Banyan Owners

THIS WEBSITE WAS REGISTERED AND DEVELOPED IN 2002 BY CHARLES TURNBAUGH [ RESUME] (NOW A MEMBER OF THE BOARD OF DIRECTORS OF THE BANYAN RESORT) AND FAMILY TO PROVIDE INFORMATION TO OWNERS OF THE BANYAN RESORT TIMESHARE IN KEY WEST.

THE WEBSITE IS MAINTAINED AT NO COST TO THE BANYAN RESORT AND IS NOT AN OFFICIAL BANYAN RESORT WEBSITE

CONTACT CHARLES TURNBAUGH AT: cpturnbaugh@comcast.net or

410 342 1988

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NEWS FROM THE BANYAN

November 17 , 2007

ELECTION RESULTS

Forty five owners sent in Proxies but chose to not circle the names of any candidates. Steve Linder, using his powers as Proxy, decided to cast these unmarked ballots. He cast 45 votes for Char Abercrombie. In spite of Linder's 45 votes, Abercrombie got fewer votes than any other candidate and is no longer on the Board of Directors. The vote count was:

Bruce Lacy - 585

Bruce Willis - 520

Joe Cimini - 434

Dwight Anderson - 424

Charlotte Abercrombie - 402

The new Directors are Bruce Lacy, Bruce Willis and Joe Cimini. The full Board of Directors [Cimini, Kuntz, Lacey, Mortgu-Furrer, Myers, Turnbaugh and Willis] must now hold an "Organization Meeting" within 10 days in order to elect Officers and conduct "organization" business.

It appears that the message of the owners was that they want the contention and conflict on the Board of Directors to end. Both incumbent Directors lost their positions. John Kuntz, as the acting President because he is the current Vice President (until the election of officers at the organization meeting) must now call the Organization meeting. Another update to this Website will be posted after the Organization meeting.

October 25 , 2007

ELECTION

I have spent thousands of hours working to improve governance at the Banyan since 2002. I have not asked for or received a cent of compensation. I am not running for election this year and am not seeking to be and will not be President next year. There are other members of the Board with the talent, experience and commitment to be President. I support them and will work with them to make reforms and continue the progress being made at The Banyan.

Incumbent Director Dwight Anderson [ELECTION LETTER] and candidate Joe Cimini [ELECTION LETTER] are both running for election and I strongly encourage you to vote for both of them. Dwight was an active member of the Board that removed the management company and has worked diligently for three years (two as Vice President) to improve the Banyan. He has the character and integrity to challenge the majority when appropriate. He is known for his ability to work collaboratively for the benefit of the Banyan. Joe Cimini is an experienced executive with strong decision making skills and the ability to work as part of a problem solving team. His broad management experience will be beneficial to the Banyan Board.

I believe some things have occurred at the Banyan that were not in the best interest of the Banyan Resort or Banyan Owners. The primary example is the payment of over $102,000 to Director Charlotte Abercrombie over a 21 month period for bookkeeping and accounting support. Huge payments to Directors should not be allowed. Both Dwight Anderson and Joe Cimini agree that the Banyan By-laws should be changed to prevent such payments from happening again. This expense was in addition to the cost of a full time bookkeeper and the extensive time devoted by the General Manager to bookkeeping matters.

Charlotte Abercrombie is now running for reelection. Please do not vote for her.

You are being told by the current treasurer, Jerry Myers, that the Banyan now has a functioning bookkeeping system. He implies the Banyan's bookkeeping problems have been solved by Director Abercrombie. I do not think that is true. I understand the bookkeeping system now in place involves maintaining data on two separate software systems and on TWENTY excel spreadsheets. I understand all of the twenty spreadsheets are maintained manually. This bookkeeping system is NOT the integrated, simplified system needed for a small resort with a small staff. I predict that after paying Director Abercrombie over $102,000, more money will be required to now create a bookkeeping system that is more suitable for our small resort and which can be maintained by existing staff. Both Anderson and Cimini will support obtaining a more integrated, simplified appropriate accounting system that can be operated by staff without constant outside assistance.

We also do not understand why independent contractor Abercrombie was involved with the preparation of the budget. The Treasurer, General Manager and Bookkeeper should have been able to create the budget for our small resort.

Once again, please elect Dwight Anderson and Joe Cimini to the Board of Directors of the Banyan. Please do not elect Charlotte Abercrombie. I am not well acquainted with candidates Bruce Lacy and Bruce Willis and cannot make a recommendation concerning the third position for Director.

If you do not receive proxy material or desire to change your vote, please print a copy of the attached [PROXY], insert your name, address, unit number and week, vote as you desire and mail or fax to Paul Mills, CPA who has been retained to receive and count the ballots.

ALSO, PLEASE REVIEW THE UPDATE FOR SEPTEMBER 30TH BELOW

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September 30, 2007

Board of Directors Terminates Abercrombie "Engagement" effective November 1, 2007

Local Accounting firm of Bishop & Rosasco retained to oversee bookkeeping at the Banyan

At the Board Meeting of August 22, 2007, Charles Turnbaugh moved to terminate the "engagement" under which Director Abercrombie has been providing accounting and bookkeeping services and accept the proposal of the accounting firm of Bishop, Rosasco & Co. to support the bookkeeping efforts at the Banyan. Director Abercrombie has been paid in excess of $100,000 under this "engagement". Vice President John Kuntz seconded the motion. President Steve Linder, John Kuntz, Dwight Anderson and Charles Turnbaugh spoke in favor of terminating the engagement of Director Abercrombie. Director Abercrombie objected strenuously, claiming she needed more time to train the current bookkeeper, Steve Dosch, how to do monthly financial reports. Mr. Dosch has a degree in accounting and has been on the job since March, 2007. At the request of Steve Linder, the motion was amended to terminate the engagement effective Nov. 1, 2007. Directors Jerry Myers and Carolyn Mortgu-Furrer took no part in the discussion. The motion passed.

The Bishop, Rosasco & Co. proposal is to "provide professional accounting and consulting services as you may request from time to time" at their standard hourly rates. They do similar work for many businesses in the Florida Keys and estimated the cost of providing such services at $500 per month and "can not forsee circumstances under which the cost of providing these services would be more than $12,000 per year."

Editorial Comment

Maintaining the accounting records at the Banyan under the former management company had never been a problem. Former bookkeeper Debbie Von Scoyoc and Martin Bettincourt, when he was the Office Manager, used the same Quickbooks accounting and RDP Reservation systems as now used to maintain the books and produce the monthly financials. The financial records of the Banyan Resort were routinely and promptly audited and approved by a major accounting firm under the former management company.

With the removal of the management company, the rental program was conducted by Banyan Resort Realty, Inc. (a subsidiary of the BTOA-the owners association) instead of the management company. Banyan Resort Realty received the rental commissions and paid for the expenses of the rental program. This change had to be reflected in the maintenance of the accounting records.

Director Abercrombie was Treasurer of the Banyan for almost all of 2005 and responsible for assuring the bookkeeping system was changed to reflect operation of the Banyan Resort without a management company. She set up electronic connections to track bookkeeping activity from her home in rural Tennessee at the Banyan in mid 2005 and spent hours on the telephone with the bookkeeper. She asked for no assistance. While she was Treasurer, the maintenance of the accounting records of the Banyan failed and could not be audited. Director Abercrombie resigned as Treasurer and offered to assist the Banyan out of this crisis only pursuant to an "engagement" under which she has been paid $50 per hour since January 19, 2006. As President, I signed the engagement, believing it would be short term and there was no other practical alternative. By Nov. 1, 2007 when her "engagement" will end, I estimate that her total fees may be in the neighborhood of $125,000. This amount is more than three times what the Banyan spent for Housekeeping and Maintenance supplies from January through July, 2007. This amount is more than 20% of the salary budget for all of the Banyan Resort for 2007. This amount is about half of what the Banyan receives in net Rental Commissions in a year. In my judgment, it is unconscionable that the Board of Directors has allowed such a large amount to be spent on bookkeeping, much less paid to the member of the Board of Directors and former Treasurer who failed to assure the bookkeeping system was set up and operated properly to begin with.

Director Abercrombie's term as Director is up in November 2007. The Owners will have the opportunity to elect someone different to serve their interests. In my judgment, incumbent Dwight Anderson and candidate Joe Cimini, an experienced business executive, recognize the need for reform and that the Banyan Resort would perform better without the presence of Char Abercrombie on the Board.

Administrative Charges by the Florida Department of Business and Professional Regulation Against Vance Kier have been dismissed.

