Schaffer's Mill Member Proposal by BlueStar Resort & Golf

SCHAFFER’S MILL PURCHASE SUMMARY: Informational Overview JANUARY 2024

Table of Contents Executive Summary Participants in the Process Asset Description The Transaction The Vote The Timeline Due Diligence Financing the Purchase Club Operations Under SMCA Ownership Financial Summary Potential Risks Pros & Cons Frequently Asked Questions

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Executive Summary Schaffer’s Mill is a unique resort-style community containing approximately 251 acres offering access to golf, tennis, ﬁtness, swimming, dining and proximity to local mountain skiing. The community consists of 403 lots comprised of 239 single family lots and 164 Mountain Lodges, whose homeowners are members of the Schaffer’s Mill Community Association (“SMCA”). All homeowners are social members of the Schaffer’s Mill Club (“the Club”) through the Homestead License Agreement (“HLA”), an agreement between New Martis Partners (the "Developer", "Club Owner", or "Seller") and SMCA. The Club consists of many amenities including, but not limited to, an 18-hole championship golf course containing approximately 100 acres, and the appurtenant amenities including a free-standing restaurant, a club house, pool and hot tubs, sport courts, and a shuttle bus and van that transports members and their guests to Northstar Resort, where the Club offers a “Base Camp” facility with ski storage and a lounge area for SMCA members to relax while at the Northstar Village (cumulatively, “the Club Amenities”). In a recent survey of SMCA members, 85% of respondents stated they would like SMCA to own the Club Amenities. The primary reasons for SMCA to own the Club include:  Enhance and/or protect SMCA members’ home values.  Control the HLA, with which expenses associated represent ~67% of SMCA dues.  Ability to direct the quality and scope of Club Amenities going forward.  Golf Membership enrollment fee waived for a limited time for SMCA members that have paid the Special Assessment and are in good standing As it stands today, the Club Owner has sole discretion of development, operation, and maintenance of the Club and the Club Amenities. The Club Owner offered to sell the Club Amenities to SMCA in Spring of 2022. The Club Owner and SMCA signed a non-binding Letter of Intent (“LOI”) in August 2023 which details an all-cash purchase price of $11.9 million and the assumption by SMCA of certain liabilities and post-closing agreements (together, the “Transaction”). The Transaction will cause additional closing costs and reserve and capital needs, and as such, we estimate a total Transaction cost of approximately $15.5 million (“Transaction Cost"). SMCA expects to pay for the Transaction Cost through a one-time special assessment (“Special Assessment”) of $38,500 per lot. The Special Assessment may be paid through a lump-sum prepayment or an SMCA member can utilize a 4-year payment plan to pay the Special Assessment.

The Transaction and the Special Assessment require the approval of SMCA members. If, and only if, SMCA members agree to the Transaction and the Special Assessment, then the Board will move forward with the Transaction and have the authority to sign a binding Purchase and Sale Agreement (“PSA”). Ballots will be sent out following a Townhall, scheduled for January 30. If there is an affirmative vote from a quorum of SMCA members, the Special Assessment could be due as early as mid-April. The Board will ﬁnalize and enter into the PSA and a bank ﬁnancing agreement, and Closing could occur as early as mid-May. To assist SMCA members in their evaluation to purchase or not, the following overview provides additional details of the pertinent subjects associated with this matter. At the request of many SMCA members, sections are included at the end to help evaluate this decision. We encourage you to review these, understanding that various opinions are expressed and should be considered as such. Additional documents are available within the community data room. Please contact Hillary Humphreys with Granite peak if you need access.

Participants in the Process  New Martis Partners (the "Developer", "Club Owner", or "Seller”): New Martis Partners is the Club Owner. The group purchased the community and the Club in 2011 and have been the developer of the homesites and mountain lodges since. New Martis Partners includes a small group of individual and institutional investors, headed by John Marlin and Allen Jones.  SMCA Board of Directors (the “Board”): As of August 2023, the Board is comprised of five SMCA members who are independent from the Club Owner.  Acquisition Advisory Committee (the “AC”): Comprised exclusively of SMCA members who are independent from the Club Owner, in 2022, the Board selected a group of business professionals with backgrounds in law and finance, as well as mergers and acquisitions. The AC’s duties included leading due diligence and the negotiation of the LOI.  GGA Partners (“GGA”): GGA Partners is an international consulting firm and advisor to golf courses, private clubs, resorts, and residential communities. GGA was retained in January 2023 for certain due diligence services, including a market analysis, financial and operational review, club infrastructure review (capital reserve study), and evaluation of course conditioning.  BlueStar Resort & Golf (“BlueStar”): BlueStar Resort & Golf is the “Club Management Company” employed by current Club Owner to manage the hospitality experience. BlueStar has been involved throughout the Club Owner’s tenure with the project.  Transition Advisory Committee and Club Board: Made up exclusively of SMCA members, a transition advisory committee (“Transition Advisory Committee”) will be formed as soon as possible. Once closing occurs and the entity is formed, the Transition Advisory Committee will be the likely candidates to become the initial Board for the Club (“Club Board”). The Club Board will be a five-member board, which will comprise 1 member of the SMCA Board, at least 1 resident golf members; at least one 1 resident social member, and at most 1 could be a club member from outside the development.

Asset Description The Club includes all community assets not already owned by either individual property owners or SMCA (cumulatively “Club Amenities”) and includes the following:  Golf course and related equipment  Pool and hot tubs  Clubhouse, including golf shop, ﬁtness center, locker rooms and Peg’s Poolside Café  The Sawyer at Schaffer’s Mill  Common property areas outside of the golf course boundaries  Base Camp lease assumption and leasehold improvements (NorthStar Village)  Parking lot, shuttle bus, van and other vehicles  Event lawn, tennis courts, sport court, and playground  Concierge Services, and Schaffer’s Mill Vacation Rental Business  Intangible property connected to the operation of the Club Property, including logos, web domains, and phone numbers. The most detailed report of the Club Amenities is in the appraisal prepared by Newmark Valuation and Advisory, which you can review HERE.

