Addendum to 2017-18 Sky Tavern Annual Report Sky Tavern Facility and Equipment Report The purpose of this document is to inform the City of Reno on the general condition of the Sky Tavern Area, the lodge, the ski lifts and the equipment that is needed to produce programing at the area. It is also to demonstrate that Sky Tavern, a 501c3 Nevada nonprofit corporation, is committed to improving the area to serve the community through varied programs, including the Sky Tavern Junior Ski Program now in its 70th season, by demonstrating a fiscal track record of caring for the area and equipment. Lifts 100% Operational Sky Ridge, triple chair America, triple chair Rocco, left & right platter lifts Pony, base area handle tow surface lift It should be noted that all maintenance and designs are governed by the insurance companies and tramway boards nation-wide through a standardized document know as B-77, the “bible” of ski lifts. Sky Tavern’s insurance company is Safehold Special Risks which specializes in ski area insurance. Our ski lift inspector is Jason R. Zakotnik, P.E. who sits on the B-77 board making him one of the most trusted experts on the subject of ski lifts. Unlike other states, the State of Nevada has no tramway board making Jason the final word on lift condition. Example of Lifts Annual Maintenance Tasks America Grip migration/ NDT rope inspection/ lube lap Carrier inspection and repair Service brake service(measure brake pads, replace air bladder, grease pivot points) Emergency brake(measure pads, inspect brake unit for cracks or lose parts) Gear box (oil sample, find leaking gasket, check all hardware for torque 480ft/lbs, check all fittings) Tension unit(measure chains, clean and lubricate rams, check hi/low safety, lubricate chains, paint as needed) Terminal structure ( paint as needed, grease carriage rollers, grease terminal sheaves, measure bull wheel liner depth, clean , UT test bullwheel, inspect bullwheel hub) Line work (lift/spin/grease every sheave replace sheaves if bad bearings or bad liners, check alignment of assembly, check for cracks and loose hardware) Tower bases for cracks, reseal bases Repair seat pads Check all safety circuits Service air compressor(change water separator, check all air lines and fittings) APU service

Rocco is the only original lift from the Fleischmann Foundation grant in 1967. It was named for Rocco Spina, famed Parks and Recs manager of the City of Reno. In the fall of 2017 Sky Tavern rebuilt both drive units for the first time since it was installed. Also, many electrical upgrades were installed such as deropment switches. This was a very expensive project, but one that will keep Rocco going until a carpet lift is installed sometime in the future. This lift gets a huge amount of use as kids progress from never being on for the first half of the program. By week 4 most kids have progressed to the chair lifts and Rocco sits mostly dormant again.

Notes on the attached 2017 Lift Inspection. No problems found, and all noted conditions were addressed before public opening. This is an annual inspection completed by Safehold just prior to opening at all resorts. A clarification about the drives in both .

Both chairlifts have electronic controls that check the position of all safety switches before allowing the motor to move the lift. Collectively this is called the drive. Both of our chairlifts use a system Base 10. It is very common and was the standard when they were installed. It is the same system used nation-wide on hundreds of lifts including at Mt. Rose Ski Tahoe. Being what electronics are, there is now a smaller, more robust system available that can replace a Base 10 unit. Think wired house phone compared to a smart phone. Base 10 works fine. Over the years ours have been updated through donations from other resorts. It is not unsafe at all and has been made very reliable the last few seasons again through effort. In our strategic plan replacing these systems is a five-year goal. This will allow the lifts to be operated for generations to come or until electronics are again made simpler and cheaper. Cost is $80,000 per lift. There is no safety advantage to changing, just simpler maintenance. Any safety issue would have been called out during inspection and would impact resorts across the country including our neighbors. Heavy Equipment ready for Winter

Sky Tavern owns four snowcats for winter slope grooming and a front-end loader used for summer maintenance and winter snow removal. Three are modern snowcats with the fourth best used as a parking lot cat only or an entrance conversation piece.

All are up to date on maintenance, are completely functionable, even the oldest. Sky Tavern is in a great position on snowcats as in the not so distant past we operated with only one modern unit until we purchased a second for $155,000. Because of State of California regulations Homewood Mountain Resort found it advantageous to donate the third snowcat to us last season. This relationship may continue in the future all due to the tax code and California State requirements on off road equipment.

Piston Bully North American headquarters is located in Reno and they have used Sky Tavern often as a testing and devastation area for their snowcats. Sky Tavern is not only paid for this, but receives use of snowcats and operators. No time table has been set for snowcat or loader replacement. The expected life is in excesses of ten years, twenty or more for the loader. Sky Tavern also owns or has been loaned several tractors and an off-road fork lift.