The DBPR, in announcing the dismissal of the administrative charges against Vance Kier, confirmed that the decision does not affect the rights and remedies available in the civil courts of Florida to the Banyan Resort. The DPBR is working on many egregious cases with a limited staff and resources.

Litigation with Former Management Company

Possibly as a way to mitigate the administrative complaint, a breach of contract suit was filed against the Banyan Tree of Key West Condominium and Owners Association and served on the Association in November 2006. Although the Banyan would have preferred to avoid litigation, now that it has been initiated, the suit will be vigorously defended and our counterclaims pursued. By initiating legal action, for whatever purpose, Vance Kier has provided the forum for the BTOA to recover damages not only against the apparently now dormant management company, but against him personally. An amended counterclaim and Third Party Complaint against Vance Kier personally have now been filed on behalf of the Banyan Resort (Link to Portion of Pleading). The Banyan Counterclaim and Third Party Complaint against Vance Kier contain seven counts. Count One is for Breach of Contract against the management company. Count two claims the Management Company and Vance Kier breached the Fiduciary duty they owed the Banyan Resort. Count three is a count of Conversion (misappropriation) of the domain name www.banyanresort.com against BRM and Kier. Count four is for infringement of the Banyan trademark (The Banyan with artist rendition of Banyan Tree below) against both BRM and Kier. Count five is for unfair competition by BRM and Kier in regard to the Banyan trademark and domaine name. The sixth count is for unfair and deceptive business practices against Kier and BRM in regard to the trademark and domaine name and the seventh count is for intentional interference with advantageous business relationships against Kier and BRM.

Progress in Maintenance at the Banyan

With three maintenance employees working under the supervision of Chief of Maintenance Kevin Tobin, progress is now being made on lingering maintenance issues. The exterior of the 800 building, which had been an eyesore for so many years, was completed a few months ago and has now been "tented" for termites. Extensive painting and repairs have been done in units 301, 103, 202 and 504. The studio units are receiving new carpet. Certain other buildings have also been "tented" for termite treatment. Real improvement in maintenance is starting to show at the Banyan.

Financial Progress at the Banyan

The Banyan continues to make solid financial progress:

As of the end of July, 2007 slightly over $192,000 in net rental commissions have been received by the Banyan,
92% of maintenance fees for 2007 ($985,000) have been collected
As of the end of September, 2007, 24 unit weeks that had come into the ownership of the BTOA had been sold, generating net revenue of approximately $70,000.

However, over budget expenses for insurance, litigation expense and bookkeeping fees threaten to have expenses slightly exceed budget for the year. In any event, the Banyan has contributed almost $300,000 to Reserves for 2007 and, especially if there are no hurricanes in Key West, should have a fine year from a financial perspective.

August 20, 2007

Payments to Director Abercrombie Continue

Payments to Director Abercrombie for bookkeeping work now exceed $100,000!

The extremely large payments to Director Char Abercrombie for accounting/bookkeeping services from her home office in rural Tennessee continue. In spite of these payments, THERE HAVE BEEN NO FINANCIAL REPORTS SINCE MAY 8th. It is August 20th and the Board has had no financial reports for any period after March 31st. IT SEEMS THE MORE DIRECTOR ABERCROMBIE IS PAID FOR BOOKKEEPING WORK, THE LESS FINANCIAL INFORMATION IS PROVIDED TO THE BOARD OF DIRECTORS

Between January 1, 2006 and May 7, 2007 an average of almost $1300 per week was paid to Charlotte Abercrombie. This expense is in addition to a full time bookkeeper employed at the Banyan and the cost of a substantial part of the General Managers time.

Director Abercrombie's term as Director is up in November 2007. The Owners will have the opportunity to elect someone different. In my judgment, incumbent Dwight Anderson and candidate Joe Cimini, an experienced business executive, recognize the need for reform and that the Banyan Resort would perform better without the presence of Char Abercrombie on the Board. At a minimum, the reelection of Director Dwight Anderson and the election of Joe Cimini will assure that control of the Banyan passes to other than the cronies of Char Abercrombie.

Major Local Accounting Firm Offers to Support Bookkeeping at the Banyan at a Reasonable Cost

The well regarded local firm of Bishop, Rosasco & Co., Certified Public Accountants, has offered to provide the accounting and consulting services necessary for the Banyan to provide monthly financial reports to their Board of Directors and support maintaining the accounting records in accordance with generally accepted accounting principals. They do the same work for many other small businesses

The firm estimates the cost at $500 per month and "can not foresee circumstances under which the cost of providing these services would be more than $12,000 per year". This proposal was made in early June. The cover letter dated June 7, 2007 for the proposal is attached ( Bishop, Rosasco Letter). The proposal has so far been ignored by the Board of Directors.

Maintenance of the Banyan Resort Facilities

The major structural problems at the Banyan Resort (rotted porch supports, etc) left behind by the former management company have been successfully addressed. Work on the 800 building (corner of Eaton & Whitehead) including replacing rotted boards, rebuilding dormers and painting the building as well as a near complete remodeling of Unit 105, including major repair of windows, has been completed. However, the resort is far from being in the pristine condition that is desired.

Apparently responding to encouragement from Directors Anderson, Kuntz and Turnbaugh as well as criticism from many owners, two additional maintenance personnel have been added to the Banyan Staff. The highly competent Kevin Tobin (Chief of Maintenance) now has three maintenance personnel working for him (up from one). With four skilled workers instead of just two, solid progress should be made on addressing the many maintenance issues, both interior an exterior.

Litigation with Former Management Company

In July 2006, the Florida Department of Business and Professional Regulation filed an Administrative Complaint against Vance Kier alleging violations of the Community Association Management Act by subjecting the resort to potential liability by failing to comply with tax and personnel laws, misleading the Board of Directors by claiming a discounted utilities program that did not exist (link to Administrative Complaint). Possibly as a way to mitigate the administrative complaint, a breach of contract suit was filed against the Banyan Tree of Key West Condominium and Owners Association and served on the Association in November 2006. The suit was then allowed to lie dormant by the plaintiff until recently. With the suit active, and inquiries about a settlement spurned, the Banyan Owners Association has filed counterclaims and is preparing for trial. Although the resort would have preferred to avoid litigation, now that it has been initiated, the suit will be vigorously defended and our counterclaims pursued.

May 31, 2007

Financial Condition is Much Better

Last year (2006) was the first full year under the new “General Manager” system of management at the Banyan Resort. The year was a watershed year and the results have been very good for Banyan Owners. Although rentals during the beginning of the year were reduced in the aftermath of the hurricanes of 2005, the full year has been very successful.

An unaudited financial report has finally been received by the Board of Directors for year end 2006. The figures below for 2003 through 2005 are from audited financials. All of the figures reflect the results of both the Banyan Tree of Key West Condominium and Owners Association and its wholly owned subsidiary, Banyan Resort Realty, Inc. Banyan Resort Realty contains two divisions: the rental division and the sales division. Although received very late, the report for 2006 underscores the success of the new management operation. Below is a chart that demonstrates the financial progress made in the last two years under new management:

2003 2004 2005 2006

Revenues $1,525,990 $1,624,052 $1,747,841 $2,059,478

Expenses 1,726,222 1,777,098 1,739,457 1,694,837

Excess (Deficiency) (200,232) (153,046) 8,384 364,640

Net Worth 138,359 (28,808) (20,424) 344,216 (est.)

Reserves 204,565 103,254 16,486 120,092

For 2006, revenues were substantially higher (largely due to rental commissions flowing to the Banyan Resort instead of the management company) and expenses were substantially lower. The result was a very substantial profit instead of the substantial losses that occurred during the last two years under the management company. Net Worth has turned positive and is higher than at any year end in the last four years. Reserves are increasing. With the $300,000 going to Reserves from 2007 Maintenance Fees, the Banyan Resort is well on its way to having "fully funded" Reserves.

