Herbert J. Sims & Co., Inc.

Mt. San Antonio Gardens

a 40-year old ccrc in california enters the bond market for the first time to maximize its campus

Mt. San Antonio Gardens

Mt. San Antonio Gardens is an existing, CCAC accredited, lifecare CCRC in Pomona, California. Originally constructed in the early 1960’s as a campus for “widows and widowers who served as church layleaders”, the Gardens spent most the 1990s and approximately $30 million of its cash reserves refurbishing much of its 30-acre campus. The campus has experienced strong occupancy; however, as the campus has matured, the resident population declined as many of the original studio units have been combined. The result was increasing pressure on the smaller resident population to generate sufficient revenues. Management and the Board of Directors determined that the redevelopment of a 3-acre corner of the campus would benefit the organization. The redevelopment project called, The Terraces, included the addition of 32 independent living and 11 assisted living units, two levels of underground parking, maintenance and storage space. Sims met regularly with Management and various Board committees to evaluate various financing options and to explain the complexities of tax-exempt bond financing. The Gardens had not borrowed money since its original construction in the early 1960’s and resident resistance to incurring debt was strong. Sims actively helped Management respond to resident concerns.

In February 2004 the financing was completed. The structure of the financing included $27,145,000 30-year, tax-exempt variable rate certificate of participation enhanced by a letter-of-credit. The letter-of-credit is competitively priced and allows the Gardens the flexibility to determine whether project entrance fees should be used to payoff debt or retained by the organization. In addition, after significant analysis under varying interest rate assumptions the Board and Management selected an interest rate cap rather than an interest rate swap to mitigate the interest rate risk of the variable rate COPs. Sims secured an 8-year, 4% BMA cap for approximately two-thirds of the par value of the bond issue.