The Transaction Purchase Price: The SMCA, through an executed non-binding letter of intent (“LOI”), has offered to purchase the Club Amenities for $11.9 million plus costs associated with the engineering and construction of the future maintenance facility, currently estimated at $185,000, resulting in an adjusted purchase price of approximately $12.1 million. Terms and Conditions: The following is a summary and does not include all terms and conditions. For all the details of the LOI, please click HERE:  Closing Costs: The SMCA will be responsible for their share of escrow and title closing costs, as well as fees from legal and consultants retained by SMCA, currently estimated at approximately $600,000.  Recall of Master Golf Memberships: Seller shall recall and refund a total of ten (10) master memberships (“Master Memberships”) simultaneously with Closing. On, or prior to, the Closing Date, SMCA shall deposit with the escrow agent the amount of $956,000 for the Master Membership refund (“Master Membership Refund”). The Master Membership Refund shall be disbursed to the Master Memberships at Closing.*  Founder Memberships: The SMCA has agreed to recognize and allow the use of a total of twenty (20) founder memberships of The Club. Upon closing the Founder Members will enter into a new agreement with the Club limiting their aggregate rounds of golf to no more than 150 per year, and no more than 20 per Founder Member.  Use of Sales Trailers: The SMCA has agreed to allow the Seller the right to maintain its sales trailers (the “Sales Trailers”) and use up to twelve (12) adjacent parking spaces in its current location. The Sales Trailers and parking spaces are to be used as a real estate sales office solely for the purpose of selling property in the Schaffer’s Mill community.  The Seller’s use of the Sales Trailers shall be subject to some terms and conditions to be set forth in an agreement separate from the PSA between the Seller and the SMCA.  Assessment of the Club Owner’s lots: Any Assessment related to this acquisition of the Club Owner’s owned lots shall accrue at an interest rate of 5% per annum and shall be due and payable in full upon the earlier of either the sale of the lot, or six years following the closing of the deal. Although not required by the LOI, SMCA has determined that it is in the best interest of the SMCA members to establish working capital, and a Club Reserve fund and a Club Capital fund estimated at approximately $2.0 million. Therefore, the total cash required at closing is estimated at $15.5 million.

*Board Member Joe Denniston has a Master Golf Membership.

The Vote To pass the membership vote on whether to purchase the Club Amenities from the Club Owner and to levy the Special Assessment (the “Measures”), it requires a majority of a quorum. Meeting quorum has two thresholds. SMCA legal counsel, Angius & Terry LLP, provided a legal opinion on January 29, 2024, which you can review HERE. Below is a summary of what is required for the Measures to pass: (1) A minimum of 180 ballots from SMCA members are received. (2) A minimum of 206 ballots from the 403 total lots, including Developer-owned lots, are received. (3) At least a majority of SMCA member votes are “Yes”. (4) At least a majority of the vote from total lots, including Developer-owned lots, are “Yes”. The Board will host a presentation and virtual town hall with SMCA legal counsel to present the vote process and answer questions about the ballot, the process, or other legal aspects of the transaction. A ballot will be sent within a week of the presentation and virtual town hall. Balloting will be open for 30 days. If SMCA does not receive a quorum of ballots within 30 days, the balloting period will be extended two weeks at a time until quorum is reached. Once quorum is reached, a meeting for the formal ballot count will be held.

The Timeline We expect ballots to be sent out by early February, which will open the start of voting. Voting will remain open for approximately one month, assuming a quorum of ballots are returned. If needed the voting period will be extended until a quorum of ballots are received. The ballot count and the respective communications regarding the outcome of the vote could take up to two weeks after a quorum of ballots are received. If the Measures pass, the Board will execute a finalized PSA with the Club Owner, sign bank loan documents, and complete confirmatory due diligence. Thereafter, the Special Assessment levied will be due as early as mid-April. For those members who choose to utilize it, they will be given the opportunity to pay the Special Assessment over 4-years (plus interest and administrative costs). THE PROCESS POST-VOTE If the vote is “No,” the process ends. The Club Owner may continue to own the Club. However, the Club Owner has made no assurances to continue its ownership, therefore, has the right to seek new third-party buyers. If the vote is “Yes,” the Board will execute the PSA with the Club Owner and sign bank loan documents. Upon signing the PSA, SMCA will owe a $100,000 deposit to the Club Owner, which will be drawn on a line of credit. The Seller has 30 days to provide agreed-upon, sensitive, final due diligence items, and the SMCA Board will conduct confirmatory due diligence. Closing is intended to take place approximately 60 days after the vote outcome is announced, which could be as early as mid-May.

Due Diligence To determine whether SMCA should consider acquiring the Club Amenities, the Board and AC performed initial due diligence. The Board, AC, and the Finance Committee have reviewed financials, departmental performance, membership information, headcount details, and other customary information. Other diligence included services performed by GGA and appraisals provided by Cushman Wakefield and Newmark Valuation and Advisory. Below is a summary: GGA: GGA performed the following due diligence services: market analysis LINK, financial and operational review, club infrastructure review (capital reserve study) LINK , and course conditioning evaluation LINK. GGA’s market analysis revealed that the Club is in the mid-tier of the market when compared to local and regional competitive offerings, and that it appears competitive advantages are derived from the quality and upkeep of amenities rather than the amenity offering themselves. GGA’s course conditioning evaluation (completed by GGA’s partner, the USGA Green Section) noted that golf course conditioning is adversely impacted by limitations in the labor budget, the suboptimal condition and absence of certain golf maintenance equipment, and the lack of a golf maintenance facility. As a result, GGA identified some significant capital expenditures that should be considered as part of the future business plan of the Club. These expenditures include, but are not limited to, the construction of a golf maintenance facility, replacing aged golf maintenance equipment, and bunker renovations. These expenditures have been considered in the Summary Club Cash Flow Projections. LINK APPRAISALS: Two independent appraisals were performed on the property, one hired by the Bank of the Ozarks (the Developer’s Bank), and another by SMCA.  Developer’s Bank Appraiser, Cushman Wakefield, used a Market-value-based approach in September 2022. The appraised value was $15,300,000. LINK  SMCA’s Appraiser, Newmark Valuation and Advisory, used a gross-revenue-multiple approach in September 2022. The appraised value was $12,020,000. LINK The appraisals did not include the Schaffer’s Mill Vacation Rental Business.  Schaffer’s Mill Vacation Rental Business is a profitable “department” that generates approximately $250,000 of profit.  Those renting through Schaffer’s Mill Vacation Rental Business have full access and use of the Club Amenities. If the Measures to acquire Club Amenities are passed, the Transition Advisory Committee will lead the confirmatory due diligence process. Confirmatory due diligence will include service contracts, employment agreements, information related to the Schaffer’s Mill Vacation Rental Business, and a list of all personal property.