Small Equipment is considered the fleet of snow mobiles and other equipment owned such as generators, welders, off road vehicles, and landscaping equipment, saws and the like. Sky Tavern also owns machine shop equipment to maintain all other equipment and fixtures. All require repairs at time. Staff is more than able to maintain these machines. Grounds continued improvements

140 acres is a fair amount of land to maintain. Forest and slope management consume many hours. This also includes water management, maintenance of creeks, ponds and sediment catches. This requires renting equipment such as excavators that is not owned.

A concern has been the entrance to the aspen community venue. Since this is the site of weddings, concerts, camps and art gatherings, we wanted to improve the look and feel of the grounds leading to it. Improvements are the grading and seeding of the entrance to be followed by some pathways constructed after the grass takes root. This area is also part of the bike track for little kids so it is important to have it kid friendly.

Another area that a fair amount of effort has gone into is the south pond. This is a great part of Sky Tavern that is the entrance to Project Discovery. We have worked together to make it very usable summer and winter. It is home to a number of interesting critters including the otter the kids named Pop.

Bike Park and Trails ever expanding

Building bike trails is labor intensive. Several new trails have been constructed and old ones reborn. While the hope of even a sustaining income stream from mountain bike operation has been proved to be unrealistic, building trails is still the right thing to do for the community. Trail building is continuing. Events, which may include income, are filling the fall calendar.

Lodge, improving and much better than everyone thinks

When the builder of Sky Tavern was still alive he asked me what I thought we were doing. He said he built the lodge to last 30 years, 70 years ago. Well he did a better job than we gave him credit for. Structurally it proved sound coming through the feet upon feet of snow burying it in 2017 much better than its sister, the Reindeer Lodge down the hill. Much like any old building there is always something to fix and while at some point we will replace it, for now it works.

Of the original conditions of the lodge called out in the facilities survey from 2016, one has been untouched. The sidewalk leading into the first floor needs to be replaced because of a draining issue. This is not a huge concern but still needs to be addressed. If snow is not early this may be repaired this fall. The other two issues of the roof needing resealing and the chimney mason work have been finished.

Temporary buildings are planned to house special programs such as the Race Team and SkyKids. This process had to be placed on hold until the fire system was completed by the City of Reno. The fire system was certified operational by Sierra Fire on July 24,2018 with installation first started in 2010.

Lodge improvements made by Sky Tavern

Kitchen improvements with new equipment Coating of the east wing roof. Carpet Video and audio equipment Plumbing fixture replacement Hot water heater replacement (August) Propane added to the kitchen Finishing of the third floor not completed by contractor hired by the City General maintenance and painting inside and out

Financial Discloser As of 7/25/2018, Sky Tavern Inc. states that it holds in a separate account from any operations accounts, at Heritage Bank of Nevada, a balance in excess of the $16,602.80 amount stipulated in the agreement between the City of Reno and Sky Tavern, for the use of maintenance and/or replacement of the Sky Tavern Ski Area grounds, attached buildings, ski lifts and other equipment. In fiscal 2017-18 Sky Tavern is reporting spending $40,533 in labor and $38,500 in materials totaling $79,033 towards the maintenance and improvement of the Sky Tavern ski area and associated equipment. This is a separate expense from programing or administration costs and represents a commitment of the nonprofit to the betterment of the ski area as a community asset for recreation and training the next generation of Olympians. This amount has fluctuated greatly over the years as needs arise and will continue to do so. Please note that this P&L represents 12 months of a 14-month year for 2017-18. The Sky Tavern Board voted to change the fiscal year from July 1 to September 1 to allow for a clearer budgeting process and picture of seasonal spending. Fiscal 2018-19 will be 9/1 to 8/31 and true going forward.This accounts for the variation between the charts presented in the Annual Report and the P&L attached here. Like all businesses what we can spend depends on what we have in the bank. Being a 501c3 we can solicit donations for projects and have successfully. Until a Development Director is hired or donations increase due to Board and staff efforts, the working budget for 2018-19 will roll over from 2017-18. Changes in the budget will be voted on at the September Sky Tavern Board of Directors meeting if need be. A daily operating budget for mid-week operations has been presented to the Board in the past. This will come into play if there is enough natural snow for mid-week programing this season. Ski area management is a tricky business. Depending on the weather is very much being a farmer. We have planned programs and been foiled by no snow and too much snow the same week. This is a very dedicated group to Sky Tavern, its mission and the kids. We are professionals and know more about all things Sky Tavern than any other group possibly could. Sky Tavern Inc. intends to continue in its role as good stewards of the facility for generations to come and remain as a valued partner with the City of Reno.

