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HomeMy WebLinkAboutR43-Economic Development Agency ~ . ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO FROM: Gary Van Osdel Executive Director SUBJECT: PROPOSAL TO PROVIDE A CDBG FLOAT LOAN TO THE TOTALLY KIDS OR J GIN A ec. PROJECT DATE: August 23, 2004 Svnopsis of Previous Commission/Council/Committee Action(,): I On March 16, 2004 Redevelopment Committee Members Estrada, Longville and McGinnis considered the Mayor's request for the Ci!y/Agency to provide a loan guarantee for the Totally Kids Project and unanimously voted to forward this matter to the Community Development Commission for further direction. On April 5, 2004, the Community Development Commission directed staff, upon receipt of the County ECD Loan documents and a formal request for a $1.5 million loan guarantee for the Totally Kids, Inc. Project, to prepare the requisite guarantee documents for subsequent consideration and approval by the Mayor and Common Council. On August 17, 2004, the Redevelopment Committee (Members Estrada and McGinnis present) considered a proposal to provide a $1.5 million CDBG Float Loan for the Totally Kids, Inc. Project and voted to move the matter forward, without recommendation, for consideration by the entire Common Council. Recommended Motion(s): (Mavor and Common Council) Contact Person(s): Gary Van Osdel Phone: Project Area(s) IVDA Ward(s): Supporting Data Attached: iii Staff Report with attaclunents $1.5 Amount: $ million Source: (909) 663-1044 Third CDBG See Fiscal Impact SIGNATURE: Maggie Pacheco, Deputy Director Commission/Council Notes. I P:\AgendaslComm {}ev Commi5sionICDC 2004\04-09-07 Totally Kids SR,doc COMMISSION MEETING AGENDA Meeting Date: 09/07/2004 Agenda Item Number: ~ . '" ECONOMIC DEVELOPMENT AGENCY STAFF REPORT Proposal to Provide a CDBG Float Loan to the Totallv Kids Inc. Proiect BACKGROUND: On April 5, 2004, when the Common Council (the "Council") and the Community Development Commission (the "Commission') considered the request for a loan guarantee from Totally Kids Inc. (the "Developer"), not enough information regarding the overall financing scheme for the proposed project was available to enable the Council/Commission to make a decision. Thus, staff was directed to submit to the Council at a later date, a proposal to satisfy the guarantee request of the Developer at such time as a written financing commitment had been obtained by the Developer with the precise terms of the financing identified. It was anticipated at that time by the Developer to have both the Economic Development Agency ("EDA") and the Inland Valley Development Agency ("IVDA") guarantee separate portions of a $2.5 million San Bernardino County ("County") subordinate loan request for the project to be located westerly of Mountain View A venue and north of the 1-10 Freeway within the City and within the IVDA Redevelopment Project Area. The EDA was being requested to guaranty $1.5 million and the IVDA $1 million of the total County loan. At the April 5th meeting, the Council/Commission were advised that neither the City nor Agency had the financial standing or ability to make good on a loan guarantee. Therefore, at that time, staff recommended that in the event the Council/Commission desired City/Agency participation in the project, they consider pledging $250,000 annually in CDBG funds for six years to back up any potential default by the Developer on the $1.5 million loan (See attached EDA Staff Report dated 4/5/04). The City could offer this form of guaranty either (i) directly to a bank for a subordinate loan for the project for the $1.5 million amount or (ii) as a reimbursement mechanism to an "A" rated bank issuing the requested letter of credit to secure a loan from the County. The Council may recall that on January 28, 2004, the lVDA had considered the Developer's project request for a $1 million loan guaranty and approved it in concept subject to five conditions (See attached IVDA Staff Report dated 1/28/04). At this time, staff is not aware of the status of the Developer's compliance with the five (5) conditions imposed by the IVDA. Subsequent to the dates of the prior actions by both the Council and the IVDA, the Developer obtained a CDBG Float Loan commitment from the County of San Bernardino Department of Economic and Community Development ("ECD") in a principal amount equal to $1.5 million with a term not to exceed 30 months and a requirement for a City AA letter of credit guaranteeing such loan (See attached County ECD Staff Report dated 6/29/04). As with any CDBG Float Loan, because the funds used for the funding of the actuallclan are not funds held by the CDBG entitlement jurisdiction, such as the County or the City, but are un-disbursed funds retained by HUD for the funding of specifically identified eligible projects for the year for which the CDBG funds are payable, HUD requires that an unconditional direct pay letter of credit from a "A" rated or higher banking institution be obtained to guaranty the Float Loan. The purpose of the letter of credit is to assure HUD that if and when the project or projects originally intended to be funded with the un-disbursed CDBG funds are needed to fund the approved projects, the CDBG funds