Financing the Purchase THE PER LOT FINANCIAL COMMITMENT The approximate $15.5 million transaction cost shared across SMCA’s 403 lots equates to a Special Assessment of approximately $38,500 per lot. While the Board reviewed and debated a variety of ways to calculate an assessment, SMCA counsel confirmed that the CC&Rs do not allow for varying assessments per lot owner. Payment plans for those who wish to spread out payments over time will be offered. The Board is still assessing what payment plan options best balance the competing needs of the community, and a final determination will be made after the vote has been tallied, and once we know how many homeowners will need to avail themselves of the payment plan option. However, by way of illustration only, one potential model would be as follows: Using a 4-year payment plan at current interest rates (same interest rate as the SMCA bank loan), the amortized loan will result in a payment of approximately $2,840/quarterly, which covers principal, interest, and a $500 administrative fee. If the payment plan were to remain outstanding for the full 4-years, the total payments would equal approximately $45,440, inclusive of administrative fee and interest payments. Please note that if the payment plan option is “oversubscribed” - meaning that more members elect to use the payment plan than what SMCA’s loan proceeds can cover - the first payment will be larger and the remaining payments will be less than what is illustrated here. SMCA BANK LOAN SMCA will require a bank loan to fund the Transaction. SMCA will borrow the funds needed to cover the deferred Special Assessments. The amount of deferred Special Assessments will be based on the number of Developer-owned lots and the number of SMCA members that opt to utilize a payment plan. SMCA has a term sheet for access to up to a $5.0 million bank loan facility and an additional $0.5 million line of credit facility. SMCA’s bank loan will be at Prime+. Closing on the bank loan facility will be conditioned on the completion of certain due diligence, such as an appraisal and environmental report. Upfront financing fees are included in the estimated Transaction Cost. Principal payments and interest expense will be an obligation of SMCA while there is a debt balance. The required principal and interest payments will be covered by payments received from the SMCA members who opted for a payment plan, as well as payments from the Developer as they sell their lots. See Financial Summary, Impact on SMCA: Financing Deferred Assessments for more information.

Club Operations

Under SMCA Ownership The “New SM Club” will be setup as a wholly owned LLC of SMCA consisting of all Club Amenities (Golf Course, North Village, Sawyer, etc.). The Schaffer’s Mill Vacation Rental Business will be setup as “Schaffer’s Mill Exclusive Accommodations”, a separate LLC subsidiary of the New SM Club. POST-CLOSING OPERATIONS The SMCA Board will appoint an initial “Club Board” comprised of a cross section of Club members to work with the SMCA Board, BlueStar, and the Club management to survey Club members, develop a long-term strategy for the club, and create a long-term investment and operational budget. The major difference is that the Club will not operate for a third-party’s beneﬁt. A portion of HLA and Club member dues will be budgeted for contribution into a Club Reserve Fund, to repair or replace existing Club Amenities, and a Club Capital Fund, to develop any infrastructure required by the Club or create new amenities. Any proﬁt generated will be carried forward for operations and offset the need to increase HLA dues in the following year. The New SM Club will continue to use the HLA to collect “Social Dues” from SMCA members for use and access to the Club. GO-FORWARD OBJECTIVE OF THE CLUB 

Operate and invest in the Club such that it maintains and grows the property values inside Schaffer’s Mill.

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Provide predictability in HLA and SMCA dues by utilizing operational, reserve and capital budgets for the Club.

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Balance Club member desired service levels and experiences, membership pricing and operational costs.

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Departmental operations, such as Food & Beverage and Activities, should operate to mitigate operating losses, such as by charging non-members, if they have access to these services, at appropriate levels.

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Improve golf course conditions and service levels to improve Golf Club membership enrollment and charge market rate for events and guest access.

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Schaffer’s Mill Exclusive Accommodations should beneﬁt SMCA members who wish to rent their homes and want their guests to enjoy Club access, while SMCA maintains an exclusive feel for its Club members.

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Proﬁts generated from Schaffer’s Mill Exclusive Accommodations and non-SMCA members should be used to offset maintenance costs attributable to the extra usage and to achieve the long-term objectives of the Club.

Financial Summary ESTIMATED TRANSACTION SOURCES & USES Below is an estimated sources and uses to support the acquisition of the Club Amenities and to create Club Reserve and Capital Funds. Key assumptions are footnoted, including the assumption of how many SMCA members might opt to utilize a payment plan. If the upfront amount of collected Special Assessments are less than anticipated, it could impact the beginning balance of the Club Capital and Reserve Funds. In addition to what is footnoted, we have estimated the prorations that affect the adjusted purchase price and remaining transaction fees and closing costs. Depending on the timing of closing the transaction, the Club may need less or more capital than estimated to fund working capital.

NOTES: (1) Special Assessment collected from 403 lots less: (i) Developer owned lots (51); and (ii) 20% of the remaining lots that represent the SMCA members that elect to utilize a payment plan. (2) Bank loan is equivalent to the Special Assessment for the Developer owned lots and the SMCA members that are assumed to utilize a payment plan, plus a Bank loan fee added to principal. (3) Purchase price of $11.9 million plus adjustments for the reimbursement of maintenance facility costs and closing prorations. (4) Transaction costs include legal and advisor fees and other closing costs. IMPACT ON SMCA: FINANCING THE DEFERRED ASSESSMENTS SMCA will utilize a bank loan to offset the deferred Special Assessment payments from the Developer-owned lots and the SMCA members that opt to utilize a payment plan. The bank loan will have a 7-year payment term with the flexibility to prepay a portion of principal each year. Principal plus interest payments will be made monthly. SMCA will be obligated to make the payments on the bank loan. SMCA’s bank loan payments will be offset by deferred assessment payments received by the Developer (as they sell their lots) and the members that opt to utilize a 4-year payment plan. Since the Developer does not have a defined timing of cash flows, there could be a mismatch in timing between SMCA bank loan payments and SMCA receipts from deferred assessment payments.

