Dear Owner:

Your Board of Directors and the Starwood Management Team would like to update you on two important issues. As many of you may remember, your Board included a short note with the 2009 maintenance fee statements explaining the effect of increased utility expenses and Hawaii taxes on our maintenance fees.

Despite our efforts and arguments to the contrary, Maui County has determined it will begin to assess the vacation units at the resort separately using residential condominium valuations. As a result of this change, the 2009/2010 real property taxes for our resort will increase by approximately $4,124,162 (from 2008/2009 real property taxes of $2,261,819 to 2009/2010 real property taxes of $6,385,981). Your Board has authorized the expenditure of funds necessary for the Starwood Management Team to appeal both the valuation methodology and millage rate of this proposed assessment increase. Your Board and Management Team are fully engaged in the effort to mitigate the effect of this proposed increase and have submitted tax protests to Maui County. In addition, the Starwood Management Team is working with the American Resort Development Association, Resort Owners Coalition (ARDA-ROC) toward a coordinated Owner response, as Maui County's actions will impac! t other resorts. We plan to communicate with you in the near future on specific actions you can take to ensure Maui County representatives understand the negative consequences their decisions will have on individual Owners, such as yourself. During the course of the tax appeal, the tax assessments we remit to Maui County will remain in a claims litigation account which neither the association nor Maui County may access until the conflict is resolved. Unfortunately, this will require the Board to consider securing a loan, levying a special assessment and/or increasing the 2010 assessments to cover these tax payments.

To illustrate the impact of the unanticipated tax changes, the below chart details estimated increases in your Vacation Owners Association's 2010 assessments to cover the higher tax amounts. These amounts are broken down by unit type and whether ownership is on an annual or bi-annual basis. The first group of figures represents the funds necessary to cover the unanticipated increase in the real property taxes due in 2009. In addition to covering the 2009 shortfall, the second group of figures represents the funds necessary to cover that portion of the 2010 taxes which exceeds what was budgeted for in 2009. As you can see, the unanticipated increase for 2009 is less than the increase for 2010. This is because the tax year for Maui County commences on July 1, and thus the increase only impacts half of 2009.

On a more positive note, we are happy to report that we have been successful in implementing several strategies for effecting energy utilization reductions. This, coupled with your efforts to conserve energy usage while vacationing at our resort and a 2009 reduction in energy rates, has resulted in a significant cost savings to the Association of approximately $1,772,634.

We thank you for the opportunity to serve and will update you as these events continue to unfold. Should you have any questions, our Association Management team is available to assist you at 800-729-8246.

Sincerely,

Ocean Resort Master Association Board of Directors