will be available on a one-day notice without jeopardizing the funding of the approved eligible project. The conditionlimposed by the County for a "AA" rated letter of credit to guaranty the Float Loan to the Developer is not only reasonable but is required by HUD. However, the County of San Bernardino I PIA,,"d"\Co~ Do> Cor"OleOC 2004"'-09-<>7 T~.J1, K'" S'do< COMMISS~:'t~:~~::'G o~~~~~~ Agenda Item Number: ~ , . Economic Development Agency Staff Report CDBG Float Loan To Totally Kids, Inc. Project Page 2 sought to comply with the letter of credit requirement by having such be obtained by the City rather than directly from the principals of the Developer. It is more customary that such a letter of credit be obtained from the project proponent or developer rather than from another governmental entity. Existing banks in Southern California that would be able to issue such a letter of credit include Wells Fargo and Bank of America. Smaller banks would be required to have their letter of credit confirmed by a larger bank meeting the credit rating requirement. I . EDA staff and Special Counsel met with Mr. Ernie Wong of City National Bank (the "Bank") on Thursday, July 15, 2004, to discuss the terms and conditions under which the Bank would be willing to make a $1.5 million loan to the Developer's project with a City or Agency guaranty. The principals of the Developer have an established banking relationship with this Bank. Mr. Wong was presented with the option of the 6 year pledge of City CDBG funds equal to $250,000 per year, but Mr. Wong indicated that the Bank would insist upon utilizing a form of guaranty whereby the City would be allowed to make 3 monthly payments upon a payment default by the Developer, and if the project remained in default after the third monthly payment, then the full outstanding principal balance of the initial $1.5 million loan would be due and payable by the City. According to Mr. Wong, the Bank would not be willing to accept any borrower risk from the principals of the Developer and sought to have an immediate payment mechanism by the City to the Bank. The City, and not the Bank, would then need to exercise remedies against the Developer. Additionally, Mr. Wong indicated that the Bank was of aware of the current financial condition of the Agency as to the tax increment revenues and the amount of debt and other obligations payable by the Agency and would not be willing under any circumstances to accept an unsecured promise to pay from the Agency without cash collateral on deposit with the Bank. It is staff's opinion that this will be the case with any bank being requested to accept the unsecured guaranty of the Agency, after undertaking a credit analysis of the Agency and its current tax increment financial condition. CURRENT ISSUE: The Agency staff recognizes the importance of the Totally Kids project to certain segments of the community and the benefits that it produces for individuals who require the use of its facilities. An expansion of the current facilities will produce more highly trained nursing and medical related employment opportunities within the City of San Bernardino. If this is a project the Mayor and Common Council seek to fund, the Council may wish to consider providing CDBG float loan financing based on the below noted terms: Principal Amount: Interest Rate: Payments: Maturity Date: Security: I $1.5 million 6 % per annum Interest only, quarterly payments 3 years; all principal and accrued interest due and payable in whole "A" rated bank letter of credit obtained either from the Developer and/or its principals It should be n!ted that at the present time the City has zero ($0.00) float loan capacity due to the fact that unlike in thelyears prior to 1999, virtually 100% of the annual CDBG funding is spent in the year P:\A~ndas\Corrm[kvCo~is5ion\CDC2004\04-09-07TouIl)'KidsSR_dlx COMMISSION MEETING AGENDA I Meeting Date: 09/07/2004 Agenda Item Number: ~ . Economic Development Agency Staff Report CDBG Float Loan To Totally Kids, Inc. Project Page 3 received. Prior to 1999, there was a continual backlog of projects that were not being implemented within the same year as the CDBG funds were programmed, and consequently, the CDBG funds "floated" over to the next year. It is this source of unexpended funds that enable HUD to fund a CDBG Float Loan. Another reason for the City's lack of float loan capacity is that a significant percentage (approximately 90%) of the CDBG funds are now used for City related programs and projects and, due to the financial condition of the City, such funds are necessarily drawn down in the program year in which they are budgeted. To fund a HUD CDBG float loan, it would be necessary for the City to make the commitment to delay the timely receipt of at least $1.5 million of 2004-05 CDBG moneys that are presently earmarked for various City functions (e.g., fire truck leases, code compliance and demolition) until on or after July 1st of the next fiscal year. The proposed float loan for the Totally Kids project is predicated upon the ability and willingness of the City to defer General Fund expenditures for the entire term of the Float Loan by one fiscal year for 3 consecutive fiscal years for those General Fund expenditures