Long Caye Belize - Property Maintenance Summary

General Maintenance Organization Update:

Common Property Maintenance work is an important and a constant activity on Long

Caye. Property maintenance services on Long Caye are comprised of those functions
necessary for the effective upkeep of the common areas and assets on Long Caye. In
delivering these maintenance services, we strive to ensure compliance with Belize Law
and the Long Caye Belize Eco-Guidelines. We want a safe and healthy workplace for our
employees, contractors and other stakeholders, while trying to preserve and extend the
value and life of the property and assets we maintain.

All maintenance work performed on the Caye can be broken into two categories:
planned and unplanned. Planned maintenance is proactive in nature and performed in
accordance with an established program. Its intent is to respond to normally occurring
events and reduce the probability of failure or degradation in performance of tools and
other assets. Unplanned maintenance is generally reactive in nature and performed in
response to conditions precedent, and/or the failure or wear of an asset due to weather
conditions or other unexpected factors.

The Eco-Guidelines carry the core of sustainability for all our activity on the Caye. The
performance of our maintenance services is no exception to these guiding principles.
Appropriate property maintenance requires: 1) access to physical property for the
purposes of carrying out the work, 2) the necessary equipment, labor (as well as the
transportation, storage and maintenance of that equipment and labor), 3) office labor
and space for the general administrative activity related to Maintenance activity, and 4)
adequate health and safety assurance in the delivery of the Maintenance Services.

While the commercial and residential building activity has been slow on Long Caye,
maintenance services have continued for everyone. We did not bill for services in 2008
to follow up on our promise to establish the POA framework and deliver financial
reporting first. This report marks that fulfillment, and the billing for all past due and
current maintenance fees up to and including 2009 will shortly follow to all parcel
owners.

Long Caye remains an early stage development project: in fact, while about 60% of the
sold parcels have access, fewer than 2% of the available parcels have been built upon
by their owners. Because of this low participation, the owner/developer Long Caye
Belize (PIL) continues to provide all of the ongoing services of the maintenance
organization. All owners benefit from our constant presence and activity on Long Caye.
With the arrival of greater development maturity, saturation of ownership, built homes
and commercial establishments, the maintenance function will be handed off to a
formally established Property Owners Association. Until then PIL can deliver
maintenance services in the most efficient and cost effective manner.

PIL already has the logistics, equipment, tools, vehicles, offices and other facilities and
materials used on a daily basis to perform the maintenance function. To fully segregate
the maintenance services from all of PIL’s other ongoing activities on Long Caye and in
Belize would be inefficient, extraordinarily cost-prohibitive and unfair to the current
parcel owners. The combined arrangement currently allows for far more economical
delivery of the services, as our activities on Long Caye and on the mainland are
complimentary. Typically, a 75-85% build-out of the parcels (a traditional hurdle for
developments) is the time a developer would expect to turn over its operation of the
maintenance organization to the POA. We expect that the Long Caye Community
Association will likely operate independently at an earlier place in the growth cycle of
this development than an association would in a more traditional one. It is clear we are
not a traditional development. Long Caye Belize/PIL is likely to continue these services
at least until the end of 2009, and likely further.

Meanwhile, the Property Owners Association entity has been established and is being
prepared for this eventual transition away from the developer. For now, the association
will have the bulk of its services provided by the developer; eventually it will be

1
 Long Caye Belize - Property Maintenance Summary

independent. We have updated our financial reporting and formally established

accounting, deposit and payment capability for the POA. Historical financial statements
for 2006 – 2008 have been prepared by the Accountancy at Mulherin and Associates of
Braintree, MA (www.ecratchit.com) and are attached to this report. In 2009 reporting
will be more regular and sophisticated as we complete the setup with Mulherin and
Associates.

PIL attended a recent meeting with some parcel owners in CA, and the idea of having
parcel owner participate in maintenance committee activities was discussed. We think
it’s a good idea, so we have invited the parcel owners who attended that meeting to
work out a process to appoint a representative to participate in the maintenance
committee. We look forward to having a new, involved voice on the team.

Island Maintenance Update:

As always, Long Caye is in fantastic, pristine condition. It is the extraordinary remote,

unique and beautiful island we all know. Our low/no impact operations philosophy
works. In 2008 we had some flooding from rain (not nearly as bad as conditions got in
the mainland of Belize), but did not have any significant hurricane or storm damage. It
is very comforting and encouraging to know that no fundamental damage has happened
either to paths, boardwalk, our buildings or other private buildings on the caye that have
been built under our supervision. Our design philosophy works, too. We hope this is
encouragement to the 60+% of owners who have immediate buildable access to their
parcels.

