Covenant Retirement Communities West, Inc. Liquid Reserve... · PART 4 — COVENANT RETIREMENT...

Covenant Retirement Communities West, Inc. Report on Audit of Liquid Reserves and Additional Information as of and for the Year Ended January 31, 2019, and Independent Auditors’ Report

COVENANT RETIREMENT COMMUNITIES WEST, INC.

TABLE OF CONTENTS

Page

INDEPENDENT AUDITORS’ REPORT 1-2

RESERVE REPORTS AS OF AND FOR THE YEAR ENDED JANUARY 31, 2019:

PART 5 — LIQUID RESERVES REPORTS 3

Long-Term Debt Incurred in a Prior Fiscal Year (Form 5-1) 4

Long-Term Debt Incurred During Fiscal Year (Form 5-2) 5

Items from Combined Statements of Cash Flows to Forms 5-1 and 5-2 6–7

Calculation of Long-Term Debt Reserve Amount (Form 5-3) 8

Calculation of Net Operating Expenses — The Samarkand (Form 5-4) 9

Calculation of Net Operating Expenses — Covenant Village of Turlock (Form 5-4) 10

Calculation of Net Operating Expenses — Mount Miguel Covenant Village (Form 5-4) 11

Revenue Received During the Year for Services Rendered to Residents Who Did Not Have a Continuing Care Contract (Form 5-4 Support for Line 2e) 12

Items from Combined Statements of Cash Flows and Supplemental Information to Combined Statements of Cash Flows for Calculation of Cash Operating Expenses 13

Annual Reserve Certification and Attachment (Form 5-5) 14–15

Note to Liquid Reserves Report 16

ADDITIONAL INFORMATION AS OF AND FOR THE YEAR ENDED JANUARY 31, 2019:

PART 1 — ANNUAL PROVIDER FEES 17

Resident Population — The Samarkand (Forms 1-1 and 1-2) 18

Resident Population — Covenant Village of Turlock (Forms 1-1 and 1-2) 19

Resident Population — Mount Miguel Covenant Village (Forms 1-1 and 1-2) 20

PART 2 — CERTIFICATION BY CHIEF EXECUTIVE OFFICER 21

Certification by Chief Executive Officer 22

PART 3 — EVIDENCE OF FIDELITY BOND 23

Certificate of Insurance 24

PART 4 — COVENANT RETIREMENT COMMUNITIES, INC. AUDITED FINANCIAL STATEMENTS (NOT INCLUDED IN THIS BOUND DOCUMENT) 25

PART 6 — CCRC DISCLOSURE STATEMENT 26

Continuing Care Retirement Community Disclosure Statement General Information — The Samarkand 27–31

Continuing Care Retirement Community Disclosure Statement General Information — Covenant Village of Turlock 32–36

Continuing Care Retirement Community Disclosure Statement General Information — Mount Miguel Covenant Village 37–41

PART 7 — ADJUSTMENTS IN MONTHLY CARE FEES 42

Adjustments in Monthly Care Fees — The Samarkand (Form 7-1) 43

Adjustments in Monthly Care Fees — Covenant Village of Turlock (Form 7-1) 44

Adjustments in Monthly Care Fees — Mount Miguel Covenant Village (Form 7-1) 45

Basis of Monthly Care Fee Adjustment 46

Independent Auditor's Report

To the Board of DirectorsCovenant Retirement Communities West, Inc.

We have audited the accompanying liquid reserves report of Covenant Retirement Communities West, Inc., whichincludes The Samarkand, Mount Miguel Covenant Village, and Covenant Village of Turlock (collectively, the"Organization"), as of January 31, 2019 and for the year then ended, listed in Part 5 - Liquid Reserves in the tableof contents (the "liquid reserves report").

Management’s Responsibility for the Liquid Reserves Report

Management is responsible for the preparation and fair presentation of the liquid reserves report in accordancewith complying with California Health and Safety Code Section 1792; this includes the design, implementation, andmaintenance of internal control relevant to the preparation and fair presentation of the liquid reserves report that isfree from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the liquid reserves report based on our audit. We conducted ouraudit in accordance with auditing standards generally accepted in the United States of America. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the liquid reservesreport is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the liquidreserves report. The procedures selected depend on the auditor’s judgment, including the assessment of the risksof material misstatement of the liquid reserves report, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of theliquid reserves report in order to design audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express nosuch opinion. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of significant accounting estimates made by management, as well as evaluating the overallpresentation of the liquid reserves report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

Opinion

In our opinion, the liquid reserves report referred to above presents fairly, in all material respects, the liquid reserverequirements of Covenant Retirement Communities West, Inc. as of January 31, 2019 in conformity with the reportpreparation provision of California Health and Safety Code Section 1792.

Other Matter

Our audit was conducted for the purpose of forming an opinion on the basic liquid reserves report taken as awhole. The additional information listed in Parts 1, 2, 3, 6, and 7 in the table of contents is presented for thepurpose of additional analysis. This additional information is the responsibility of management. Such informationhas not been subjected to the auditing procedures applied in our audit of the basic liquid reserves report, and,accordingly, we express no opinion on it.

1

Sharice.McClendon

Schaumburg

Sharice.McClendon

Praxity

To the Board of DirectorsCovenant Retirement Communities West, Inc.

