COLUMBUS, Ohio (Aug. 25, 2005) – A new financial structure and budding relationship with a local bank offers a California retirement community financial flexibility to maintain the property, consider ever-changing resident needs and remain a strong employer.

Palm Village, a nonprofit continuing care community in Reedley, refinanced to replace a debt structure that imposed strict oversight on management and financial activity and severely limited use of a trustee-held reserve that was kept in a low-interest account.

“It was expensive and cumbersome and complicated” and it limited expansion and renovation options necessary to best serve residents, President David Reimer said of the old structure. “We need to do everything we can to work as smartly as we can to survive in various business climates. … If you don’t change and adapt, you’re going to be obsolete in 30 years.”

Lancaster Pollard underwrote the $12.1 million in tax-exempt, variable-rate bonds, which provide for more than $350,000 in capital improvements and refinance existing certificates of participation, the California equivalent of city-issued bonds. The new certificates also fund a debt service reserve fund and retire certain outstanding notes. The more flexible option allows Palm Village to invest its reserves at a higher interest rate and pay a lower rate on its debt, reducing long-term costs.

The structure is backed by an “AA-/A-1+” letter of credit that serves as a backup to the letter of credit from a local bank that wanted to contribute to the community but never had issued tax-exempt securities. Lancaster Pollard educated the bank on the process, essentially creating a new community resource for Palm Village to rely on and helping initiate a relationship that Reimer hopes will benefit his employees.

Palm Village is one of the largest employers in the area and has 270 skilled nursing beds, assisted living beds and independent living cottages. Refinancing will save Palm Village about $80,000 per year and improves nearly every financial ratio in its credit profile. Financing the new debt with a letter of credit provides a secure structure with third-party credit enhancement over the certificates’ 21-year payment period.

Palm Village’s mission began in 1942 and has evolved and expanded through name and location changes. The community is owned by Mennonite Brethren Homes.

###