We have made multiple improvements to the Welcome Center. There is a new satellite
dish and wireless internet for the general area. We have installed a solar panel, new
batteries and upgraded the inverter and electrical in the building, too. The bathrooms
have been improved. We have a TV/DVD system and growing and movie library, for the
evenings. (Feel free to donate and tapes or DVD’s on your next visit!) We also
encourage people to leave books behind as we have a good beginning of an amateur
naturalist’s reference library as well as a burgeoning free library of fiction, periodicals
and local press. Outdoor lighting, fans and decorative landscaping have also been
installed around the Welcome Center, public beach and Pier area.

Natural pest management has always been a priority related to participation and access.
As they grow, so will our management plan. In anticipation of growth we have sought
guidance from a world-class entomologist to help develop best practice pest
management plan that will honor and maintain our environmental standards. More
details will be available on this soon, as we will be interested in comment.

For additional environmental pest management, a GIS mapping specialist, (and parcel
owner) Drew Stephens, has started drainage pattern studies around the Caye. Through
strategic, sustainable management of surface water flow we can reduce standing water
breeding environments for mosquitoes and other pests. In turn, a reduced population
means eliminating the need for extra spraying. More on this as this project as it
develops as well.

We are fortunate to have very loyal, reliable and experienced Maintenance staff on the
Caye. Francisco Pacheco, Maintenance Supervisor on the Caye, has been working for us
for over four years. Francisco knows the Caye, and his responsibilities up and down.
His familiarity with the Coast Guard who visit the Caye along with the friendships and
trust he has with the local fisherman are invaluable. Elias is his “mate” and has been on
the Caye for more than two years. Both have good computer skills and send frequent
emails to management, including pictures and updates of activities.

2
 Long Caye Belize - Property Maintenance Summary

Summary of Maintenance Responsibilities and Activities

The following list summarizes maintenance priorities and specific work domains
addressed on Long Caye.

Health and Safety in the Workplace: Maintaining a safe and healthy work environment
is as important as sustaining the ecological environment on the Caye. While the Eco-
Guidelines by nature eliminate many of the innate risks and complexities in traditional
development, we are always active in our consideration of issues relevant to the
maintenance of health and safety standards. We regularly assess the condition of our
maintenance assets (tools, boats, vehicles, processes) with an eye toward ongoing
improvement of safety, cost-effectiveness and environmental sustainability. Like most
work, our duties on Long Caye involve certain risks, including management of additional
hazards inherent on a remote island. We now have helicopter evacuation capability on
the Caye in case of medical emergency. It’s comforting to know we could transport a
worker, visitor or homeowner to a hospital in less time than it would take from many
other spots in Belize.

Administrative Maintenance Activity: All maintenance work is supported by

administrative activity both on the Caye and in the mainland office. This includes
general logistics, payroll, legal, accounting and professional services, transportation
scheduling, weather issues, communications, etc…

Security: Periodic check of beaches, boats, vehicles, work areas, buildings, perimeter
and docks for unusual activity. Staff on the Caye try to keep a knowledge of people
currently on the island as well as their general activities.

Building Maintenance: General upkeep of Welcome Center and other public structures
on the Caye. Cleaning, painting, fixtures, toilets, wood treatment, windows, gutters,
roofing, planking, vegetation, termite and weatherproofing treatment, leaks, and
fasteners.

Pier Maintenance: Wood weatherization treatment, plank replacement, nail

replacement, painting, termite treatment, general cleaning and upkeep.

Road Maintenance: Ensure access for dry roads, root clearing, debris clearing, trimming
and grading as needed.

Boardwalk Maintenance: Wood weatherization treatment, post and plank replacement,

nail replacement, termite treatment, general cleaning and upkeep.

Beach Maintenance: Pickup of non-biodegradable material and all trash on beaches,

trash collection and removal to Belize City.

Pest Management: Monitoring weather and water levels, spraying and spot mediation,
distributing deterrents, reporting, expert visits, consulting, and termite nest removal.
Per our notification above – we are in the process of building our pest management
regime with outside expertise.

Transportation and Operations Equipment Maintenance: Auto, boat, tractor, ATV and
tool purchases, upkeep, cleaning, repair and replacement.

Garbage Pickup, Consolidation, Sorting and Removal: Collection of garbage on the

Caye, sorting, and monitored transportation back to Belize for responsible disposal.

Maintenance Reporting: Information form workers to Management, updates on

conditions, weather, work progress, and general activity.

