COMMUNITY DEVELOPMENT FORUM

Community Development Forum: Profit Centers in Mixed Use Resorts-
Monday, April 24, 1995
10:30 am to 12:00 noon
Frederick Conte, RRP- Panelist



























American Resort Development Association 1995 Annual Convention and Exposition April, 23-26, 1995
Disney's Contemporary Resort Orlando, Florida


Notes and Bullet Points for ARDA Discussions

Community Development

A. BACKGROUND

Preferred Equities Corporation ("PEC") is a privately held Nevada corporation engaged in retail land sales, resort timeshare and other real estate activities. PEC is one hundred percent (100%) owned by Mego Financial Corp. ("MEGO"), a publicly owned corporation listed on the NASDAQ Stock Exchange. PEC's activities include acquiring and developing unimproved real estate parcels and lots and marketing them on a retail basis for residential, commercial, industrial and recreational use. PEC also engages in the business of selling timeshare interests in resort hotels located in Las Vegas and Reno, Nevada; Steamboat Springs, Colorado; Honolulu, Hawaii; and Brigantine, New Jersey (located just outside Atlantic City).
PEC through certain of its subsidiaries also sells larger unimproved land parcels, primarily located in Colorado In addition, PEC operates a recreational vehicle facility at its Calvada Subdivision in the Pahrump Valley, Nye County, Nevada, where it sells timeshare interests in vehicle pads and hookups and also runs a recreational facility.
Land Sales: PEC is engaged in the sale of land at the retail level for residential, commercial, industrial, and recreational use.
The retail land sales business involves the acquisition of lots and large tracts of unimproved land followed by tract subdivision and retail sale. PEC has made a substantial portion of its retail land sales for residential, commercial and industrial use in the Pahrump Valley, Nye County, Nevada.
Calvada: One of the Company's major developments is a planned community called Calvada located in the Pahrump Valley, Nye County, Nevada. Pahrump is situated near the Nevada California border about 58 mile; northwest of Las Vegas, Nevada.

The Calvada Property consists of seven subdivisions totaling 18,148 acres: Calvada Valley (11,919 acres),
Calvada North (1,834 acres), Calvada Meadows (2,440 acres), Country View Estates (242 acres), Country Play II (291 acres), and Golden Spring Ranch (1,320 acres). These subdivisions consist of 28,752 residential and commercial lots.
Since 1969, the Company has constructed roads, utility infrastructure, and other improvements at a cost in
excess of $30 million and now operates amenities at the development including two 18-hole golf courses and mobile home residential community with a clubhouse, pool and two tennis courts.
In addition, there is a separate $1.0 million sports complex offering indoor and outdoor tennis, bowling lanes, and a complete health club. The Company has also developed the Preferred RV Resort in Calvada, which has its own clubhouse, pool and organized activities for its members.
The Company has donated land and facilities for the six schools, local Chamber of Commerce and community library presently located on the Calvada Property as well as a community medical center, a 33-unit senior citizen's village, and county park which contains three little league baseball fields along with concession stand In addition, the Company also owns and operates Central Nevada Utilities Company, which provides water and sewer services to the community. This utility recently completed a new sewage treatment plant at a cost in -
excess of $800,000 which is projected to handle further growth in the community for years to come.


- commercial development, including national franchises such as Days Inn, Radio Shack, and Smiths Food King, has accelerated in recent years to meet the needs of an expanding population in the Pahrump Valley.

Growth Statistics:

Therein lies the challenge of providing and operating facilities and amenities that are compatible with the area enhance the value of the development and do not prove to be a drain on the Developer's bottom line.

The original amenity package planned for in the 60's has undergone a tremendous transformation.

Two 18 hole golf courses
Equestrian Park - Bridal Trails Gun Club
Utility Company to provide central water and sewage service
Mobile Home community (complete with its own recreational amenities) Grocery Store
Bank
Air Strip

As the community has grown, some of these amenities have proved to be successful, others have not.

Boom in popularity of golf
Less interest in gun club and equestrian park

Growth of the community has demanded an ongoing review which has led to the establishment of.

An interval ownership RV Park Resort
Sports and Health Complex
Establishment of a community library
Construction of a new hospital with 24-hour emergency care Expanded and more efficient utility services
Model Home community

Create a partnership with the community

Examine the evolution of the Amenity Package and the synergy of operations You cannot micro manage this program, it helps to take a macro approach.

(2) 18 hole golf courses - traditional avenues of establishment of profit centers
1) Pro Shop merchandising
2) Food and Beverage service
a} Range ball
4) Creation of yardage book - that incorporates sales information
5) Signage, benches at Executive Course
6) Cart Rentals
7) Flexibility in pricing of greens fees
8) Irrigation by effluent which enables the Developer to transfer fresh
water rights for grey water effluent (enables future development)
Provides for efficient and cost effective disposal for the utility
9) Sale of sludge as fertilizer




10) The right personnel - encourage marketing of facilities for
corporate outings and tournaments of all kinds
11) Partnering with local hotel and casino to provide overnight golf packages
(Stay and Play)

Utilities:
Turn a minus into a plus
Locate the sewage treatment plant in the middle of the golf course eliminate need for spray fields and lagoons
- sell the effluent to the golf course
freed up land for the Developer to subdivide at a future time

RV Park:
Response to the independent and flexible lifestyle of the typical 90's customer

1) Took a piece of property 7 acres in size that would have been
subdivided into 1/2 acre lots, generating sales of approximately $500,000
2) 250 site RV Resort
Each pad sold 10 times (undivided interest)
Generating sales of $9,875,000, certainly a more significant
yield for the initial sale
3) Reduced marketing costs, we draw from our typical land
buyer profile -- how many would we have lost?
4) RV support local economy (play golf, retail establishments, and casinos)
5) Repeat buyer - purchase land - statistics?

Supports the association:
Use of vending machines on site Laundry facilities
Provides fees to utility company through the establishment of specialized dumping stations. Daily, weekly memberships in Sports/Health complex and Executive Golf Course

Strategic placement of Library and Chamber of Commerce offices adjacent to Sales Office a d d Mode . How /

'Model Home Complex captures the drive-by or walk-in market '
1) Development of design centers

Sometimes the property itself can be turned into profit centers
1) Main highway/commercial sites can and are utilized for billboard leases

2) Gravel - sold to local contractors
3) Farming and ranching (ground leases on property that development was some time in the future)

Development of the winery into a tourist destination
from a marketing perspective

Airstrip - landing fees and establishment of a fixed base operation for fueling, repair and maintenance of
aircraft.

In the past 15 years, the Master Planned community has revolutionized the real estate industry, and the name and concept is now as familiar to the public as "Mortgage" and "Escrow".

The mission established for Calvada was to provide and encourage a rural lifestyle with residential
neighborhoods while integrating elements necessary to the establishment of a total community, which included recreational amenities, office parks, retail centers, civic centers, public schools, churches and a system of parks and trails. The plan was to provide a community of balanced land uses, with a portion of the land reserved as open space, to not only protect the ecological balance but also to preserve the rugged beauty and southwestern character of the land.