which are payable from the CDBG funds. In this manner the City will thus create the HUD CDBG Float Loan capacity required for the project for the 3-year term of the Float Loan. If the City General Fund budget requires that all the CDBG funds designated for City projects and activities be actually paid to the City by June 30 of each fiscal year, then the City will continue to have zero ($0.00) float loan capacity and thus would be unable to provide the Developer with a CDBG Float Loan. In the event the City were to make a HUD CDBG float Loan available to the Developer and at a later date were unable to defer the CDBG funded City General Fund expenditures, the Developer's "A" rated letter of credit would immediately be drawn upon without any recourse against the City for any such early draw of the letter of credit. It is precisely for this reason that HUD requires the "A" rated letter of credit in conjunction with this type of financing. During the RDA Meeting of August 17, 2004, a representative of the Developer advised the Committee of their inability to meet the letter of credit requirement. Given these circumstances, staff seeks direction from the Mayor and Common Council. ENVIRONMENTAL IMPACT: None. FISCAL IMPACT: The fiscal impacts to the City and Agency are described above. I RECOMMENDATION: That the Mayor and Common Council consider the feasibility of providing a $1.5 million CDBG Float Loan for the Totally Kids, Inc Project and direct staff accordingly. ~ / ~ Gary V COMMISSION MEETING AGENDA Meeting Date: 09/07/2004 Agenda Item Number: ~ . E C~ )i 0 M I C DE VEL 0 P MEN 11 G E N C Y OF THE CITY OF SAN BERNARDINO . FROM: Gary Van Osdel Executive Director SUBJEcr: CONSIDER REQUEST FROM "TOTALLY KIDS" FORA SI.5 MILLION LOAN GUARANTEE FOR EXPANSION OF ITS PEDIATRIC SUBACUTE FACILITY DATE: March 22, 2004 Synopsis of Previous Commission/Council/Committee Action(s): On March 16, 2004, Redevelopment Committee Members Longville and McGinnis unanimously voted to recommcnd that "the request from Totally Kids for a $1.5 million loan guarantee be forwarded to the Common Council/Community Development COnuIDssion for discussion, consideration and possible action. Recommended Motion(s): MOTION: (Mavor and Common Council) THAT UPON RECEIPT OF COUNTY ECD LOAN DOCUMENTS AND A FORMAL REQUEST FOR A $1.5 MILLION LOAN GUARANTEE FOR THE TOTALLY KIDS, INC., PROJEcr, APPROPRIATE STAFF BE DlREcrED TO PREPARE THE REQUISITE GUARANTEE DOCUMENT(S) FOR SUBSEQUENT CONSIDERATION AND APPROVAL BY THE MAYOR AND COMMON COUNCIL. Contact Person(s): Project Area(s) Tim Cook Phone: (909) 384.5133 Third IVDA Ward(s): Supporting Data Attached: iii Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Lettel~ $1,500,000 FUNDING REQUIREMENTS Amount: Guarantec Source: CDBG Funds SIGNATURE: None Commission/Council Notes: P~ndu\Comm DcYCommission\CDC 2004\04-04-05 TotaU'I Kick Loa.n.dox: COMMISSION MEETING AGENDA Meeting Date: 04/05/2004 Agenda Item Number; . EC, )OMIC DEVELOPMENT :GENCY STAFF REPORT Consider Request From "Totallv Kids" for a $1.5 MiIliou Loan Guarantee for Expansion onts Pediatric Subacute Facilitv BACKGROUND: The principals of Mountain View Child Care, Inc., dba Totally Kids, have operated 64 facilities for developmentally disabled children and adults in Southern California since the early 1970's. Most of the facilities have been sold off, thereby enabling them to concentrate on programs for medically fragile children at their campus located on south Mountain View Avenue in the City of San Bernardino where they have been in operation for 32 years. Their Pediatric Subacute facility has received broad national and international recognition as a model for efficient caring and effective healthcare for medically fragile and technology-dependent children. Now, Totally Kids desires to expand their existing facilities in order to broaden their service capabilities' to the growing population of medically fragile children. The proposed expansion, including land, construction and equipment is estimated to cost approximately $10,803,000. The . intent is to expand the existing medical treatment center from 50 beds to 80 beds and to construct an 80-unit Pediatric Day Care Health Center (the "Project"). The Project, when completed, will employ approximately 420 persons. Totally Kids proposes to finance the Project using a combination of an owner's contribution of approximately $747,000, bank financing of $7,556,000, a loan of $2,500,000 from the County Economic and Community Development Department (the "ECD") and an IVDA loan guarantee of $1,000,000. On January 28, 2004, the IVDA approved their loan guarantee of$1 million in concept, subject to the following conditions: i 1. Totally Kids must ribtain a real estate loan in the minimum amount of $6,500,000. 2. Totally Kids must obtain a loan in the amount of $1,056,000 from another lender to cover a projected operations deficit during the fill-up period. 3. Totally Kids must obtain a loan from the ECD in the minimum amount of $2,500,000. 4. Personal Guarantees, acceptable to IVDA Counsel, jointly and severally guaranteeing the $1,000,000 back to the IVDA. . 