ELKHORN RESORT DEMOLITION
After the following report was prepared but before it had been sent to you, it was discovered that Toni Lash, a local realtor who apparently does not own property in Elkhorn, had sent a recent letter (in addition to a previous one sent some time ago) to some or all owners regarding the demolition of the Elkhorn Hotel. We do not have the space in this newsletter to address the numerous errors, misstatements of fact and inaccurate assumptions in Ms. Lash's correspondence. However, any member of the Board would be happy to address the specifics of the letter(s) with any owner. You can contact us at the addresses or numbers listed on the enclosed Board of Directors list.

The facts of the matter follow:
In early 2002 CG-Elkhorn Hotel, LLC, the new and current owner of the Elkhorn Resort ("CG-Elkhorn") presented a very ambitious proposal to the SVEA Board that included the demolition of the existing Resort buildings, and exchange of land with SVEA, a relocation of the village swimming pool, a decrease in the number of tennis courts, and construction of 29 new buildings on the resort property. The new buildings consisted of several shared-ownership condo buildings, numerous townhomes, a new amenity facility with health club, restaurant, swimming and tennis facilities, underground parking, etc. Without elaborating on the details of the negotiations, trials and tribulations that followed, suffice it to say that those negotiations failed and the project, as initially proposed, was abandoned. CG-Elkhorn has recently admitted that the initial proposal was much too ambitious and, as they now realize, had little or no chance of being acceptable to SVEA and the City of Sun Valley.

CG-Elkhorn appears now to realize that they will continue to face serious and substantial opposition the development of their property for multi-family residential units unless they cooperate wit the community and include meaningful commercial uses, lower density, reasonable height restrictions, adequate parking, sufficient landscaping and other limitations that make the development compatible with Elkhorn's overall environment.

This past fall CG-Elkhorn closed the hotel. The hotel building is now empty. The SVEA Board of Directors has concluded that there is no reasonable basis to assume that the hotel will be reopened by CG-Elkhorn or that CG-Elkhorn would be successful in any effort to sell the property to someone who would spend the substantial funds necessary to renovate and operate the hotel. The history of the hotel's operations by several owners simply does not support a conclusion otherwise. The Board has also concluded that neither the City of Sun Valley nor SVEA can require CG-Elkhorn to continue to operate an unprofitable hotel and that the hotel will come down. The question then becomes when.

CG-Elkhorn has met on several occasions with Sun Valley P&Z to determine when and under what conditions they could demolish the existing Resort buildings. The City's position is that demolition is a separate application from the later application for approval of the Master Plan for final redevelopment of the resort property. Recently, the P&Z approved the demolition of Phase I (almost all of the buildings) during February and March of this year and Phase II (the building currently housing Sun Valley/Elkhorn Realty and the old golf club house near the tennis courts) in early 2005.

CG-Elkhorn must also obtain approval of the appropriate committee of SVEA to demolish the resort buildings. Actions by the SVEA Board are governed by the SVEA governing documents. The primary document is the Elkhorn Master Declaration (known to many as the CC&Rs). As advised by SVEA's legal counsel that document provides that matters regarding construction, repair, excavation, rebuilding and, in this case, removal of structures in Elkhorn require approval of the SVEA's Architectural Design Committee ("ADC"). At a meeting on Dec. 11, 2002 (the third meeting on the matter) the ADC reviewed and approved plans for the demolition of Phase I. The ADC had tabled the matter twice, each time requesting additional information and adding more conditions. The approved conditions are very specific and very comprehensive. They include, among many requirements regarding timing and performance, land filling, leveling of the land and landscaping. We will be glad to provide you with a copy of the conditions upon request.

Within a few days of this decision several Elkhorn property owners appealed the ADC's decision to the SVEA Board. The Board heard the appeal on December 31, 2002. After receiving comments and reviewing letters from the owners, the Board upheld ADC's decision with the added condition that a satisfactory performance/completion bond be required.

The ADC's decision was reported at the December 30 annual meeting of the SVEA members. Due to the concerns expressed by many of the owners attending that meeting and the fact that two new members of the Board were elected, the Board announced that it would reconsider its decision and scheduled another Board meeting on January 9, 2003. Many of the same owners who had initially objected to the decision attended that meeting. Also present were representatives of CG-Elkhorn. Following comments by both sides, the SVE Board discussed the matter again in great details. Although the Board understood and sympathized with the concerns expressed by the opponents of the demolition. It was not persuaded to change its position and voted to reaffirm the decision previously made with an additional condition that CG-Elkhorn enter into a binding agreement with SVEA providing for the process for the approval of a master plan of its property and the content thereof. The Board has directed SVEA's legal counsel to review and approve the details of the required performance/completion bond to insure that it is adequate to protect SVEA's interest and the written agreement with CG-Elkhorn prior to the demolition providing for SVEA's participation in the planning process for the redevelopment of the resort property. Based on promises from CG-Elkhorn we anticipate that the agreement will include surveys sent out to the SVEA membership, planning workshops, input from SVEA membership in the redevelopment plan.

ANNUAL MEETING REPORT
The SVEA Annual meeting was held on December 30, 2002 at the American Legion Hall in Ketchum. A quorum was established with 56% of the members represented at the meeting either in person or by proxy. Minutes of the 2001 Annual meeting were approved. Various members of the Board reported on topics such as:

-The Community School- It was reported that this topic has not been resolved. The applicant (Community School) is still before Sun Valley P&Z in an effort to receive a Conditional Use Permit. The anticipated traffic continues to be a major stumbling block for the applicant. Please read the separate article in this newsletter for the latest information.

