desert mountain club, inc.

2 0 1 6 A N N U A L R E P O R T

Vision and Mission Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Letter from Joe Maslick, President . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Board of Directors and Committee Members . . . . . . . . . . . . . . . . . . .4

Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Golf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Food and Beverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Sonoran Clubhouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Tennis, Spa and Youth Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

The Ranch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Social Clubs and Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Audit Report and 2016 Financial Summary . . . . . . . . . . . . . . . . . .12-13

2017 Financial Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Senior Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Letter from Bob Jones, COO/GM . . . . . . . . . . . . . . . . . . . . . . . . .16-17

25+ Years of Membership Anniversaries . . . . . . . . . . . . . . . . . . . . . .18

Welcome New Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Desert Mountain by the Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . .20

TA B L E O F C O N T E N T S

V I S I O N S TAT E M E N TDesert Mountain Clubs goal is to be one of the finest

private golf and recreational communities in North America.

M I S S I O N S TAT E M E N TDesert Mountain Club is dedicated to providing its members

and their families and guests with a commitment to excellence,resulting in member pride and a distinguished reputation.

L E T T E R F R O M J O E M A S L I C K , P R E S I D E N T

Dear Fellow Members,As I look back on my eight years on the Board, I am amazed atwhat we have accomplished together. We have seen DesertMountain successfully transition from a developer-owned to amember-owned club. At the same time, we have added world-class facilities such as the Jim Flick Golf Performance Center,The Ranch and an award-winning 15-mile hiking and bikingtrails system. Beyond that, 2016 stands out as one of the mosteventful years for our members as we witnessed many successes:

We completed our new Sonoran Fitness Center & Spa,on time and on budget, and introduced wellness programsfor the health and enjoyment of our members.

The sale of Parcel 19 for $24 million nears completion withan increased escrow deposit of $2.5 million in the event theclosing is rescheduled no later than June 17, 2017.

Value nights were added to our food and beverage diningoptions and wine specials were offered at each restaurant.

We refreshed the member website with updated calendarfeatures and better visibility into our many activities suchas croquet, pickleball and over 42 social clubs and events.

The condition, playability and access of our golf experi-ence were optimized for all levels of play year-round.

We successfully hosted the Charles Schwab Cup that was nationally televised on the Golf Channel.

Membership sales, value and exit options werecomprehensively addressed:

The temporary Exit Transfer Option (ETO) programreduced the list of members who wanted to exit theClub from 96 to 37.

The move to a market-based approach resulted in a$20,000 increase in the sale price of a membership.

Treasury memberships were issued for 28 EquityGolf Memberships, 48 Lifestyle Memberships and21 Senior Lifestyle Memberships.

The initiation fee for Equity Lifestyle membershipswas increased from $10,000 to $15,000 as of 2017.

Discover Desert Mountain, a member referralprogram designed by Creative Golf Marketing,was launched in 2017 to increase our membership.

Not surprisingly, the remarkable Desert Mountain experience hasbeen recognized with several prestigious awards in 2016 such as:

The Five Star Platinum Club Award for 2016-2018 Top Ten Best Places to Work - Phoenix Business Journal The Distinguished Clubs of America - Emerald Award One of Americas Healthiest Clubs Award for menu

choices, fitness services and wellness programing

PGA of America Merchandiser of the Year Privateawarded to Mark Thush, our Director of Retail Sales

Looking ahead, we are embarking on a new chapter in the evolution of the Desert Mountain experience, which will beled by our new CEO, Damon DiOrio, a seasoned and well-respected industry leader. I am very confident that Damon willdeliver an outstanding experience for our members within fiscally responsible parameters. This is also an opportune timefor our transition to a new governance model under which theCEO and his team will be responsible for day-to-day operationswhile the Board will focus on policy and strategic initiatives tobest position the Club going forward.

To all Board and Committee members past and present it has been my honor to serve with you. Thank you for generouslysharing your time and talent, and know that you have made apositive difference for Desert Mountain.

