PLANNED DEVELOPMENT Mineola, Texas

AUGUST 28, 2019 RIO SABINE, LLC

1508 Old Mill Road, Salado, TX 76571 tjjones@energylodge.com Telephone: 214.668.4548

1

Table of Contents

Executive Summary……………………………………………..2

Business Description…………………………………………….2

Opportunity……………………………………………………...2

Description…………………………………………………….…2

Survey- JDS Surveying Inc. ……………………………………3

Aerial Photo of Land……………………………………………4

Site Plan A……………………………………………………….5

Site Plan B……………………………………………………….6

Status……………………………………………………….……7

Numbers…………………………………………………………7

Competitive Advantage………………………………………...7

Economic Advantage…………………………………………...7

Design……………………………………………………………7

Project Location………………………………………….……..8

Marketing……………………………………………….………9

Target Market…………………………………………..………9

Competitive Position within Target Market…………………10

Industry Analysis………………………………………………11

Industry Description…………….……………………………..11

Project Feasibility…...…………………………………………11

Company Structure/Ownership/Management Team… ……12

Financial Plan………………………………………….………15

Proforma ………………………………………………………16

Operating Expenses…………………………………………...16

Construction Costs………………………….…………………16

2

Executive Summary

TJ Jones and company, along with builder Marvin Hlavaty, created a highly profitable

professional lodging development for companies doing business in oil and gas resource

plays for the last 10 years. Partnered again, TJ Jones and Marvin Hlavaty formed Rio

Sabine to develop projects in Mineola, Texas, subject here an improved 55-year-old and

better, upscale community. Planned developer has purchased the land and the City of

Mineola has rezoned to multi family. Rio Sabine is currently working on financing the

entrance, utilities, and phase 1 of construction.

Subject property is in an excellent location, positioned across the street from a nursing

home. The site is beautiful and lush, covered in pine and various other hardwoods,

featuring multiple large green belts. Only 1.5 hours from the DFW Metroplex, this area

is a lovely place to get away and enjoy a slower community life. Mineola is a certified

retirement city in Texas with limited development in the city limits.

Rio Sabine, LLC will develop the land in 4 separate phases. To ensure quality, the

retirement community will be heavily deed restricted and managed.

Phase I will cost approximately $1,640,000 to develop. All utilities, land, phase 1 and

entrance is included in the cost.

This is a product specifically suited to the needs of those looking for an exclusive, well

maintained, high end and comfortable place to live.

Rio Sabine, LLC will build an inconspicuous duplex style, gated compound in Mineola,

Texas, a certified retirement city which will cost $1,640,000 to develop phase I and will

provide $175,440.00 in annual revenue after operating expenses.

Business Description

Opportunity

Rio Sabine, LLC has found a niche as a retirement community provider to those looking

to downsize maintenance and live near others in their same socio-economic status, in a

town certified for retirees.

Description Subject consists of inconspicuous duplex style units. The duplexes can include all utilities,

expanded basic cable, high speed internet, water and electricity. Gated entrance with fishing

pond and fountain features. The goal of the developer is to disguise the fact the building

really is a duplex, to create the illusion of a large single family home from the

streets/drives, and to foster the “individuality” feeling, and privacy from the other, for the

tenants/owners of each side of the duplex. Accomplished with the offset floor plans and

by varying materials and finishes, adding selected gable roof forms in key positions

around the facades, where key features (entries/porches, etc) occur. Architects treated the

design slightly different in size and location between the two plans, so the facades

wouldn’t be exactly alike. Designers instilled a simple, usually hipped roof form around

the buildings, with gable forms and timber open detailing where the user/owner would

generally see them and appreciate them.

3

4

5

6

7

Status Land Purchased

All Architectural and Engineering Plans Complete

Property Rezoned

Ready to Build

4 x 2 Bed/ 2 Bath gross monthly income $ 7,800

4 x 3 Bed/ 2 Bath gross monthly income $ 9,600

Effective Monthly Gross Rental Income $ 17,400

Competitive Advantage

Economic Advantage:

This project can save clients currently living in houses 50% on living

expenses. Taxes and insurance will be lower in most cases.