Restricted Use

This special purpose report is intended solely for the use of Covenant Retirement Communities West, Inc.'smanagement and board of directors and for filing with the California Department of Social Services and is notintended to be and should not be used or relied upon for any other purpose.

May 16, 2019

2

3

Part 5Liquid Reserves

(a) (b) (C) (d) (e)Credit Enhancement

Long-Term Date Principal Paid Interest Paid Premiums Paid Total PaidDebt Obligation Incurred During Fiscal Year During Fiscal Year in Fiscal Year (columns (b)+(c)+(d))

CO 12 A 9/7/2012 - 5,110,250 - 5,110,250

CO 12 B 9/7/2012 - 1,033,550 - 1,033,550

CO 12 C 9/7/2012 1,665,000 493,750 - 2,158,750

CO 13 A 7/31/2013 - 1,233,888 - 1,233,888

CO 13 B 7/31/2013 7,550,000 237,825 - 7,787,825

CA 13 C 7/31/2013 - 1,150,313 - 1,150,313

CO 15 A 4/1/2015 4,415,000 4,983,200 - 9,398,200

CO 15 B 4/1/2015 2,700,000 460,067 - 3,160,067

IL 17 2/1/2017 3,400,000 1,383,580 - 4,783,580

19,730,000$ 16,086,423$ -$ 35,816,423$

Provider: Covenant Retirement Communities

FORM 5-1LONG-TERM DEBT INCURRED

IN A PRIOR FISCAL YEAR(Including Balloon Debt)

NOTE: For column (b), do not include voluntary payments made to pay down principal.

4

(a) (b) (C) (d) (e)Amount of most Number of Reserve Requirement

Long-Term Date Total Interest Paid Recent Payment Payments over (see instruction 5)Debt Obligation Incurred During Fiscal Year on the Debt next 12 months (columns c * d)

CO 18A 11/13/2018 - 3,910,000 - - CT 18B 11/13/2018 - 820,000 1 820,000

-$ 4,730,000$ 1$ 820,000$

Provider: Covenant Retirement Communities

NOTE: For column (b), do not include voluntary payments made to pay down principal.

FORM 5-2LONG-TERM DEBT INCURRED

DURING FISCAL YEAR(Including Balloon Debt)

5

Items from Combined Statements of Cash Flows to Forms 5-1 and 5-2Long-Term Debt Incurred in Prior and Current Fiscal Years

For the Fiscal Year Ended January 31, 2019

CRC Total

Principal paid on long-term debt per Schedule 5-1 19,730,000$ Early redemption of bondsPrincipal paid on other debt 233,600+ Total per Cash Flows - Payment of Debt 19,963,600$

+ Combined Statements of Cash Flows 19,963,600$

6

Items from Combined Statements of Cash Flows to Forms 5-1 and 5-2Long-Term Debt Incurred in Prior and Current Fiscal Years


CRC Total

Interest paid on long-term debt per Schedule 5-1 16,086,000$ Interest paid on other debt 1,857,000

+ Total per Cash Flows - Interest Paid 17,943,000$

+ Combined Statements of Cash Flows 17,943,000$

7

Provider: Covenant Retirement Communities, Inc.California Reserve ReportForm 5-3Long-Term Debt Incurred in Prior and Current Fiscal Years

Line1 Total from Form 5-1 bottom of Column (e) 35,816,423$

2 Total from Form 5-2 bottom of Column (e) 820,000

3 Facility leasehold or rental payment paid by provider during fiscal year.(including related payments such as lease insurance) -

4 TOTAL AMOUNT REQUIRED FOR LONG-TERM DEBT RESERVE: 36,636,423$

8

Line Amounts TOTAL

1 $26,941,000

2

a. Interest paid on long-term debt (see instructions) $169,000

b. Credit enhancement premiums paid for long-term debt (see instructions) $0

c. Depreciation $4,594,000

d. Amortization $8,600

e. Revenues received during the fiscal year for services to persons who did not have a

continuing care contract $6,555,000

f. Extraordinary expenses approved by the Department $0

3 $11,326,600

4 $15,614,400

5 $42,779

6$3,208,425

PROVIDER:

COMMUNITY:

FORM 5-4CALCULATION OF NET OPERATING EXPENSES

Total operating expenses from financial statements

Deductions:

Total Deductions

Net Operating Expenses

Covenant Retirement Communities

The Samarkand

Divide Line 4 by 365 and enter the result.

Multiply Line 5 by 75 and enter the result. This is the provider's operating expense reserve amount.

