Redevelopment Discussion Corporation of the County of Grey The warmth of human connection

2 Amico and Sienna: Scope The Team Amico is a family owned Canadian development and construction company that is recognized for meeting clients’ needs. Amico has made the planning and construction of purpose built seniors’ facilities one of its areas of expertise, having been involved in the design and construction of a number of seniors facilities across Ontario in the past ten years. Sienna owns and operates 35 long-term care homes and 11 retirement residences, representing a combined 6,939 beds/suites across Ontario and British Columbia. Scope Sienna Senior Living Inc. & Amico have been requisitioned to provide support for the feasibility study and predevelopment phases of Rockwood Terrace redevelopment.

3 LTC Wait list in Ontario (June, 2015): Capacity - 77,500 LTC Beds; Wait List – 24,520 Ontario LTC Supply and Demand Source: MOHLTC LTC Home System Report – June, 2015

4 SW LHIN & Grey County Homes Source: South West LHIN Long-Term Care (LTC) Home Renewal Survey Summary (December 2012). Source: CCAC Data (Feb 2016) provided by Grey County management. LTC in SW LHIN (June, 2015): Capacity – 7,374 LTC Beds; Wait List – 1,229 Source: MOHLTC LTC Home System Report – June, 2015 Bed Classification in SW LHINBed Classification in Grey County

5 Overview Move 100 Rockwood Terrace beds to Grey Gables Move 66 Grey Gables beds to Rockwood Terrace (on current or new site) Move 66 Grey Gables beds to Rockwood Terrace (on current or new site) Redevelop Rockwood’s 100 beds either on or off site Scenario 1 Scenario 2 Scenario 3

Application & Development Process 6 Year 2-3 Consultant Reports (Sanitary Serving, Geotechnical, environmental, noise, wildlife, traffic, soils, etc.) Pre-Consultation Meeting with Town Determine development fees Apply for Site Plan Approval Architectural Services (Site plan, area calculations, elevations, design brief, etc.) Apply for Building Permit Year 1 Determine financial feasibility & preliminary plan Submit MOHLTC application Apply for occupancy reduction protection Seek approval from MOHLTC Year 3-4 Ensure all related approvals Ministry Approval Site Plan Approval Building Permit Approval Finalize Development Agreement Commence Construction Move-out / in process Year 1 Year 2-3 Year 3-4

Construction Funding Subsidy 7 PLANNING GRANT FOR NOT-FOR-PROFIT HOMES (one-time basis) = $250,000 CALCULATION OF CONSTRUCTION FUNDING – ROCKWOOD TERRACE

COMBUSTIBLE VS. NON- COMBUSTIBLE CONSTRUCTION A premium to the base capital funding subsidy should be included for operators who choose to pursue non-combustible construction. INDUSTRY PERSPECTIVE CAPITAL FUNDING ESCALATOR There is no inflation protection. Funding is fixed and each year costs are anticipated to increase. OA FUNDING ESCALATOR Other Accommodation PRD should have a fixed escalator each year to provide predictability for operators and support continued sector investment. CHALLENGE 8 BUILDING SIZE To achieve operating efficiency, the minimum LTC home size is 128 beds. PREFERRED ACCOMODATION RATE Offset to phasing in of preferred accommodation. 60% preferred required for model to work. Critical Success Factors

9 Design Concepts

10 Scenario 1 – Design Move Rockwood’s 100 beds to Grey Gables

11 Scenario 2 – Design Move Grey Gables’ 66 beds to Rockwood Terrace

12 Scenario 3 – Concept Plan Build 100 Bed LTC on Same or New Site: Site scaled to 2.5 Acres

13 Building Construction Construction Experience As an original founder and equity partner in Seasons Retirement Communities, Amico has made the planning and construction of purpose-built seniors housing and retirement facilities one of its areas of expertise. This includes residences that offer services spanning from independent and assisted living through the full continuum of care. Materials Construction Materials: steel and concrete Details beyond that will depend on a number of things such as the site, geotechnical characteristics It will be non combustible - to meet and exceed the Building Code standards

14 Financial Feasibility

15 Current State BUDGET SUMMARY  The Corporation of the County of Grey provides an approximately $2.14 million subsidy annually for Rockwood Terrace and Grey Gables combined in order to fund the levy incurred by the homes. What financial impact will the redevelopment scenarios have on the current levy? Note 1 – Tenant Revenues have been netted with Other Accommodations