Payments to Director Charlotte Abercrombie - $90,960

The extremely large payments to Director Char Abercrombie for accounting/bookkeeping services from her home office in rural Tennessee continue. As of May 7, 2007, Director Abercrombie has been paid $25,760 in 2007 for services rendered. These fees are in addition to the $65,200 paid to her in 2006. Director Abercrombie has been paid a total of $90,960 for what essentially is bookkeeping support. I am aware of no sophisticated accounting work that has been provided. Since January 1, 2006, she has earned an average of almost $1300 per week for providing bookkeeping support to the Banyan Resort. This expense is in addition to a full time bookkeeper employed at the Banyan and the cost of about 60% of the General Managers time devoted to responding to and following the instructions of Director Abercrombie. In return for this extraordinarily large expense, very few monthly financial reports were provided to the Board of Directors in 2006. Unaudited financial results for year end 2006 were not provided to the Board of Directors until May 8, 2006, about an hour before the Board of Directors Meeting called to discuss year end results. Obviously, there was no meaningful discussion of the results at that meeting. Except for one incomplete report for January 2007 delivered on May 8th, no monthly financial reports were provided to the Board of Directors until May 24th when a quarterly financial report for the quarter ending March 31st was provided. Nothing has been received for the month of April, 2007. The excuse for no financial reports has been that the auditor is conducting his audit. Such an excuse is bogus. I have been connected with many corporations in my 35 year career in law and financial services. No corporation I have worked for delayed the delivery of monthly financial reports to the Board of Directors because of an audit.

Maintenance of the Banyan Resort Facilities

The major structural problems at the Banyan Resort (rotted porch supports, etc) have been addressed. However, the resort is far from being in the pristine condition that is desired. Many owners have noticed the many areas of rotted boards and peeling paid. Work on the 800 building (corner of Eaton & Whitehead) consisting of replacing rotted boards, rebuilding dormers and painting the building began in mid January. Scaffolding continues to be up on one wall of the 800 building, with the project not yet complete after 4 1/2 months.

The maintenance staff is currently down to two people: Chief of Maintenance Kevin Tobin and Chris (a skilled carpenter). Both are highly valuable Banyan employees. However, four maintenance personnel, not two, are needed if the resort is to reach the pristine condition desired. In my judgment, maintenance of the Banyan Resort has been hindered by the resources and attention devoted to keeping the books. Currently, it appears that more money is being spent on bookkeeping at the Banyan than on building maintenance.

Rental Division of Banyan Resort Realty Inc.

Julie Crane manages the Rental Division of Banyan Resort Realty, Inc. which is a wholly owned subsidiary of the Banyan Resort owners association. Accordingly, the owners of the Banyan Resort are the owners of Banyan Resort Realty.

Rentals at the Banyan Resort have recovered from the affect of the hurricanes of 2005. As of this writing, there have been no vacancies at the Banyan Resort for most of 2007. The general manager indicates that rental commission receipts are up 14% for the first quarter of 2007 compared to the first quarter of 2006. In 2006, a total of $222,641 in rental commissions was received by the Banyan. These fees covered many expenses at the Banyan that formerly were born by the owners. Rental activity in 2006 was clearly reduced due to the lingering affects of the 2005 hurricane season and we hope for an even better year in 2007

Sales Division of Banyan Resort Realty, Inc.

Amy Lachat Lynch, a licensed Florida Real Estate Broker, manages the sales division of Banyan Resort Realty. For a timeshare resort such as the Banyan that has been "sold out" for years, an effective resale program that assists in the purchase and sale of units is very important. In order for someone to feel comfortable in buying a unit at the Banyan, they must feel that they will be able to sell their unit at some time in the future. ( Link to recent list of Banyan weeks for sale).

In 2006, the resale program was active, but at a high cost to Banyan Owners. Banyan Resort Realty received $145,090 in commissions. The broker received $105,259 in commission and fringe benefits for arranging these sales at the Resort. Some of those on the Board believe this is a part time job and believe it is not appropriate for a Banyan Owner to lose 25% of the value of their Banyan Unit, regardless of price, when they sell their unit through a company they own. It is of no consequence that real estate commissions are higher at the Galleon and other timeshare resorts that continue to be controlled by the developer or a management company related to the developer. Banyan Owners should get a better deal from the Sales Division of Banyan Resort Realty.

Grossly One Sided Real Estate Broker Contract Adopted for Amy Lachat Lynch

In September 2006, the Board of Directors approved a grossly one sided contract for the real estate broker for Banyan Resort Realty (Link to Contract) with especially strong support coming from Directors Myers, Abercrombie and Mortgu-Furrer. The contract was adopted over the strenuous objection of three directors (Turnbaugh, Anderson and Kuntz) who strongly believe that the contract is so one sided in favor of the Broker that adoption of the contract violated the fiduciary duty that Members of the Board of Directors owe to the owners.

Some of the provisions of the contract that are so offensively one sided are:

Section 11 of the Contract, the broker can terminate the contract for any reason at any time. The Banyan can terminate the contract only for cause, upon 21 days notice and a right to cure but only by a unanimous vote of the Board of Directors. Any one of the brokers’ friends on the Board could prevent termination, regardless of cause. “For Cause” is defined very narrowly as losing the brokers license necessary to perform the duties under the contract; being convicted of illegal actions adversely affecting Banyan Resort Realty or the Association or repeated and substantial violations of her duties etc.
The normal personal services contract provides that the broker will hold the client harmless if the broker does something that causes financial harm to the client. This contract, in Section 13 does the opposite. If the broker does harm, or violates the law and suffers a financial penalty, the Banyan Resort must make the broker whole and pay the damages, fines or penalties resulting from the broker’s actions as well as the broker’s attorney’s fees and court costs unless the conduct is willful or intentional.
Compensation: Section 7 provides that the broker receives 70% of all commissions plus $1000 per month in lieu of providing a major medical insurance plan. Under Section 8, all of the broker’s expenses are paid. Under Section 6, the Banyan must supply office space, equipment and personnel necessary to operate a modern real estate office. After paying the broker her commissions, $1,000 per month for medical insurance and paying business expenses, there is generally little or nothing left for the Banyan Resort. , Section 2 of the contract allows the broker to have an active practice selling other Key West Property, without sharing the commissions with her employer, Banyan Resort Realty.
Exclusivity: Section 9 provides that the Banyan Resort can do nothing to interfere with or render of less value the terms of the contract to the Broker.

Upcoming Elections for Directors of the Banyan Owners Association

Director Abercrombie who favored the one-sided Broker Agreement and has received over $90,000 in payments for bookkeeping support will be up for election in November.

Joe Cimini, an experienced business executive who has convinced many of his friends to purchase weeks at the Banyan is running for election in November against Director Abercrombie. Joe ran last year [link to 2006 election letter] against Carolyn Mortgu Furrer, a close friend of Charlotte Abercrombie who also strongly supported the one side broker contract. It has been reported that the real estate broker actively campaigned for Director Mortgu-Furrer. In conjunction with their work at the Banyan Resort, both Director Char Abercrombie and Broker Amy Lachat Lynch have access to the Banyan Owners list and email addresses. Directors Turnbaugh, Anderson and Kuntz do not have access to the Owners List or email addresses.

March 25, 2007

DIRECTOR CHAR ABERCROMBIE PAID ANOTHER $9500 FOR BOOKKEEPING WORK AT THE BANYAN: After being paid $65,200 in 2006 for bookkeeping work performed from her home in Tennessee, close questioning by Director Dwight Anderson at the March 8th telephonic board meeting revealed that another $9,500 had been paid for Abercrombie's services in 2007. This brings the total to $74,700 for bookkeeping support. This cost is in addition to the cost of a full time bookkeeper. For all of this effort and money paid to the sole practitioner CPA from rural Tennessee, as this is written (3-25-07); THERE HAVE BEEN NO MONTHLY FINANCIAL REPORTS SINCE NOVEMBER. THE BOOKS FOR 2006 HAVE NOT YET BEEN CLOSED AND THE AUDITOR HAS NOT YET BEGUN A REVIEW. I HAVE NEVER BEEN ASSOCIATED WITH A BUSINESS THAT DID NOT HAVE FINANCIAL REPORTS FOR THE BOARD OF DIRECTORS FOR ALMOST FOUR MONTHS. The Board of Directors has been told that collections of maintenance fees are going well and that there is ample money in the bank accounts, but has received no reports in regard to income and expenses since the end of November.
It was only a few years ago that Martin Bettencourt as Office Manager and Debbie Van Scoyoc as bookkeeper maintained the books and records of the Banyan Resort and were able to routinely have the books ready for the auditor (Myers, Brettholtz & Company, P.A.) to arrive in early February. The cover letter that accompanies the certified financials for 2003 was dated February 4, 2003. The letter accompanying the certified financials for 2002 was dated February 7, 2003. It has been confirmed that the Myers, Brettholtz accounting firm has an excellent reputation and is a specialist in accounting for timeshares. Director Abercrombie has berated this firm in the past and questioned their abilities.