There has been extensive modelling to review the cash flow impact to SMCA under different scenarios. The table below is a projection of annual cash receipts and payments. The scenario incorporates an assumption that the developer sells 9 lots per year, and pays the respective Special Assessment and accrued interest, until they have sold all their lots. The scenario below also assumes that all excess cash receipts are utilized to pre-pay SMCA’s bank loan. In the example above, at the end of the term, SMCA would have paid approximately $108,000 ($269/lot) more than what was collected (“carry cost”). In year 5, SMCA will have a higher payment obligation than cash receipts. Variables that affect the carry cost and whether SMCA has a higher payment obligation than cash receipt in any year include: (i) how quickly the Developer sells lots; (ii) if the members elect to prepay their Special Assessment balances; and (iii) how quickly SMCA prepays its obligations. When/if obligations are greater than cash receipts, SMCA will need to utilize its operating fund cash balance. To minimize the carry cost, SMCA should utilize the prepayment option; and to mitigate the need for a future special assessment, the Board’s budget will need to incorporate a line item to budget for this potential future carry cost as projected. CLUB CASH FLOW AND FUNDING CAPITAL EXPENDITURES BlueStar provided SMCA with the Seller’s Club budget for 2024, which has been used as the starting point for a summary cash flow forecast. The following summary cash flow forecast has been provided to illustrate the various considerations around cash flow planning for the Club. The template for the forecast was provided by GGA to the Board for cash flow planning purposes. The key inputs to the forecasts have been developed by the Board with reference to the reserve study for timing of capital expenditures. Key takeaways from the forecast below:  Capital expenditures for existing amenities and equipment can be funded with the Club Reserve Fund and Cash Flow from Operating activities.  The Club can utilize a construction loan and the Club Capital Fund to fund the cost of the Maintenance Facility.

 The Club can maintain a Club Reserve Fund and cash balance that mitigates the need for future surprise special assessments. However, if the Club Board puts forth a plan to significantly improve existing amenities or build new amenities in the future, which would be based on Club member input, SMCA members might be asked to vote on a future special assessment. Key assumptions made to develop the forecast above (note: the list below is indicative but not exhaustive, for more detail on the assumptions, see the Summary Club Cash Flow Projections, LINK):  EBITDA increases at inflation each year. As such, the assumption is that there are no significant changes to operations. Feedback from SMCA member surveys might result in changes to operating principals, which can cause financial results to be materially different than what is assumed above.  Operating Adjustments include assumptions around savings in the “Owner’s Expense” that is currently charged to the HLA budget, an increase in labor costs, and collection of dues from Master Members.  Income taxes have not been modelled herein. Depreciation and amortization, a non-cash expense, will mitigate tax expense.  The construction of the Maintenance Facility is delayed to year 2. If SMCA were to close on the Transaction in May, the short construction season might not allow for sufficient planning to begin construction in year 1.  The Board used judgement around timing of certain capital expenditures. For example, the reserve study calls for the renovation of golf course bunkers in year 1. Given the short season when this project could be done, the completion of bunker renovation in one year is not feasible, even with help from outside contractors, per the Club’s golf course superintendent. As such, the Board spread the capital costs related to renovating the bunkers over a 4-year period as advised. In addition, while the reserve study might call out for the replacement of certain gym equipment due to age, the Club Board might agree with the Club management on using Club Reserve Funds for more pressing needs for the Sports Center such as replastering the pool floor and curbing, updating the handicap access for the pool, and replacing selected patio furniture. Below is a summary of cash flow assumptions used for capital expenditures:

These cash flow forecasts are preliminary in nature and based on a number of estimates and assumptions. Actual operating results and capital expenditures will be different, and likely in a material manner. EXPECTED IMPACT ON HLA DUES AND CLUB DUES Should the Transaction go forward, we expect 2024 will be a transition year. While some changes might take effect in 2024, the Club will largely operate as it has and therefore, the SMCA Board does not anticipate significant changes to the Club Owner’s current budget for 2024. We expect the operations of the Club Amenities to be financially sustainable as per the budget provided by BlueStar and will require no increase in SMCA social dues or an additional special assessment to sustain operations in 2024. The 2024 golf dues for SMCA members will be set as per BlueStar’s budget assumptions and communicated prior to the start of the golf season, just as they have been in the past. Going forward we would expect that the HLA payment from the Club will be restructured to remove Owner’s expense (currently $120,000 per year) and the Owner Profit (up to 15% of the annual expenses). However, a portion of the HLA dues will be budgeted toward the Club Reserve Fund and Capital Funds, the size of which will be based on the priorities the Club Board sets.

Potential Risks The transaction and the ownership of the Club Amenities pose risks and uncertainties. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Information Overview and available in the community data room. The risks described below are not the only risks SMCA might face. Additional risks that we are unaware of, or we currently believe are not material, may become important factors that affect SMCA. TRANSACTIONAL RISKS  The estimated transaction costs might be different than estimated. If the transaction costs are higher than expected, SMCA might need to utilize a higher bank loan balance or allocate less to the Reserve and Capital Funds than what is currently estimated.  The collections from Special Assessments might be less or slower than estimated due to more SMCA members than expected who opt to utilize a payment plan or some members that cannot pay and go into collections. If this occurs, and we cannot offset these amounts by the bank loan, less monies might need to be allocated to the Reserve and Capital Funds at the onset to offset the cash needed for the purchase price and other closing costs. As the Special Assessments are collected later, these amounts can go toward the Reserve and Capital Funds as initially expected.  While SMCA has worked with the Seller on reasonable extensions to the exclusivity period to facilitate the SMCA’s due diligence, the Seller could decline to agree to further extensions and begin negotiations with interested third parties as a back-up buyer.  It is conceivable that one or more SMCA members may object to the acquisition of the Club Amenities and could attempt a legal challenge to prevent it going forward (notwithstanding that any acquisition ﬁrst requires approval by the SMCA membership). The HLA arguably prohibits such a lawsuit – but even an attempted legal challenge could adversely impact SMCA resources, funds, and functioning.  SMCA’s funding plan relies on a bank loan. The bank loan may not be available. While we have a term sheet, if a material adverse change occurs or market conditions change drastically, a bank might not provide ﬁnancing.

