05-13-2020 Council Packet - Laserfiche WebLink

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23 organization (i) is dedicated to providing, and in fact provides or otherwise makes available services for, care and housing to aged individuals who otherwise would be unable to provide for themselves without hardship, (ii) to the extent of its financial ability, renders services to all or a reasonable proportion of its residents at substantially below actual cost, and (iii) renders services that minister to the needs of the elderly and relieve hardship or distress. Revenue Ruling 79-18 holds that a facility providing residential services to the elderly may admit only those tenants who are able to pay full rental charges, provided that those charges are set at a level that is within the financial reach of a significant segment of the community’s elderly persons, and that the organization is committed by established policy to maintaining persons as residents, even if they become unable to pay the monthly charges after being admitted to the facility. Absence of Rating The Series 2020 Bonds have not been rated by any national rating agency and no application has been made for a credit rating for the Series 2020 Bonds. The absence of a rating could adversely affect the market for and the price of the Series 2020 Bonds. The Series 2020 Bonds are believed to bear higher rates of interest than would prevail if the Series 2020 Bonds were rated investment grade in order to compensate investors for a level of risk that is higher than the risk generally associated with investment grade bonds. In addition, unrated bonds typically are less liquid in the secondary market than rated bonds. See “NO BOND RATING” in this Official Statement. Value of Mortgaged Property The security for the Series 2020 Bonds includes a mortgage lien on the Project evidenced by the Mortgage. Attempts to foreclose under the Mortgage may be met with protracted litigation and/or bankruptcy proceedings. Litigation and bankruptcy proceedings can cause delays in the liquidation of the assets secured by the Mortgage. See “ENFORCEABILITY OF OBLIGATIONS” in this Official Statement. Therefore, there can be no assurance that, upon the occurrence of an Event of Default, the Trustee will be able to obtain possession of the Project and generate substantial revenues from the sale or operation of the Project to ensure timely payment of the principal of and interest on the Series 2020 Bonds. If revenues from the Project are not sufficient to pay the principal of and interest on the Series 2020 Bonds, after the payment of operating costs of the Project, the market value of the Project may be less than the amounts due in respect of the Series 2020 Bonds. For these and other reasons, there can be no assurance that proceeds derived from the sale of the Project upon any default and foreclosure would be sufficient to pay the Series 2020 Bonds and accrued interest thereon. Liquidation of Security May Not be Sufficient in the Event of a Default Except payments made by Limited Guarantor under the Limited Guaranty, the Trustee must look solely to the revenues of the Borrower, the Project and any funds held under the Indenture to pay and satisfy the Series 2020 Bonds in accordance with their terms. The Bondholders are dependent upon the success of the Project and the value of the assets of the Borrower for the payment of the principal of, premium, if any, and interest on, the Series 2020 Bonds. The Borrower has not made any representations to Bondholders regarding the market value of the Project upon completion. In the event of a default, the value of the Project may be less than the amount of the outstanding Series 2020 Bonds, since the Borrower’s community exists for the narrow use as a senior living community. In addition, even without consideration of the special purpose nature of the Project, the sale of property at a foreclosure sale may not result in the full value of such property being obtained. The special design features of the Project may make it difficult to convert the Project to other uses in the event of a foreclosure, which may have the effect of reducing its attractiveness to potential purchasers. In the event of a default and subsequent foreclosure and sale of the Project, Bondholders have no assurance that the value of the Mortgaged