During the past few months, we focused on the following critical priorities:

3 Creek Annual Report This is the first Annual Report since responsibility for operating the Club was turned over from Farallon to the membership. I ll review the priorities we ve been addressing for the past few months and those we plan to address in the coming year. Board Priorities During the past few months, we focused on the following critical priorities: Ensuring a smooth ownership transition from Farallon to the membership Operating the Club in a fiscally responsible manner Increasing new membership Reviewing and Recommending Revisions to the Bylaws Beginning the Strategic Plan Process Selecting the full Board Candidates I believe we made significant progress on all items. Ownership and Leadership Transitions Our successful turnover is attributable to a number of factors: The Turnover Committee and prior Board of Governors did an effective job negotiating a favorable agreement with Farallon and laying the groundwork for the transition. Our staff continued to deliver outstanding service through a period of uncertainty. All of you continued to support the Club, remain engaged, and believe that the result would be an even stronger and more vibrant Club. A special thanks to all of you Financial Condition and Outlook 1

We consider three questions when we think about the Club s financial condition: Are we managing our declining deficit to be better than turnover projections on operations? How does the revenue we generate from dues, food and beverage, and usage fees compare to our projections? Are we generating enough initiation and transfer fees from the sale of new memberships to maintain the quality of our physical plant in accordance with our Reserve Study? Do we have the ability to fund any additional capital investments or operating priorities to meet the needs and expectations of current and future members over the long term? The Club is in very strong financial condition. We are doing better than projections on operations. We are considering a number of ways to manage expenses more efficiently and effectively, while at the same time preserving quality. We expect these trends will continue. We have fully funded our capital improvement requirements for the year through the transfer fees and initiation fees associated with new memberships. Based on a long-term capital reserve study, which we completed prior to Turnover, we know the annual spending required each year to maintain the quality of our capital equipment and physical facilities. Given the transfer fees and initiation fees we retain through membership sales (50% for resale of golf equity and 100% for non-equity sales ), we need to sell 12 new memberships annually to fund our capital needs which we believe is achievable, but our goal is to sell significantly more each year. We have initiated a strategic planning process that will identify any additional capital investments in club improvements required to ensure that the Club can maintain and enhance its preeminent position. We ll keep you well-informed as we move through this process. 2

Operating Update: Capital Update: Membership New membership activity is a key metric of the overall health of any private Club, it is essential that we continue to attract new and retain existing members: Normal attrition at a high-end club like ours averages about 5% (~9 members) per year; o We need to attract at least an equivalent number of new members each year to maintain a healthy membership level. o We need to continue to sell additional memberships to reach a sold out, 240 full equity memberships, condition Membership dues are our primary source of operating revenue 3

Membership sales fund our capital expenditure requirements thru initiation and transfer fees. The Membership Committee and our staff are involved in a complete overhaul of the messaging and marketing of our club. The marketing will be tied to our Vision of the Club and will be completed over the winter. We budgeted for the sale of 12 Equity Memberships this year. To date, we have sold 9 Equity together with one Junior and one National Memberships. Memberships Sold By Type w / redemption adjustment Cap Equity 147 Incentive Equity 15 10th Anniv. Inc.Equity 19 ***Subtotal*** 181 240 Junior 24 25 National 2 10 Invitational 15 15 Senior 2 10 Company 2 2 Honorary 3 15 Honorary Dining 2 2 RTU 2 2 Total Memberships 233 321 Next 12 Month Priorities Develop and begin to implement a long-term strategic plan Like most top clubs, we are faced with the challenge of attracting new members and retaining existing members. This requires that we address a broad and evolving range of interests and expectations, while continuing to operate the Club financially in a prudent and responsible manner. Through the Strategic Planning Process we will: 4

