January 31, 2007

Dear Fellow VPV Homeowner:

Since late 2002, the VPV HOA Board of Directors (the Board) has worked to form a plan to address the continuing siding deterioration and water intrusion issues throughout the complex. A letter of interest was mailed to 39 Los Angeles area Architectural firms, soliciting professional involvement with the project. In April of 2002, the Exploratory Architectural Committee, comprised of interested homeowners, was formed to help the Board review design and repair options. Following recommendations from other local communities who have also undergone such renovations, a decision was reached to hire professionals to aide in the up-front planning efforts for this extensive project. In April 2005, the Board took action to retain the services of Fremer Architects. During this period, the Exploratory Architectural Committee was disbanded to allow the hired professionals to proceed with the destructive testing and Post-Construction Deficiency studies.

The Board had been budgeting for siding replacement at a rate of 2% per year, but actual required replacements have exceeded those budgets. A comprehensive solution to address the issues had yet to be developed. As a result, a major work product in direct support of this process and the initiatives to date was the completion of the Construction Deficiency Report. This report revealed the extent of the required repairs and the systemic maintenance issues.

In late September 2006, the VPV Exterior Renovation Committee (ERC) was formed to help the Board maintain focus on this vital project and provide additional resources to manage the effort. In the October 12, 2006 letter to the Community, the ERC advised you of our planned process for organizing our involvement with this extensive project. We are pleased to uphold our commitment to provide you the following comprehensive accounting of the project to date and signify the completion of Phase I of our commission.

VPV Exterior Renovation Committee (ERC) - Mission Statement

To review, evaluate and recommend to the Board of Directors all aspects of the proposed VPV Exterior Renovation Project and to communicate the project status and recommendations on a frequent basis to Homeowners via the Board of Directors.  To consider the structural integrity, maintenance and aesthetic aspects of such a renovation so the project moves forward in a positive and timely manner, with the specific intent of recommending the best design and best value for all Homeowners and one that the Community of VPV will be proud of.

VPV ERC Communication to Homeowners

Project Status - January 31, 2007

Page 2

During the past few months, the ERC completed several important first steps in its advisory capacity to the Board. The following has been accomplished:

• Assemble and review the work products
• Ascertain the role of Horizon Management in the project
• Establish the actual status of the project to date
• Provide the Board with a preliminary written report of our findings and any additional questions or items requiring clarification
• Work to resolve any outstanding questions and / or requirements
• Provide a final report on this Phase of the work to the Board of Directors, accompanied by any recommendations
• Communicate the project status to the Homeowners

To date, the ERC has made the following recommendations to the Board:

• Cease all work currently commissioned from all contractors and consultants until the ERC has time to become familiar with the project and the work performed to date. Board action taken 10/7/06.
• Advise the Homeowners to promptly identify and submit any suspected interior maintenance issues that may be attributed to exterior construction or maintenance issues.
• Contracts: Issue thorough contracts for all work, with clearly identified scopes of work and deliverables; ensure all contracts are signed by both parties; avoid contracting for hourly fees unless it is minor work; ensure any hourly fee contracts include a “Not to Exceed” limit. Board concurs with recommendation.
• Ensure contract oversight: by the following measures: request project Milestone Schedules including an approval process for each milestone; require invoices to be submitted with the appropriate detail; enlist cost control measures to mitigate miscellaneous expenses; ensure all communications with contractors and consultants are documented, etc. Board concurs with recommendation.
• Appoint a Board member to act as the key interface with the ERC.

Board action taken.

• Determine a method (Newsletter, Website) for communication with the Community on a regular basis. Board approved use of Website.
• Regularly advise the community of any major expenses and / or change in vendors. Board approved recommendation.

VPV ERC Communication to Homeowners

Project Status - January 31, 2007

Page 3

ERC Recommendations to the Board Continued

• Terminate agreement with MC2 and request return of $2,500 retainer. Board action taken.
• Establish a pre-authorized spending threshold for all major expenditures or services, including cumulative spending. Board taking action under advisement.
• Clarify the November 2, 2006, Annual HOA budget package to Homeowners which mentioned a special assessment to recover a portion of the project costs to-date. Board taking action under advisement.
• Meet with the ERC on a regular basis. Board action taken.

Project Scope of Work To-Date and Deliverables

Since April 2005, the Board hired the following contractors and consultants to evaluate the level of deterioration throughout the complex, provide repair and design concepts, and to advise on project management considerations:

H.H. Fremer Architects:

- Limited Investigation of Complex Phases I, II, III and IV to address repair and corrective work attributable to original construction deficiencies, water proofing and exterior siding maintenance issues. Job #5002 to include Investigation Phase, Document Review Phase and Report Preparation Phase, including sub-consultants, i.e. roofing. -- (Construction Deficiency Report and Roofing Study received.)