5. Delivery to the IVDA of certified copies of the City's Conditions of Approval and all development permits for the Project, together with copies of any State, County and City liceJses required for operations. I ~mmDc.,.4Conninion'O)C2OO4\04-04-(l.5 Totally Kids Loan..doc I I COMMISSION MEETING AGENDA Meeting Date: 04/0512004 Agenda Item Number: "I 'Economic Development. ~~ency Staff Report Totally Kids Loan Guarantee Page 2 . . ') Apparently the ECD has been directed to make the $2.5 million loan to Totally Kids for the Project contingent upon the City or Redevelopment Agency guaranteeing such a loan. Thus, Mayor Valles has requested that the Council/Commission consider providing the requested assistance for the Project At the time of the Redevelopment Committee Meeting on March 16, 2004, Agency staff was unable to provide sufficient information to enable the Committee to make an informed decision. On that date, neither the terms and conditions of the primary loan or the ECD loan were available for consideration and staff was unable to provide any information on the proposed work program and schedule, the financial strength and viability of Totally Kids and its principals, and any proposed security for a City/Agency loan guarantee. The Redevelopment Committee did learn from a representative of Totally Kids, who attended the meeting, that Valley Bank will most likely be the principal lender and that the NDA guarantee will be used in part to guarantee the ECD loan. CURRENT ISSUE: Based on the Agency's current budget, as well as projected revenues and expenditures for the next five years, the Agency would not be able to evidence a legitimate ability to back-up a loan guarantee in the foreseeable future, regardless of amount Thus, within any loan guarantee agreement involving the Agency, the County would be required to acknowledge the Agency's inability to make good on its guarantee. Likewise, in light of the City's budget woes, a City loan guarantee using general fund monies would not be prudent at this time. Therefore, in the event the Council elects to recommend a City/Agency involvement in the Project, the Council may wish to consider pledging CDBG funds to back~up its share ($1.5 million) of the overall guarantee of the ECD loan and require personal guarantees from the principals of Totally Kids acceptable to the City Attorney, jointly and severally guaranteeing the $1.5 million back to the City. Under this scenario, Staff would recommend that in the event of a defined default on the ECD loan, the City's CDBG backed guarantee be paid out over six years at $250,000 per year without interest, beginning in the first full CDBG Program Year following the date of the defined default ENVIRONMENTAL IMPACT: The act of providing a loan guarantee is exempt under CEQA. FISCAL IMPACT: In the eveJt the City guaranteed the ECD loan with CDBG funds and Totally Kids failed to repay the ECD loan, then the City would be called upon to fund the loan guarantee, at that time incurring a cost of up to $1,500,000 payable in 6 consecutive fiscal years. . p;\Agendas\Comm Dev Cornmission\CDC 2004~S TotIUy Kids Loan.doc I COMMISSION MEETING AGENDA Meeting Date: 04/05/2004 Agenda Item Number: &onomic Development )ncy Staff Report Totally Kids Loan Guarantee Page 3 RECOMMENDATION: That the Mayor and Common Council adopt the form Motion. ) . ~~Comn:Ussion'O>C2Q04ID4.04..05TOUUyKidtLoul.doc: I COMMISSION MEETING AGENDA Meeting Date: 04/0512004 Agenda Item Nnmber: . TO: Inland Valley Development Agency Board FROM: Donald L. Rogers, Interim Executive Director DATE: January 28, 2004 SUBJECT: CONSIDER REQUEST FROM "TOTALLY KIDS" FOR A $1 MILLION LOAN GUARANTEE FOR ITS DEVELOPMENT EXPANSION PROJECT; AND PROVIDE APPROPRIATE DIRECTION TO STAFF RECOMMENDED ACTION: Approve in concept a loan guarantee in the maximum amount of $1,000,000 for the benefit of Totally Kids, subject to five protective conditions, to assist in financing the construction of a 30- bed facility to be used to provide sub-acute medical services to physically impaired children. This guarantee would remain in place for a period of 5 years from the date of execution. Approval will be subject to the following conditions being met prior to execution: 1. Totally Kids must obtain a real estate loan in the minimum amount of $6,500,000. The Inland Valley Development Agency (IVDA) would not be obligated to repay, except to the amount of the guarantee. Totally Kids must obtain a loan in the minimum amount of $1,056,000 from another lender to cover their projected operations deficit for the fill-up period. Totally Kids must obtain a loan from the County of San Bernardino Economic Development Department in the minimum amount of$2,500,000. Personal Guarantees must be received, in a form acceptable to IVDA counsel, from each of the owners of Totally Kids, guaranteeing jointly and severally the entire amount of $1,000,000 back to the IVDA in the event the guarantee is ever called upon to satisfy the real estate lender. Delivery to the IVDA of a certified copy of the Grading Permit, Building Permit, and all City of San Bernardino Conditions of Approval for the proposed facility, together with copies of all licenses required for operations from the State of California, County of San Bernardino and City of San Bernardino. , 2. 3. 4. 