Develop an understanding of priorities of our members---both those we have today and those we want and need to attract new members Develop a long-term vision Decide what changes, if any, need to be made and in what priority To the extent these changes require additional investment, determine which will be supported by our members and how the investments will be funded Continue to grow our membership base Our goal is to reach the point where we have a waiting list of people who want to join the Club. To do this we will have to clear the resign list which we expect will be down to 10 by the end of this year and then add enough new members each year to offset normal attrition. Jill Moberg, our Membership Director, and Membership Committee, under Chad Becker s leadership, will be considering many options in the coming months. The full plan will be developed as part of the strategic plan. Board Governance Approach and Election Results Governance Approach 5

We believe that the Board has two primary responsibilities: Ensuring that the Club operates in a financially responsible manner Ensuring that the Club operates at the highest level possible regarding the quality of facilities, food and beverage, programming, and services. Club management, under the leadership and direction of our General Manager, Chad Becker, is responsible for operating the Club on a day-today basis to achieve these goals. The Board has a limited, but important role: it provides oversight, support, and advice to the General Manager, forms and leads the Finance, Golf, House and Membership Committees, evaluates GM performance, and keeps members apprised of issues under consideration. Members enjoy the Club and participate as actively as they d like in Club events and activities. When they have thoughts or opinions about any aspect of the Club, they should communicate them to the General Manager who will consider this input and take any action he deems appropriate. Election Results With the completion of this year s Board elections, the Board is comprised of the following people: Name Term Expires Fred Arbuckle, President 2018 John Carifa 2017 Bill Egan 2019 Missy Hoster 2017 Penney Hubbard 2017 Donald Opatrny 2018 Arnold Silverman 2018 Liz Spradling 2019 Barbara Vogelstein 2019 There are 4 Board officer positions---president, Vice-President, Treasurer 6

and Secretary---and 4 Board committees and chairs---finance, Golf, House and Membership. Following this year s elections, here are the officers and committee chairs: President Vice President Treasurer Secretary Finance Committee Golf Committee House Committee Membership Committee Fred Arbuckle John Carifa Don Opatrny Arnold Silverman Don Opatrny John Carifa Missy Hoster Bill Egan Committee membership includes the Board members listed above as Chairmen, the department head in charge, and members-at-large selected by the Committee Chair. Chad Becker attends all committee meetings. In closing and on behalf of the Board, I want to thank all of you for being such great members and for working to make 3 Creek Ranch the best club in the valley and one of the top Clubs in the country. Fred Arbuckle, President General Manager s Report Chad Becker What an exciting year for the Club, Members and Staff. On May 26 th we successfully transitioned to be the only Member-Owned, Member Governed Club in the Valley. I would like to thank the Turnover Committee, Board and each of the members who have volunteered their time and worked tirelessly to accomplish a successful transition. This summer has been incredibly busy with the post turnover tasks as well as the increased membership activity throughout the Club. This year s projects have required more time in the office for me this year and less time 7

out amongst the team assisting and guiding them. I wish to thank each of them for their hard work and dedication in making it another great summer at the Club. With over 26 years of Private Club experience, I am still excited each day about what I do and 3 Creek Ranch, it s members and my team. We will remain focused on providing an extraordinary experience and product each and every day. Here is a brief update on several areas of the Club through Mid-August: Food & Beverage (F&B) Menu design and execution continues to improve under Chef Tim s leadership. Year to date meals served: 1,315 more or a 10.6% increase over 2015 January August 15th Increase in Covers 2015 2016 Over prior year Covers Clubhouse Lunch 4,167 4,655 488 11.70% Clubhouse Dinner 3,345 3,748 403 12% Pool Grill (All Day) 3,453 3,865 412 12% Special Events 1,481 1,493 12 0.80% Total 12,446 13,761 1,315 10.60% One of our most popular events continues to be Family Fun Night every Tuesday. From June 29 th through August 16 th we have served 854 meals during 8 events. With an average of 107 diners per event and our busiest night on August 9 th serving 155 meals and even serving 112 diners on an evening when the power went out: our young members are having a great time every Tuesday evening during the summer. 8

