CC Min 1998-04-27 - Laserfiche WebLink

Browse Search

people to buy homes, so housing for low income families and seniors will become more important than ever. In response to Mrs. Mahany's questions, City Manager Everett said the City would not be monitoring rates. In response to Mrs. Mahany's questions, Louis Swart, CEO of The Hillsdale Group, said that the plans did call for a special care Alzheimer's unit for 50 residents. He said that under the proposed financing mechanism, the rate will be about 6.5%, "whereas if we had done conventional financing... the rate would be closer to 9%. That differential on debt service is about $1 million a year... which translates down to about $300 per unit which would ultimately be passed on to the unit occupier. By going with this mechanism you are able to control the rents because working with a non-profit, lower interest rate, the not-for- profit doesn't have the same kinds of pressures to deliver returns on investment to the investor. Typically, we imagine that the rents will not creep by more than about 2% per annum, depending upon inflation." Mr. Swart said that to a certain extend that is a safeguard for the current and future residents. In response to Mayor Howard's questions regarding meetings with current residents, Mr. Swart said that he had personally met with the residents Council and with all of the residents. He said he was certainly willing to meet with them again. In response to Council Member Claire's questions, Mr. Swart said that ARV was acquiring all of the properties now owned by The Hillsdale Group, including Hillsdale Manor which has an Alzheimer's unit. Susan Keely, member of the HHCC, said she was very uncomfortable that Council had not been told during its first consideration of this matter, that The Hillsdale Group was in negotiations to sell its properties to ARV. She said she understood the necessity for confidentiality, but felt that the ethical thing to do would have been to ask for a postponement. Louis Swart, CEO of The Hillsdale Group, said, "In October of 1997 the City of Redwood City was approached to act as issuer of the bonds... Two months later in December, Hillsdale entered into discussions with the Costa Mesa based ARV Assisted Living, which is a publicly held company, traded on the American Stock Exchange. In keeping with SEC requirements both companies signed stringent confidentiality agreements which precluded a disclosure of any potential transaction to third parties. And we were both bound by that. On February 9, the Redwood City Council approved the bond issuance. Three days later on February 12, Hillsdale entered then only into a definitive agreement with the sale of its retirement division to ARV, and a public announcement was made immediately. I think we acted with as much good faith and dispatch as we possibly could. Once some of these transactions start they assume a life of their own, and they have to run their course. There was no intent at any time by either Hillsdale or ARV to obscure the details of the transaction from the City. Instead we did so as soon as were legally allowed to." REGULAR COUNCIL MEETING MINUTE BOOK NO. 56 APRIL 27, 1998 MINUTES Page No. 426 PAGE 23