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family housing revenue bonds in connection with the sale of the Woodside Terrace Retirement Facility ITom the Hillsdale Group to the non-profit entity, Woodside Advanced Senior Care, Inc. (Woodside Senior Care). Director Ponty said Woodside Senior Care had requested that the City issue tax-exempt bonds, and loan the proceeds to Woodside Senior Care, a non-profit organization, that would use the proceeds to purchase the facility ITom the Hillsdale Group. He said Woodside Senior Care would be responsible for making the principal and interest payments to the bondholders, and the City would not be promising any City revenues or resources to the bondholders in the event Woodside Senior Care defaulted on its obligations. He stated Hillsdale Group would sell the facility to the non-profit corporation, Woodside Senior Care, but would remain on site as the facility manager under contract with the non-profit organization and would also purchase some of the bonds. He said this type of financing is often called conduit debt financing and is permitted under the Federal Treasury Regulations. Finance Director Ponty reviewed the background of the facility, stating it was built in 1989, had 274 units, 193 for self-sufficient residents and 81 as assisted living units. He stated that the transaction would include physical modifications to the facility, which were approved by the City, approximately 2,000 square feet would be added for dining and communal areas, and 25 apartments would be changed to accommodate residents with Alzheimer's Disease. He said that an Architectural Permit had been obtained for the project, and a building permit would be issued in the near future. Finance Director Ponty said that in return for the City's assistance, Woodside Senior Care had offered the City a compensation package that over the life of the 30 year life of the bonds, represented a net present value to the City of $3.3 million. He reviewed the breakdown of the compensation package. Finance Director Ponty stated that there would be little financial risk to the City. Bond Counsel, William Euphrat, had indicated there were sufficient safeguards built into the transaction to protect the City's interest. He said that the most substantial risk would be if Woodside Senior Care defaulted, the City would not receive any compensation it was scheduled to receive. Director Ponty said if the City declined to participate, Woodside Senior Care would most likely conclude the transaction with ABAG or the state, and the City would stand to lose $46,000 per year in property taxes. Finance Director Ponty introduced the balance of the financing team: Bill Euphrat, Financial Advisor to the City, Tom Downey of Jones-Hall, who was serving as bond counsel to the City, Joe Litten, Financial Advisor to Woodside Senior Care, and Drew Bradley, who represented Hillsdale Group. In response to a question from Council Member Hartnett, Tom Downey said, "The bond is issued as a revenue bond, and the bond documents are set up so that the bonds are issued and the money is loaned to the entity that is borrowing ITom the City. That money REGULAR COUNCIL MEETING MINUTE BOOK NO. 56 JANUARY 26, 1998 MINUTES Page No. 186 PAGE 14