Our Mother s Day Brunch, Father s Day Cookout, July 3 rd Mexican Night, July 4th BBQ, Brunches with Santa and New Year s Eve Gala all continue to attract large crowds and great feedback. This year we added a series of Friday morning Tech Classes to assist our members with everything from Smartphone Tips, to Apps and Social Media. Due to their popularity we will likely continue them in 2017. Regular a la carte dinner service continues to be the most popular with serving more than 100 diners on several evenings and our busiest night of 124 diners served. All 124 diners were served by 8:20 pm that evening allowing for up to another 30-40 more diners for those who can dine from 8:15 to 9:00 pm. The entire team works hard to accommodate every member dining reservation request, or as close to it as possible, in order to provide the best possible food and service to each and every member. Our biggest hurdles continue to be tables that are more than 15 or 20 minutes late for their reservations, no shows or last minute cancellations that can prevent us from serving more of our members each and every night. We ask that you please arrive before your time to be seated or call as soon as you know you might be late or will need to cancel so that we may accommodate more of your fellow members during the busiest evenings. We thank you for your continued support of the Food and Beverage program in all areas and we look forward to the upcoming fall and Holiday seasons with you. Golf Under Greg Glover s and Dan Tolson s leadership and with the active involvement of the Golf Committee, chaired by Joey Schaeffer, we 9

accomplished a great deal, including: Maintaining the playing condition and aesthetics of the golf course to world-class standards Maintaining an exciting and varied tournament and event schedule Continuing Golf 101 to introduce new women players and some men s players to the game. Dan worked closely with Architect Rees Jones throughout the offseason to design and construct six new forward tees on holes 5, 8, 9, 12, 14, & 16; it was completed on time and under budget. The course is scheduled to remain open until October 16 th, weather permitting Here s some data on course usage: 2016 Year to date through June Additional Rounds Data: Rounds Played At 3 Creek Ranch Y/Y Change 2014 Total 4,625 2015 Total 4,421-4.4% 2016 Through Mid-August 3,460 Dan Tolson is one of the best golf course superintendents in the country and we are fortunate to have him here at 3 Creek Ranch. I have spent significant time with him on the golf course and club grounds learning about the special circumstances of our property from an agronomy and maintenance standpoint. 10

Golf Course Superintendent, Dan Tolson, Report We were very fortunate to have successfully navigated the H2-B Visa program again this year. Our 20 workers, the backbone of the golf course maintenance department, arrived from Mexico in the nick of time on April 18th. With their help the construction of 6 new tee boxes was completed in house, on time and under budget, all while cleaning up the winter damage and prepping the golf course to open on May 7. A mild spring was followed by 10 weeks of the hottest and driest summer weather I have experienced in Jackson Hole. More than 30 days over 85 degrees and less than 2 of rain has been the cause of a busy wildfire season, and a busy irrigation season. Despite the smoke, the heat, and many of our crew opting to sleep in their cars or camping due to the housing crisis, our hearty crew has kept a smile on their face while keeping the golf course in top shape. There are no short term concerns and we are already preparing the golf course for a healthy winter shutdown. Poa update: Poa annua ( Poa ) is an un-desirable grassy weed that poses the largest threat to sustaining a pure golf course. We fight an aggressive battle utilizing pre-emergent and post emergent herbicides, plant growth regulators, hand picking, fertility management and water management to prevent Poa establishment. Despite a strong Poa crop this spring, we have achieved excellent control this summer, with the heat and drought playing a helpful role. We have recently completed fall herbicide treatments for Poa and you will see white patches of dying Poa after Labor Day. We will continue to do what it takes to manage the Poa and prevent establishment on the greens and tees. Lightning Safety: On the afternoon of August 15th, a small thunderstorm passed over the golf course and lightning struck the ground adjacent to #9 tees. We were lucky to be able to quickly put out the fire that followed with little damage, but it could have been worse had there been golfers in the area. Our lightning alarm may seem like a burden but it is for your safety. It is an accurate indicator of lightning activity. Please take shelter on #8, #15 or the golf shop after hearing 1 long blast from the lightning alarm. 11

