November 8 and has scheduled an open forum to be held at 11:00 a.m. in the Island House to provide an opportunity for property owners to discuss and ask questions. You may wish to plan a visit to Daufuskie at that time. Meanwhile, you can send your thoughts to us via the Contact Us page on the web site..
With best regards,
Mitch Evans President
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