9

Line Amounts TOTAL

1 $32,475,000

2

a. Interest paid on long-term debt (see instructions) $1,222,000






f. Extraordinary expenses approved by the Department

3 $19,772,000

4 $12,703,000

5 $34,803

6$2,610,225

PROVIDER:

COMMUNITY:



Deductions:

Total Deductions



Covenant Village of Turlock



10

Line Amounts TOTAL

1 $23,443,000

2

a. Interest paid on long-term debt (see instructions) $1,130,000






f. Extraordinary expenses approved by the Department

3 $10,473,000

4 $12,970,000

5 $35,534

6$2,665,050

PROVIDER:

COMMUNITY:



Deductions:

Total Deductions



Mount Miguel Covenant Village



11

Covenant Retirement CommunitiesCalifornia Reserve ReportForm 5-4 Support for Line 2eRevenue received during the year for services renderedto residents who did not have a continuing care contract

Covenant Village Mount MiguelSamarkand of Turlock Covenant Village

Maintenance fees and Ancillary service fees received from non-contract residents 6,488,000$ 15,647,000$ 5,717,000$ Other operating revenue from non-contract residents (e.g., telephone charges, cable TV, other) 67,000 14,000 4,000

Total per Form 5-4, Line 2(e) 6,555,000$ 15,661,000$ 5,721,000$

12

Items from Combined Statements of Cash Flows & Supplemental Information to Combined Statements of Cash Flows for Calculation of Cash Operating Expenses


CRC Total Samarkand Mt. Miguel Turlock All Others

* Depreciation 48,508,000$ 4,594,000$ 3,597,000$ 2,858,000$ 37,459,000$

* Amortization 736,000$ 8,600$ 25,000$ 31,000$ 671,400$

Routine Resident Services and Other Items 241,335,000$ 16,060,000$ 13,930,000$ 13,028,600$ 198,316,400$ Revenues received from non-contract residents 27,937,000 6,555,000 5,721,000 15,661,000 0

+ Total per Cash Flows - Cash from Residents 269,272,000$ 22,615,000$ 19,651,000$ 28,957,600$ 198,048,400$

Interest paid 17,943,000$ 169,000$ 1,130,000$ 1,222,000$ 15,422,000$ Credit enhancement premiums paid for long-term debt 0 0 0 0 0

+ Total per Cash Flows - Interest Paid 17,943,000$ 169,000$ 1,130,000$ 1,222,000$ 15,422,000$

+ Combined Statements of Cash Flows

* Supplemental Information to Combined Statement of Cash Flows

13

Covenant Retirement Communities, West

Form 5-5 Attachment Re: Reserves

The reserves included on Form 5-5 are categorized as follows:

Benevolent Care Fund: 18,314,245$

Property Replacement Fund: 10,265,426

Capital Reserve Fund: 26,444,154

Other Board Designated Funds 15,062,274

Good Neighbor Fund 1,069,067

Total Funds 71,155,166$

Portion of Funds Consisting of Approved Securities 22.47%

Reserves (cash, investment securities and equities

included on Form 5-5) 15,985,121$

Additional Cash Not in Reserves 61,119

Total Qualifying Assets per Form 5-5 16,046,240$

Description of Reserves:

Benevolent Care Fund:

Property Replacement Fund:

Reserves established to pay for non-routine capital. For example: roofs, HVAC systems, etc.

Capital Reserve Fund:

Other Board Designated Funds:

Good Neighbor Fund:

Per Capita Cost of Operations: 51,000$

Defined as total operating expenses dived by the average number of residents

Principal accumulates as a board designated endowment fund. Earnings are utilized to

offset benevolent care provided to residents.

Reserve is to provide funds for optional early redemption of variable rate debt (in a rising interest

rate environment). Reserves are also available to internally finance significant campus capital

renovations and expansions.

These reserves include the funds held to pay refundable contract obligations as well as other

miscellaneous Board designations.

This fund is held by the Samarkand only and is utilized to assist residents who are receiving an

benevolent care discount for their monthly fee with other personal needs (e.g., new eye glasses).

15

16

COVENANT RETIREMENT COMMUNITIES WEST, INC.

NOTE TO LIQUID RESERVES REPORTAS OF AND FOR THE YEAR ENDED JANUARY 31, 2019

1. BASIS OF ACCOUNTING

The accompanying liquid reserves report on pages 3 through 15 has been prepared in accordance with the provisions of the Health and Safety Code Section 1792 administered by the State of California Department of Social Services. The liquid reserves report includes the accounts of the following entities of Covenant Retirement Communities West, Inc.: The Samarkand, Mount Miguel Covenant Village, and Covenant Village of Turlock. Covenant Retirement Communities West, Inc. and the related entities are subsidiaries of Covenant Retirement Communities, Inc., an Illinois not-for-profit corporationresponsible for operating retirement, assisted-living, and skilled-care facilities.

* * * * * *

17

Part 1Annual Provider Fees

Line Continuing Care Residents TOTAL

[1] Number at beginning of fiscal year 334

[2] Number at end of fiscal year 339

[3] Total Lines 1 and 2 673

[4] Multiply Line 3 by ".50" and enter result on Line 5.

[5] Mean number of continuing care residents 336.5

All Residents





[10] Mean number of all residents 390

[11]

Divide the mean number of continuing care residents (Line 5) by

the mean number of all residents (Line 10) and enter the result

(round to two decimal places).0.86

FORM 1-2

ANNUAL PROVIDER FEE

Line TOTAL

[1] Total Operating Expenses (including depreciation and debt service - interest only) $26,941,000

[a] Depreciation $4,594,000

[b] Debt Service (Interest Only) $169,000

[2] Subtotal (add Line 1a and 1b) $4,763,000

[3] Subtract Line 2 from Line 1 and enter result. $22,178,000

[4] Percentage allocated to continuing care residents (Form 1-1, Line 11) 86%

[5] Total Operating Expense for Continuing Care Residents

(multiply Line 3 by Line 4) $19,073,080

x .001

[6] Total Amount Due (multiply Line 5 by .001) $19,073

PROVIDER:

COMMUNITY:


The Samarkand

FORM 1-1

RESIDENT POPULATION

x .50

x .50

18






[5] Mean number of continuing care residents 338

All Residents





[10] Mean number of all residents 486

[11]




FORM 1-2

ANNUAL PROVIDER FEE

Line TOTAL



[b] Debt Service (Interest Only) $1,222,000






x .001


PROVIDER:

COMMUNITY:



FORM 1-1

RESIDENT POPULATION

x .50

x .50

19






[5] Mean number of continuing care residents 374

All Residents





[10] Mean number of all residents 433.5

[11]




FORM 1-2

ANNUAL PROVIDER FEE

Line TOTAL



[b] Debt Service (Interest Only) $1,130,000






x .001


PROVIDER:

COMMUNITY:



FORM 1-1

RESIDENT POPULATION

x .50

x .50

20

21

Part 2Certification by Chief

Executive Officer

23

Part 3Evidence of Fidelity Bond

CERTIFICATE OF INSURANCE DATE (MM/DD/YYYY)

04/22/2019THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).

PRODUCER

CHIVAROLI & ASSOCIATES INC 200 N Westlake Blvd #101 Westlake Village, CA 91362 (805) 371 – 3680

CONTACT NAME: Mary Winterburn PHONE (A/C, No, Ext): 805-371-3680 FAX

(A/C, No): 805-371-3684E-MAILADDRESS: [email protected]

INSURER(S) AFFORDING COVERAGE NAIC # INSURER A: National Union Fire Insurance Company 19445

INSURED Covenant Ministries of Benevolence 5145 N California Ave Chicago, IL 60625-3661

INSURER B:

INSURER C:

INSURER D:

INSURER E:

INSURER F:

COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.

INSR LTR TYPE OF INSURANCE

ADDL INSR

SUBR WVD POLICY NUMBER

POLICY EFF (MM/DD/YYYY)

POLICY EXP (MM/DD/YYYY) LIMITS

GENERAL LIABILITY EACH OCCURRENCE $ COMMERCIAL GENERAL LIABILITY DAMAGE TO RENTED

PREMISES (Ea occurrence) $ CLAIMS MADE OCCUR MED EXP (Any one person) $

PERSONAL & ADV INJURY $ GENERAL AGGREGATE $

GEN’L AGGREGATE LIMIT APPLIES PER: PRODUCTS – COMP/OP AGG $ POLICY PRO-

JECT LOC

AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT (Ea accident) $

ANY AUTO BODILY INJURY (Per person) $ ALL OWNED AUTOS

SCHEDULED AUTOS BODILY INJURY (Per accident) $

HIRED AUTOS NON-OWNED AUTOS

PROPERTY DAMAGE (Per accident) $

UMBRELLA LIAB OCCUR EACH OCCURRENCE $ EXCESS LIAB CLAIMS-MADE AGGREGATE $ DED RETENTION $

WORKERS COMPENSATION AND EMPLOYERS’ LIABILITY Y / N

N / A

WC STATUTORY LIMITS

OTHER $ ANY PROPRIETOR/PARTNER/EXECUTIVE/ OFFICER/MEMBER EXCLUDED? E.L. EACH ACCIDENT $ (Mandatory in NH) If yes, describe under

E.L. DISEASE – EACH EMPLOYEE $

DESCRIPTION OF OPERATIONS below E.L. DISEASE – POLICY LIMIT $

A Commercial Crime 01-340-57-58 4/30/2019 4/30/2020 $1,000,000 per occurrence

DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space is required)

Evidence of Insurance

CERTIFICATE HOLDER CANCELLATION

CA Department of Social Services Continuing Care Licensing Division 744 P Street, M.S. 11-90 Sacramento, California 95814

SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS.

AUTHORIZED REPRESENTATIVE

© 1988-2010 ACORD CORPORATION. All rights reserved.

ACORD 25 (2010/05) The ACORD name and logo are registered marks of ACORD

24

25

Part 4Covenant Retirement

Communities, IncAudited Financial Statements

(not included in this bound document)

26

Part 6CCRC Disclosure Statement

FACILITY NAME:

ADDRESS: ZIP CODE: PHONE:

PROVIDER NAME: FACILITY OPERATOR:

RELATED FACILITIES: RELIGIOUS AFFILIATION:

YEAR OPENED: NO. OF ACRES: 17 MULTI-STORY: SINGLE STORY: BOTH: Y

MILES TO SHOPPING CENTER: MILES TO HOSPITAL:

NUMBER OF UNITS: INDEPENDENT LIVING HEALTH CARE

APARTMENTS - STUDIO 17 ASSISTED LIVING

APARTMENTS - 1 BDRM 66 SKILLED NURSING

APARTMENTS - 2 BDRM 123 SPECIAL CARE

COTTAGES/HOUSES 11 DESCRIBE SPECIAL CARE

% OCCUPANCY AT YEAR END 95%

TYPE OF OWNERSHIP: NOT FOR PROFIT FOR PROFIT ACCREDITED: BY:

FORM OF CONTRACT: LIFE CARE CONTINUING CARE FEE FOR SERVICE

ASSIGN ASSETS EQUITY ENTRY FEE RENTAL

REFUND PROVISIONS (Check all that apply): 90% 75% 50% PRORATED TO 0% OTHER:

RANGE OF ENTRANCE FEES: 92,500$ TO 625,000$ LONG-TERM CARE INSURANCE REQUIRED?