Design

Traditional House in Neighborhood VS 55 and Better Reserve

House

• Bills, Maintenance, Lawn Care

• Isolated

• Young families, loud children, different community goals

• Accessible to drive by crime, if not gated

55 and better Reserve

• Architecturally designed to blend with the beautiful landscape

• Specifically designed to meet the needs of specific age range by providing certain

desirable amenities

• Maintenance and Landscaping provided

• 55 and better community will be private, upscale and gated

• Water Features, Large Green Belts, Walking Trails and Recreation Areas

• Gated Entrane

• Additional Services Provided

8

Project Location 55 and better community is located in Mineola,

Texas, strategically placed in a certified

retirement designation near easy travel to Dallas.

The town incorporated in 1877 and is in the

heart of the timber belt. During the

community's first sixty years, farm products

included cotton, livestock, fruit, and berries.

By 1930 the population was 3,000, and by

1970 it was 4,000. Diversified farming gave

way to cattle raising and watermelon crops.

Subsequently, sweet-potato farming, a

creamery, a nursery, and a company that

supplies poles and pulpwood to the

telephone company helped the economy.

The town remains a shipping center and is home to a women’s clothing manufacturer,

sporting goods sales facilities, fertilizer and cattle feed companies and The Wood County

Airport, five miles north of Mineola, all provide employment for many people. Lake Fork

and nearby Lake Holbrook attract residents and visitors.

The Mineola Nature Preserve on the Sabine River encompasses 2,911 acres located in

Wood County, and is home to 193 species of birds, numerous wildlife, buffalo, longhorn

cattle, and a pristine wetlands environment. Owned by the City of Mineola, this is part of

a comprehensive development plan to protect natural wildlife and habitat for future

generations. This area is great for walking, hiking, biking, birding, wildlife viewing, with

over 20 miles of equestrian trails, fishing ponds, picnic areas, camping areas,

Recreational Vehicle Utility Connections at The Derby, which consists of two pavilions

with restrooms, playground and beehive viewing area. There is an abandoned rail bed

that lends itself to accommodate walkers and is recognized by historical markers, such as

the Hasinai Tribe of the Caddo Indian Nation. The Preserve is in the top 15 city parks in

the nation, a top choice destination for educators, birders, hikers, bikers, equestrians,

local, regional, and national groups. In many respects, the site is still in the visionary

state, with both progress and plans continuing to develop.

Mineola was chosen as a National Main Street City by the National Trust for Historic

Preservation. The Main Street Board’s mission is to use historic preservation as a method

for economic growth in the community. Since its designation the program has produced

the development of a strong, focused historic downtown district, with over eleven million

dollars of investment made by private and public funds in the central business district.

Main Street is the heart and soul of a community and with the city, merchants, and the

community's strong commitment to revitalizing the historic homes and downtown area,

Mineola continues to establish itself as a great place to be and live.

Local Attractions include, Mineola Nature Preserve, Depot Railroad Museum, Mineola

Historical Museum, Select Theatre and Lake Country Playhouse, Lake Fork, Lake

Holbrook

9

10

Marketing TJ Jones and company have been running and filling apartments and rental

commercial properties in east and south Texas for the past 10 years. They have gained

complete understanding of lease agreements and sales contracts, have knowledge of corporate

lodging and have many helpful business and personal contacts, team feels these will help in

the marketing of said development. Jones is a real estate broker and is comfortable finding

buyers and or renters. Jones, partnering with local real estate offices will begin

marketing by reaching out to local brokers via email, text and mass market web

listings. Will create posts for aplaceformoms.com, and reach retirement living

brokers/referral agents. Next, Jones will make appointments and personally invite

brokers and agents, face to face, knowing that this method is most effective in

introducing opportunities, to view the property. Jones will obtain the broker’s contact

information and keep them updated on the progression of the project with emails and

phone calls. A meeting room will be rented out in Tyler to showcase and tell brokers

about the property. The DFW, Tyler and local MLS will be invited to ensure the

maximum number of realtors will attend the meeting. The goal of the first meeting

will be to target Brokers with clients looking for a quiet place to retire from the city,

empty nesters looking for a new home for the next chapter of life. Meetings will be

set with these offices and all will be invited to a catered event at the property. An

intensive social media campaign will be launched to promote the project with

multiple posts per day on various media outlets, including Facebook, Instagram,

SnapChat and Nextdoor. Target markets will expand to include Houston and Austin

for this marketing effort.

