Published : Monday, June 19, 2017 | 5:42 AM
The Pasadena City Council will discuss on Monday a proposal to issue California Statewide Communities Development Authority Revenue Series 2017 Bonds in an amount not to exceed $175 million to fund capital improvements and refinance debt associated with three existing senior living communities in Southern California, one of which is Villa Gardens in Pasadena.
The discussion will be in the form of a Tax Equity and Fiscal Responsibility Act (TEFRA) public hearing that could eventually culminate in the City Council adopting a resolution for the issuance of the bonds.
Front Porch Communities and Services, a nonprofit developer, owner and operator of market rate senior housing communities primarily in the Southern California area, operates the Pasadena senior living community at Villa Gardens, and two other residential care facilities for the elderly in San Diego and in Anaheim.
Villa Gardens, constructed in 1987 at 842 E Villa Street in Pasadena, is licensed as an residential care facilities for the elderly. The campus includes 190 independent living units and 39 assisted living units. All of the assisted living units and 23 of the independent living units were constructed in 1998.
Adjacent to Villa Gardens is a skilled nursing community, the Villa Gardens Health Center, which was constructed in 1990 and is licensed for 54 skilled nursing beds.
According to an Agenda Report prepared by the Pasadena Department of Finance for the City Council, Front Porch expects to issue the $175 million maximum par amount in long-term, fixed-rate, tax-exempt bonds through the California Statewide Communities Development Authority (CSCDA).
About $103 million of bond proceeds will be used to refinance outstanding fixed rate bonds issued in 2007 and variable rate bonds issued in 2012 and 2015. The remainder of the bond proceeds will help fund certain capital improvements at various Front Porch communities, and pay for costs of issuance related to the proposed Series 2017 bonds.
Front Porch currently maintains a BBB+ credit rating from Standard and Poor’s Financial Services LLC.
The benefits of the proposed Series 2017 bonds will accrue to the current residents of their communities through lower interest cost on outstanding fixed rate debt; a more stable capital structure by refunding outstanding variable rate debt to a long term, fixed interest rate; and funding much needed projects that will help sustain and improve the nonprofit’s operations.
Since the Villa Gardens project is located in Pasadena, Section 147(f) of the Internal Revenue Code of 1986 requires that for the Bonds to be issued by CSCDA on a tax-exempt basis, the issuance of the Bonds must be approved by resolution of the City Council, as an “applicable elected representative” of the governmental unit having physical jurisdiction over the site of the project.
The adoption follows a public hearing with respect to the project and the bonds, and preceded by notice of publication in a newspaper of general circulation in the City.
Similar TEFRA hearings have been scheduled at the San Diego City Council and at the Anaheim City Council.
City Finance Manager Matthew Hawkesworth said the proposed obligation to be issued by CSCDA will be the sole responsibility of Front Porch as the developer. The City of Pasadena will have no financial or legal obligation for the tax exempt status of the Bonds, the debt service on the Bonds, or any other matter related to the Bonds.