-Village Sauna and Steam- A brief report was given on the overall operation of the SVEA pools for the year 2002. The new Steam Room and Sauna at the Village are now open.

-Resort Demolition/Redevelopment- This topic was given considerable time at the meeting. Please refer to the article in this newsletter titled: "Elkhorn Resort Demolition".

-Golf course purchase- It has been suggested by several Elkhorn owners that SVEA attempts to purchase the Elkhorn Golf course. The Board reported that a sub-committee would look at the issue and meet with the Resort to understand what their plans are for the golf course. The committee will request that the resort give SVEA the opportunity to look at the possible purchase of the golf course should it be placed on the market for sale.

-Financial Report- Smith Cook & Co. made a brief presentation on the audit and their findings. The 2002/2003 budgets were reviewed.

-Board of Directors-In addition to the Board nominated candidates; Bill Burnham, Meredith Carnahan and Michael Roos; Jeff Kingston was also nominated. Members were asked to leave their proxy/ballots and a final count of the voting was conducted following adjournment of the meeting. Bill Burnham, Meredith Carnahan and Michael Roos were elected to the Board. A list of new Board and Committee members is enclosed for your records.

Copies of the minutes of the Annual Meeting will be sent with your April statement and newsletter.

COMMUNITY SCHOOL
Our last communication regarding the Community School was in the fall newsletter sent to you in October 2002. At that time, the Sun Valley Planning and Zoning Commission (P&Z) had continued the public hearing for the school until December 10, 2002 but had scheduled a work session for October 23 to establish a maximum number of daily car trips for the total of the Sagewillow site. The P&Z met on January 14, 2003 to consider the School's application for the 8th time. Following a presentation by the applicant, public comment and lengthy deliberations by the Commission, the decision was unanimous to approve the conditional use permit (CUP) to allow the Community School to construct an elementary school campus on their Sagewillow property. Numerous conditions were included in the approval. Though the CUP will not require the approval of the City Council, the applicant will need to come back before P&Z for review and approval of the actual design of the structures and other improvements. In addition, the Community School will need to apply for SVEA's Architectural Design Committee (ADC) review and receive approval of their plans prior to commencing construction. Please note that SVEA's only review of the school will be through the ADC.

SUN VALLEY MORATORIUM
At their December 19, 2002 meeting, the Sun Valley City Council passed an emergency 120-day moratorium on the processing of applications and land use permits in the City's two commercial zoning districts (Elkhorn Village and Sun Valley Village). We believe their decision was in light of the recent Sunshine Parcel Application where residential use only is being requested for the commercial zone, as well as the anticipated redevelopment of the Elkhorn Resort property. The current Commercial Center zoning (CC) allows for a mix of commercial and residential uses; however, regulations currently in effect do not provide sufficient definitive criteria to evaluate to evaluate and condition development with the CC zones. The City has hired a consultant to work with the Planning and Zoning Commission to draft amendments to the regulations to address appropriate densities, heights, and setbacks for these areas. This moratorium does not affect the Sunshine (Sun Villas) Parcel or the demolition of the Elkhorn Hotel, as these applications were submitted prior to the moratorium.

SUNSHINE PARCEL DEVELOPMENT
In November, the owner/developer of the Sunshine Parcel submitted an application to the Sun Valley P&Z Commission for the constructions of 111 condominium units ("Sun Villas") The application was tabled pending additional information. Plans have not been submitted to SVEA for the Architectural Design Committee's review.

WINTER SPA OPERATIONS
Great news! Not only are the Harker Center and Village Hot Tubs open daily from 3 p.m. until 9 p.m. for the winter season, but the new steam room and sauna have been completed at the Village Bathhouse. Stop in for an evening of relaxation. Please remember that valid amenity cards are required for admission to these and any other Elkhorn amenities. You may arrange for cards for any guests staying in your Elkhorn property by contacting the office.

EXTERIOR AND SEASONAL LIGHTING
Please remember that Elkhorn now has exterior lighting guidelines. Those guidelines allow for decorative holiday lighting, used on thee exterior of building and in plantings, from November 1 until March 15 providing a timer is used to insure the seasonal lighting is turned off by 11:00 p.m. each evening. Check your Christmas lights and if you are a non-resident property owner, please contact your Landscape Company or caretaker and inform them of these guidelines.

2003 SVEA BOARD MEETING AND SUMMER PICNIC
The Board meetings for 2003 have been scheduled. These meetings are held at the Harker Center, generally commence at 9 a.m. and are open to any Elkhorn owner. Though not required, it is helpful with setting agenda times if you can contact the office in advance of any meeting you wish to attend to address specific issues. The Board meetings for 2003 will be held on January 9, March 28, July 3, October 3, and December 30. The Summer membership Meeting and Picnic will be on Thursday, July 3. Please watch for details of the picnic in the April statement/newsletter mailing.

RUBBISH CARTS
For those of you who haven't already obtained a trash cart from Wood River Rubbish we would ask that you please consider doing so. There is no charge for the carts and they make trash collection much easier. Another advantage of the carts is that they are much more difficult for marauding animals to tip over and spread the trash. For more information please contact Wood River Rubbish at 208-726-9600. Please return your empty trash carts or cans to your garage or storage area as soon as possible after pickup.