DIRECTOR CHAR ABERCROMBIE'S TERM ON THE BOARD OF DIRECTORS IS UP IN NOVEMBER 2007. Banyan Owners will have the chance to replace her on the Board of Directors and bring this nonsense to an end. The terms of Dwight Anderson and Steve Linder will also end in November and they must stand for reelection if they want to continue to serve. Dwight Anderson, John Kuntz and Charles Turnbaugh have continued to object to the seemingly endless payments to Director Char Abercrombie.Joe Cimini, an experienced business person who ran last year for the Board of Directors will be running for election to the Board of Directors in November, as will Dwight Anderson.

APRIL WILL BRING BANYAN RESORT MEMBERSHIP IN RCI: Under the terms of the agreement between The Banyan Resort and Interval International, 90 days notice had to be given Interval International before the Banyan joined another exchange company. The notice has been given and the waiting period is up in April. RCI is a much larger Timeshare Exchange organization than Interval International. The only other Timeshare in Key West that is an RCI member is the Galleon. Soon, Banyan Owners should be able to join both Interval International and RCI if they so desire. There have been complaints about the effectiveness of both II and RCI in obtaining exchanges for members. Each Banyan Owner should investigate and make an independent decision about what, if any, exchange organization to join. I intend to be a member of both.

LITIGATION WITH FORMER MANAGEMENT COMPANY: The former management company filed suit against the Banyan Resort for breach of contract in November, 2006 after dismissing an earlier case. The Banyan Resort responded with an answer and counterclaims. Since then there has been relative silence from the plaintiff and the litigation is stagnant. Unless the plaintiff pursues the case, no real purpose is served by the Banyan Resort pursuing the counterclaims. At the moment, we simply wait for further developments, if any.

RENOVATION WORK CONTINUES AT THE BANYAN: The scaffolding that had been on the Whitehead Street side of the 800 building has been moved to the side facing the 300 building (The Abernathy House). I am told that the renovations that have been completed (including reconstruction of the Dormers on the top floor of the 800 building) look very good. Comments from Owners concerning the renovation work are welcome: email cpturnbaugh@comcast.net.

March 3, 2007

BANYAN IS J0INING RCI: The Banyan Resort is currently only a member of Interval International, the second largest Timeshare Exchange program. RCI is a much larger Timeshare Exchange organization. The only other Timeshare in Key West that is an RCI member is the Galleon. The Board of Directors, with only one member opposed, has voted to join RCI. That effort is now underway. Soon, Banyan Owners should be able to join both Interval International and RCI if they so desire.

UNITS FOR SALE: Attached is a recent list of the units for sale from weeks 49 through 20 through Banyan Resort Realty (Link). Sellers generally must pay a commission of 25% to sell their units in this manner.

ATTACKING TERMITES: Termites have a wonderful life in the Tropics. No cold weather to slow their activities. The buildings that constitute the Banyan Resort are of wood constructions, and most were constructed in the early 1900s. I have personally observed significant termite damage in many of the buildings. The most effective way to kill termites and protect structures in Key West is to "tent" the structure and fumigate the entire building. The tenting of the termite infested buildings at the Banyan will begin this year. Four buildings will be "tented" in 2007. The 400 building will be fumigated during week 35. The Saunders House (Units 101-202) in week 36, the 300 building in week 37 and the 800 building in week 38. The General Manager indicates that all affected owners have been contacted and arrangements made to accommodate them.

REPAIRS TO 800 BUILDING: Replacement of some siding and painting of the wall of the 800 Building facing Whitehead Street has been finished. The dormer facing Whitehead Street has also been repaired and painted. The dormer facing Eaton Street was found to be in very bad condition and is being repaired and painted. It has been a very long time since the Dormers on the 800 building were last painted. The rotted large porch posts on the 800 building have already been replaced and rain gutters repaired. Work on this building continues.

MATTRESS REPLACEMENT: Most of the mattresses at the Banyan have now been replaced (both regular and sleeper sofas).

WIRELESS HUB INSTALLED: A wireless "hub" has been installed in the Banyan Gazebo.

RENTAL PROGRAM: The General Manager reports that the rental program for January 2007 was up 14% over January 2006 and better than January 2005 when the Banyan was under the former Management Company. Thanks to Martin Bettencourt and all involved.

OCCUPANTS DAMAGE 800 BUILDING: Occupants of 805 decided to fill their sink and then walked away and forgot the water was running. The occupants of unit 804 below were out sightseeing and came back to a soaked bed and carpeting. A great deal of clean up had to occur, sheetrock had to be replaced and painted but Kevin Tobin, Chief of Maintenance, was able to salvage the ceiling fan. Events of this type sometimes occur at a resort.

RAIN GUTTER REPLACEMENT: The rain gutters are being replaced on the 300, 400 and 800 buildings.

January 15, 2007

The weeks since the last update have brought good and bad news at the Banyan.

GOOD NEWS

GARDENS: The relationship with the Monroe Association for Retarded Citizens ("MARC House") continues to work well and the gardens are being tended in a manner that is better than ever. Although some of the large trees continue to show the effects of Hurricane Wilma, they are alive and recovering nicely.

FINANCIAL CONDITION: Much improved from July 2005, but not yet excellent. In 2005, the Banyan Resort had to use $200,000 in Reserves and about $92,000 in 2006 maintenance fees to make it through 2005. In 2006, there was no transfer from Reserves but it is estimated that between $90,000 and $100,000 of 2007 maintenance fees were be used for 2006 expenses. We are making financial progress and have budgeted approximately $300,000 for Reserves in 2007. A combination of reduced overall expenses and commission income from the rental program are behind the improved financial condition. In 2008, with proper management at reasonable cost, Reserves should be fully funded and all 2008 expenses paid from 2008 income.

HOUSEKEEPING: Andy Borgia remains head of housekeeping and strives to have the units tidy and clean. Obtaining cleaning staff in Key West has become a major problem.

MAINTENANCE: Kevin Tobin remains head of maintenance and is working diligently to make the Banyan the pristine resort that it must become. The failing porch posts on a number of the buildings have been replaced and work has finally begun on making meaningful repairs to the 800 Building. The rotted siding is being replaced and the unpainted Dormer should soon receive attention. Unfortunately, there has been substantial turnover within the maintenance staff.

TIKI BAR: David Lucas continues to set the relaxing tone of the Banyan with the outstanding service and ambiance he provides at the Tiki Bar.

BOOKKEEPER: Richard Tidd, the full time, in-house bookkeeper has worked at the Banyan for many years and has been on the job as Bookkeeper for about 15 months. He knows his job.

RENTAL PROGRAM: Martin Bettencourt continues to operate the rental program with an expertise developed over many years with the program. The rental commissions are now income to the Banyan Resort and are being used to keep maintenance fees low while dramatically increasing Reserves.

OWNERS ATTITUDE: Owners continue to express their enjoyment of the Banyan Resort under new management and acknowledge the correctness of terminating the relationship with the former Management Company. However, I have begun to hear complaints about the level and quality of service provided by the Banyan. This is a problem as the Banyan Resort is in the hospitality business where service at the desk, clean rooms, and adequate maintenance are critical. Please let me know if there are problems.

FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION FILED AN ADMINISTRATIVE COMPLAINT AGAINST VANCE W. KIER: The Agency charged with regulating the practice of community association management has filed an administrative complaint against Vance Kier, the President of the former management company, accusing Mr. Kier of "committing acts of gross misconduct or gross negligence in connection with the practice of community association management." [Link to Administrative Complaint]. Mr. Kier has filed an answer denying the allegations and has requested a hearing. This is an action by the regulator, not the Banyan Resort.

ROBBIE O'NEILL IS NO LONGER AN OWNER: Robbie O'Neill, once a member of the Board of Directors, close friend of Vance Kier and a losing candidate in the last two elections for Board of Directors, has sold his early October week and is no longer an owner and eligible to run for election to the Board.

BAD NEWS

DIRECTOR ABERCROMBIE COMPENSATION ($65,200) - President Linder has confirmed that Director Abercrombie was paid $65,200 in compensation for accounting and bookkeeping support in 2006. With the election of Carolyn Mortgu-Furrer, Director Abercrombie's personal friend as a Director in the last elections, and the development of mutual support among the majority of Banyan Directors, this paid arrangement could continue indefinitely. Directors Anderson, Kuntz and Turnbaugh believe that Director Abercrombie is performing tasks at $50 per hour that should be done by the General Manager and Bookkeeper. They believe that bookkeeping work at $50 per hour is extremely expensive and that payments of this magnitude to a Director of the Banyan Resort are inappropriate and must be stopped.