HEALTH CARE BENEFITS INCLUDED IN CONTRACT:

ENTRY REQUIREMENTS: MIN. AGE: 62 PRIOR PROFESSION: OTHER:

RESIDENT REPRESENTATIVE(S) TO, AND RESIDENT MEMBER(S) ON, THE BOARD: John Kennedy attends 4 Board meetings annually.

COMMON AREA AMENITIES SERVICES AVAILABLE

AVAILABLEFEE FOR SERVICE

INCLUDED IN FEE

FOR EXTRA

CHARGE

BEAUTY/BARBER SHOP HOUSEKEEPING TIMES/MONTH 4

BILLIARD ROOM NUMBER OF MEALS/DAY 1 2

BOWLING GREEN SPECIAL DIETS AVAILABLE Yes

CARD ROOMS

CHAPEL 24-HOUR EMERGENCY RESPONSE

COFFEE SHOP ACTIVITIES PROGRAM

CRAFT ROOMS ALL UTILITIES EXCEPT PHONE

EXERCISE ROOM APARTMENT MAINTENANCE

GOLF COURSE ACCESS CABLE TV

LIBRARY LINENS FURNISHED

PUTTING GREEN LINENS LAUNDERED

SHUFFLEBOARD MEDICATION MANAGEMENT

SPA NURSING/WELLNESS CLINIC

SWIMMING POOL-INDOOR PERSONAL NURSING/HOME CARE

SWIMMING POOL-OUTDOOR TRANSPORTATION-PERSONAL

TENNIS COURT TRANSPORTATION-PREARRANGED

WORKSHOP OTHER

OTHER -

All providers are required by Health and Safety Code section 1789.1 to provide this report to prospective residents before executing a deposit agreement or continuing care contract, or receiving any payment. Many communities are part of multi-facility operations which may influence financial reporting. Consumers are encouraged to ask questions of the continuing care retirement community that they are considering and to seek advice from professional advisors.

The Samarkand

2550 Treasure Drive, Santa Barbara, CA


Wireless Internet Access

N/A

60 Health Care Days with 10% Discount OR 30 Health Care Days Only

1 mile

FACILITY SERVICES AND AMENITIES

38

63

16

Assisted Living Memory Care

1966

1 mile

Evangelical Covenant Church

Continuing Care Retirement Community

Disclosure Statement

General Information


805-687-070193105-4148

See Page 2

Y N

Y N

27

PROVIDER NAME:

CCRC's LOCATION (City, State) Phone (with area code)

Covenant Village of Golden Valley Minneapolis, Minnesota 763-546-6125

Covenant Shores Mercer Island, Washington 206-268-3000

Covenant Village of Colorado Westminster, Colorado 303-424-4828

Covenant Village of Cromwell Cromwell, Connecticut 860-635-5511

Covenant Village of Florida* Plantation, Florida 954-472-2860

Covenant Village of the Great Lakes Grand Rapids, Michigan 616-735-4541

Covenant Village of Northbrook Northbrook, Illinois 847-480-6380

Covenant Village of Turlock Turlock, California 209-632-9976

The Holmstad Batavia, Illinois 630-879-4000

Mount Miguel Covenant Village Spring Valley, California 619-479-4790

The Samarkand Santa Barbara, California 805-687-0701

Windsor Park* Carol Stream, Illinois 630-682-4377

MULTI-LEVEL RETIREMENT COMMUNITIES

Covenant Home of Chicago Chicago, Illinois 773-506-6900

FREE-STANDING SKILLED NURSING

SUBSIDIZED SENIOR HOUSING

* PLEASE INDICATE IF THE FACILITY IS LIFE CARE

Covenant Retirement Communities, Inc.

28

PROVIDER NAME:In Thousands

2016 2017 2018 2019

INCOME FROM ONGOING OPERATIONS

OPERATING INCOME

(excluding amortization of entrance fee income) 267,812$ 266,114$ 285,193$ 279,311$

LESS OPERATING EXPENSES

(excluding depreciation, amortization, & interest) 237,801$ 244,994$ 254,053$ 251,097$

NET INCOME FROM OPERATIONS 30,011$ 21,120$ 31,140$ 28,214$

LESS INTEREST EXPENSE 15,743$ 16,386$ 16,815$ 16,607$

PLUS CONTRIBUTIONS 1,059$ 555$ 1,450$ 446$

PLUS NON-OPERATING INCOME (EXPENSES)