Bill Henderson Executive Director/General Manger Sky Tavern EIN 88-275590

Membership of Junior Ski Program 2214 members, over 1500 kids. Down from 2017 due to no snow SkyKids and the Race Team continue to grow!

Program Registration Scholarships: 151 applications granted including 37 from Reno Housing Authority ($155 Pass + $50 gear voucher + up to $120 bus ticket if recipient participated each weekend) Scholarship applications were down due to weather. Applicants tend to apply late in the year and Sky Tavern tries to be accommodating. Equipment Loan Program: $38,500 in subsidized value through donations. Winter Operations 10 Program Lesson days 6 Adult Training days 4 Open Ski Days Weather held us to just under 20,000 skier visits. 2018 was a very calm season for the Ski Patrol with no injuries requiring an ambulance ride. The week-long Sky Tavern Adaptive Program produced in partnership with the City of Reno, Disabled Veteran’s Learn to Ski Camp, was shorten due to weather. More than 20 community and fundraising events are still a core undertaking of Sky Tavern. Summer concerts, Ski Swap, Pray for Snow Part, Sunrise Tavern, Warren Miller Movie, Chili Cook-off and countless events with our partners, Bobos Ski & Board and Scheels, gives the chance to tell the story and get Reno involved. Summer use in 2017 was way down because most of the base remained underwater from winter 2017 snow. Summer 2018 has seen a huge increase over any year with new mountain bike trails, events and summer camps. More weddings are booked than in any other year

Membership by ethnicity the child identifies with

Sky Tavern Inc. Budget vs. Actuals: 2017-2018 Budget - FY18 P&L July 2017 - June 2018