5. Final contracts will be brought back to the Board for approval. FINANCIAL IMPACT: None, but J.,ith the following explanation: I In the event that Totally Kids fails to repay their real estate lender, then the IVDA may be called on to fund the loan guarantee, at that time incurring a cost of up to $1,000,000. In addition, one of the prot~ctions to the IVDA is a personal loan guarantee from high net worth individuals. It would be their obligation to reimburse the IVDA for any amounts payable under the loan guarantee. Before the guarantee would be callable by the lender, the underlying property ivda\agenda\O 12804\totallykids.doc ITEM NO. 6 would first have to be foreclosed and the proceeds applied to the loan; only any unpaid principal (up to the maximum of$I.O million) would be paid by the IVDA to the bank. BACKGROUND AND COMMENTS: In July 2003, Totally Kids requested that the IVDA guarantee a loan in the amount of $9,300,000 to assist with the construction of an expanded medical facility located on Mt. View A venue just North of the 1-10 freeway. After several months of negotiations with Totally Kids and their lenders, the request was recently reduced to a maximum of $1,000,000. The approval is subject to important conditions which must be met before the loan guarantee agreement will be executed. They intend to expand the existing medical treatment center from 50 beds to 80 beds using the funds requested. The expansion also includes construction of an 80-unit Pediatric Day Care Health Center. The entire expansion program costs $10 million, most of which is financed by traditional real estate financing. Totally Kids has a 32-year history of operating at its current location providing medical care to sub-acute children who are not eligible to be housed in an acute hospital. These include children with severe breathing problems, and other serious physical impairments. The expanded facility will employ a total of 420 persons. The request for the loan guarantee was reviewed by the IVDA Finance Committee who recommends the approval to the full Board. Staff recommends that the Board approve the above recommended action. ivda\agenda\O I 2804\totallykids.doc ITEM NO. 6a 8M Totally Kids@ Specialty Healthcare Pediatric Subacute Care: '. , Supporting Development of the I Ghild Dependent on Life-Sustaining Technology Inland Valley Development Agency Phone: (909) 796-6915 ~ Fax: (909) 796-4365 I ~ Totally Kids Circlebrook KidShip Totally Kids-Sun Valley (in development) Lilac Care Home Coloma Care Home Elm Care Home KidShip-Sun Valley - Totally Kids. Sf~ci.-t!f)' 1i1.,tbhCil1"/! What Totally Kids Brings to San Bernardino . A pediatric subacute care facility viewed by the State as the best - an example for others. . A day care program for both technology dependent children and non-technology dependent children . An organization that is loving and caring - to the children we serve, their families, and our staff. . New j~bs!! Totally Kids Specialty Healthcare will bring appro~imately 150 new jobs to San Bernardino, added to the 270 current jobs provided. . ""'<::i g Totally Kids' Silf"cil1/~r HCilltJ,('tlrr Totally Kids Circ1ebrook KidShip Lilac Care Home Coloma Care Home Elm Care Home San Bernardino Totally Kids-Sun Valley (in development) KidShip-Sun Valley January 8, 2004 Inland Valley Development Agency Totally Kids@ is planning a significant capacity expansion due to market de- mand and the need for higher quality services for special needs children. Enclosed are letters from various agencies encouraging this expansion. Over 150 new jobs will be added to our existing 270 jobs. These range from entry level in housekeeping and dietary to those requiring licenses and skills in vari- ous medical disciplines. Our care model includes a comprehensive training program that supports employees' upward movement in their respective field and the oppor- tunity to change fields. We also offer our facilities for training for others from the Community. \ We are seeking a loan guarantee from the IVDA to assist us in accomplishing this major expansion, and appreciate your consideration. If you have a question about any of our facility operations, please contact Mr. Jeff Lewis, our Campus Administrator, at (909) 796-6915. If you have a question about the details of our expansion as described in this packet, please contact me di- recdy at (909) 796-6916 - EXT 151. Sincerely, ~ ;;;? c-~ / ~ij Doug Padgett President, Totally Kids Specialty Healthcare Manager, SVCC Properties, LLC t Totally Kids- Spec/alf)' HMlth,~,'re Totally Kids Cirelebrook KidShip Lilac Care Home Coloma Care Home Elm Care Home 0< San Bernardino Totally Kids-Sun Valley (in development) KidShip-Sun Valley Agency Sponsorships of Project LoanslLoan Guarantees Land purchase and construction (zoning in place - CUP approval pending) Total Project Owner Contribution Furniture & Equipment Lender 1 Guarantee Needed $ 10,802,946.00 (1,000,000.00) 743,820.00) (6.500,000.00) $ 2,559,126.00 Funded by Owners Funded by Owners Bank financing-normal risk Lender 2 San Bernardino County Loan $ 1,000,000.00 $1,559,126.00 IVDA Guarantee Requested City of San Bemardino Guarantee Requested "'I Children's Health Care in San Bernardino Project Summary & Business Development Objectives Totally Kids@ Specialty Healthcare December 12, 2003 The