Target Market

The target market for this project are those aged 55 and above. There are many people

looking to get away from the hustle and bustle of city life and escape to a smaller town.

Those interested in less traffic and more activities for their age range. People locally and

those in the Dallas, Fort Worth Metroplex, Tyler, Houston and Austin will be the target.

Clients looking for a quiet place to retire from the city, empty nesters looking for a new

home for the next chapter of life.

Competitive Position within Target Market

Due to factors including location, attractiveness of property, strength of retirement real

estate market and the proximity to local lakes and attractions; a community like this

stands out well in the East Texas new residential market.

Rio Sabine will attend area association meetings and begin promoting said project, as an

industry leader in corporate lodging in agricultural areas, proven sales tactics will be

implemented in the marketing of the subdivision. This is the only community of its kind

in Mineola and the surrounding areas. Marvin Hlavaty, the construction expert at Rio

Sabine has a lifetime of building and development experience and is an East Texas native

who knows a lot about the conditions, climate and variability of the area. He is a nature

enthusiast and preservationist. Hlavaty is onsite to make sure everything is done right

through all aspects of the project.

Selling points include fresh air, birds and wildlife, big beautiful trees, walking trails and

water features. After all phases of development 8 acres will remain as buffer and land

conservation, making this project the most desirable in the area. Located in a Main Street

11

Texas designation town, near the 2,000-acre wildlife preserve. This area and the

surrounding districts are lively marketplaces hosting antiques, pottery, crafts, collectibles,

Americana and Southwest decor, handcrafted furniture, trendy fashions, gourmet foods

and wines. The downtown is quaint, full of history and great restaurants.

Near the Mineola Country Club that caters to subject age group by hosting a 50 and up

scramble every Thursday, where the course is closed to all others.

35 minutes from Canton! Canton is known far and wide as the home of the world famous

First Monday Trade Days, the largest flea market in America. Canton is also host to year

around festivals, attractions, shopping and more. What started more than a century ago

as a flea market has become home to some of the most exciting, cutting-edge home

furnishings, antiques and collectibles that can be found anywhere. Over the past 150

years, lots of things have changed but this is still a place where you can slow down, visit

and ask questions, talk to collectors and antique dealers, and meet the artists and

craftsmen who create one-of-a kind items. The world's largest outdoor trade days takes

place Thursday through Sunday before the first Monday of every month in Canton,

Texas. Every month, thousands of vendors from across the country turn this friendly East

Texas community into a shopper's paradise where you can find rare antiques and

collectibles, furniture, fine home decor, arts and crafts, clothing, jewelry, tools,

produce, and much more.

The continued development of land to escape Tyler and Dallas/ Fort Worth is a

key force for strong activity continuation, as there is a growing value for land of this

nature. It is not unreasonable to assume an unlimited period of active development in

Mineola and the surrounding area until it is fully developed

Industry Analysis

Industry Description There are designated places all over the country where inhabitants are choosing to live in

which they can enjoy a relaxed and stress-free setting in well-designed communities offering

a variety of amenities and activities. Clients include those who have worked sixty-hour weeks

and raised their families and are now ready for a different lifestyle. New home communities

rooted in southern hospitality, with design that inspires friendly beginnings offset by

moments of idleness and privacy. More than just a retirement community these projects

give people an opportunity to learn and discover; to have fun and relax; to reclaim time

and do the things they love to do as well as the things they always wanted to try, a place

for those 55 and up will thrive. Residents of these places claim that regardless of your

passions, you are sure to find other like-minded residents who share your interests. There

are dozens of clubs and interest groups including card clubs, tennis, woodworking, arts

and crafts, stained glass, pickleball, photography, bocce ball, and much more. According

to the website 55 and up, there are 68 of these restricted and designated communities in

Texas.

Project Feasibility

The feasibility of this project depends upon the number of people attracted to reserved,

gated, upscale communities with restrictions and amenities. 78.8 million baby boomers,

age 55 and up in the US.