BANYAN RESORT MANAGEMENT, INC. FILES CONTRACT ACTION IN KEY WEST COURT: The old Management Company, with new counsel, has again filed a law suit against the Banyan Resort alleging breach of contract. Attorney Robert Cintron is representing the Banyan Resort and has filed an answer and made counterclaims against the management company on behalf of the Banyan Resort. The attorney on the Board and President during the termination effort, Charles Turnbaugh, does not believe the litigation is a substantial threat to the Banyan Resort. He believes the management company claims to be without merit. Although all litigation is expensive, the Banyan Resort is also in much better financial shape than in July, 2005 when the management company contract was terminated and can withstand the cost of litigation. In addition, litigation may resolve the conflict between the parties once and for all.

MANAGEMENT COSTS WERE EXTREMELY HIGH IN 2006: In the opinions of Directors Anderson, Kuntz and Turnbaugh, management and accounting costs at the Banyan Resort for 2006 were extremely high and plainly excessive. Although they believe that the managers at the Banyan should be very well paid, they feel these expenses have gotten out of control. In 2006 Director Abercrombie was paid $65,200; the General Manager was paid $102,600 in salary and bonus plus benefits and the use of a vehicle. These costs, when combined with the salary and benefits for an assistant to the General Manager and a full time bookkeeper, are too much.

SALES COMMISSION FOR OWNERS TO SELL THEIR WEEKS THROUGH THE BANYAN REAL ESTATE BROKER REMAINS AT 25%: Directors Anderson, Kuntz and Turnbaugh believe greater effort must be made to reduce the commissions charged through the Banyan resale program. They believe the resale program should provide an efficient market for the purchase and sale of Banyan Units, better benefit owners and not strip from owners 25% of the value of the units during the sale. Owners seeking to buy or sell units are invited to use the Bulletin Board on this website to advertise units for sale and to seek units to purchase. There is no charge for this service.

The Board of Directors at the Banyan is now deeply divided with Abercrombie, Linder, Mortgu Furrer and Myers on one side and Turnbaugh, Anderson and Kuntz on the other. The current majority has kept the "engagement letter" for accounting consulting by Char Abercrombie in place so that she has now received over $52,000 and about 17 free nights at the Banyan as compensation. [See the October 25th Update] Mortgu Furrer, Abercrombie's best friend (they sometimes vacation together in Key West) Myers and Linder have kept this arrangement in place. Turnbaugh, Anderson and Kuntz believe these services should be provided by a real accounting firm in Key West, not from a Director who is a solo accountant operating from her home in rural Tennessee.

Myers has a close relationship with the Broker for Banyan Resort Realty, Inc. He has been most vocal in maintaining the atrociously one sided contract now in place with the Broker. [See October 25th Update]. Abercrombie and Mortgu Furrer have supported Myers and the Broker they apparently now consider a friend. Linder failed miserably at renegotiating the contract, resented well deserved criticism of his inept handling of the negotiations and now supports the atrocious contract. Turnbaugh, Anderson and Kuntz insist that the contract have standard, even sided terms and believe the negotiations were a farce.

After my resignation as President and Anderson as V.P in protest of the actions regarding services by Abercrombie and the Real Estate Broker, it was clear that there would be a contested election over Mortgu Furrer. It was then that Abercrombie. Linder, Mortgu Furrer and Myers came up with a "censure" that the three in the minority understand to be purely political, false and deceptive. I engaged in no misconduct while in office. Please see my comments below about this Smear campaign. The Smear campaign was apparently was successful since Mortgu Furrer was elected over a much more qualified candidate in Joe Cimini [recommended by Turnbaugh, Anderson and Kuntz and others].

However, Turnbaugh, Anderson and Kuntz will continue to oppose the abusive actions of Abercrombie, Mortgu Furrer, Myers and Linder. Abercrombie and Linder must stand for election next year.

The vote count was: Carolyn Mortgu-Furrer - 518 (Pres. Linder provided 65 votes from unmarked proxies), John Kuntz - 377, Bruce Lacy - 331 (Pres. Linder provided 65 votes from unmarked proxies), Joe Cimini - 257, Rob O'Neill - 143

The Ballot questions were either contrary to law or routine. The proposal concerning wireless access was defeated.

An Inept President Linder Mangled the Annual Meeting and Wasted about $4000 of Banyan Funds

Steve Linder is a recruiter for sales people in the business operated by he and his wife: The Sellutions Group (Thesellutionsgroup.com). You would think he would be more knowledgeable in preparing for annual meetings or else seek expert advice. The proxy used for voting at the Annual Meeting was far more complicated than necessary and contained two unauthorized questions that contradicted Florida Timeshare Law.

Annual Meetings and Voting should be relatively straight forward and simple for Banyan Owners to understand, but not this time with President Linder. Apparently on a whim and without the approval from the board of directors, he added the question about granting the Board discretion to move funds between reserve categories and the question about waiving full funding of reserves. Both questions are already answered by Florida Law and were unnecessary. I was unaware of the proxy questions until after they were printed and being mailed.

The proxy form became so confusing that 62 owners gave their proxy to Mr. Linder but did not circle the names of their choice for Director. In past elections this has rarely occurred. When a proxy is signed but not candidates selected, Mr. Linder as proxy gets to chose who receives the votes. Also, in the past unmarked ballots were generally not voted. This time Mr. Linder chose to give the votes to Carolyn Mortgu Furrer and Bruce Lacy. Mortgu-Furrer won but Lacy did not. I hope President Linder's actions were simply the result of ignorance and arrogance, and not an attempt to influence the election by making it difficult to complete the proxy.

One question proposed that owners "grant discretion to the Board of Directors to move funds between Reserve Categories. Section 721.13(3)(c)2 of the Florida Timeshare Act already provides that notwithstanding anything contained in Chapter 718…, the board of administration of an owners' association which serves as the managing entity [the situation at the Banyan] may from time to time reallocate reserves for deferred maintenance and capital expenditures…" In prior years, upon advice of experienced timeshare legal counsel, these transfers have been made in a routine fashion. The question was totally unnecessary. The Board already has the authority being requested.

The question about waiving full funding of reserves was also inappropriate. Last year, legal counsel provided a good argument to the Regulator that reserves may be waived. The timeshare regulator disagreed and provided a letter stating it was unlawful for timeshare owners under the Florida Timeshare Act to waive reserves. Only timeshare owners under the Florida Condominium Act may waive reserves. Timeshare owners under the Timeshare Act may not waive reserves. There are only a few owners at the Banyan subject to the Condominium Act. However, the regulator did not require corrective action to last years vote because waiving full funding of reserves was done under advice of highly competent counsel. My effort as President to avoid the harsh financial burden of fully funding reserves in the first year after replacing the management company was successful. An excellent rapport was established with the Regulator. Regardless, the regulator emphasized that Timeshare Act Administrative Rule 61B-40.0062(2) prohibits non condominium timeshare plans [all but a few units of the Banyan] from waiving full funding of Reserves and that this rule must be followed in the future.

Mr. Linder had the question seeking waiver of reserves placed on the Proxy Ballot without authority to do so from the Board of Directors in violation of instructions from the Timeshare Regulator at the same time that forbearance was being sought concerning the level of Reserves for 2007. Fortunately, without knowing about the unlawful proxy question, the Timeshare Regulator agreed to forebear from taking action against the Banyan for inadequate reserves in 2007. This was a very risky act by Mr. Linder and could have had serious negative consequences for the Banyan Resort.

Before my Resignation in Protest to actions of the Board of Directors, I was severely criticized by Mr. Linder for doing what Presidents have the authority to do. I hope President Linder will remember that he is only the President and cannot unilaterally take corporate actions that require approval from the Board of Directors.

Last year, the Annual Meeting organized when I was President, included a full day of activities. There was the Owners Meeting at which Directors were elected. This is largely a formality that is basically the announcement by CPA Paul Mills of the results of the votes by proxy that have been received. Owners Meetings generally take no more than 30 minutes. These meetings were then followed by a Board Meeting at which officers were elected and reports were received concerning the state of the resort, the results of the rental program, the results of the resale program, etc. A Board Meeting of Banyan Resort Realty was also held.

This year, six members of the Board of Directors went to Key West from around the country and Costa Rica. The only activity was the CPA announcing the results of the voting by proxy in front of about a dozen owners. No other meetings were held. All were then free to go home. I rearranged my flights so that I could leave the same day and return home. The expense of having Board Members attend this meeting and spend nights at the Banyan in units that could have been rented was a waste of money (estimated at $4000).