Please note that this P&L represents 12 months of a 14 month year for 2017-18 The Sky Tavern Board voted to change the fiscal year from July 1 to September 1 to allow for a clearer budgeting process. Fiscal 2018-19 will be 9/1 to 8/31 This is the variation between the charts presented in the Annual Report and here. Total % of Actual Budget over Budget Budget Revenue 4000 SPECIAL EVENTS INCOME 0.00 5,000.00 -5,000.00 0.00% 4000.08 Summer Camps 4,375.00 15,000.00 -10,625.00 29.17% 4000.09 Summer Competitions 0.00 3,500.00 -3,500.00 0.00% 4000.10 Summer Concert Series 802.00 5,000.00 -4,198.00 16.04% 4000.11 Bike Park Events 0.00 1,500.00 -1,500.00 0.00% 4000.2 Ski Swap 113,620.84 98,000.00 15,620.84 115.94% 4000.4 Pray for Snow Party 0.00 3,000.00 -3,000.00 0.00% 4000.41 Winter Competitions 0.00 2,000.00 -2,000.00 0.00% 4000.42 Snow Play 0.00 2,000.00 -2,000.00 0.00% 4000.43 Friday Program 0.00 8,000.00 -8,000.00 0.00% 4000.5 Bring A Friend Day 0.00 2,850.00 -2,850.00 0.00% 4000.6 Special Event Rentals 5,250.00 4,000.00 1,250.00 131.25% 4000.9 Golf Tournament 9,740.00 9,000.00 740.00 108.22% Total 4000 SPECIAL EVENTS INCOME $ 133,787.84 $ 158,850.00 -$ 25,062.16 84.22% 4001 REGISTRATION 725.00 0.00 725.00 4001.1 Registration Fees 277,761.84 319,000.00 -41,238.16 87.07% 4001.2 Registration Refunds -3,071.00 0.00 -3,071.00 4001.5 Transportation Fees 6,495.00 27,000.00 -20,505.00 24.06% Total 4001 REGISTRATION $ 281,910.84 $ 346,000.00 -$ 64,089.16 81.48% 4002 Race Team 285.00 0.00 285.00 4002.1 Race Team Entry Fees 5,235.00 7,000.00 -1,765.00 74.79% 4002.3 Race Team Registration Fees 8,710.00 10,500.00 -1,790.00 82.95% 4002.4 Race Team Rental 0.00 750.00 -750.00 0.00% 4002.5 Race Team Logo Wear Sales 0.00 2,000.00 -2,000.00 0.00% Total 4002 Race Team $ 14,230.00 $ 20,250.00 -$ 6,020.00 70.27% 4003 Snowsport Equipment Income 25,720.00 20,000.00 5,720.00 128.60% 4025 Project Discovery Lease 3,500.00 3,500.00 0.00 100.00% 4030 Restricted Donations 20,000.00 5,000.00 15,000.00 400.00% 4030.5 Bike Park 0.00 1,500.00 -1,500.00 0.00% 4030.6 0.00 10,000.00 -10,000.00 0.00% 4030.7 Rental Donation 0.00 500.00 -500.00 0.00% 4030.8 Alpine 0.00 30,000.00 -30,000.00 0.00% 4031 Home Depot - Lodge Improvements 1,500.00 0.00 1,500.00 4032 Scholarship 15,000.00 15,000.00 0.00 100.00% 4035 Sky Kids Program 0.00 1,000.00 -1,000.00 0.00% 4036 Adaptive Program 0.00 2,000.00 -2,000.00 0.00% 4037 Race Program 0.00 2,000.00 -2,000.00 0.00% 4040 Program/Development Director 6,000.00 5,000.00 1,000.00 120.00% Total 4030 Restricted Donations $ 42,500.00 $ 72,000.00 -$ 29,500.00 59.03% 4045 Non-Restricted Donations 82,562.14 50,000.00 32,562.14 165.12% 4050 ON-HILL PROGRAM INCOME 0.00 0.00 0.00 4051 Logo Wear 4,939.55 5,000.00 -60.45 98.79% 4100 Temporary Badges 2,114.00 3,500.00 -1,386.00 60.40% Total 4050 ON-HILL PROGRAM INCOME $ 7,053.55 $ 8,500.00 -$ 1,446.45 82.98% 4200 CONCESSIONS 20,573.24 45,000.00 -24,426.76 45.72% 4210 Meal Passes 6,370.00 10,000.00 -3,630.00 63.70% 4220 Meal Pass Refunds -140.00 0.00 -140.00 Total 4200 CONCESSIONS $ 26,803.24 $ 55,000.00 -$ 28,196.76 48.73% 4250 Catering Sales 0.00 1,000.00 -1,000.00 0.00% 4300 Other Sales 0.00 500.00 -500.00 0.00% Total Revenue $ 618,067.61 $ 735,600.00 -$ 117,532.39 84.02% Cost of Goods Sold 5001 Cost of Goods Sold 0.00 0.00 0.00 5001.10 COGS - Race Team Entry Fees 0.00 7,000.00 -7,000.00 0.00% 5001.2 Concession Food Purchases 18,486.50 27,500.00 -9,013.50 67.22% 5001.3 COS - Golf Tournament 7,440.77 7,000.00 440.77 106.30% 5001.4 Logo Wear Purchases 3,622.22 3,500.00 122.22 103.49% 5001.5 COS - Ski Swap 3,668.58 4,000.00 -331.42 91.71% 5001.6 COS - Summer Concert Series 0.00 300.00 -300.00 0.00% 5001.7 COS - Pray for Snow 365.00 800.00 -435.00 45.63% 5001.8 COS - Catering and Lodge Rental 0.00 500.00 -500.00 0.00% 5001.9 COGS - Other Events 0.00 2,000.00 -2,000.00 0.00% 5002 Ski Vendor payments 83,783.99 81,340.00 2,443.99 103.00% Total 5001 