FINANCIAL RISKS  Operating income might be less than what is projected, caused by less than expected revenues or higher than expected operating expenses. Revenues are dependent on several different factors. Examples of why revenues might be less than expected include a lower number of proprietary and associate golf members than expected that pay dues, less visitors to the Sawyer, or less rentals managed via the Schaffer’s Mill Exclusive Accommodations Rental Business. Operating expenses might be higher than expected, which might cause operating income to be less than what is projected. While BlueStar has significant experience operating Golf & Resorts like Schaffer’s Mill, the budgeted operating expenses for 2024 might be higher than expected. The New SM Club might also decide to increase maintenance and service levels, which could cause operating expenses to be higher. If this occurs, it might cause the New SM Club to delay capital expenditures, to cut back on other operating expenses or require SMCA to request a further special assessment.  Capital expenditures might be more expensive than expected or required earlier than expected. The Board retained GGA, and its partner firm R.J. Burnside & Associates, to complete a club infrastructure review (capital reserve study). The reserve study estimates costs required to repair and replace key existing capital components and forecasts the timing of these expenditures over a 25-year period based on the estimated useful life and current conditioning of the components. A Club Reserve Fund will help to mitigate the need for future special assessments for repairs and replacements, but if the future costs of such capital items are significantly different than what is projected, it might require the need for a special assessment. In addition, the Board relied on a quote for the Maintenance Facility that the Seller obtained and on informal conversations with professionals with construction experience or golf industry experience to validate the quote. The Club Capital Fund and a Construction Bank Loan will help mitigate the need for a future special assessment; however, the cost of building a Maintenance Facility might be significantly more than what is expected, and it might require the need for a future special assessment.  If the Developer does not sell all the Developer-owned lots and becomes insolvent, SMCA’s ability to repay its bank loan may be impaired. The lots will have a lien for the Special Assessment and accrued interest, and SMCA should be able to collect upon sale of the assets, but there could be a timing delay.

Pros & Cons NO. 1 – MANAGEMENT RISK CON: The Club and Club management are good enough now, why change? To purchase the Club, it puts significantly more responsibility on the SMCA Board and its members who may or may not have the needed expertise to run the Club. Lack of Club management experience may also lead to financial risks. PRO: By purchasing the Club, SMCA will have more control over the short and long-term decisions that affect the operations of the Club. This control will allow the objectives of SMCA to be more closely aligned with the objectives of the Club. Also, SMCA will put in place a Club Board to develop a strategic plan for the Club and to oversee the professional Club Management Company to ensure members and their guests have the experience they expect from our community. Continued support from BlueStar (the existing Club Management Company) and Granite Peak (the existing HOA management firm) mitigate the need for the SMCA Board to “run the Club Amenities” directly. PRO: The HLA agreement and golf club membership agreements allow the Club Owner to change terms and amenities at will. As such, there is no guaranty that “good enough” will continue. By purchasing the Club, SMCA will have control over the HLA and membership structures to insure they are aligned in the best interests of SMCA and its members. NO. 2 – FINANCIAL RISK CON: We don’t know how dues might change and whether there will be large future assessments to fund operations or capital improvements. There is a lot of Club equipment that is maturing or past its useful life, and the Club needs a Maintenance Facility. The members will have to pay for these capital needs, which is not required today with the current Club Owner. PRO: By purchasing the Club, SMCA will have control over the financial decisions to support the expectations of SMCA members and to provide for the capital needs of the Club going forward. Dues may change, but it will be dependent on SMCA member input. GGA completed a capital reserve study which estimates the cost and timing of repairs and replacements (on a like-for-like basis) for existing assets. To support these capital expenditures and the construction of the Maintenance Facility, the Board has earmarked approximately $2.0 million from the Special Assessment to establish Club Reserve and Capital Funds. In addition, a portion of the HLA and member dues will be budgeted toward dedicated Club Reserve and Capital Funds to build up the balances and mitigate the need for surprise special assessments. The current ownership structure

that relies on the HLA yields financial risk to SMCA members. The HLA produces significant profit to the Club Owner and allows the Club Owner to increase Social dues up to 20% per year, which represent a significant portion of our SMCA quarterly dues. The degree of profit reinvestment is at the absolute discretion of the Club Owner. With SMCA as the owner, it reduces the risk of misaligned objectives and the allocation of resources to meet the ongoing needs of SMCA and Club members. NO. 3 – THIS TRANSACTION HAS NO BENEFIT TO HOMEOWNERS CON: We all are required, regardless of our membership in the golf club, to pay an equal Special Assessment. You will get nothing in return. You will still have to purchase a new golf membership and pay the annual dues. If you decide to sell your home, you can’t re-sell any Club membership as you have NO equity in this purchase. PRO: Per the CC&R’s, we all are required to pay an equal Special Assessment. The Transaction has benefits for all SMCA members: Enhance and/or protect SMCA members’ home values. Control the HLA, with which expenses associated represent ~67% of SMCA dues. Ability to direct the quality and scope of Club Amenities within the SMCA gates going forward. PRO: If you currently do not have a golf membership but are interested in one, SMCA members that paid their $38,500 Special Assessment will have their golf membership enrollment fees waived for a limited time. WHY SOMEONE MIGHT VOTE “YES” Reasons to vote “Yes” revolve around control and protection. Owning the Club Amenities provides SMCA with control over everything within the gates of the community. For better or worse, most SMCA members prefer to make their own choices. No longer would you need to rely upon the competence or intentions of a third-party group to influence your own experience. As a community, we would have the ability to influence the Club to provide the amenities and level of experience we would like. From a protection standpoint, a portion of the value across all SMCA homes is tied to the quality of the Club Amenities and overall experiences provided by them. Although the magnitude of this impact cannot be quantified, it is relevant. Beyond experience, it is well documented that communities which own and control their own high-quality amenities benefit from enhanced real estate values, whether golfers or not. It seems worthwhile to invest $38,500 to protect this. Below is a comparison of the average sales price for calendar year 2023 for selected communities in the Truckee area that have a golf course and other amenities within the community.