The four Directors, with whom I and two other Directors have major disagreements concerning Policy and governance at the Banyan Resort, have circulated derogatory material and a “censure” motion they adopted. I did not aggressively respond to this smear campaign because I thought only a few owners were being reached. That was a mistake on my part and probably caused Joe Cimini to lose to Carolyn Mortgu Furrer, the best friend of Char Abercrombie. The censure, at a minimum, is malicious, misleading and deceptive. There has been no misconduct by me. I also believe it was adopted primarily for the purpose of circulating it to owners as part a smear campaign in hopes they would retain control of the management of the Banyan Resort. Joe Cimini was far better qualified to be a Director than Mortgu-Furrer who was part of the Smear Campaign.

Since 2002, after former Director Bill Hermeling and his wife Shirley helped me understand the real situation at the Banyan, I have worked to return control of the resort to the owners and empower the Board of Directors that the Owners elect. I have spent thousands of hours on this project, frequently using my skills as an attorney, all with no compensation whatsoever. I asked for none and received none. I believe it was my skill -as an attorney combined with a conservative leadership approach that caused the replacement of the Management Company and the empowerment of the elected Board of Directors, with no lingering litigation. I do believe that performing work for the Banyan should not be a financial hardship. Accordingly, when two board members were to be asked to take time off from their employment to conduct a review of compliance practices at Banyan Resort Realty, I recommended that they received modest compensation ($20 per hour, eight hours max per day). The job was to take only a few days.

Never have I suggested that Director Char Abercrombie should be allowed to receive $52,000 (so far) and about 17 nights of free lodging at the Banyan as a bookkeeping/accounting consultant. These payments are outrageous and her conduct is absolutely wrong.

My opponents contend that I “gave” this website to the Board of Directors and have now reneged on signing transfer of registration documents. This is absolutely untrue. At the Board Meeting of June 20, 2005, in order to avoid the development costs for an owner’s website, I donated “control over”, not ownership of the website to the Board which then appointed a communications committee (Pres., VP, Sec. and Tres.) to approve content. There was no mention of transferring the registration of the website to the Banyan Resort as must be done to transfer ownership. Since I still owned the website, all costs related to the website remained the responsibility of me and my family even after donation of the use of the website.

Later, I began the successful effort to recover the banyanresort.info site from the Estate of Lori Katz. The recovery of that site stopped the publication of the police reports related to an incident involving the Abercrombies at the Resort and provided a future website for use by the Banyan Resort.

A clear notice that the www.banyanowners.com website was my personal property and that the website was not an official site of the Banyan Resort has been on the site since shortly after I reclaimed control over the site, well before the "censure". Had I not reclaimed control of the site, I believe the owners would have never learned of the Abercrombie Engagement Letter or of the content of the Contract with the Real Estate Broker for Banyan Resort Realty, Inc., the wholly owned subsidiary of the Banyan Resort Owners Association

This allegation is a hoot! As a corporate attorney, I understand that it is the By-Laws of the Corporation, as approved by vote of the Owners that are the rules for Corporate Governance at the Banyan Resort. Now that the Management Company is gone, the By-Laws provide that the Banyan Resort is to be governed in the same manner as a regular corporation. The By-Laws provide that the day to day management of the resort is to be with the Officers (President and CEO, Vice President, Secretary and Treasurer) as elected by the Board of Directors, not the entire Board. With the hiring of a General Manager for the Banyan Resort, many of the responsibilities of these Officers have been delegated to the General Manager. However, the day to day operations of the Banyan Resort are required by the By-Laws to be in the Officers and General Manager of the Banyan Resort. As the President and CEO of the Banyan Resort, it was my responsibility to be involved and work with the General Manager in making some decisions. Because I sometimes acted as a President and CEO, I have been accused of abuse of power.

Certain non officer Board Members refused to accept the mandate of the By-Laws. They demanded they be made aware of and involved with practically everything that happened. There was an email discussion among Board Members about the kind of ice maker to be purchased for the Tiki Bar. There was a Board email discussion about the possible salvage value of large palm trees that might be removed from the property, etc. It is inefficient, expensive and inappropriate for all Board Members to be involved in such decisions. The role of the Board is to elect officers, approve budgets, establish policy, and to oversee the activity of the Officers and General Manager. These Directors abusedtheir powers by refusing to follow the By-Laws of the Banyan Owners Association, as approved by the Owners by preventing the Officers they elected from functioning as required by the By-Laws.

The negotiations with the Real Estate Broker over a new contract were a fiasco. Under normal business practice, the negotiations would have been conducted by the Officers of the Corporation and the Agreement then submitted to the Board for Approval. Not so here. Day to day management of a Florida Resort by a full Board of Directors with Members scattered across the United States and Costa Rica does not work.

In November 2005, I began my current year as President and CEO of the Banyan Resort. I was very proud of the progress that had been made and was enthused about the future of the Banyan Resort. As President, I was in lawful possession of a copy of the Owners list used for making phone calls in support of the campaign to terminate the management company. About half of the telephone numbers were valid. The Owners List is maintained by the Banyan Resort for use in the business of the Banyan Resort. Florida law prevents the Banyan Resort from publishing the Owners List or providing copies to purchasers or third parties.

From December 2005 through mid September, 2006, I placed telephone calls to almost 100 owners to discuss the situation at the Banyan and seek their opinion on how the transition was going. With about a dozen owners, two issues were discussed, one about replacing tall palm trees and the other about the resale program at the Banyan Resort.

In two of these telephone calls, the owners were adamant that they would never sell their units through the resale program and lose 25% of the value of their units in commissions. One owner stated they did not buy through the resale program and were not going to sell through the resale program. Both owners indicated a desire to eventually sell their units. This was memorable for me because I felt the Banyan had a great future and I wanted to purchase additional units. Being President of the Banyan Resort does not prevent me from making purchases. Indeed, it is an advantage to be President because the President gets to know a lot of owners, some of whom want to sell. The President as well as every other owner has no obligation to use the Banyan Real Estate Broker. When these two owners eventually decided to sell their units, they sold them to me at agreed upon prices. Both were fully aware of current resale values at the Banyan. Attached is a letter from Joe Beard [Link], one of the sellers that explain the circumstances of the sale. Both Joe and I are adamant that there was no abuse of the owners list, no breach of any rule of ethics or inappropriate activity in regard to the transaction.

My opponents contend that, as President and CEO, I should not have contacted any Banyan employees in the absence of Julie Crane, the General Manager. My response is simply that it is right and proper for the President and CEO of any corporation to contact any employee at anytime to inquire of the affairs of the corporation. The contention that I did something wrong in calling the bookkeeper is not only false, but ridiculous.

As President and CEO of the Banyan Resort, the Board had directed that I be the sole contact with our attorneys. A lot was going on of a legal nature. There was a dispute over use of the name Banyan Resort; there was litigation initiated by the Management Company; there was an EEOC complaint filed by Joe Schumacher alleging retaliation because he complained of sexual harassment years earlier; there was a class action to recover unpaid rental proceeds for Banyan Owners; there was a stop work order issued concerning pool resurfacing because of lack of permits; there was a citation for a building code violation because of installation of solar heaters without proper permits; there were a substantial number of foreclosures in regard to high value units in winter weeks; there were legal questions to be answered concerning compliance with law in regard to the resale program. I spent an extensive amount of time on these matters and all of theselegal matters have been successfully resolved as of September 30, 2006. Through August 2006, total legal fees spent in 2006 were $19,450, an incredibly low number for the amount accomplished. My experience in managing litigation and other legal matters for corporations has paid off handsomely for the Banyan Resort. I hope you can see that the allegation in the "censure" that I squandered legal fees is preposterous.

I regret that I did not answer these false and malicious allegations prior to the election. If I had been more aggressive, maybe Carolyn Mortgu Furrer, the lesser qualified candidate and best friend of Char Abercrombie would not be on the Board of Directors.

Char Abercrombie must stand for election next year. This website will continue to expose any inappropriate actions by Abercrombie and Linder.

TURNBAUGH AND ANDERSON RESIGN AS PRESIDENT AND V.P. IN PROTEST OF ACTIONS OF BANYAN BOARD

Until recently I was President and CEO of the Banyan Resort and Dwight Anderson was Vice President. Both of us resigned our positions as Officers to protest the actions taken by a bare majority of the Board (Abercrombie, Linder, Mortgu-Furrer and Myers) regarding payments to Director Abercrombie and a Real Estate Broker Contract. Although I will not be President next year, it is critical that the best directors be elected. The details of the payment to Director Abercrombie of $42,000 (probably much more by the time of the Annual Meeting) of Banyan funds and the adoption of a grossly one sided Real Estate Broker Contract are detailed below.

