GCTF Updates

GRAND CARIBE TASK FORCE
Committee:	Tony Orfila, Chair
	Jerry Mitchell
	Larry Peterson, General Manager
	Bob Shugert
	Al Sorensen

May 13 2008	Meeting at Loews Coronado Bay Resort, 5-7 pm.
Mar. 20 2008 Letter from Mayor Smisek	The City of Coronado has recently become aware that SCI Capital Group has approached the San Diego Unified Port District (SDUPD) about its intent to develop a destination resort hotel on North Grand Caribe Island. As you know, North Grand Caribe Island is located in the Coronado Cays subdivision in the City of Coronado, but is tidelands property held in trust by the SDUPD. There have been many attempts at developing high density projects at North Grand Caribe Island. The proposal in 2005 by Grand Caribe, Incorporated (GCI) for a 183 suite hotel spa was significantly opposed by the Coronado Cays Homeowners Association (CCHOA). The City of Coronado opposed the proposal by GCI because the project was submitted to the SDUPD without adequate public outreach to determine the impacts on the community. Although the City Council has not considered the development proposed by SCI Capital Group, the City continues to be concerned about proposals for high density developments at North Grand Caribe Island and the potential adverse affects such developments would have on the Coronado Cays subdivision. As noted in the May 11, 2005 letter from Shahriar Afshar, SDUPD Senior Asset Manager, regarding the SDUPD's comments on a previous proposal for North Grand Caribe Island, the City concurs with the position of the SDUPD that a development proposal at North Grand Caribe Island should "... gain approval from the City of Coronado and the surrounding neighborhoods." Therefore, the City respectfully requests that the SDUPD continue to require any developer proposing projects at North Grand Caribe Island, seek thorough public review by the affected communities early in the development process, and seek approval from the City of Coronado.
Mar. 2008	On March 5th your Task Force met with SCI officials and their consultant. In attendance also was our consultant. In this meeting our opposition to the hotel concept and our determination to continue such opposition were more clearly defined. Our remarks seemed to have little effect on the SCI gentleman who headed the group. He repeatedly stated that they were going to continue to plan for a high end destination resort and had talked to five of the commissioners thus far at the Port. He expressed the view that they were prepared to spend six or seven years in the process. He also clarified one point in that SCI is in the lenders position rather than an equity position. In other words, they now hold the note owed by GCI and are not actually on the Port Lease in an equity position. The meeting ended on a cordial note and SCI promised to be transparent and keep us informed. We are now going to deliver the aforementioned letter to the City Council for review. This letter summarizes the situation as it stands today. Be assured that your Board and the Grand Caribe Task Force are guided by your stated opposition to a hotel development in the surveys conducted in June 2004 and May 2005, wherein between 81% to 90% of those responding, opposed a hotel. You will be kept informed of developments as they occur. If you have any questions or concerns, please forward them to Larry Peterson. Your continued support is greatly appreciated.
Jan. 2008	On Jan. 16^th SCI representatives met at a luncheon in Coronado with our President Dan Harrigan, General Manager Larry Peterson, Tony Orfila and our consultant Richard Ledford. The meeting was cordial and informative, however it became apparent that SCI was continuing their due diligence and was intent upon developing a hotel on North Grand Caribe. They were given a letter from the Port District to GCI dated May 11^th, 2005, reiterating the practice of gaining approval of the City of Coronado and the surrounding neighborhoods for a project before proceeding in the application process. On this same date of Jan. 16^th, the committee sent Mayor Smisek an update on the matter and requested a meeting wherein we could reaffirm the City’s support on our position regarding any development on North Grand Caribe. On January 15th Mayor Smisek met with our Task Force Committee in our conference room. Based on this meeting the Task Force agreed to send a letter to the City Council asking for their support. The Task Force has prepared a letter and your Board of Directors has approved it.
Dec. 2007	On Dec. 20^th the committee sent a letter to SCI memorializing the history of prior development proposals on the property, emphasizing the precedent of the Port District’s practice of obtaining approval of the surrounding neighborhood and the City of Coronado for any development proposal. SCI was invited to come down here for a conference, and a copy of the Dec. 20^th letter was sent to Mayor Smisek and Port Commissioner Spane. On Dec. 26^th the committee sent a letter to Mayor Smisek apprising him of all the developments including copies of the various documents relating thereto.
Nov. 2007	On Nov. 29^th, 2007 SCI representatives met with the Port District staff, announcing that they would spend the next 90 days doing their due diligence in preparation to develop a “Premier Destination Resort” on North Grand Caribe Isle. Historically the Port District’s practice required approval by CCHOA and the City of Coronado before a project could progress through the application process. Your Board of Directors became aware of these developments in early November and directed the Grand Caribe Task Force to address the matter. This committee obtained documentation pertaining to the purchase of the GCI note and performed some research on the new owner, SCI.
May 2007	On May 31^st, 2007 a Notice of Default was filed against Grand Caribe, Inc. Bridge Capital USVI, L.L.C. (a U.S. Virgin Island Limited Liability Company). Prior to the scheduled foreclosure sale on Nov. 20^th, 2007 the note of $4,113,000 was purchased from the holder, Bridge Capital by SCI Capital Group, a venture capital firm headquartered in Los Angeles. We do not know the actual purchase price of the note or any other terms of the note.