Information gathered from TSMLS, January 3, 2024, as quoted on website ElderGroupTahoeRealEstate.com

Finally, controlling the HLA to protect SMCA members is critical. Currently 67% of your quarterly SMCA dues is for HLA payment, which goes to the Club Owner to cover your “Social” dues. The Club Owner has the right to increase the SMCA’s Club Charges by up to 20% each year (HLA Section 6.3) and has no service-level requirements or promise to maintain the existing Club Amenities. In addition, the HLA transfers to any new Club Owner, and the current or new Club Owner has the right to amend the HLA at will. WHY SOMEONE MIGHT VOTE “NO” The reasons for a “No” vote mostly center around the cost/beneﬁt of the transaction and the risks of the unknowns pertaining to future dues and assessments. From a cost-of-transaction standpoint, there is skepticism in the valuation reported by the two appraisals, including an independent appraisal prepared for the SMCA Board in September 2022. You prefer to vote “No” because you believe that SMCA will have an opportunity to re-negotiate the price. You believe that third party ownership of the Club Amenities by either the current Club Owner or someone else makes more sense, and you are willing to accept the risks that the HLA brings to SMCA members.

WHY SOME “NOS” SHOULD STRONGLY CONSIDER “YES” We have heard from some who fundamentally support the reasons for a “Yes” vote but intend to vote “No,” because they believe a better deal could have been negotiated. Without qualitative judgment, for better or worse, the negotiated deal is what’s on the table. The position of the SMCA Board from the start of this process was to get to the best deal that the Seller would accept at this time. Then put it in front of the community to decide. No deal is ever perfect, and there will always be individual terms that some of us disagree with. Each of us will have to decide for ourselves as to whether this deal makes sense for us individually, and for the community as a whole in our own opinion. We would encourage these individuals to consider the alternative: allowing ownership of the Club Amenities to go to a third party and shift out of the SMCA’s control. Such a scenario could have a negative impact on SMCA and community home values. We understand and acknowledge some view this process as imperfect. But ultimately, the choice being made will determine who controls the future experience within the community. We would encourage everyone to keep this in mind. Consider a $38,500 special assessment for each resident that results in SMCA owning the Club Amenities, as compared to current Schaffer’s Mill golf club memberships that are selling for $30,000. And then consider how that compares to the potential home value that could be gained or lost. Others are concerned that SMCA will not maintain expenses at current levels. The Club has generated positive cash flow for the Club Owner. The cash flow projection summary assumes that the Club operates largely as it has, and therefore, should continue to generate cash flow. The Special Assessment that will be collected will capitalize the New SM Club with approximately $2 million in a Club Reserve Fund and a Club Capital Fund, to mitigate the need for future special assessments as it relates to planned capital expenditures. Finally, some want to own the Club Amenities, but only if there is “equity ownership,” because it allows for a direct observation of value and an ability to re-coup the Special Assessment by selling their equity ownership later. The Club Owner’s offer to sell the Club Amenities was to SMCA, not to a group of individuals. The Board of SMCA has a fiduciary duty to explore the purchase for SMCA, not for a group of individuals. The Club Amenities will be held in a separate LLC. If, later, SMCA decides it wants to sell all or a portion (i.e., the golf club portion) of the Club Amenities to a group of individuals that want to make it an “equity club”, SMCA could vote to do that.

Frequently Asked Questions HOW MUCH WILL I HAVE TO PAY? The approximate $15.5 million Transaction Cost will be shared across SMCA’s 403 homesites. This equates to a Special Assessment of approximately $38,500 per SMCA member. This amount will be consistent for all SMCA lot owners as the CC&Rs do not allow for varying assessments per lot owner. For those who wish to spread out payments over time, SMCA will offer a payment plan. To illustrate a 4-year payment plan at current interest rates, payments will be approximately $2840/quarterly (which includes an appropriate allocation of the HOA’s interest on its bank loan), plus administration fees. If the payment plan were to remain outstanding for the full 4-year term, the total payments would equal approximately $45,440 including the administration fees and interest. WHAT IF I OWN MULTIPLE LOTS? You will need to pay the Special Assessment per lot that you own. HOW WAS THE ACQUISITION PRICE NEGOTIATED? The Acquisition Advisory Committee (the “AC”) was formally established June 2022. A subset of the AC negotiated with the Club Owner to establish a “walkaway price.” This is the lowest price the Club Owner is willing to accept for the Club Amenities. As part of the Transaction, SMCA to assume all memberships, including the Master and Founding Members. The SMCA Board members have decided to require the Master Memberships to be terminated upon the completion of the Acquisition, increasing SMCA’s price by $956,000. Late in the negotiation, Schaffer’s Mill Vacation Rental Business was added to the list of assets being offered by the Club Owner to make the transaction more attractive to SMCA while still meeting the Club Owner’s “walkaway price.” The Schaffer’s Mill Vacation Rental Business generates approximately $2 million revenue with an EBITDA of approximately $250,000+. ISN’T IT RISKY TO USE DEBT TO FINANCE A GOLF CLUB? The Board estimates that SMCA will have up to a $5.0 million bank loan to cover the delayed payments from the Developer-owned lots who will pay their Special Assessment per lot upon sale of a lot, and the portion of the SMCA members who opt for a payment plan. SMCA will be obligated to pay interest expense on this loan, but the interest expenses will be offset by interest income accrued on the Seller-owned lots and the SMCA members payment plans. The cash ﬂows will not match perfectly, however, with the ﬂexibility to pre-pay the bank loan, SMCA can mitigate carry cost of the bank loan. Refer to the Financial Summary, Impact on SMCA: Financing the Deferred Assessments above for more information.