Cost of Goods Sold $ 117,367.06 $ 133,940.00 -$ 16,572.94 87.63% Total Cost of Goods Sold $ 117,367.06 $ 133,940.00 -$ 16,572.94 87.63% Gross Profit $ 500,700.55 $ 601,660.00 -$ 100,959.45 83.22% Expenditures 5010 Accounting 1,693.99 800.00 893.99 211.75% 5030 Advertising & Marketing 60.75 0.00 60.75 5031 Website 5,953.50 4,000.00 1,953.50 148.84% 5032 Internet Social Marketing 3,079.94 4,000.00 -920.06 77.00% 5033 Program Advertising & Marketing 3,015.99 10,000.00 -6,984.01 30.16% 5034 Events Advertising & Marketing 1,132.44 1,500.00 -367.56 75.50% Total 5030 Advertising & Marketing $ 13,242.62 $ 19,500.00 -$ 6,257.38 67.91% 5060 Dues & Subscriptions 1,965.07 2,300.00 -334.93 85.44% 5065 Filing Fees 0.00 75.00 -75.00 0.00% 5066 Bank Fees 185.45 307.00 -121.55 60.41% 5070 Insurance 0.00 0.00 0.00 5071 Insurance-Liability 21,386.00 28,000.00 -6,614.00 76.38% 5072 Insurance-Property 12,713.20 6,000.00 6,713.20 211.89% 5073 Auto Insurance - Buses 5,158.00 10,000.00 -4,842.00 51.58% 5074 BOD Insurance 1,044.00 1,100.00 -56.00 94.91% 5075 Road vehicle insurance 2,089.00 1,135.00 954.00 184.05% 5082 Workers Comp Insurance 11,623.00 22,000.00 -10,377.00 52.83% Total 5070 Insurance $ 54,013.20 $ 68,235.00 -$ 14,221.80 79.16% 5110 Volunteer Appreciation 1,580.21 700.00 880.21 225.74% 5120 MTN-CIP/GENERAL 0.00 0.00 0.00 5122 CIP/Radio System 8,703.00 0.00 8,703.00 5129 On-hill program supplies 603.75 0.00 603.75 Total 5120 MTN-CIP/GENERAL $ 9,306.75 $ 0.00 $ 9,306.75 5200 MTN - PAYROLL 0.00 0.00 0.00 5210 Salary - Mountain Manager 0.00 50,000.00 -50,000.00 0.00% 5211 Wages - Lift Ops 5,001.39 22,000.00 -16,998.61 22.73% 5212 Wages - Mtn Year Around 67,669.77 35,000.00 32,669.77 193.34% 5213 Wages - Janitorial 0.00 2,000.00 -2,000.00 0.00% 5216 Wages - Grooming 1,757.60 5,000.00 -3,242.40 35.15% 5217 Wages - Office Labor 24,382.00 35,000.00 -10,618.00 69.66% 5218 Wages - Concessions Payroll 0.00 4,000.00 -4,000.00 0.00% 5225 Wages - Executive Director 65,000.00 65,000.00 0.00 100.00% 5226 Development Director 0.00 37,000.00 -37,000.00 0.00% 5227 Athletic/Summer Director 0.00 6,000.00 -6,000.00 0.00% 5228 Catering/Special Events 0.00 100.00 -100.00 0.00% 5493a Wages - Bus Driver 3,146.00 10,000.00 -6,854.00 31.46% Total 5200 MTN - PAYROLL $ 166,956.76 $ 271,100.00 -$ 104,143.24 61.58% 5230 OPERATIONS GENERAL - MTN 0.00 0.00 0.00 5231 Lease Vehicles 0.00 4,500.00 -4,500.00 0.00% 5232 Construction Materials 750.00 0.00 750.00 5234 Materials - General 300.00 10,000.00 -9,700.00 3.00% 5235 Supplies - Tools 14.80 5,000.00 -4,985.20 0.30% 5236 Repair and Maintenance - Lodge 15,779.81 5,000.00 10,779.81 315.60% 5237 Heavy Equipment Rental 7,649.52 5,000.00 2,649.52 152.99% 5238 Permits 5,013.00 1,140.00 3,873.00 439.74% 5239 Equipment Purchase 0.00 10,000.00 -10,000.00 0.00% Total 5230 OPERATIONS GENERAL - MTN $ 29,507.13 $ 40,640.00 -$ 11,132.87 72.61% 5240 MTN - SKI LIFT MAINT. 2,105.00 0.00 2,105.00 5243 Rocco 8,649.10 10,000.00 -1,350.90 86.49% 5245 Sky Ridge Chair 1,976.21 5,000.00 -3,023.79 39.52% 5246 America Lift 184.21 5,000.00 -4,815.79 3.68% Total 5240 MTN - SKI LIFT MAINT. $ 12,914.52 $ 20,000.00 -$ 7,085.48 64.57% 5250 MTN - EQUIPMENT MAINT. 0.00 0.00 0.00 5251 Other Mountain Equipment 5,351.02 1,000.00 4,351.02 535.10% 5254 Snowmobiles 100.68 1,000.00 -899.32 10.07% 5255 Snow Groomer - Bombardier - 105 2,277.13 5,000.00 -2,722.87 45.54% 5259 Snow Groomer 106 275.59 5,000.00 -4,724.41 5.51% Total 5250 MTN - EQUIPMENT MAINT. $ 8,004.42 $ 12,000.00 -$ 3,995.58 66.70% 5260 MTN - REPAIR & MAINTENANCE 0.00 0.00 0.00 5261 Equipment 856.13 0.00 856.13 5262 Materials 774.31 0.00 774.31 Total 5260 MTN - REPAIR & MAINTENANCE $ 1,630.44 $ 0.00 $ 1,630.44 5270 MTN - FUEL - General 0.00 0.00 0.00 5273 Diesel 6,194.39 12,980.00 -6,785.61 47.72% 5274 Gasoline 2,458.34 3,384.98 -926.64 72.62% 5275 Lubricants 1,328.68 1,354.28 -25.60 98.11% 5276 Welding Fuel 0.00 111.56 -111.56 0.00% Total 5270 MTN - FUEL - General $ 9,981.41 $ 17,830.82 -$ 7,849.41 55.98% 5290 MTN -UTILITIES 0.00 4,767.25 -4,767.25 0.00% 5291 Sky Ridge 4,017.71 3,242.35 775.36 123.91% 5294 America Chair 1,941.54 3,982.41 -2,040.87 48.75% 5295 Rocco/Pony 1,558.11 1,191.45 366.66 130.77% 5296 Lodge 2,567.91 2,344.51 223.40 109.53% 5297 Propane for Lodge 4,168.57 10,628.66 -6,460.09 39.22% 5298 Propane for Shop 0.00 1,000.00 -1,000.00 0.00% Total 5290 MTN -UTILITIES $ 14,253.84 $ 27,156.63 -$ 12,902.79 52.49% 5318 Office Supplies 1,198.40 3,800.00 -2,601.60 31.54% 5319 Office Software & Computers 6,786.29 5,500.00 1,286.29 123.39% 5422 Continuing Education 0.00 600.00 -600.00 0.00% 5423 Postage 0.00 500.00 -500.00 0.00% 5432 Telephone 3,403.56 1,900.00 1,503.56 179.13% 5490 ON HILL PROGRAM OPERATIONS 0.00 0.00 0.00 5492 Adaptive 1,330.97 2,000.00 -669.03 66.55% 5492b Equipment/Adaptive 5,341.86 0.00 5,341.86 Total 5492 Adaptive $ 6,672.83 $ 2,000.00 $ 4,672.83 333.64% 5493 Buses 2,765.00 0.00 2,765.00 5493b Bus Mileage 0.00 10,000.00 -10,000.00 0.00% Total 5493 Buses $ 2,765.00 $ 10,000.00 -$ 7,235.00 27.65% 5494 Race Program - General 1,082.16 0.00 1,082.16 5494a Equipment 6,505.34 2,000.00 4,505.34 325.27% 5494c Memberships 1,025.00 0.00 1,025.00 5494d Race Entry Fees 5,235.00 0.00 5,235.00 Total 5494 Race Program - General $ 13,847.50 $ 2,000.00 $ 11,847.50 692.38% 5495 Ski School - General 0.00 1,200.00 -1,200.00 0.00% 5495b PSIA Membership Dues 290.00 0.00 290.00 5495c Training 0.00 1,000.00 -1,000.00 0.00% Total 5495 Ski School - General $ 290.00 $ 2,200.00 -$ 1,910.00 13.18% 5496 Ski Patrol - General 0.00 0.00 0.00 5496a Equipment 0.00 2,000.00 -2,000.00 0.00% 5496b Supplies 620.40 400.00 220.40 155.10% Total 5496 Ski Patrol - General $ 620.40 $ 2,400.00 -$ 1,779.60 25.85% 5497 Snowsport Equipment Rental 2,151.29 6,000.00 -3,848.71 35.85% Total 5490 ON HILL PROGRAM OPERATIONS $ 26,347.02 $ 24,600.00 $ 1,747.02 107.10% 5600 CONCESSIONS EXPENSE 0.00 0.00 0.00 5620 Concessions - General 0.00 0.00 0.00 5621 Equipment 57.78 3,000.00 -2,942.22 1.93% 5622 Supplies 1,836.41 300.00 1,536.41 612.14% 5623 Repairs & Maintenance 646.24 1,000.00 -353.76 64.62% Total 5620 Concessions - General $ 2,540.43 $ 4,300.00 -$ 1,759.57 59.08% Total 5600 CONCESSIONS EXPENSE $ 2,540.43 $ 4,300.00 -$ 1,759.57 59.08% 5700 FUNDRAISING EXPENSE 250.00 0.00 250.00 5701b Grant Writing Expense 2,512.50 5,000.00 -2,487.50 50.25% 5701c Capital Fundraising Plan 0.00 5,000.00 -5,000.00 0.00% 5701d Capital Plan Oversight 0.00 7,000.00 -7,000.00 0.00% Total 5700 FUNDRAISING EXPENSE $ 2,762.50 $ 17,000.00 -$ 14,237.50 16.25% 5701a Printing & Reproduction 2,399.89 3,000.00 -600.11 80.00% 5845 Merchant credit card fees 10,430.74 10,000.00 430.74 104.31% 5846 Online Registration Fees 2.00 0.00 2.00 65000 Operations 0.00 0.00 0.00 65020 Postage, Mailing Service 365.88 0.00 365.88 65050 Telephone, Telecommunications 79.99 0.00 79.99 Total 65000 Operations $ 445.87 $ 0.00 $ 445.87 66000 Payroll Expenses 1,222.99 1,000.00 222.99 122.30% Taxes 14,531.10 20,000.00 -5,468.90 72.66% Wages 17,427.19 4,000.00 13,427.19 435.68% Total 66000 Payroll Expenses $ 33,181.28 $ 25,000.00 $ 8,181.28 132.73% 68300 Travel and Meetings 0.00 0.00 0.00 68310 Conference, Convention, Meeting 1,475.26 1,000.00 475.26 147.53% 68320 Travel 46.01 1,000.00 -953.99 4.60% Total 68300 Travel and Meetings $ 1,521.27 $ 2,000.00 -$ 478.73 76.06% 6999 Uncategorized Expenses 220.00 0.00 220.00 Bank Charges 10.00 0.00 10.00 Reimbursements 260.00 0.00 260.00 Unapplied Cash Bill Payment Expenditure 0.01 0.00 0.01 Uncategorized Expenditure 1,034.76 0.00 1,034.76 Total Expenditures $ 417,779.83 $ 578,844.45 -$ 161,064.62 72.17% Net Operating Revenue $ 82,920.72 $ 22,815.55 $ 60,105.17 363.44% Other Revenue 4400 Interest Income 93.37 0.00 93.37 Total Other Revenue $ 93.37 $ 0.00 $ 93.37 Net Other Revenue $ 93.37 $ 0.00 $ 93.37 Net Revenue $ 83,014.09 $ 22,815.55 $ 60,198.54 363.85%