16 Financial Feasibility Scenario 1

17 LTC construction cost per bed (100 beds)$180,000 Total construction cost ($180K for 100 beds)$18,000,000 Cost Assumptions <---- Construction cost savings are potentially available versus other scenarios due to the use of Grey Gables’ existing kitchen and laundry facilities Scenario 1 – Cash Flow Assumptions Move Rockwood’s 100 beds to Grey Gables Down Payment$2,800,000 Mortgage Loan$15,200,000 Interest Rate5.0% Period25 Years Financing Assumptions Other Considerations – Costs for preparing the Rockwood site for sale have not been considered as part of our projections. OUTFLOWS - Annual Principal and Interest Payments = $1,066,292 <---- $2.8 million in reserves available for project

18 Construction Funding Subsidy Scenario 1 – Cash Flow Assumptions Move Rockwood’s 100 beds to Grey Gables The principal and interest payment outflows can be supported by the following inflows: Potential Savings and Adjustments for the Combined Home Note 1 – Administrative Wages & Benefit savings were provided by Grey County management using Lee Manor as a proxy Note 2 – To be conservative, assumption made that only 80% of the total potential preferred accommodation revenue (based on 60% private) would be collected due to the income levels in the region

19 Scenario 1 – Impact on Levy Move Rockwood’s 100 beds to Grey Gables OUTFLOWS Annual Principal and Interest Payment $1,066,292 INFLOWS Additional Cash Flows from Operations $703,649 INFLOWS Construction Funding Subsidy $635,100 IMPACT ON LEVY (rounded) ($272,000) CONCLUSION – Therefore, Scenario 1 is expected to decrease the annual levy paid by the Corporation of the Country of Grey by $272,000, from $2.14 million to $1.87 million. Construction Funding and Mortgage Period – 25 Years

20 Financial Feasibility Scenario 2A

21 LTC construction cost per bed (166 beds)$180,000 Total construction cost ($180K for 166 beds)$29,880,000 Cost Assumptions Down Payment$14,800,000 Mortgage Loan$15,080,000 Interest Rate5.0% Period25 Years Financing Assumptions Other Considerations – Costs for preparing the Grey Gables site for sale have not been considered as part of our model. OUTFLOWS - Annual Principal and Interest Payments = $1,057,874 Scenario 2A – Cash Flow Assumptions Move Grey Gables’ 66 beds to Rockwood <---- Construction costs likely to be higher than Scenario 1 due to lack of existing kitchen and laundry facilities <---- $2.8 million available for project plus $12.0 million in sale proceeds from Grey Gables property (management assumption)

22 Construction Funding Subsidy The principal and interest payment can be supported by the following inflows: Potential Savings and Adjustments for the Combined Home Scenario 2A – Cash Flow Assumptions Move Grey Gables’ 66 beds to Rockwood Note 1 – Administrative Wages & Benefit savings were provided by Grey County management using Lee Manor as a proxy Note 2 – To be conservative, assumption made that only 80% of the total potential preferred accommodation revenue (based on 60% private) would be collected due to the income levels in the region

23 OUTFLOWS Annual Principal and Interest Payment $1,057,874 INFLOWS Additional Cash Flows from Operations $607,586 INFLOWS Construction Funding Subsidy $635,100 IMPACT ON LEVY (rounded) ($185,000) RESULTS – Therefore, Scenario 2A is expected to decrease the annual levy paid by the Corporation of the Country of Grey by $185,000 from $2.14 million to $1.95 million Construction Funding and Mortgage Period – 25 Years Scenario 2A – Impact on Levy Move Grey Gables’ 66 beds to Rockwood

24 Financial Feasibility Scenario 2B (Sensitivity Analysis)

25 Scenario 2B – Sensitivity Comparison Move Grey Gables’ 66 beds to Rockwood The results of Scenario 2A are largely based on the following two factors, which if different than the assumption, will have an impact on the expected adjustment to the levy: o Construction Cost per Bed – Costs for Scenario 1 and 2 were assumed to be the same at $180K per bed. Realistically with all new facilities, construction costs would be higher than $180K per bed and current quotes are coming in as high as $230K per bed. o Sale Proceeds for Grey Gables - A formal appraisal hasn’t been completed and the market demand is unknown so there could be a range of fair market value possibilities.

