| IMPORTANT MEMO TO ALL MCC OWNERS |
| Dear MCC Owners, We are writing to update you about two important developments at the Marina City Club. Essex Arbitration: We recently received the arbitrator’s Partial Final Award regarding Phase I of the arbitration brought by Essex. Unfortunately, the arbitrator ruled that we are obligated to pay for 43.5% of the repair costs for the Promenade Garage, or $1,264,425.91. This is the second arbitration finding that we are required to pay for a proportionate share of the cost to repair portions of the Shared Area. The Board is working with our attorneys to consider all options in response to this Award. Talks with L.A. County: As many of you know, L.A. County Department of Beaches and Harbors (“DBH”) has initiated conversations with us and Essex to begin the process of making major repairs to the Marina City Club. DBH is very concerned about the deteriorating condition of MCC; they are concerned that there will be an event such as an electrical fire or falling concrete that will cause loss of life. As a result, DBH has threatened to “Red Tag” the development, which would mean the buildings are declared unsafe and must be immediately evacuated, unless Essex and we begin the process of repairing MCC. In response, Essex and your Association have jointly hired a consultant, Ryan Eck, to assess the necessary repairs. Moreover, DBH has made clear that it expects that MCC Owners will immediately take steps to arrange for the necessary financing to pay for MCC Owner’s proportionate share of the costs of necessary repairs and to increase the Shared Area Reserves to appropriate levels. MCC Owners will have to pay for a substantial portion of the repair costs, which will likely be tens of millions of dollars. We will begin working with DBH and Essex to explore options to pay for these costs. Finally, DBH claims that MCC Owners and Essex have not paid the full amount of “shadow rent” due under the lease with the County. In response, our Association has hired a consultant to determine the proper calculation of the “shadow rent” that we paid to Essex, and which Essex is supposed to remit to DBH. Additionally, it is our strong opinion that Essex has been negligent in their overseeing the required accumulative of capital reserves necessary to replace the infrastructure deficiencies. Essex has from their initial overseeing the property in 2004, and based on contractual obligations with the County, allowed a huge deficiency in a non-accumulation of capital improvements to their buildings. The current capital reserve deficiency is approximately 40 Million dollars. MCC Homeowners should be prepared for a substantial assessment as part of our negotiations with the County at which time we will seek an extension on the land lease that currently ends in 2067. (46 years from now) – See C.P.A.’s financial statements which outlines this deficiency. We understand that these developments are concerning. The Board is diligently working with the Association attorneys, as well as with DBH and Essex, to explore all options and address DBH’s concerns. Mark Greenberg, President MCC Condominium Owners Association MCC Executive Litigation Committee |
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