principals of Mountain View Child Care Inc., dba Totally Kids@ have operated 64 facilities for developmentally disabled children and adults in Southern California since the early 1970's. Most of those facilites (ranging in size from 6 beds to 59 beds) have been sold to some of our managers enabling us to concentrate on programs for medically fragile children on our campus in the City of San Bernardino. Our Pediatric Subacute facility has become the flagship of our current operations of six local facilities and has received broad national and international recognition as a model for efficient, caring, and effective healthcare for medically fragile and technology-dependent children. The focus of our development plan includes the expansion of the pediatric subacute facility and the expansion of our innovative daycare and pediatric day health center. This expansion broadens our service capabilities to the growing population of medically fragile children. Our San Bernardino campus currently consists of: ~ Totally Kids@ Specialty Healthcare, a 50-bed Pediatric Subacute facility, including in-house schooling and therapy ~ Circlebrook, a IS-bed Intermediate Care Facility (Nursing) for developmentally disabled children ~ KidShip, a 41 unit Pediatric Day Health and Daycare Center for medically fragile and mainstream children ~ Respite from 2 to 30 days for all levels of care I Our San Bernardino Residential Facility operations currently consists of: I Lilac, Coloma, and Elm Care Homes, each a 6-bed Intermediate Care Facility for developmentally disabled adtlts, within five city blocks of our principal healthcare campus. These are nursing-intensive and NOT htmes for behavioral clients. I Page 1 018 - We propose to build: :>> 30 additional beds adjoining Totally Kids@ Specialty Healthcare for medically fragile children, including a special 10-bed unit for newborns and additional therapy area :>> A Training & Education Services Building with offices :>> A new 80-unit Pediatric Day Health and Daycare Center for medically fragile and mainstream children that will include after-school, infant care, therapies, and early start programs :>> Special campus features that enable self-sufficient water and power generation in the event of a disaster. We plan to incorporate additional badly needed local capacity for treatment ofrespiratory issues in the event of a biological or chemical disaster. Need: Some children live today dependent on technology to such a degree that the technology itselfis a risk factor for death. We propose an expansion of our program that will help these children grow and develop despite the perils they face on a daily basis. A comprehensive feasibility study has just been released by HTG Consultants, Inc., citing a great need for the services we are proposing. The Directors of the Department of Developmental Services and the Department of Health Services for the State of California are also urging us to expand due to our unique emphasis on each child's growth and development and the many millions of dollars we have saved the State. Stimulus to the San Bernardino Economy: The Citizens of the County of San Bernardino will benefit from our expansion in two distinct ways: First, they will benefit from improved health care and increased capacity. Second, they will benefit through the funds that stimulate the local economy and new jobs. Stimulus: I Employees: Payroll: I Consultant/Service Providers: Supplies: I I Annual Cash into S8 Economy: I Number of Buildings: . Square Feet of Building Space: . construJtion Cash into S8 Economy: 1- Present Phase II Total 260 150 410 $7,235,935 $4,174,578 $11,410,513 $594,240 $342,831 $937,071 $1,276,824 $736,629 $2,013,453 $9,107,259 $5,254,188 $14,361,447 9 3 12 34,418 39023 73,441 ~{~~~~::.:,~IH.(")~~'" ,,"~'I..!<'':'~'~',,~' ,'- $10,802,946 $10,802,946 Page 2 of 8 Collaboration: Over the last two decades we have developed an effective partnering program with Lorna Linda University Children's Hospital, Kaiser Hospitals, and the Inland Regional Center. Our strong commitment to each other's goals has ensured that care for children in our area is of the highest quality. Advisory Committee: Our care model thrives on community interaction. Therefore, we are proposing that a Citizens Advisory Committee be set up to assist us with broad-based and relevant input. Emphasis on Training and Education: Our care model emphasizes the value of comprehensive orientation and ongoing training that includes mentorship programs. We use a building block approach to support the adult learner. We also provide for career ladder advancement. Licensed nurses, nursing assistants, and respiratory therapists are able to advance to "Career II" positions within our company. This advancement increases their responsibilities, their pay, and their opportunity for further educational achievement. Totally Kids~ is also involved in collaborative efforts to add capacity in our community nursing schools. In addition to our existing services as a clinical training site for several schools, the first floor of our training/office building is being designed to serve as a standing classroom for lectures and clinical studies, both for internal training and for outside vocational school participation. A