26 RESULTS – Under Scenario 2B, if the construction costs are $230K per bed and $8.00 million is received as proceeds for the sale of the Grey Gables site, the annual levy paid by the Corporation of the Country of Grey would increase by $678,000 from $2.14 million to $2.82 million. Similarly, if the construction costs are $230K per bed and no sale proceeds are received, the annual levy paid would increase by $1.24 million from $2.14 million to $3.38 million. Scenario 2B – Sensitivity Comparison Move Grey Gables’ 66 beds to Rockwood Impact on Levy – Sensitivity Analysis – Scenario 2B

27 Financial Feasibility Scenario 3A

28 LTC construction cost per bed (100 beds)$180,000 Total construction cost ($180K for 100 beds)$18,000,000 Cost Assumptions Down Payment$2,800,000 Mortgage Loan$15,200,000 Interest Rate5.0% Period25 Years Financing Assumptions OUTFLOWS - Annual Principal and Interest Payment = $1,066,292 Scenario 3A – Cash Flow Assumptions Redevelop Rockwood’s 100 beds on or off site <---- $2.8 million available for project

29 Construction Funding Subsidy The principal and interest payment can be supported by the following inflows: Potential Savings and Adjustments for the Redeveloped Home Scenario 3A – Cash Flow Assumptions Redevelop Rockwood’s 100 beds on or off site Note 1 – To be conservative, assumption made that only 80% of the total potential preferred accommodation revenue (based on 60% private) would be collected due to the income levels in the region

30 OUTFLOWS Annual Principal and Interest Payment $1,066,292 INFLOWS Additional Cash Flows from Operations $170,000 INFLOWS Construction Funding Subsidy $635,100 IMPACT ON LEVY (rounded) $261,000 Construction Funding and Mortgage Period – 25 Years Scenario 3A – Impact on Levy Redevelop Rockwood’s 100 beds on or off site CONCLUSION – Scenario 3A is expected to increase the annual levy paid by the Corporation of the Country of Grey by $261,000, from $2.14 million to $2.40 million.

31 RESULTS – Under Scenario 3B, if the construction costs are $230K per bed, the annual levy paid by the Corporation of the Country of Grey would increase by $612,000 from $2.14 million to $2.75 million Impact on Levy – Sensitivity Analysis – Scenario 3B Scenario 3B – Sensitivity Comparison Redevelop Rockwood’s 100 beds on or off site

32 Conclusion

33 Considerations Movement of residents and staff Competition for staffing in upcoming years Human resource costs associated with closing /moving a home Competition for staffing in upcoming years Human resource costs associated with closing /moving a home Community Connections This review has focused on the financial feasibility of three scenarios. Other things that are difficult to assess but have an impact include: Human Resources TimingTiming 9 years remain on Rockwood licence Development time frame 9 years remain on Rockwood licence Development time frame Capital Expenditures Significant requirements at Rockwood now

34 Summary of Results Move Rockwood’s 100 beds to Grey Gables – Reduced levy from $2.14 million to $1.87 million. Move Grey Gables’ 66 beds to Rockwood Terrace (Construction costs of $180K/bed and sale proceeds of $12 million) – Reduced levy from $2.14 million to $1.95 million. Move Grey Gables’ 66 beds to Rockwood Terrace (Construction costs of $180K/bed and sale proceeds of $12 million) – Reduced levy from $2.14 million to $1.95 million. Redevelop Rockwood’s 100 beds either on or off site (Construction costs of $180K/bed) – Increased levy from $2.14 million to $2.40 million. Scenario 1 Scenario 2A Scenario 3A Move Grey Gables’ 66 beds to Rockwood Terrace (Construction costs of $230K/bed and sale proceeds of $8 million) – Increased levy from $2.14 million to $2.82 million. Move Grey Gables’ 66 beds to Rockwood Terrace (Construction costs of $230K/bed and sale proceeds of $8 million) – Increased levy from $2.14 million to $2.82 million. Scenario 2B Redevelop Rockwood’s 100 beds either on or off site (Construction costs of $230K/bed) – Increased levy from $2.14 million to $2.75 million. Scenario 3B

35 Recommendation Choice of Scenario We recommend Scenario 1 (Move Rockwood’s 100 beds to Grey Gables) as the most viable option due to the following reasons: It does not rely on the sale of property to proceed. It maximizes efficiencies through economies of scale. It is the scenario with the best opportunity to reduce the levy currently being funded by the Corporation of the County of Grey due to the potential construction cost savings available from the use of the existing laundry and kitchen facilities at the Grey Gables site.

36 Appendix

Construction Funding Subsidy Policy 37