Thursday, Jul 05, 2018 09:12:26 AM GMT-7 - Cash Basis

Maintenance Category Line Item heavy equipment 5237 lodge 5236 construction materials 5262, 5232, 5234 lifts 5240 snowcats 5255, 5259 Other hill equipment 5251 Safehold Special Risks, Inc. Lift Resort: Sky Tavern Survey Report Survey Date: December 5, 2017

Resort: Sky Tavern Survey Date December 5, 2017 Location: 21130 Mt. Rose Highway, Reno, Nevada Report Date December 12, 2017 Accompanied by: Ben Jones, Trip

A visual field survey of the above area was performed by Jason Zakotnik, P.E. using the ANSI B77.1 2011 as a guide.

All items of non-conformance listed in the previous survey dated: November 30, 2016 have been complied with in full unless noted with an asterisk below.

Listed below are additional items of non-conformance revealed during this survey:

ALL ITEMS REQUIRE CORRECTION BY: Before opening to the public unless otherwise noted: RESPOND IN WRITING OF THE STATUS OF THESE NON-CONFORMANCE ITEMS BY: January 12, 2018

Item No ANSI B77 / Other Reference Description þ All Lifts 1 Safehold Special Risk Please complete the “Items To be Completed” list as discussed and which is also attached as page 3 of this report. 2. Sky Tavern Maintenance Complete and document all planned maintenance remaining for all of these lifts. Schedule 3. X.3.3.1 Review item from last year. Acknowledge that this has been done. All lift maintenance manuals should be reviewed and the written maintenance schedules revised to reflect all required maintenance at the required maintenance intervals. This applies to daily, weekly, monthly, yearly, and off year items. THIS ITEM REFERS TO THE SURFACE LIFTS AND TOWS AS WELL. 5. X.3.3.1 Review item from last year. Acknowledge that this has been done. In ANSI B77.1- 2011 items that are required annually or monthly are required every year or month, regardless of the number of hours that the equipment is run. Ensure that this is reflected on maintenance schedules and documentation. 6. X.3.3.1 / Annex A / Annex The haul rope inspector needs to understand Annex A and Annex B if they are B qualified to inspect the haul ropes. Before next inspection Skyridge – YAN / Hall 1A 4.3.3.1 The Base 10 lift control system is being influenced by RF interference which causes the lift to over accelerate. The drive should be serviced by a qualified lift electrician. America - YAN 2A 4.3.3.1 The mouse trap drop dog activation arm needs to be cleaned and lubricated. It is very sticky and hard to pull out. 2B 4.3.3.1 The normal stop, emergency stop, and emergency brake only stops were longer than specified in the B77.1-2011 standard. Brakes need to be adjusted so that stops are within required distances and are smooth. Rocco Right Surface Lift 3A 5.3.3.2 The lift needs aligned. Rocco Left Surface Lift 4A 5.3.3.1 Every assembly needs a deropement wire placed in the proper location so that a deropement will cut the wire. 4B 5.1.1.11.1 This lift has not been run, maintained, or inspected for several years. Before it can be run to the public it needs to be inspected by Qualified Personnel to ensure compliance with the original design and all de-grandfathered items from the ANSI B77.1 – 2011 standard. The original design information and acceptance test documentation should be sent to me. Pony wire rope tow Not set up-could not run Safehold Special Risks, Inc. Lift Resort: Sky Tavern Survey Report Survey Date: December 5, 2017

Item No ANSI B77 / Other Reference Description þ 4A 6.3.3.1 Set up lift per ANSI B77.1-2011 and manufacturer’s instructions. Make sure that stop gate placements, stopping distance, rope twist, and acceleration meet the requirements in B77.1-2011. Test and document all of the items above, as well, as the operation of all operation and protection circuits. 4B 4.3.3.1 Replace the handle splice each year. Other comments: Other items discussed: • Again, the lift maintenance program is MUCH IMPROVED from all previous years that I have been to Sky Tavern. o NDT records, dynamic load tests, and wire rope inspections are up to date. o Motor room cleanliness much improved. o Knowledge of the maintenance staff (Ben Jones) is coming along. • Ben should be commended for his work over the last year. • If the electrical is going to be changed on Rocco next year it needs to be certified by an Engineer that it conforms to ANSI B77.1-2017.

