HomeMy WebLinkAbout2000-01-18 City Council (23)City of Palo Alto
City,Manager’s Report
TO:
FROM:
HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE:
SUBJECT:
JANUARY 18, 2000 CMR: 105:00
STATUS OF LYTTON GARDENS REVENUE BONDS
This is an informational report and no Council action is.required.
DISCUSSION
Lytton Gardens, Inc. was established in 1980 by Community Housing, Inc., as a
nonprofit public benefit corporation. Lytton Gardens is a skilled nursing facility
and convalescent hospital located on Webster Street in Palo Alto. In October
1981, the City issued $9.6 million in City of Palo Alto Insured Health Facility
Revenue Bonds, to acquire, construct, and equip Lytton Gardens. In October 1982
and in December 1986, the City advance refunded (refinanced) the bonds.
As a private corporation, during the 1986 refinance Lytton Gardens was required
to use the name of a local agency in order to sell tax-exempt bonds. The City of
Palo Alto agreed to be the named agency for the issuance. However, under the
issuance, the City of Palo Alto was involved in name only. The City faced n.o
obligation to make bond payments nor as insurer in the case of default, nor was the
City’s credit rating connected to the bonds in any way. Instead, the bonds were
insured by the State of California under the California Health Facility
Construction Loan Insurance Program, and the State had fiduciary responsibility
for the bonds.
Staff has periodically reported to the Council regarding the financial status of
Lytton Gardens, particularly during times when Lytton Gardens was having
financial troubles and had to use its bond reserve in order to make scheduled debt
service payments in the early 1990s.
CMR:105:00 Page 1 of 2
The financial picture of Lytton Gardens has recently improved and the
organization was able to refinance its existing bonds. With this refinancing, the
City of Palo Alto has been removed as the issuer of record. The City Manager
signed paperwork to this effect in mid December 1999.
PREPARED BY: Shannon Gaffney, Senior Financial Analyst
DEPARTMENT HEAD APPROVAL:
CITY MANAGER APPROVAL:
----~D~ ,~~rn~nistrative Services
Assistant City Manager
CMR: 105:00 Page 2 of 2