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5/8/2010 5:29:15 PM

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Section 5: OPA Board
Subject: OC Bayside Debacle Msg# 738434

From:

Bill Rakow Past OPA Board Member 2007-2010

Joined 5/20/2004

To:

Joe Reynolds (Read) OceanPinesForum.com

Joined 8/1/1999

Joe,

The tax implications in this have nothing to do with the conditions in the lease other than any such taxes must be paid by Secreats.

If you, or anyone, was under the impression that the "value" of the lease should be addressed by identifying the tax "saving" you were mistaken, as you have so learned.

Whether OPA would have to pay taxes on the property were we not to lease it is not relevant to the lease negotiations. Had anyone reviewing the lease believed that taxes must be paid by OPA should we not renew the lease, that would have no bearing on the lease as it was finalized.

You may point out that some people were unaware of that fact if you want to do so, but their knowledge - or lack of knowledge of that - does not disqualify them from reviewing the lease.

Would you like to volunteer to be a member of our contract review team? If so, let me know are we'll consider it.

For reference, the above message is a reply to a message where:

In case you don't see my other post on this:

JKnepper 5/5/2010
guess I am confused... The lease has an annual price of $40,000 or so, escalating. In addition, OPA will not have to pay the real estate tax on the property... I am not sure exactly what that figure is... but let's say it is $35,000 per year. That makes the annual return to OPA $75,000 ($40,000 plus $35,000). Since this is a five year lease... that aggregates to $375,000 on a property that is worth say, $2,500,000.

Knepper was apparently involved in the lease review, yet his words above clearly indicate he, like Marty, didn't have a clue as to the status of the taxes.

Jeff, I am not faulting you, rather OPA for obviously not providing those reviewing the lease with all the pertinent information. Aside from the tax-exempt status of the property for OPA itself, OPA apparently did not even inform those reviewing the new lease that the property assessed value had been reduced from $3 million to $1.3 million.

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