Safehold Special Risks, Inc. Lift Resort: Sky Tavern Survey Report Survey Date: December 5, 2017

ITEMS TO BE COMPLETED PRIOR TO OPENING

During the annual inspection all of the following items may or may not be in place for the inspector to observe. It is understood that you remove many of these items when the lift is not being operated for public operation. It is the responsibility of the owner to have all of these items in place prior to operation each lift for public use.

X.1.1.5.1 Vertical clearances. Install appropriate barriers where there is inadequate clearance under the lift line.

X.1.1.9 +.1 +.2 Loading and unloading areas. Properly prepare the snow surface at loading and unloading areas. Mark the “wait here” and “load here” points.

X.1.2.6 Brakes and rollback devices. Torque test all brakes according to the approved torque test procedures. As a minimum the testing shall be done monthly during the operating season. Also test the brake activation devices for backstops and drive sheave brakes.

X.1.2.10.2 Counterweights. Install appropriate fencing around counterweights to prevent unauthorized persons from coming in contact with or passing under the counterweight.

X.2.3.2 Provisions for automatic stop devices. Where appropriate, properly install all removable stop gate wands and equipment.

X.1.5 Provisions for operating personnel. Provide properly tagged and certified fire extinguishers that are correctly hung in all operator and attendants’ stations and in the machine room. Make sure that they are sized and appropriate type for the location.

X.1.5 Provisions for operating personnel. Supply operating instructions and emergency procedures in all operators and attendants stations. Make sure communications are in place and operating properly.

X.2.13.4 Emergency lighting. For those lifts that operate at night, verify that the emergency lighting is properly installed and functional to permit unloading of the lift, emergency evacuation and operation of the evacuation drive.

X.3.1.2 Additional signs. Post all required signs at loading and unloading areas as detailed in ANSI B- 77.1-2011 Annex D.

X.3.2.4.1 Control of passengers. Install appropriate fencing and gates at the loading area for the marshaling of passengers.

X.3.2.5.7 Evacuation. Review your evacuation plan and update as necessary. Conduct and document training in Operation Log including estimated time to completely evacuate a fully loaded lift.

X.3.3.1 General (Maintenance). Complete all ropeway maintenance that is defined on the maintenance schedule as required prior to public operations. Make sure you have a written maintenance schedule.

Safehold Special Risks, Inc. Lift Resort: Sky Tavern Survey Report Survey Date: December 5, 2017

The following additions and/or changes to the uphill transportation equipment have been made since the last survey:

This periodic survey consisted of a visual and audible examination of structures and equipment in terminals or stations and such review of the towers, trackage, clearances, and conditions of clearings as was possible by riding or walking full length of each tramway.

No examination was made of such detail parts of the equipment as bolts, bearings, welds, axles, shafts, castings, rope grips, hangers, anchorages, etc., since such components must be examined periodically during the operations and maintenance program by the owner to insure the safety of the public. While certain aspects of the overall safety requirements, such as foundations, grounding, etc. could not be inspected in detail, evaluations contained in these report are based upon the general appearance of each tramway, and statements of operation and/or supervisory personnel. Also, no attempt was made to check the physical requirements of the various components from a design standpoint, and responsibility for the design belongs to the owner.

This is a report of the audio/visual field survey of your tramway/tow utilizing the ANSI B77.1-2011

While this report was made to provide information to insurance underwriters, you may find it appropriate to provide copies to other organizations or agencies with which you are involved. If so provided, we would suggest you provide such entities with copies of your responses to any items of non- conformance.

This survey is not intended to provide engineering information, advice or consultation to the ski area, beyond that required by the General Inspection provisions of the standard, as they have been interpreted by the ANSI B77 Committee.

Send notification of compliance by mail, e-mail or FAX to: Jason R. Zakotnik, P.E. P. O. Box 1256 Pinedale, WY 82941 C = 307 733 6187

[email protected] Submitted By: Jason Zakotnik, P.E. Date: December 12, 2017

Inspector's Signature

Report e-mailed to: Ben Jones, Bill Henderson, Wally Shank, [email protected]