1. Orange County Board of County Commissioners March 20, 2007 Discussion Agenda Conduit Finance and the Orange County Health Facilities Authority Orlando Lutheran Towers Project Orange County Board of County Commissioners March 20, 2007 Discussion Agenda Conduit Finance and the Orange County Health Facilities Authority Orlando Lutheran Towers Project

2. OCHFA Conduit Finance and the Health Facilities Authority Conduit Finance Conduit Issuance Policy Orlando Lutheran Towers Project and Waivers Approved Benefit Summary Recommended Actions Presentation Topics:

3. OCHFA Conduit Finance and the Health Facilities Authority Conduit Finance Conduit Issuance Policy Orlando Lutheran Towers Project and Waivers Approved Benefit Summary Recommended Actions Presentation Topics:

4. OCHFA Conduit Finance Orange County has created five Conduit Finance Authorities: Orange County Educational Facilities Authority Orange County Industrial Development Authority Orange County Health Facilities Authority Orange County Housing Finance Authority Orange County Research and Development Authority

5. OCHFA Conduit Finance Conduit Finance: –Separate legal entities from Orange County –County appoints Authority Board Members –No County funds involved –Funding for public purpose projects –Taxpayers benefit without financial risk –County gives limited TEFRA approval –County directed staff to standardize conduit debt issuance policies in 2003

6. OCHFA Conduit Finance and the Health Facilities Authority Conduit Finance Conduit Issuance Policy Orlando Lutheran Towers Project and Waivers Approved Benefit Summary Recommended Actions Presentation Topics:

7. OCHFA Conduit Issuance Policy Combines best practices Manages debt issuance Same for all conduit issuers Adopted by all five Authority boards

8. OCHFA Conduit Debt Policy Summary Insure proper investment of proceeds Minimal impact on: –A, AA, AAA rated issues –Credit enhanced issues Places debt limitations on: –Issuers without financial strength –Non-rated debt issues –Issues without credit enhancement

9. OCHFA Conduit Issuance Policy Key Elements Financial Advisor required for challenging issues Investment of proceeds must be certified For unrated/uninsured issues –No book-entry (private placement) –$100,000 or $250,000 denominations –Sophisticated investor’s letter –Waiver allowed in compelling instances –Waiver allows consideration of worthwhile projects in challenging industries

10. OCHFA Conduit Finance and the Health Facilities Authority Conduit Finance Conduit Issuance Policy Orlando Lutheran Towers Project and Waivers Approved Benefit Summary Recommended Actions Presentation Topics:

11. OCHFA Orlando Lutheran Towers Overview Non-profit continuing care retirement community “CCRC” Downtown (Church St) 27 years Home to over 400 residents Towers Home Care –Elderly people in tri-county area homes

12. OCHFA Orlando Lutheran Towers Overview Independent Living –Studio –One bedroom apt –Two bedroom apt Assisted/Nursing Care Restaurant style dining Fitness center Adjacent to County Admin near Lake Eola

13. OCHFA Orlando Lutheran Towers Operations Summary Occupancy has been nearly full (90%+) in all levels of care over the past several years Operating income has increased steadily over the past three years from $995,000 in 2003 to $1.6 million in 2005 Refinancing in 2005 saved over $6.5 million Excess profits have been used to bolster reserves and broaden non-profit mission by growing home health, expanding into pharmacies and pursuing proposed project (expansion and renovations)

14. OCHFA Orlando Lutheran Towers Repositioning Activities To plan for the future, OLT needs to reposition its residential offerings and improve/update its campus –More parking for residents, staff and families –Larger, nicer assisted living units –Larger independent living apartments –Improved commons areas Planning has been completed and OLT is seeking financing for the following projects –New 250-space parking garage (over existing parking) –New 108-unit AL building (across from campus) –Renovation of old AL to 45 larger IL apartments –New dining and other commons areas Local contractors and architects Total construction amount roughly $33 million

15. OCHFA Orlando Lutheran Towers Description of Financing BB&T hired to underwrite tax-exempt bond issue Estimated par amount $38.5 million Issued through Orange County Health Facilities Authority Preliminary use of bond proceeds: –$33 million – Construction –$4.5 million – Cash reserves and funded interest –$1.0 million – Legal, banking, consulting fees Financial Feasibility Study by Florida-based accounting firm Moore, Stephens, Lovelace

16. OCHFA Orlando Lutheran Towers Financing History OLT previous OCHFA bonds –1987, 1996, 2005 – good payment history Series 1996 OLT bonds outstanding –Non-rated; 8.69% avg. coupon –$5,000 denominations – small investor risk Series 2005 OLT refunding bonds –Non-rated; $6.5 million cash flow savings or 13.6% net present value –$25,000 minimum denominations Series 2007 OLT Expansion Project –Non-Rated –$100,000 denominations to sophisticated investors –Initial investor letter

17. OCHFA Orlando Lutheran Towers Financing Requirements OCHFA approved waiver of policy for OLT Refunding –Policy requires $100k or $250k denominations –Approved $100,000 denominations –Only offered to sophisticated investors –Investors required to sign initial letter confirming sophistication –Book-entry bond record keeping OCHFA-approved waivers will help lower interest rates –$100,000 denominations allows smaller investments (creates competition) –Book-entry is standard form of holding securities

18. OCHFA Conduit Finance and the Health Facilities Authority Conduit Finance Conduit Issuance Policy Orlando Lutheran Towers Project and Waivers Approved Benefit Summary Recommended Actions Presentation Topics:

19. OCHFA Orlando Lutheran Towers Merits of Refinancing OLT shows improving credit and financial health (balance sheet, profitability, occupancy) OLT has a history of successful payment of debt issued through OCHFA Provides funding to expand service $33 million in new facilities for Seniors Enhances service and further improves ability to carry out mission OCHFA approved 2007 bonds in denominations of $100,000, with initial investor letter, in book-entry form

20. OCHFA Conduit Finance and the Health Facilities Authority Conduit Finance Conduit Issuance Policy Orlando Lutheran Towers Project and Waivers Approved Benefit Summary Recommended Actions Presentation Topics:

21. OCHFA Orlando Lutheran Towers Action Requested OLT requests that the Board of County Commissioners grant approval of the proposed resolution under TEFRA as requested by the OCHFA “ Orlando Lutheran Towers was the right choice for me.” – S. K., OLT Resident

22. OCHFA Orlando Lutheran Towers Action Requested Orlando Lutheran Towers is seeking BCC approval of the Resolution approving the bonds solely for TEFRA purposes, and approval of waivers recommended by the OCHFA that the bond issue may be sold in $100,000 minimum denominations in book-entry form accompanied by a sophisticated investor letter from initial investors.