- Consulting Preliminary Design Phase, Job #5006 to include Measured Drawings for Phase I, Preliminary Design Phase, CAD conversion, Model erection, and Extended Preliminary Design Phase. -- (Seven design elevations received, two scale models commissioned – 70% complete, CAD work remaining estimated at approximately 80-100 hrs or $10,000)

Q-CAD (sub-consultant to Fremer)

- CAD conversion of Phase I

- Digitize existing drawings for Phases II, III and IV

VPV ERC Communication to Homeowners

Project Status - January 31, 2007

Page 4

Project Scope of Work To-Date and Deliverables Continued

MC2 Consultants

- Services related to the review of proposed program for the exterior renovation of the property to include review of existing or proposed agreements with design and construction consultants; meetings; review and analysis of reconstruction plans and permits; review of schedule, insurance coverage and HOA requirements.

- Explanation of construction process and industry practices.

- Consult with HOA and additional consultants as required.

The GB Group Companies: (sub-consultant to Fremer)

- Construction Services for Destructive Testing

o Cut, move or remove items as necessary for access for testing

o Conduct destructive testing

o Investigate and quantify nature and extent of any conflict with intended function design.

o Repair and restore all testing locations

Brussels Consulting Co. (BCCM):

- Phase I – Site Inspection including visual inspection of all units and photo documentation of existing conditions. Create matrix of existing conditions noting level of deterioration of each building facade. -- (Matrix not performed by Brussels as commissioned and total estimate for this Phase was thus not fully invoiced.)

- Phase II – Invasive Testing including 2 units per phase (total of 8 units), document damage to underlying elements (flashing, structural members, etc).

- Preparation of preliminary construction budgets including quantity take-offs and extrapolation of repair costs. -- (Four estimates received: Like for Like – Cedar; Like for Like – Hardie Plank; Like Design - Plus Additional Stucco; Hardie Plank; Rhienzink Metal Paneling)

VPV ERC Communication to Homeowners

Project Status - January 31, 2007

Page 5

Project Cost Summary

The total costs of the project to-date, authorized by the Board prior to the formation of the ERC, are summarized as follows:

Village Palos Verdes Exterior Renovation Project

Fees Invoiced As of January 2007

Fremer Phase I, Job #5002 $ 36,050 Const. Deficiency Report

Architects Phase II Job #5006 $ 181,320

Retainer $ 5,000

Total ` $ 222,370

Brussels Phase I $ 11,523 Destructive Testing

Consulting Phase II $ 16,324

Total $ 27,847

GB Group Construction $ 47,209 Destructive Testing

Q-CAD CAD Drawings $ 13,455

MC2 Project Consultant $ 730 *

Grand Total $311,611

(*Note: Reflects return of $2,500 retainer due from MC2 week of 1/29/07)

The ERC would like to thank Phil Greer for his outstanding work in preparing presentation materials explaining the findings of the Construction Deficiency Report. Phil provided a fact-based presentation and a personal perspective on the existing condition of the complex and the increasing maintenance requirements stemming from the original construction and systemic maintenance issues associated with our wood siding.

The preceding summary of the project to-date completes the first Phase of the ERC’s advisory work on behalf of the Board. The ERC will meet with the Board during the week of February 5, 2007, to work together to plan the next stage of the process, and seek their approval to proceed with our specific involvement in this important project.

VPV ERC Communication to Homeowners

Project Status - January 31, 2007

Page 6

The proposed ERC Phase II actions include:

· Determine if adequate as-built construction plans are available for the complex, and if necessary, make recommendations for obtaining such documents

· Work with the project’s consultants to review and refine the proposed repair and design concepts, and accompanying construction estimates

• Work with the project’s consultants to develop a definitive design and construction estimate for the recommended solution/s
• Provide continuing updates and meet with Homeowners to discuss the project status
• Prepare a recommendation to the Board for the scope of work which provides the best exterior renovation solution and greatest value for VPV Homeowners
• Determine if the ERC is authorized by the Board to proceed with Phase III actions which may include construction bid oversight, etc.

As the ERC Chairperson, I would like to acknowledge the hard work and dedicated effort of the entire Committee. This has been a significant challenge. The positive attitude and teamwork proven by this group of volunteers is essential to our success as a Community and I personally thank them for their efforts to date.

If you have any questions regarding this material, the ERC will be happy to address them as submitted in writing through Horizon Management. The agenda for the upcoming Monthly VPV Homeowners’ meeting on February 8, is currently full, but specific responses may either be returned directly to Homeowners or if warranted, agenda time for this topic will be requested for the March HOA meeting.

Sincerely,

Carma Hardin

Carma Hardin, Chairperson

VPV Exterior Renovation Committee