(excluding extraordinary items) -$ -$ -$ -$

NET INCOME (LOSS) BEFORE ENTRANCE FEES,

DEPRECIATION AND AMORTIZATION 15,327$ 5,289$ 15,775$ 12,305$

NET CASH FLOW FROM ENTRANCE FEES

(Total Deposits Less Refunds) 66,311$ 61,425$ 60,594$ 81,016$

DESCRIPTION OF SECURED DEBT AS OF MOST RECENT FISCAL YEAR END

LENDEROUTSTANDING

BALANCEINTEREST

RATEDATE OF

ORIGINATIONDATE OF

MATURITYAMORTIZATION

PERIOD

FINANCIAL RATIOS (see next page for ratio formulas)2016 2017 2018 2019

DEBT TO ASSET RATIO 41.91 39.13 37.32 41.47

OPERATING RATIO 94.67 98.22 94.98 95.75

DEBT SERVICE COVERAGE RATIO 3.40 2.70 2.34 3.01

DAYS CASH-ON-HAND RATIO 302.89 320.72 369.45 401.70

HISTORICAL MONTHLY SERVICE FEESAVERAGE FEE AND PERCENT CHANGE

2016 % 2017 % 2018 % 2019 %

STUDIO 2,475$ 4.0% 2,535$ 2.4% 2,600$ 3.0% 2,678$ 3.0%

ONE BEDROOM 3,260$ 4.0% 3,340$ 2.5% 3,425$ 3.0% 3,527$ 3.0%

TWO BEDROOM 3,640$ 4.0% 3,730$ 2.5% 3,825$ 3.0% 3,939$ 3.0%

COTTAGE/HOUSE 5,660$ 3.9% 5,775$ 2.0% 5,910$ 2.3% 6,087$ 3.0%

ASSISTED LIVING 5,758$ 5.0% 5,908$ 2.6% 6,083$ 3.0% 6,265.00$ 3.0%

ASSISTED LIVING SPECIAL CARE 7,258$ 4.9% 7,518$ 3.6% 7,743$ 3.0% 7,974$ 3.0%

SKILLED NURSING $ 374/day 3.9% $ 384/day 2.7% $ 396/day 5% $ 415/day 5.0%

SKILLED NURSING SPECIAL CARE $ 398/day 3.9% $ 408/day 2.5% $ 408/day 0.0% N/A

COMMENTS FROM PROVIDER: Second Person Care Fees in Residential: 2016 = $860.00; 2017 = $880.00; 2018 = $900.00; 2019 = $927 Second Person Fees in Assisted Living: 2016 = $2,715.00; 2017 = $2,785.00; 2018 = $2,870.00; 2019= $2,955

Covenant Retirement Communities, Inc. (The Samarkand)

* See Attached Sheet ** See Attached Sheet ** See Attached Sheet *

29

PROVIDER NAME: Covenant Retirement Communities, Inc.DESCRIPTION OF SECURED DEBT AS OF MOST RECENT FISCAL YEAR ENDAs of January 31, 2019In Thousands

LENDER

1/31/19 OUTSTANDING

BALANCEINTEREST

RATEDATE OF

ORGINATIONDATE OF


PERIOD

California Statewide Communities Development Authority Variable Rate Certificates of ParticipationSeries 2013C 20,450 5.625 7/31/2013 12/1/2036 23 years

Illinois Finance Authority Revenue Refunding Direct Placement BondsSeries 2017 45,425 variable 2/1/2017 12/1/2029 13 years

Colorado Health Facilities Authority Revenue BondsSeries 2012A 104,205 4.50-5.00 9/7/2012 12/1/2033 21 yearsSeries 2012B 22,905 4.00-5.00 9/7/2012 12/1/2026 14 yearsSeries 2012C 8,210 2.00-5.00 9/7/2012 12/1/2022 10 yearsSeries 2013A 21,995 4.250-5.750 7/31/2013 12/1/2036 23 yearsSeries 2015A 97,460 1.00-5.00 4/1/2015 12/1/2035 21 yearsSeries 2015B 12,595 variable 4/1/2015 12/1/2024 10 years

State of Connecticut Health and Educational Facilities Authority Series 2018A 59,780 5.00 11/13/2018 12/1/2048 30 yearsSeries 2018B 46,850 5.00 11/13/2018 12/1/2040 22 years

Total long-term debt 439,875

30

PROVIDER NAME: Covenant Retirement Communities, Inc.

FINANCIAL RATIO FORMULAS

LONG-TERM DEBT TO TOTAL ASSETS RATIO

Long-Term Debt, less Current Portion Total Assets

OPERATING RATIO

Total Operating Expenses-- Depreciation Expense

-- Amortization Expense Total Operating Revenues

--Amortization of Deferred Revenues

DEBT SERVICE COVERAGE RATIO

Total Excess of Revenues over Expenses+ Interest, Depreciation,

and Amortization Expenses-- Amortization of Deferred Revenue

+ Net Proceeds from Entrance Fees Annual Debt Service

DAYS CASH ON HAND RATIO

Unrestricted Current CashAnd Investments

+ Unrestricted Non-Current Cash and Investments

(Operating Expenses - Depreciation- Amortization)/365

Note: These formulas are also used by the Continuing Care Accreditation Commission. For each formula, that organization also publishes

annual median figures for certain continuing care retirement communities.

31

FACILITY NAME:



















RESIDENT REPRESENTATIVE(S) TO, AND RESIDENT MEMBER(S) ON, THE BOARD: Hans Wilhelm attends 4 Board meetings annually.


