HomeMy WebLinkAbout0108.094({I}.
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JanuaIY 13# 1994
HO~ORABLE CITY COUNCIL
Palo Alto, California
LITTON GA&DINS-lII STATUS REPORT
Mambers of the Council:
This is an informational report and no council action is required.
S.DOr~ in Brier
Lytton Gardens Inc:.. (LeI) has used bond .reserves to make the
Dece.))er 15, 1993 payment. The debt service r-ese.rve has been
re.cluced from $1.2 million to $29, 142 ~ The bond.s are insured by tile.
Office ot Statewide Health Planninq and Development (OSHPD). OSHPD
has assured staff that it has established the necessary procedures
to make the next semi-annual interest payment~ If OSHPD ~akes the
June 1994 payment, it 'Would have the. legal right to close the
facility. However, it has not indicated to staff what it intends
to d.o~
BackqroUQ;~
LGI is_a-California nonprofit ~ublic benefit corpor~tion, which was
established in May 19BO by community Housing, Inc. (CHI). Oil,
also a nonprofit public benefit corporation~ vas created in
February 1970, by members of tvo Palo Alto churches for the purpose
of developinq housing fQr senior citizens with low incoaes.
Lytton Gardens III is a skilled nursing facility and convalescent
hospital built by CHI on Webster street. In October 1981 f the City
issued City of Palo Alto Insured Health Facility Revenue Bonds of
$9.6 million to acquire, constrllct and equip Lytton III~ In
october 1982, and aqain in Decembe~ 1986, the City advance refunded
the bonds. The last financing was in the principal amount of $13.4
million and had a $1~2 million reserve.
CMR:108:94
,
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The semi-annual interest payments to the holders of the 1986 bonds
have been aade on a timely basis. However, from December: 1989
throuqh the present, the corporation had been unable to make full
payments, and the trustee has used funds from the bond reserve
account. In ~ugust 199.1 (CMR: .381: 91) j staff reported the bond
reserve had been reduced to $427,000. In July 1993 (CMR:J85:93)~
staff reported L~at the reserve was used to make the June IS, 1993
payment; and the reserve was red~ced to $278,500.
Dap lIt lo' af :oabt 8ery.l~~J~~J .rve
The Trustee for the City of Palo Alto/Lytton Carden Revenue Bonds,
Bank of America., has informed the city that the debt service
reserve was again used to make the Dece~ber 15, 199) payment; and
the reserve has been reduced to $29,1~2.
The ~udited rina~cial statements for LGI tor fiscal years ending
Karch 31, 1992 and 1993 showed that LGI continued to have operatir.g
de:ticits of $40,242 anc $559,300, respectively. During the two
)'ears, the overall fund deficit increased trom $4.8 million to $5,4
million.
Interest on the 1986 bond
and December 15 sach year.
vill be added in 1997.
issue of $443,290 is payab1e on June 15
The first principal payment of $345,000
Office o( Statewide Health Planp,ninq ancS Development
The bonds are insured by OSHPD. staff has maintained contact with
-both the OSHPD and Lytton management. During recent discussions,
the representative from OSHPD explained that their aqency was
&etting up the necessary mechanisms to allow them to ma~e the June
15, 1994 payment, if that becomes necessary. The representative
frcm OSHPD explained to both the Lytton management and staff that
if OSHPD is required to make a payment, they would have the legal
riqht to close the facility or replace the management~ However,
t.l].e representative froi!', OSHPD also stated that the agency has no
plana to either replace the management or close the facility at
this time.
Starf will continue to monitor the status of LGI and the City of
Palo Alto/Lytton Gardens rt~venue Bonds and report to Council on any
developments.
CIIR:l0S:94 2
..
Reopeetfully
h-A.·~
Gordon S. Ford
~ea. IS Manager
T'~0<.Q ;1' HARRISON
Dir f nee
Related Staff Reports: CKR:387!91
ClIP. 5Q4 91
CMR 233 93
CI!R 385 93
CMR:loa:94 J