Three current Directors (Anderson, Kuntz and Turnbaugh) as well as candidate Joe Cimini (Link to Supplemental Cimini Letter) believe this bare majority of the Banyan Board of Directors is conducting the affairs of the Banyan Resort in a manner that is counter to the policy: OWNERS FIRST at the Banyan Resort. Carolyn Mortgu Furrer has supported both the Broker Contract and the Abercrombie Engagement Letter we find so offensive and we encourage you to reject her candidacy.

Charlotte Abercrombie, a Member of the Banyan Board of Directors, Has Been Paid (as of the end of August) over $42,000 to Perform Bookkeeping and Accounting Work for the Banyan Resort.

The Transition from the Management Company to a General Manager was relatively smooth except for the failure of the accounting and bookkeeping function. As President of the Banyan Resort during the transition, I initially was confident that there would be no problems with bookkeeping at the Banyan Resort after the removal of the Management Company. The Treasurer was Char Abercrombie, a CPA from Tennessee who was actively overseeing the function. Debbie, the long time bookkeeper at the Banyan continued to work at the Banyan and the accounting software (Quickbooks) and the Reservation System used before the transition continued to be used. I understand Ms. Abercrombie regularly spoke by telephone with the bookkeeper (frequently for hours each week). An electronic connection was created so that Ms. Abercrombie had full access to the books and records and could see all accounting entries as made.

However, at the end of 2005, Ms. Abercrombie reported that the accounting records were such a mess they were unable to be audited. Her solution to the problem was that she be hired to provide bookkeeping and accounting services from her home office in Tennessee at $50 per hour so that most of the 2005 data could be reentered. After Hurricane Wilma and at the end of the year, the accounting firms in Key West were not taking new clients. Although it is atrocious management practice to hire a director to be your accountant/bookkeeper, there was no real alternative but to sign, with Board approval, the engagement letter presented to me by Ms. Abercrombie. There was an expectation that the engagement would last only until the 2005 records could be audited and the accounting books properly set up. However, the engagement letter continues even today. The engagement letter continues because of support for it from Directors Mortgu-Furrer, Myers and Linder.

In September, four members of the Board of Directors (Abercrombie, Myers, Linder and Mortgu-Furrer) approved a grossly one sided contract for the real estate broker for Banyan Resort Realty. (Link to Contract) The contract was adopted over the strenuous objection of three directors (Turnbaugh, Anderson and Kuntz) who strongly believe that the contract is so one sided in favor of the Broker that adoption of the contract violated the fiduciary duty that Members of the Board of Directors owe to the owners.

Earlier, the Board of Directors had unanimously approved a proposed contract which all Directors believed was generous to the Broker. That proposed contract was summarily rejected by the Broker.

Displeasure with the Broker contract caused me, not a party to the contract or bound by its terms, to add a free “For Sale by Owner-Banyan Weeks Wanted to Buy” section to this website. Banyan Owners are welcome to post weeks they want to sell or purchase and then deal directly with the other party, free from broker commissions. Keys Abstract & Title Company has agreed to handle resulting Banyan Closings, but owners may pick any attorney or title company authorized to close real estate transactions in Florida.

A recent inventory of all weeks for sale through Banyan Resort Realty is also posted on the site. For reasons I do not agree with, this list is not routinely made available to Banyan Owners.

Historical Architectural Review Commission (HARC) Approves Solar Collectors to Heat Swimming Pools

In January, solar collectors were installed to heat the water for both swimming pools. The project cost $8,500. The contractor selling the installation of the solar panels had informed Julie Crane, General Manager of the Banyan Resort, of Section 163.04(1) of the Florida Statutes as the statutory basis for why HARC approval and a building permit were not required. That section of Florida law prohibits the adoption of an ordinance by a governing body which prohibits or has the effect of prohibiting the installation of solar collectors or other energy devices based on renewable resources. Based upon the content of that Florida Statute, Banyan Management did not insist that the contractor obtain HARC approval and a building permit as is the usual procedure.

Shortly after installation of the solar panels, Vance and Joan Kierwrote a letter of complaint to HARC and a Citation alleging a violation of the Building Code was issued to the Banyan Resort. The Banyan Resort requested a hearing. Eventually, the City Attorney for Key West provided an opinion to HARC stating that HARC could not prohibit the installation of the solar panels but that a building permit was required and that HARC had jurisdiction over where the panels were installed.

After the expenditure of over $3300 in legal and expert witness fees, HARC retroactively approved the solar panels, as installed, and a building permit was issued. The Banyan Resort will look to the Contractor for the legal and expert witness expense. As a result of this effort, Julie Crane and the Board of Directors of the Banyan Resort were further sensitized to the restrictions on making improvements and repairs in the Key West Historic District.

Six prime, winter period Banyan weeks have been obtained though foreclosure from the defunct corporation that was the developer of the Banyan. These units had been languishing in the rental pool of the prior management company. They are now owned by the Banyan Owners Association and the proceeds of the sale will go pay Banyan expenses and build reserves.

If you are interested in these properties,contact Amy Lachat Lynch, Florida Licensed Real Estate Broker, at 305 296 1230 or email: Amy@thebanyanresort.com. Inquiries are welcome from friends and family as well as Banyan Owners. This is a rare chance to purchase prime weeks at the Banyan Resort. Some of these units may be sold in an auction.

Larry Hammar has resigned his position as Director. A Deputy Police Chief in Illinois, Larry was instrumental in providing security during the transition from the former management company to management by the Board of Directors through a General Manager. Local police officers hired by Larry stopped the effort by the former management company to remove the computers and the essential data they contained from Banyan premises on July 31, 2005. Without the data from the computers, it would have been extremely difficult for the Board of Directors to continue uninterrupted operations of the Banyan Resort. We thank Larry for his efforts on behalf of the owners and we will miss him as a Director.

John Kuntz of Windermere, Florida has been elected by the Board of Directors to fill the vacancy left by Larry. John will stand for election by the Owners in November. John is a Real Estate agent and Mortgage Broker and Appraiser who has, in the past, been active in the timeshare industry. John was active in the effort to obtain the owner vote to terminate the management contract of the former management company. He has encouraged many friends to purchase units at the Banyan Resort and has a strong desire for the Banyan to prosper as well as be a wonderful place to vacation.

The Banyan Resort incurred some extraordinary expenses in 2005 with the removal of the Management Company and transition to a General Manager beginning on July 31, 2005. Four hurricanes and the postponement of Fantasy Fest also reduced our revenue. In spite of this, the Banyan Resort ended 2005 with a greater net worth than in 2004. The Banyan Resort paid all of the attorneys' fees, bought all of the computer equipment and software used at the resort, paid for added security required for the transition away from the Management Company and our revenues still exceeded our expenses. Last year was the first time in three years that the revenues of the Banyan Resort exceeded expenses. The independently audited and certified financials for 2005 are attached (Link: Certified Audit Part I, Part 2, Part 3).

Some figures taken from the certified financials of the Banyan Resort (consolidated) for the last three years clearly demonstrate that the Banyan Resort is being "turned around" from a financial standpoint:

As of today, the Banyan Resort has bank accounts containing in excess of $600,000 and is operating within budget. For the first six months of 2006, the Banyan Resort generated $301,209 in revenue, including rental commissions, in addition to collecting 96% of maintenance assessments; $999,109. Strong revenue and firm control over expenses will result in a financially sound Banyan Resort. We must make substantial additions to our Reserves over the next few years.

The lawsuit initiated by Banyan Resort Management, Inc. against the Banyan Resort has been dismissed, "without prejudice". Although the suit has been dismissed and David Rogel, attorney for the management company and Mr. Kier, has written that he no longer represents either party, the management company and Mr. Kier have the right to again initiate litigation. We cannot predict their actions and we are prepared for any contingency. However, at the moment the Banyan Resort is free of litigation.

Joe Schumacher, former maintenance supervisor at the Banyan, but currently employed by Vance Kier in his new management company and 1800 Atlantic, filed a complaint with the EEOC alleging that he had not been offered employment at the Banyan after the takeover because he had complained of sexual harassment years earlier. The complaint was investigated by the EEOC. The case was dismissed and the file closed. In our opinion, the investigation showed not only that there was no retaliation, but that there was never any sexual harassment. It cost the Banyan Resort $5000 in legal fees to meet the deductible before the insurance company for the Banyan Resort assumed financial responsibility for the defense.