Of course, all of our successes could not have been possible without our excellent staff. On behalf of the Board, we expressour deepest appreciation to Bob Jones for 20 years of dedicationand loyalty to Desert Mountain. He has been instrumental inevery aspect of the Club as we know it today. I personally thankBob for his friendship over the years and wish him much successin his new venture. Also, I extend special gratitude to FrancineKeller for all of her tireless effort and utmost professionalism insupporting management, the Board and our members.

To every person on our staff, although often unspoken, pleaseknow that the Board and the membership greatly appreciate all that you do for us. More than anyone else, you are responsiblefor thousands of incredible member experiences each and every day.

Last but not least, I thank my wife Paulette for her support, patience and understanding during my eight years on theBoard. I look forward to spending more time with my family and getting my handicap back to familiar territory.

I leave my role as President knowing our Club is in very goodhands and that the best is yet to come! It truly has been an honor and unique privilege to have the opportunity to repre-sent Desert Mountain, one of North Americas finest privategolf and recreational communities.

Respectfully,

Joe Maslick, President

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From left to right - Steve Clark, Secretary, Bob Borsch, Wayne Mailloux, Kathy Henderson - Treasurer Carol Ann Petren - Vice President, Bill Robinson, Joe Maslick - President, Scott Urdang, Keith Johnson

D E S E R T M O U N TA I N B O A R D O F D I R E C T O R S

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D E S E R T M O U N TA I N C O M M I T T E E S

AUDITSteve Clark - Chair

Wayne MaillouxPatrick Allender

Robert BaumgartnerNora GevlinNancy Settles

FINANCEKathy Henderson - Chair

Keith JohnsonBill RobinsonScott UrdangGeorge BenzLeo Birkby

Frank BrownGeorge Juetten

MEMBERSHIPBill Robinson- Chair

Kathy HendersonCarol Ann Petren

Scott UrdangSteve Garry

Larry PorcellatoVerna ShewchukJerry StricklandChris StorbeckChris Wilson

NOMINATINGCarol Ann Petren - Chair

Joe MaslickSteve Clark

Keith JohnsonCassie Bailey

George KuehnJim MacAllen

Michelle NewlinBarb Pearse

2017 ELECTION COMMITTEELeo Birkby

David OstermeyerJim Pickett

Karen SeduskiKathy Thomasson

DISCIPLINARYBill Robinson - Chair

Bob BorschWayne MaillouxJanet Anderson

Lynda BakerDavid BalakBurt Barnett

Pete CunninghamBill Friedl

Maisie HeikenMary Kuehn

Arthur Rosenbloom

STRATEGIC PLANNINGSteve Clark Chair

Bob BorschKathy HendersonCarol Ann PetrenWayne Mailloux

Scott UrdangHarold Boyanovsky

Dave Dargo Lynn Magnuson

Deborah McIntyreJim PickettGreg Wylie

GOLFCarol Ann Petren Chair

Keith JohnsonBill Robinson

Stephen AndersonJanet Curry

Sharon SlatteryBarbara StewartGene Thomas

Russell Thornton

HANDICAPJeff Zieky Chair

Jan AndersonNancy Besemer

Allen EakerJim MorrisseyClaudia PilotKeith Reese

COMMUNICATIONSBob Borsch Chair

Keith JohnsonWayne MaillouxFrances Emerson

Derek HillBev McTigueJake Murdock

SERVED SINCE APRIL 2016

FINANCEThe Finance Committee worked with Clubmanagement during the year regarding the financial operations and assessing the impact on the Clubs overall financial posi-tion. We also worked with management tostreamline the budget approval process.After the Exit Transfer Option was offered,the Committee advised on a sustainable approach for the use of the funds to offset thereduced dues and membership contributionincome. The Clubs 5-year financial model,that we continue to refine, will be a valuableresource for future strategic decisions. For2017, the Committee will be focusing on the financial leadership transition, updatingthe 5-year model together with financingand capital needs including the RenegadeProject and Fairways building, and oversee-ing the investment and designation of Parcel19 proceeds.

MEMBERSHIPThe Membership Committee played an important role in welcoming 88 Equity Golf and 48 Equity Lifestyle Members toDesert Mountain. We also facilitated