WILL MY DUES GO UP BECAUSE WE NOW OWN THE CLUB? We expect 2024 SMCA dues will remain as budgeted and already disclosed to SMCA members. While the 2024 HLA budget includes line items such as “Owner’s expense” and “Owner’s profit” that will no longer be required, we expect to maintain the level of 2024 HLA dues and utilize a portion of the HLA dues to further capitalize Club Reserve and Capital Funds. Some Club expenses might change because of SMCA’s ownership, however, the 2024 budget should be able to withstand a modest level of increases in expenditures. With regards to golf club dues for the 2024 golf season, given the Transaction could close no earlier than May, we expect the current Owner and Club management to set and communicate the 2024 golf club dues structure. The Club Board, with SMCA member input, will determine a strategic short- and long-range plan and create a financial plan, and dues would be set commensurate to the quality of the Club we as members desire. We cannot promise that SMCA dues will not increase even if SMCA didn’t own the Club, since a big portion of SMCA dues are attributed to the HLA which the Club Owner controls. Additionally, we also cannot promise that SMCA dues will not increase if SMCA owns the Club. This will be dependent on the long-term strategy of the Club and the desires of SMCA members. Under SMCA’s ownership, the Club Board would set and recommend the HLA annual budget and golf club dues structure for 2025 and beyond. WHAT WILL HAPPEN TO THE HLA IF SMCA ACQUIRES THE CLUB? The HLA is a good vehicle to ensure all SMCA members have social access to the Club Amenities and can pay the “Social Dues” through the quarterly SMCA fees. The HLA will be revised upon closing the acquisition to protect SMCA going forward. The HLA budget will be revised to create an allocation to Club Reserve and Capital Funds, which will provide a level of predictability for the community. WHAT IF I AM NOT A GOLFER? We believe all SMCA members benefit from the ability to own and control the Club. The owner of the Club not only can control the trajectory of the HLA, but also has absolute discretion and control of all Club Amenities. While we cannot explicitly quantify the appreciated value, it is well documented that communities which own and control their own high-quality amenities benefit from enhanced real estate values, whether golfers or not. Home values are tied to the quality of Club Amenities and the golf course within our gated community. The Club Amenities are comprised of numerous assets. The golf course is just one of them. Golf club revenue, including golf membership dues, contributes approximately 40% of the Club’s revenue. Initially, we expect golf club profits will need to fund high-priority capital improvements for the long-term health of the golf club. Longer term, we would expect the Golf Club to be self-sustaining, and the revenues from the golf club may subsidize other Club Amenities.

WHAT IF I AM NOT A GOLF MEMBER, BUT WANT TO BECOME ONE? For a short period of time, the New SM Club will waive enrollment fees for a proprietary golf membership for every member of the community who is not currently a golf member. If you agree to become a golf member during this initial offering period, you will be expected to pay the annual golf dues, but you will not have to pay the enrollment fee. In 2023, annual golf dues were approximately $6,000, and we expect that the Owner will communicate the 2024 golf dues prior to the Transaction closing. Presently, the enrollment fee for a golf membership is $30,000. If you do not wish to become a Proprietary golf member during the initial offering window, then you will not be asked to pay annual golf dues. After the initial offering window, we expect the golf club to continue the practice of enrollment fees for both SMCA members that do not already have a Proprietary golf membership in good standing, and non-SMCA members who wish to join the golf club. For example, if you sell your home in the future, the new owner can become a golf member with an enrollment fee. Or, if you decide to become a golf member after the initial offering period, you will have to pay the enrollment fee. I ALREADY PAID $30,000 GOLF ENROLLMENT FEE IN THE LAST COUPLE OF YEARS, WILL I STILL BE ASSESSED THE FULL $38,500? Yes. Unfortunately, these are two separate transactions. The $38,500 is the Special Assessment that relates to the acquisition of the Club and is completely unrelated to the golf enrollment fee. Relative to any remaining value of your enrollment fee, should the new Club decide to cancel, change, or recall any membership, the terms outlined within the Schaffer’s Mill Membership agreements will be honored. WHO WILL RUN THE CLUB? The Club will continue to be managed by a professional management company. Currently, the Club is managed by BlueStar Resort & Golf, with strategic direction from the Club Owner. If SMCA acquires the Club Amenities, we expect the Club Board will provide oversight and strategic direction to the retained professional management company. The SMCA Board will execute an agreement with BlueStar to continue managing the Club Amenities, just as they have been, through a transitional period, and longer if they meet the members expectations. AS A MOUNTAIN LODGE OWNER AND/OR A NON-GOLFER, WHY IS MY ASSESSMENT AMOUNT THE SAME? The Special Assessment process is governed by our community CC&Rs. The Board considered different assessment models, but upon review with legal counsel, SMCA CC&Rs only allow for an equal assessment across all lot owners.

HOW WILL THE MASTER MEMBERSHIPS BE HANDLED?? The SMCA Board will recall the Master Memberships at close. HOW WILL THE ASSOCIATE MEMBERSHIPS BE HANDLED? The Associate Members of the Club are, and will continue to be, an important part of the membership group within the Club. Currently, we do not envision changes to the golf club structure and will maintain Associate memberships. WHAT HAPPENS TO MY AMBASSADOR MEMBERSHIP? Your membership will convert either to a Proprietary Membership or an Associate Membership. If you are an SMCA member, you will become a Proprietary Member. If you are not an SMCA member, you will become an Associate member. WILL NON-SMCA MEMBERS CONTINUE TO RECEIVE A DISCOUNTED RATE IN THEIR MEMBERSHIP DUES? The Associate Members of the Club are, and will continue to be, an important part of the membership group within the Club. Their dues today represent approximately ~$1M of the Club revenue. We also recognize there’s an arguable inequity between SMCA members and non-SMCA members (i.e., SMCA golf club members pay ~$13,000 per year between the HLA fee and golf dues vs. non-SMCA members pay ~$8,000) for basically the same level of Club access. The new Club Board will review comparative dues for next year and determine if, how and when to balance these. WHAT HAPPENS WHEN I SELL MY HOME? SMCA members are members of the non-golf Club Amenities via the HLA. A large portion of your quarterly SMCA dues pay the HLA dues to support the Club operations. If you sell your home, you will no longer pay SMCA dues and you will not have access to the Club as a Social Member. If you have a Proprietary Membership with the Golf Club, and wish to remain a member, your membership will convert to an Associate Membership. DOES THE CLUB MAKE MONEY RIGHT NOW? Per the financials provided by the Club Owner, which are available in the data room, the Club Owner generated EBITDA of approximately $1.1M in 2023. While SMCA members receive an HLA budget every year which shows significant operating loss, the HLA budget excludes certain revenues and profits that the Club Owner generates from the Club Amenities, and if these revenues continue, will accrue to the Club owned by SMCA. These revenues and profits include revenues from the golf memberships, event space rental, outside golf tournaments, and profits from the Vacation Rental Business. There is a risk that revenues and profits from these additional sources decline, and therefore, the profitability of the Club could degrade under SMCA ownership.