AVAILABLEFEE FOR SERVICE

INCLUDED IN FEE

FOR EXTRA

CHARGE


BILLIARD ROOM NUMBER OF MEALS/DAY 1 Depending on unit 2


CARD ROOMS













WORKSHOP OTHER

OTHER



General Information


2125 North Olive Avenue, Turlock, CA 95382 209-632-9976

Covenant Retirement Communities Covenant Retirement Communities

See Page 2 Evangelical Covenant Church

1977

1 mile less than 1/4 mile

81

194


60 Health Care Days; 10% Discount or 30 Health Care Days

N/A


Computer Lab

NY

Y N

NY

Y N

NY

Y N

NY

Y N

NY

Y N

32

PROVIDER NAME:




















33

PROVIDER NAME:

In Thousands2016 2017 2018 2019


OPERATING INCOME














LENDEROUTSTANDING

BALANCEINTEREST

RATEDATE OF

ORIGINATIONDATE OF


PERIOD

FINANCIAL RATIOS (see next page for ratio formulas)

2016 2017 2018 2019


OPERATING RATIO 94.67 98.22 94.98 95.75



HISTORICAL MONTHLY SERVICE FEES

AVERAGE FEE AND PERCENT CHANGE

2016 % 2017 % 2018 % 2019 %

STUDIO 1,770$ 3.5% 1,820$ 2.8% 1,870$ 2.7% 1,925$ 2.9%

ONE BEDROOM 2,528$ 3.4% 2,595$ 2.7% 2,657$ 2.4% 2,735$ 2.9%

TWO BEDROOM 3,393$ 3.2% 3,461$ 2.0% 3,556$ 2.7% 3,660$ 2.9%

COTTAGE/HOUSE 2,140$ 3.1% 2,200$ 2.8% 2,278$ 3.5% 2,345$ 2.9%

ASSISTED LIVING $3,350-4500/ Month 4.7% $3,440-4,625/ Month 2.8% $3,540-4,785/ Month 2.9% $4,432-4,925/ Month 3.0%

SKILLED NURSING $325-$465/ Day 3.7% $335-480.00/ Day 2.9% $358-495/ Day 3.3% $328-519/ Day 4.9%

SPECIAL CARE

COMMENTS FROM PROVIDER:

Covenant Retirement Communities, Inc. (Covenant Village of Turlock)

Second Person Care Fees in Residential: 2016= $450 or $855 Depending on unit, 2017= $460 or $910 Depending on unit, 2018= $470 or $935 Depending on unit, 2019=$484 or $963 Depending on Unit

The calculation methodology for the ONE BEDROOM, TWO BEDROOM and COTTAGE/HOUSE unit is based on an average as there are several unit types.

* See Attached Sheet ** See Attached Sheet ** See Attached Sheet ** See Attached Sheet ** See Attached Sheet ** See Attached Sheet ** See Attached Sheet *

34


LENDER

1/31/19 OUTSTANDING

BALANCEINTEREST

RATEDATE OF

ORGINATIONDATE OF


PERIOD






35





OPERATING RATIO














36

FACILITY NAME:



















RESIDENT REPRESENTATIVE(S) TO, AND RESIDENT MEMBER(S) ON, THE BOARD: Allan Goodmanson attends 4 Board meetings a year.


AVAILABLEFEE FOR SERVICE INCLUDED IN FEE

FOR EXTRA

CHARGE


BILLIARD ROOM NUMBER OF MEALS/DAY 1 2


CARD ROOMS













WORKSHOP OTHER

OTHER

See Page 2

N/A

60 Health Care Days; 10% Discount or 30 Health Care Days

8 miles

1964

1 mile



36

84

10

Assisted Living Memory Care

Monthly



General Information

619-479-479091977-5810

Evangelical Covenant Church


325 Kempton Street, Spring Valley, CA

Covenant Retirement Communities Covenant Retirement Communities

NY

Y N

NY

Y N

NY

Y N

NY

Y N

NY

Y N

37

PROVIDER NAME:




















38

PROVIDER NAME:

In Thousands2016 2017 2018 2019


OPERATING INCOME














LENDEROUTSTANDING

BALANCEINTEREST

RATEDATE OF

ORIGINATIONDATE OF


PERIOD

FINANCIAL RATIOS (see next page for ratio formulas)

2016 2017 2018 2019


OPERATING RATIO 94.67 98.22 94.98 95.75



HISTORICAL MONTHLY SERVICE FEES

AVERAGE FEE AND PERCENT CHANGE

2016 % 2017 % 2018 % 2019 %

STUDIO 1,729$ 3.5% 1,794$ 3.8% 1,848$ 3.0% 1,905$ 3.1%

ONE BEDROOM 2,097$ 3.3% 2,170$ 3.5% 2,235$ 3.0% 2,304$ 3.1%

TWO BEDROOM 2,470$ 3.0% 2,550$ 3.2% 2,627$ 3.0% 2,708$ 3.1%

COTTAGE/HOUSE N/A N/A N/A

ASSISTED LIVING 4,784$ 4.0% 5,000$ 4.5% 5,150$ 3.0% 5,305$ 3.0%

SKILLED NURSING $322/Day 4.0% $338/Day 4.0% $355/Day 5.0% $373/Day 5.1%

SPECIAL CARE 6,750$ 12.5% 7,054$ 4.5% 7,407$ 5.0% 7,629$ 3.0%

COMMENTS FROM PROVIDER:

Covenant Retirement Communities, Inc. (Mount Miguel Covenant Village)

Second Person Care Fees in Residential: 2016 = $861; 2017 = $904; 2018=$931; 2019=$959