Equipment Purchasing and Maintenance: The Maintenance Organization must

constantly repair and maintain the equipment it uses. From power and hand tools to

3
 Long Caye Belize - Property Maintenance Summary

the ATV, ladders and consumables, we must keep a minimal parts inventory and be
prepared for typical failure and end of life issues with all the equipment we use.

Delinquency and Enforcement:

Average payment delinquency rates for parcel owners from 2006, 2007 and 2008 are
over 40%. This is not a sustainable situation. All parcel owners, according to the Eco-
Guidelines, must make annual payment of their maintenance dues. We will begin
aggressively collecting Maintenance Fees immediately. Efforts will be made to help
people catch up with their bills through online and credit card payments and perhaps
quarterly billing. We will use all means available to us to enforce payment from those
who are not paying. We are confident that those of you who are paying would like
those who are not to begin paying immediately. Given the significant deficit the
developer (PIL) is currently covering in the expenses, we feel it is important to begin
building financial sustainability into the maintenance organization for the future.

A Financial Summary for 2006, 2007 and 2008 prepared by Mulherin and Associates
follows this page.

4
 Long Caye Belize - Property Maintenance Summary

Maintenance Expense Summary

The following chart shows Maintenance expenses for 2006, 2007 and 2008 in Belize (BZ)
Dollars. (prepared by Mulherin and Associates, Braintree, MA)

Jan - Dec 06 Jan - Dec 07 Jan - Dec 08 TOTAL

Billed Maintenance
4021 - Maintenance Due $ 154,666.64 $ 158,316.68 $ 162,250.00 $ 475,233.32
Incom e
4020 · Maintenance $ 101,750.00 $ 106,765.99 $ 65,791.66 $ 274,307.65
Total Incom e $ 101,750.00 $ 106,765.99 $ 65,791.66 $ 274,307.65
Expense
5010 · Payroll Expenses
5015 · Salaries
5016 · Adm inistrative Salaries $ 20,505.80 $ 12,114.35 $ 14,701.09 $ 47,321.24
5017 · Other Salaries $ 65,194.59 $ 57,849.15 $ 66,776.30 $ 189,820.04
Total 5015 · Salaries $ 85,700.39 $ 69,963.50 $ 81,477.39 $ 237,141.28
5020 · Taxes & Burdens
5021 · Social Security Expense $ 2,024.40 $ 2,246.88 $ 2,951.16 $ 7,222.44
5020 · Taxes & Burdens - Other $ 10,071.00 $ 9,969.28 $ 8,751.08 $ 28,791.36
Total 5020 · Taxes & Burdens $ 12,095.40 $ 12,216.16 $ 11,702.24 $ 36,013.80
Total 5010 · Payroll Expenses $ 97,795.79 $ 82,179.66 $ 93,179.63 $ 273,155.08
6010 · Operating Expenses
6015 · Repairs & Maintenance
6016 · Motor Vehicle $ 484.37 $ 1,876.95 $ 1,863.25 $ 4,224.57
6015 · Repairs & Maintenance - Other $ 265.60 $ 300.00 $ 1,587.44 $ 2,153.04
Total 6015 · Repairs & Maintenance $ 749.97 $ 2,176.95 $ 3,450.69 $ 6,377.61
6020 · Insurance $ 454.43 $ 137.80 $ 129.19 $ 721.42
6025 · Grounds Maintenance $ 113.00 $ - $ 405.00 $ 518.00
6030 · Food Supplies $ 10,894.89 $ 13,274.49 $ 14,311.90 $ 38,481.28
6035 · Operating Supplies $ 20,477.72 $ 12,466.68 $ 15,681.32 $ 48,625.72
6040 · Building Maintenance Supplies $ 2,248.58 $ 2,271.12 $ 2,279.56 $ 6,799.26
Total 6010 · Operating Expenses $ 34,938.59 $ 30,327.04 $ 36,257.66 $ 101,523.29
6060 · Professional Fees
6062 · Consulting $ 24,828.25 $ 22,595.04 $ 24,494.75 $ 71,918.04
Total 6060 · Professional Fees $ 24,828.25 $ 22,595.04 $ 24,494.75 $ 71,918.04
6070 · Rent & Utilities
6075 · Utilities
6076 · Electricity $ 1,566.54 $ 1,337.63 $ 575.13 $ 3,479.30
6077 · Internet $ 687.78 $ 693.00 $ 693.00 $ 2,073.78
6078 · Telephone $ 890.83 $ 896.55 $ 1,764.78 $ 3,552.16
6079 · Water $ 210.82 $ 121.25 $ 282.60 $ 614.67
6075 · Utilities - Other $ 1,995.37 $ 1,295.02 $ - $ 3,290.39
Total 6075 · Utilities $ 5,351.34 $ 4,343.45 $ 3,315.51 $ 13,010.30
6085 · Rent $ 2,700.00 $ 2,700.00 $ 2,700.00 $ 8,100.00
Total 6070 · Rent & Utilities $ 8,051.34 $ 7,043.45 $ 6,015.51 $ 21,110.30
6090 · Office Expense
6092 · Bank Service Charges $ 1,165.54 $ 1,052.88 $ 1,873.43 $ 4,091.85
6093 · General $ 248.32 $ - $ 825.00 $ 1,073.32
6094 · Postage & Courier $ 197.68 $ 673.16 $ 419.67 $ 1,290.51
6095 · Freight $ - $ - $ 1,694.43 $ 1,694.43
Total 6090 · Office Expense $ 1,611.54 $ 1,726.04 $ 4,812.53 $ 8,150.11
7000 · Travel Expense
7001 · Travel $ 156.25 $ - $ - $ 156.25
7002 · Transportation $ 15,528.75 $ 31,099.95 $ 23,625.57 $ 70,254.27
7003 · Fuel, Oil, Lube $ 1,036.36 $ 1,720.82 $ 3,053.87 $ 5,811.05
Total 7000 · Travel Expense $ 16,721.36 $ 32,820.77 $ 26,679.44 $ 76,221.57
Total Expense $ 183,946.87 $ 176,692.00 $ 191,439.52 $ 552,078.39
Net Incom e $ (82,196.87) $ (69,926.01) $ (125,647.86) $ (277,770.74)
Outstanding Maint. Fees Uncollected: $ 52,916.64 $ 51,550.69 $ 96,458.34 $ 200,925.67
Adjusted Net Incom e After Collection: $ (29,280.23) $ (18,375.32) $ (29,189.52) $ (76,845.07)