HAS AN APPRAISAL BEEN COMPLETED? Yes, the Board hired Newmark Valuation and Advisory to perform an appraisal on the Club Amenities. The appraised value was $12,020,000 as of September 2022. Newmark Valuation and Advisory did not appraise the Schaffer’s Mill Vacation Rental Business, and as such, any value associated with Schaffer’s Mill Vacation Rental Business would be additive to the appraised amount. WHAT WILL BE THE OWNERSHIP STRUCTURE OF THE CLUB AMENITIES? The assets of the Club will be owned by an LLC that is a 100% subsidiary of SMCA. The Vacation Rental Business will be setup as an LLC under the Club LLC. There will be a separate Board created to run the Club LLC. The Board has consulted with SMCA’s tax accountant on the ownership structure. For tax purposes, the Club will be considered a for-profit entity. While many people think of membership clubs as tax-exempt entities, there are significant and strict criteria to become a section 501c(7) tax-exempt social club. As an aside, the way the Developer set up SMCA, SMCA does not qualify to file a homeowner association tax form (form 1120H). SMCA files as a regular C-corporation (and uses form 1120). While the Club will have some profits that could be taxable, the Club will be able to utilize depreciation and amortization expense to mitigate tax expense. WHY CAN’T WE HAVE AN EQUITY -OWNED CLUB? The Seller offered the Club Amenities for sale to SMCA, the community association, and did not offer the Club Amenities to a group of owners to purchase. The Board, as a representative of SMCA, explored different ownership structures, and alternatives to separate the golf club from the rest of the Club Amenities to insulate SMCA from potential future golf club expenses. To affect a separation it would require assessing SMCA members and then immediately spinning out the Club, or a portion of it, to a set of owners separate from SMCA. After multiple meetings with legal and tax advisors, the Board concluded that this was not a viable option to offer. Rather, the best option to put forth to SMCA was for SMCA to acquire the Club Amenities, own the Club Amenities in an LLC and continue to operate as it has in the past. While there are positives and negatives to this approach, this approach would create the least turbulence in the ownership transition and provides SMCA control over the Club Amenities. In the future, SMCA could decide to change the ownership structure, but this would require a SMCA membership vote. WAS A RESERVE STUDY DONE & WHAT ARE THE EXPECTATIONS FOR FUTURE CAPITAL REQUIREMENTS? Yes. GGA provided SMCA with a capital reserve study prepared by their partner R.J. Burnside & Associates. The reserve study provides a guide for what repairs and replacements should be expected and their cost. As with any capital reserve study, these are estimates and there is risk that the actual capital expenditures are higher than what was projected. GGA and its partner, the USGA Green

Section, cited the lack of a maintenance facility leading to excess wear and tear on the golf maintenance equipment. Both a maintenance facility and upgraded golf maintenance equipment will be needed in the future to support improved conditioning and long-term sustainability. See the section under Financial Summary, titled “Club Cash Flow and Funding Capital Expenditures” for a table that summarizes projected capital expenditures. HOW WILL CAPITAL IMPROVEMENTS BE FUNDED? A Club Reserve Fund and a Club Capital Fund will be capitalized as part of the Transaction Cost with estimated $2.0 million. The repair and replacement of existing Amenities (and related equipment) will be covered by a Club Reserve Fund. The maintenance facility will be covered by a construction loan and Club Capital Fund. Going forward, a portion of the HLA and member dues will be allocated to maintain the Club Reserve and Capital Fund balances, as determined by the needs of the Club. Positive cash flow from operations and excess cash could also be used to fund capital requirements. Club project selection and priorities will be a Club Board decision based on input from SMCA members. To the extent the Club has capital needs beyond the savings in the Reserve Fund or the Capital Fund, the Club Board might decide to assess golf club members through incremental annual dues, or they might recommend to the SMCA Board a special assessment from SMCA members. As per SMCA’s CC&Rs, special assessments would require a majority vote from a quorum of SMCA members. See the section under Financial Summary, titled “Club Cash Flow and Funding Capital Expenditures” for more information. IF SMCA ACQUIRES THE CLUB AMENITIES, IS THERE A RISK THAT THERE WILL BE ADDITIONAL SPECIAL ASSESSMENTS IN THE FUTURE? Yes, this is a risk. If SMCA votes to acquire the Club Amenities, the amenities will become part of SMCA’s common property and SMCA will have financial responsibility for any unforeseen financial requirements of the club. While we fully expect the Club Board, Club Management Company, and club employees to operate within the bounds of the agreed upon annual Club budget and mitigate this risk, there is always the risk that something unforeseen comes up that could indeed require the need for a special assessment of the Community. If a special assessment recommendation comes to the SMCA Board from the Club Board, as per SMCA’s CC&Rs, special assessments would require a majority vote from a quorum of SMCA members. WHY ARE WE PAYING FOR THE CLUB WHEN THE HLA DEFINES A “TRANSFER RIGHT”, WHERE THERE SHOULD BE NO PURCHASE PRICE OBLIGATION? While the HLA states that the Owner shall have the right to transfer the Club Property to SMCA, so long as the transfer is free from an obligation to pay a purchase price, it also states that there is no obligation for the Owner to transfer the Club Property to SMCA. The HLA also states the Owner has the right to sell the Club. The “Transfer Right” is a mechanism for the Owner to transfer

the Club to SMCA without a ballot vote from SMCA members. The Transfer Right, for example, could be utilized if the Owner needed rid itself of liabilities or operating losses associated with Club. Since the Club generates profit for the Owner, the Owner has communicated he will not utilize this option; rather, the Owner offered the Club for sale. HOW WILL INSURANCE FOR THE CLUB BE HANDLED? Insurance coverage due to fire risk has been a significant challenge in northern California. Historically, the Club’s insurance has covered under BlueStar’s global policy. In 2024, the Club Owner was required to take out a separate property and general liability policy. If SMCA acquires the Club, SMCA will also have to get its own property and general liability policy as well. The Board received estimates and are awaiting formal quotes. WHAT DON’T WE KNOW? There will always be risks and no one can foresee or predict every possible outcome or factor. The Board has researched the facts and explored the potential risks and benefits as much as possible. The Transaction allows SMCA to control the future of community and protect property values. If SMCA members do not agree to the purchase, the current Owner could maintain ownership of the Club, or sell to a different third-party. In such case, SMCA members will have limited, if any control, of the community experience. If SMCA members agree to the Transaction, there will always be risks and unforeseen financial issues with ownership of the Club, and SMCA will be ultimately responsible any issues that arise.