On April 7th at about 3:00 a.m., a woman drowned in the small "adult" pool at the Banyan. Our insurance company has conducted an investigation and we feel strongly that no negligence by the Banyan contributed to the death. The pool has operated without incident for almost 20 years. Our security personnel had passed by the pool minutes earlier and found nothing unusual. No litigation has yet been initiated.

Construction has begun on the repair work that needs to be completed on the Saunder (Unit 101-103, 201 and 202), Abernathy (300s), Locke (800s), Cosgrove (400s) and Thorpe (Units 605-608) Houses. There are significant structural issues that need attention due to long deteriorated porch posts in addition to roof repairs that were caused by Hurricanes Rita and Wilma. However, the work is progressing slowly due to persistent rain during the past two weeks. We are also in the permitting process to replace the rotted wood siding on the buildings and dormers. Work will begin on the Locke House as soon as we have received the proper permits.

The garden pathways have been refreshed with a new layer of river rock. Additionally, the property is flourishing with native flowering plants, which require little care to maintain but add to the resort’s tropical feel. Special thanks go out to the MARC House for a job well done.

In the first half of the year the rental program has produced $139,000.00 in commission proceeds which is being used to offset daily operating costs. In spite of the slowdown in rentals in Key West caused by Hurricane Wilma, our rental program produced bookings almost equal to those of a year ago. However, the hurricane season will be a major factor in determining our rental occupancy rate for the remainder of the year.

Our official website, www.thebanyanresort.com, is greatly improved and is now receiving far more hits than the non functioning "imposter" website that continues to be operated by the former management company . Please visit our website frequently to improve our web placement with the various search engines.

Another way to improve our rental program is to make your usage decision sooner rather than later. We turn away thousands of dollars in bookings each month because we don’t have the inventory. Most vacation travelers make their accommodation plans between six and eight months before their travel date. However, Banyan Owners typically don’t place their units into the rental pool until 90 days before their interval begins. You can call the Banyan at anytime to request a rental listing agreement from Martin Bettencourt. The more in advance you list your unit, the better your chances are of receiving an entire week’s bookings. Additionally, if you later decide that you would like to use your week, call the resort to let us know so that we can work on relocating the renter into another similar unit. Taking these ideas into consideration would greatly improve our rental program and insure the continued benefit of utilizing the 25% rental commission towards offsetting operating expenses

Beginning August 1, 2006, the Banyan Resort will be offering Traveler’s Protection Insurance to its rental guests. Banyan Owners will be offered this insurance with the next assessment billing due in January 2007. The insurance will benefit the owners in a multitude of ways. First, the association will benefit by receiving a commission for each policy that is sold. Second, owners who place their unit into the rental pool will have their rental proceeds insured if the renter decides to purchase a policy. This is especially significant for those owners of weeks between June and November (A. K. A. Hurricane Season). Local traveler surveys conclude that the number one reason why travelers are hesitant to book/travel during this time in South Florida is because of the lack of protection plans available if a hurricane should interfere with their travel plans. Policies will be offered at the cost of 6.5% of the total booking price and offers 100% coverage for vacation cancellation or interruptions caused by covered perils such as windstorm, family emergencies, illness or injury. Policies that will be offered to owners starting January 2007 will be at a flat rate of $59.00 per unit week and offer 100% coverage of their operating fees for the aforementioned perils. Complete information will be included in your 2007 Assessment Billing.

Our cancellation policy will be changing as a result of offering this coverage. A 40% deposit will be required to confirm a reservation at the time of booking. That deposit will be refunded less $30.00 (to cover administrative costs) for cancellations that occur 30 days before the first night of a guests’ stay. The guest will forfeit the entire 40% if they cancel their reservation inside of 30 days prior to their arrival date.

We have been researching our options to provide high-speed internet service to our owners and guests. However, installation quotes for these systems are quite high. It is hard to justify the expense, which the owner’s will ultimately bear, without knowing the necessity and possible return on investment. Therefore, we are conducting an informal survey of our owners in an effort to aid us in our research. Please take the time to respond to the following questions. You can either: copy and paste this survey to an email, then send it to Julie@thebanyanresort.com or print this page and mail the completed survey to The Banyan Resort, 323 Whitehead Street, Key West, FL 33040, Attn: Julie Crane.

3.) How frequently do you think you would use the internet access during your week?

4.) Do you think that offering high-speed internet service is an important amenity to offer renters and guests even if you will not personally use it?

Comments:_________________________________________________________________________________________________________

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Julie Crane, General Manager reports that she and the Banyan staff have been very busy planning for and have already completed some budgeted improvements that are planned for 2006.

Although audited financials will not be available for another six to nine weeks, the Banyan Resort is in better financial condition now than a year ago. The Banyan Resort has over $580,000 in bank accounts that can be used for operating expenses and also $92,000 in the investment account for Reserves In addition, based upon recent experience, there will be an average monthly income of $26,000 from rental commissions, bike rentals, parking rentals and other income for the rest of 2006. Rental commission income is new income to the Banyan Owners Association. The Banyan Resort is also being operated with fewer staff and at a lower operating cost than in prior years. With less than eleven months to go in 2006, we are confident that the Banyan Resort will have the money necessary in 2006 to function in a much improved manner. Almost all of the owners visiting the Banyan are very pleased with the Resort and operations.

Julie Crane reports that the end of the 2005 budget year has seen an estimated expenditure of $92,000.00 from 2006 operating fees to cover 2005 expenses; a remarkable recovery given that the prior management had spent approximately $233,000.00 of 2005 operating fees during 2004.

We look forward to providing more complete and traditional financial statements when they are available. However, we are unable to predict litigation expense.

The 71 Banyan Owners with units in July who had rented through Vance Kier's Banyan Resort Management, Inc. and did not get their rental proceeds owe a debt of gratitude to Banyan Owners Vicki Gordon and Arthur Rogers for acting as the representatives of a class of these owners in a Class Action law suit against Banyan Resort Management. Mr. Kier, President of the management company had written to almost all of the affected owners explaining why he would not be sending them their money. Attorney Robert Cintron of Key West was counsel for the Class plaintiffs in this action. Shortly after Mr. Kier was served with suit papers and a demand letter seeking triple damages under Florida law, checks began to flow to the affected Banyan Owners. The Banyan Owners Association has also received the maintenance fees that the management company had been holding on behalf of owners as well as $4,300 in housekeeping fees. A survey is being conducted to make sure all owners have received their funds.

If all affected owners have received their funds, Robert Cintron intends to reduce his fee to approximately $50 per unit in the class and will be sending a bill to all affected owners. If you receive a bill, please pay this small amount to Attorney Cintron. He performed a great service to the Banyan Resort and affected owners by agreeing to pursue this unusual case.

At about the time of the Annual Meeting and the election of directors, the Banyan Owners Association was served with a lawsuit initiated by Banyan Resort Management, Inc. The lawsuit sought two kinds of court action. The first was to have the court order that Banyan Resort Management, Inc. under Mr. Kier be reinstalled as the Property Manager of the Banyan Resort. The second count was contract damages alleging that the Board of Directors had unlawfully terminated the management contract and that the management company was due its lost compensation.

The Banyan Owners Association filed a Motion to Dismiss the first count seeking reinstatement as a remedy not available under the law. Nothing happened in the litigation until about six weeks ago when our counsel received a letter from the attorney for Mr. Kier stating that the second owners' vote had the legal effect of eliminating reinstatement of the management company as an available remedy. A majority of the board of directors has expressed their willingness to settle the lawsuit and is prepared to negotiate a settlement that is in the best interests of the owners. To that end, brief settlement discussions were undertaken; however, a settlement has not been reached.

If the Kier management company moves forward with the litigation, the Banyan Owners Association has an excellent defense team in Robert Cintron, supported by an experienced litigation law firm from the mainland of Florida. The Board also has confidence in the correctness of their legal position and will pursue counterclaims against Mr. Kier and the management company should litigation proceed.

Joe Schumacher, the former head of maintenance for the Banyan Resort Management, Inc. now works for Mr. Kier in his new company, Keys Management Services, Inc. (the property manager at the "1800 Condominiums", a large condominium complex in Key West. In late November Mr. Schumacher filed a complaint with the EEOC claiming he was not offered employment at the Banyan after the takeover because he had complained of sexual harassment and that this was unlawful retaliation.We have submitted our response to Mr. Schumacher’s charge denying his allegation of unlawful conduct. This claim is covered under our Employment Practices Liability Insurance. We believe the Banyan Owners Association is well represented and we strongly believe that the claim is unfounded. As this matter is presently pending before the EEOC, we believe we are constrained from discussing this matter further.