12

Company Structure/ Ownership/ Management Team

Rio Sabine is a Limited Liability Company, whose address is 1508 Old Mill Rd, Salado,

Texas 76571

DEVELOPER: Rio Sabine Construction- Salado, Texas

ENGINEER: Duke Garwood and Terry Colegrove - Austin, Texas

CONTRACTOR: Rio Sabine Construction- Mineola, Texas

LENDER: TBD

Marvin Hlavaty

Mineola, Texas 75773

903.279.8141

MarvinHlavaty@yahoo.com

Rio Sabine Construction in Mineola, Texas will be the developer and construction

manager of all projects. The management team consists of two principal owners, Marvin

Hlavaty & T.J. Jones. Hlavaty has led and managed multimillion-dollar projects for

national and local firms, whose primary roles are development and site management

where he contributes expert budget analysis, bid evaluation, financial reporting,

estimating, and scheduling.

Marvin Hlavaty offers over 20 years of Superintendent Field Management

leadership coupled with practical experience from large commercial and industrial firms,

Hlavaty contributes invaluable management expertise. As a senior Superintendent, he has

led multifamily, hospitality, and restaurant projects averaging 15 million dollars.

Participation in a range of projects including tenant finish outs, schools, banks, FDIC

depositories, libraries, commercial “lease” space, restaurants, hotels, multi-family, and

overall provides a wide scope of expertise. Marvin contributes applied field knowledge,

beginning his career as a carpenter and transitioning into managing projects averaging 15

million dollars and playing key roles on projects reaching 150 million dollars. As the

head of field operations and senior construction manager, Marvin Hlavaty’s field

coordination and construction knowledge are instrumental assets to Rio Sabine. Major

activities and accomplishments include:

Moore Building 1995-2009

Creek Side Estates Phase 2, 98 units, Lufkin, Tx

Ryan’s Crossing, 112 units, Marshall Tx

Lake Ridge Apartments, 156 units, Texarkana, Tx

Piney Woods Home Team, 48 homes, Lufkin Tx and Orange, Tx

Southwest Pines, 259 units, Tyler, Tx

Development and building involvement with Moore building associates 40 million total

General Contractor 2009–2013

Shelby Energy Lodge, Center, Tx, 2.3 million

Sleep Inn & Suites, Center, Tx, 3.8 million

Energy Lodge-Carrizo Springs, 2.5 million

Energy Lodge-Kenedy, 2.3 million

MD Anderson-Restroom Remodel and Escalator change out-Galleria Mall, Houston, TX

13

Hoar Construction September 2013- October 2017

Waterford Glenn Apartments, 187 units, Keller, Tx, 22 million

Revella at East Point, 283 units, Baytown, Tx, 32 million

Revella at Town Square, 307 units, with 7 story precast garage, Jacksonville Florida, 45

million

Emzy (T.J.) Jones, IV

1508 Old Mill Road

Salado, Texas 76571

214.668.4548

TJJones@energylodge.com

T.J. Jones has been actively engaged in real estate sales, construction, and development

for his entire life. He grew up taking pictures of real estate lots with his father a lifelong

appraiser. In 2008 Jones and partners launched Energy Lodge, LLC. Energy Lodges are

a revolutionary new form of housing, Marvin Hlavaty built the three Energy Lodges,

within months of opening the lodges were completely full and have pretty much

remained that way ever since. Through several cycles of business, Jones has consistently

identified attractively priced assets with high potential for value enhancement through

entitlement, selective development, and problem resolution. His career is distinguished

by marketing and acquisition skills, a keen ability to organize and launch enterprises,

team building, and raw sales talent. He enjoys enduring relationships with influential

property owners, industry executives, and providers of professional services. Major

activities and accomplishments include:

• 2007-2008: Licensed Texas Real Estate Broker, Sold homes to-be-built and

existing houses for Main Street Homes. Jones gained a ton of knowledge and experience

about the home buying, selling, building, and development process. He sold

approximately 3 million worth of homes in 9 months to many happy families specializing

in USDA rural development loans and first-time home buyers.