Aerification: Aerification of greens and tees is scheduled for September 19th and 20th. The size and spacing of the holes will depend on the results from soil samples we sent off to the lab for physical testing. The tests help us determine a quantifiable measurement of the percent organic matter removal required to keep up with the growth of the bent grass. Most likely it will be similar as past years and the greens will be back to a good roll after 10 days. Once greens and tees are completed we will begin fairway aerification, a process that lasts about 2 weeks. End of Season: Even though we are winding down it is still more important than ever for each and every golfer to sand their divots, repair their ball marks plus one additional ball mark, and to rake each bunker when exiting. Your reinforcement and continued support of good course etiquette greatly helps in maintaining our top conditions. The course is scheduled to remain open until October 16th, weather permitting. Thank you for your continued support of the agronomy program at 3 Creek. Tennis/Platform Tennis Tennis continues to thrive and be an important part of our operation. Our forecast is that as younger families join the Club and our current Members have families visiting, tennis will continue to be a more prominent part of their Club usage. Tennis is an important facility not only to have but to continuously enhance. Platform Tennis continues to be one of the fastest growing sports in the US. We are the only private Club with a Platform Tennis Court in the valley. We have an active group of more than 25 families who actively participate in the program. Winter Ski Programs Nordic This year we will again utilize the Golf Shop as our Nordic Center. Once the Nordic Track opens the Nordic Center will be open 7 days per week. 12

Alpine The Ski Club Amenity at JHMR continues to grow in popularity and activity. For the past Ski Season there were 48 families who utilized the Ski Club and our goal for this season is 55 families. Camp 3 Creek In my more than 26 years in the business there is no doubt that our Camp 3 Creek is the best Summer Camp Program I have ever seen. A special thank you to Mark Binstadt and Steven Lubner for the great job and the special care and attention provided to our young members. Camp Attendance 2014 2015 2016 48 total campers 66 total campers 78 total campers Total Camper Days Average Campers per day 2 friends 15 friends 7 friends 2008 154 3 Week 1 53 18 0 (camp not held) 2009 185 4 Week 2 57 46 40 2010 288 6 Week 3 84 83 67 2011 464 11 Week 4 67 89 47 2012 679 14 Week 5 60 93 95 2013 573 12 Week 6 65 52 86 2014 660 14 Week 7 77 84 88 2015 657 14 Week 8 94 56 51 2016 638 14 Week 9 96 59 90 Week 10 33 77 74 Total 660 657 638 Fitness Center 2015 January through Mid-August Total Training Sessions hosted 1185 13

2016 January through Mid-August Total Training Sessions hosted 1100 down 7.7% due to illness and injuries of trainers 2015 January through Mid-August Total Class Attendance 202 2016 January through Mid-August Total Class Attendance 268 up 32% From January through July 31 st of this year we had 2,031 members/guests sign in over 213 days. There still seems to be a large number of members who are not signing in themselves or their guests and this is so important for our future planning needs to have an accurate number to review. The Fitness Center shows an average of about 10 users per day from January through July 31st. Fitness on a national level is the only segment of usage growing in private clubs today. Our class participation for members is up 32% for the year due to increased interest, as well as the depth of instruction and expertise of the fitness team lead by Fitness Center Director Lindsey Sosovec. In addition, she has put together programming that encompasses a wide variety of interests and abilities. Concluding Comments I wanted to take a moment to thank the entire team but to especially congratulate Jane Smith on her upcoming retirement and new journey. Thank you for all you have done for the Club, the Members, the Staff, and for Shelly and me. I look forward to seeing you at the Club soon, Chad E. Becker, CCM GM/COO 14