* See Attached Sheet ** See Attached Sheet ** See Attached Sheet ** See Attached Sheet ** See Attached Sheet ** See Attached Sheet ** See Attached Sheet ** See Attached Sheet ** See Attached Sheet *

39


LENDER

1/31/19 OUTSTANDING

BALANCEINTEREST

RATEDATE OF

ORGINATIONDATE OF


PERIOD






40





OPERATING RATIO














41

42

Part 7Adjustments in Monthly

Care Fees

Form 7-1 Report on CCRC Monthly Service FeesThe Samarkand

Residential

Living

Assisted

LivingSkilled Nursing

1 Monthly Service Fees atbeginning of reporting period:(indicate range, if applicable)

2 Indicate percentage ofincrease in fees imposedduring reporting period:(indicate range, if applicable)

Check here if monthly service fees at this community were not increased

during the reporting period. (If you checked this box, please skip down tothe bottom of theis form and specify the names of the provider andcommunity.)

3 Indicate the date the fee increase was implemented: 2/1/2018

(If more than 1 increase was implemented, indicate the dates for each increase.)

4 Check each of the appropriate boxes:

x Each fee increase is based on the provider's projected costs, prior year per

capita costs, and economic indicators.

x All affected residents were given written notice of this fee increase at least

30 days prior to its implementation.

x At least 30 days prior to the increase in monthly service fees, the designated

representative of the provider convened a meeting that all residents wereinvited to attend.

x At the meeting with residents, the provider discussed and explained the reasons

for the increase, the basis for determining the amount of the increase, and the

data used for calculating the increase.

x The provider provided residents with at least 14 days advance notice of each

meeting held to discuss the fee increases.

x The governing body of the provider, or the designated representative of the

provider posted the notice of, and the agenda for, the meeting in aconspicuous place in the community at least 14 days prior to the meeting.

5 On an attached page, provide a concise explanation for the increase in monthlyservice fees including the amount of the increase.

$2,235 to$6,087

$5,375 to$7,155

$12,450 to$17,160

2.99% 2.99% 4.95%

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Form 7-1 Report on CCRC Monthly Service FeesTurlock

Residential Living

Assisted Living Skilled Nursing

1 Monthly Service Fees atbeginning of reporting period:(indicate range, if applicable)







x Each fee increase is based on the provider's projected costs, prior year percapita costs, and economic indicators.

x All affected residents were given written notice of this fee increase at least30 days prior to its implementation.

x At least 30 days prior to the increase in monthly service fees, the designatedrepresentative of the provider convened a meeting that all residents wereinvited to attend.

x At the meeting with residents, the provider discussed and explained the reasonsfor the increase, the vasis for determining the amount of the increase, and thedata used for calculating the increase.

x The provider provided residents with at least 14 days advance notice of eachmeeting held to discuss the fee increases.

x The governing body of the provider, or the designated representative of theprovider posted the notice of, and the agenda for, the meeting in aconspicuous place in the community at least 14 days prior to the meeting.


$1,925 to $4,345

$4,432 to $4,925

$328 - $519 / Day

2.93% 2.93% 4.93%

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Form 7-1 Report on CCRC Monthly Service FeesMount Miguel

Residential

Living

Assisted

Living

Skilled

Nursing1 Monthly Service Fees at

beginning of reporting period:(indicate range, if applicable)







x Each fee increase is based on the provider's projected costs, prior year per

capita costs, and economic indicators.

x All affected residents were given written notice of this fee increase at least

30 days prior to its implementation.

x At least 30 days prior to the increase in monthly service fees, the designated

representative of the provider convened a meeting that all residents wereinvited to attend.

x At the meeting with residents, the provider discussed and explained the reasons

for the increase, the vasis for determining the amount of the increase, and thedata used for calculating the increase.

x The provider provided residents with at least 14 days advance notice of each

meeting held to discuss the fee increases.

x The governing body of the provider, or the designated representative of the

provider posted the notice of, and the agenda for, the meeting in aconspicuous place in the community at least 14 days prior to the meeting.


$1,903 to $3,088

$5,356 to $8,278

$10,071 to $14,310

3.07% 3.00% 5.07%

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COVENANT RETIREMENT COMMUNITIES WEST, INC. Year Ended January 31, 2019 Form 7-1

The data utilized in establishing adjustments in monthly care fees include projected increases in costs such as salary and benefits, food costs, utilities, contract services, supplies and other operating costs and economic analyses of market conditions. The development of the budget, which includes planning for next years' costs of salary and benefits, food costs, utilities, contract services, supplies and other operating costs is a six-month process which starts with ten year forecasting in the spring. For the budget process, historical expenditures are reviewed as well as actual year-to-date expenditures for the current year and an estimated actual for the remaining months of the year. Budgeted apartment revenues are calculated for the residential units by taking into account occupancy percentages by apartment type and specific monthly rates. Budgeted revenues at the personal care and skilled nursing facilities take into account room type, occupancy percentages by patient payer type and specific monthly and/or daily rates. Revenues generated from monthly fees are budgeted for in the operating plan. These revenues are planned to cover operating costs and an operating margin consistent with industry standards. Adjustments to monthly fees typically only occur annually on the first day of the fiscal year, February 1.

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