miniature care room will be included for bedside training. The Mission That Drives Our Development: Children who rely on technology to survive and cannot live at home need an alternative environment to hospital-based neonatal and pediatric intensive care units. If they are able to live at" home they can benefit from a preschool center with caregivers who are familiar with their special medical, developmental, and social needs. Both elements of this program operate within a care model Totally Kids@has successfully designed and implemented that reduces the interference of technology and medical care so young children can respond better to our developmental learning programs. Medical, nursing, respiratory, and other therapy services are offered, overseen by a pediatric medical director with intensive care experience. . WhJreas other care environments are wrestling with just keeping these kids alive, we are actually pla~ng with them, teaching them, and promoting their growth. In our nurturing care model, Page 3 of 8 the child can now actually participate in his or her education because the distractions of their medical condition and medical care are minimized. For example, instead of using medications to sedate the child on a ventilator, we vary the ventilator settings to calm the child. With increased mental alertness, our children smile and participate in school and other developmentally beneficial activities. Page 4 of 8 . Details of our Care Model: (Excerpts from recent presentations and proposals) Totally Kids@, our pediatric subacute program, blends the strengths of four extant domains: I) technology from the intensive care unit, 2) management of acute illness from the hospital, 3) maintenance of physiologic integrity in the nursing facility, and 4) special education services from a non-public school, to provide an appropriate, effective school program to optimize communication, independence and community participation. Children will be admitted for short-term stays (two to four weeks), long term stays (five weeks to age 18), and respite care (two days to 30 days). Medically fragile children usually have respiratory difficulties in addition to multiple system failures. Our services featUre respiratory care practitioners who focus on relieving the discomfort caused when their breathing is disrupted due to their disease. Our core service is nursing. Due to the high level of acuity (more akin to intensive care than an acute hospital ward) we maintain a strong ratio ofregistered nurses, licensed vocational nurses, and certified nursing assistants and have been shown to be safe<IO). Our attending physicians are at the facility every day of the year. Regulations require that a physician sees each subacute child once every week, but we have found that daily availability is more effective. Our model also includes nurse practitioner/physician's assistant involvement on a full time basis. This member of the team provides additional support at the bedside and on our interdisciplinary committees evaluating the effectiveness of our care. Physician coverage includes pediatric sub- specialists who will make routine facility visits to reduce the outside trips by the children to the clinics and hospitals for specialized work-ups. These include intensivists, pulmonologists, infectious disease specialists, physiatrists, neurologists, ear, nose, & throat, gastroenterologists, podiatrists, dentists, audiologists, and optometrists. Therapy is also an integral part of our program. Occupational and speech therapists are effective with newborns and young children, helping them learn to swallow and talk, which are difficult tasks when complications have arisen with early onset disease or prematurity. Physical therapists work with children to strengthen limbs, order corrective splints, and customize special-fit wheelchairs. All of these are critical components oflife skills that free the child to play and pursue interests at whatever level he or she can. The medically fragile children's desire to grow and develop as natUrally as possible is the reason for our emphasizing our child development department. A child development coordinator and an assistant serve the zero to three year olds with early intervention programs designed individually to Page 5 of 8 L "I . . meet each child's needs. This staff also provides evaluation and periodic direct services to our children over three and ensures that the school program is providing a stimulating program for them. "Adopted Grandparents" and other volunteers will augment the activities of the department and the school. The local school district will fund services for children three years and older. A non-public school is located on our campus in order to provide the maximum learning opportunity to every child we serve. Though it is the law that every child three years and older be provided educational services appropriate to his or her individual needs, medicalIy fragile children often do not receive sufficient stimulation and activities. Our program is designed from beginning to end to support and nurture the health of these vulnerable children so they can be better prepared to benefit from the early intervention and school services that should be available. Our services