• 2007: Oldham Goodwin Group leased and managed several large multifamily

projects. Specialized in TAR and TAA lease forms

• 2006: ET Jones and Associates Appraiser’s assistant. Delivered appraisals,

picked up plans from builders and banks, reduced plans, and provided general assistance

to appraisers

• 2008-Present: Founded Energy Lodge, LLC to invest in, develop, market and

sell/lease real estate, as an owner and operator. Energy Lodge, L.L.C.

(www.energylodge.com) formed in response to no suitable permanent housing in rural

towns. Energy Lodge makes oil and gas “hubs” out of smaller towns instead of the

surrounding big cities. Through ongoing relationship with Hlavaty formed Rio Sabine,

LLC, currently focused on acquiring land for residential development. Major projects:

Shelby Energy Lodge (www.shelbyenergylodge.com), a 37 unit corporate apartment

complex in Center, Texas; Handled all development, marketing, sales, and management.

The Shelby Energy Lodge was 100% occupied for the entire first two years it was open

and the Lodge opened with a waiting list of 35 people and companies. SOLD

JUNE/JULY 2019

14

Energy Lodge- Carrizo Springs (www.energylodge.com), a 37 unit corporate apartment

complex in Carrizo Springs, Texas; Handled all development, marketing, sales, and

management. The Energy Lodge is 100% occupied for the entire first three years and

when the Lodge opened it was completely full with a waiting list of 60 people and

companies. SOLD DECEMBER 2018

Energy Lodge- Kenedy (www.energylodge.com), a 37 unit corporate apartment complex

in Kenedy, Texas; Handled all development, marketing, sales, and management. The

Energy Lodge is 100% occupied for the entire first three years and when the Lodge

opened it was completely full with a waiting list of 75 people and companies. SOLD

NOVEMBER 2018

5D Grill and Lounge (5Dgrillandlounge.com) Carrizo Springs, Texas opened January

2013

Education

2007 Texas A&M University, B.S. Agricultural Development

College Station, Texas

2008 Licensed Texas Real Estate Broker #570160

Duke C. Garwood

101 Vale Street

Austin, TX 78746

512-328-4881

Duke C. Garwood Architects, Inc. in Austin, Texas is responsible for architectural and

engineering. Garwood has diverse skills that have earned success and acclaim for both

commercial and residential design work. The vernacular architecture of Central Texas

that Duke promotes in his creative approach to design is a tribute to the regional qualities

of the Texas Hill Country - forms, materials, details and site adaptation. Under his

leadership, Duke C. Garwood Architects, Inc. has successfully completed over 600

commercial and custom residential projects that each hold function, cost efficiency and

the environment in high regard. Duke started this firm in 1988 as a single person shop.

Over the years, he has successfully built the practice into a thriving enterprise that is

known for its exceptional design work and its pledge to excellent service. He is deeply

committed to his vocation, his clients and his community.

15

Financial Plan

Proforma

55 and Better Reserve

8 units

Phase 1

Mineola, TX

8 units

Total Rentable square footage 8,960

Year Built 2019

4, 2-bedroom 2-bathroom units - $1950 per month x 4 units = $7,800

4, 3-bedroom 2-bathroom units - $2,400 per month x 4 units = $9,600

Effective Monthly Gross Rental Income $17,400.00

Effective Annual Gross Rental Income: $208,800.00

Operating expenses ($2,780 x12): $33,360.00

Phase I

Annual Net operating Income before taxes: $175,440.00

16

Operating Expenses

Expenses: Dollars per month Dollars per year

Management @

10% EGI

$1,680 $20,160

Repair and

Maintenance

$200 $2,400

Lawn Care $400 $4,800

Property Insurance $500 $6,000

TOTAL $2,780 $33,360

Construction Cost

Costs: Dollars

Land $200,000

Permits $10,000

Water, Sewer, Taps $10,000

Architecture/Engineering $30,000

Entrance

Pond $6,000

Gate $4,000

Landscaping $15,000

Dirt & Grubbing $55,000

Sewer $25,000

1,200’ of Water with

Fire Hydrants

$45,000

Road 1,300’ by 30’ x

$3.00 per foot

$117,000

Trash and Erosion

Control

$8,000

General Conditions $100,000

4 Buildings 8,960 square

feet x 110 per foot

$985,600

Rio Sabine Builder

Contingency

$29,400

TOTAL $1,640,000