5
 Long Caye Belize - Property Maintenance Summary

Summary of Maintenance Expense Categories with Descriptions:

Expense related to Maintenance Activity Description of Expense

5010 · Payroll Expenses
5015 · Salaries
5016 · Adm inistrative Salaries Portion of Belize Operations Manager (Rob Trujillo) Salary
5017 · Other Salaries Portion of Island Manager and Crew of 2-3, plus occaisional extra labor
Total 5015 · Salaries
5020 · Taxes & Burdens
5021 · Social Security Expense Legally required by the Gov't of Belize - Indexed to Salaries Expense
5020 · Taxes & Burdens - Other Legally required by the Gov't of Belize - Indexed to Salaries Expense
Total 5020 · Taxes & Burdens
Total 5010 · Payroll Expenses
6010 · Operating Expenses
6015 · Repairs & Maintenance
6016 · Motor Vehicle Portion of Repair cost for Auto and ATV and other Vehicle expenses
6015 · Repairs & Maint. - Other Portion of Repars for Tools, Appliances, other equipment
Total 6015 · Repairs & Maintenance
6020 · Insurance Portion of Auto Insurance
6025 · Grounds Maintenance Portion of Seeds, Plants and Landscaping
6030 · Food Supplies Portion of Food Cost for Crew on Caye - does not include transportation
Portion of General Consumables: Tools, Wood, Material Supplies, Nails, Pest
6035 · Operating Supplies Treatment, Various, etc..
6040 · Building Maintenance Supplies Portion of Bulding Maintenance Materials: Sealant, Stain, Paint, Thatching, Roofing
Total 6010 · Operating Expenses
6060 · Professional Fees
6062 · Consulting Portion of Legal, Back Office, Accounting and Related Consulting Fees
Total 6060 · Professional Fees
6070 · Rent & Utilities Each category is the portion the cost paid attributed to Maintenance Activity
6075 · Utilities
6076 · Electricity see 6070
6077 · Internet see 6070
6078 · Telephone see 6070
6079 · Water see 6070
6075 · Utilities - Other see 6070
Total 6075 · Utilities
6085 · Rent see 6070
Total 6070 · Rent & Utilities
6090 · Office Expense
6092 · Bank Service Charges Portion attributed to Maintenance Activity
6093 · General Portion of Office Supplies, Equipment and Consumables, etc…
6094 · Postage & Courier Portion attributed to Maintenance Activity
6095 · Freight Portion attributed to Maintenance Activity - international shipping, customs duties, etc..
Total 6090 · Office Expense
7000 · Travel Expense
7001 · Travel Portion attributed to Maintenance Activity
7002 · Transportation Portion attributed to Maintenance Activity - moving crew and supplies
7003 · Fuel, Oil, Lube Portion of non-transportation related fuel for Maintenance (on land and on Caye)
Total 7000 · Travel Expense