support each child's preparation for school participation(II,12). TotalIy Kids@ is a transitional as well as a long-term care center, and discharge planning begins before any child is admitted. Family or caregiver training is always a part of that plan. Our RN case managers, bedside nurses and therapists are involved in sharing their successful care techniques with the family so they can participate in daily care, and be confident and competent when they take their child home. Our case managers also coordinate the multiple aspects of home care necessary to a successful discharge. Social support and family councils are helpful to the families as they seek to understand their child's needs. Most find that interacting with other families of children who are medically fragile is meaningful. Our social worker will spend time with families to support them and help them solve problems or find referrals and resources as needs are indicated. A registered dietitian is one of many service contracts Totally Kids has in order to serve the specialized needs of the children. For example, most of the children require feeding by tube and specialized formulas must be ordered to ensure that nutrition is optimal. Some children are fed through their veins requiring very special attention from the dietitian, pharmacist, and physician. Ancillary services, such as radiology, laboratory, and pharmacy services will be provided to the children by facility contract, overseen by the Administrator. Our specialized clinical caregivers enable us to maintain our own transport team for non-emergency transports to clinic or on activity outings. Our in-house laundry and housekeeping services provide a hospitable and clean environment for the children and their families. I I I I I I **... Page 6 of 8 . KidSbip'ffi, our blended pediatric day health center and preschool on the same site, takes advantage of the same clinical model above to ensure an optimal learning experience for those children who are stable enough to live at home, but still require medical and nursing oversight. We combine highly skilled nursing and medical personnel with compassionate child development staff who are able to assist children in their daily activities as they develop independent skills to the best of their ability. These children can grow up happier and healthier by playing alongside their healthy peers in a creative and stable leaming environment. Licensed nursing staff(RN's and LVN's) and CNA's will provide nursing treatments and assistance with activities of daily living as needed, helping to quiet the technology so that the child's energy can be focused on learning and playing. This allows the teachers and teachers' assistants to conduct their activities with the least interference possible. Physical, occupational, and speech therapists will also be utilized, adding to the value of the center's activities. Adaptive equipment will be purchased and made available to accommodate special needs, increasing independence. Respiratory therapists will be in the building whenever a child is present who is on ventilator assistance, and will be on call all other times. All of the medical care is guided by each child's own physician. The physicians will find value in the fact that, for their patients who live at home, regular I and frequent nursing and therapy is available to them at KidShip'm. Because of our medical model we will be able to care for a normally healthy child who becomes ill during the day. This is called the "mildly ill component" of our license. Our center will be open from 5:30am to 7:00pm Monday through Friday, in order to accommodate various work and school schedules. Meals and snacks will be provided from the kitchen in the adjoining Totally Kids~ building. All the fun and learning activities that are expected in a quality preschool will be overseen by the Program Director. Toys and playground equipment will be available for play, social interaction, and learning. All the children will benefit from the coordination of services p~ovided in our day care setting. KidSiip,m will provide an exceptional service by using developmental assessments to guide each child's individual progress. These standardized assessments will be used within 14 days of I enrollment and quarterly thereafter. These proposed projects add support services to families who lead extraordinarily complex lives due to the special needs of their children. Page 7 of 8 t . .' l . References ., 1. Hogan DP, Park 1M: Family factors and social support in the developmental outcomes of very low-birth I weight children. Clinics in Perinatology 2000;27(2): pp 433-459 2. Msall M, DiGaudio K, DuffY L, et al: WeeFIM: Normative sample ofan instrument for tracking functional independence in children. Clin Pediatr 33:431-438,1994 3. McCain M, Mustard JF: Reversing the real brain drain, early years study final report. Children's Secretariat, Toronto, ON, 1999, pp 6-7 4. House J, Kahn R: Measures in concepts of social support. In: Cohen S, Syme S (eds): Social Support and Health. Orlando, Academic Press, 1985, pp 83-105 5. School Readiness Working Group Executive Summary: Joint committee to develop a master plan for education-kindergarten through university. 2002. p 4 The following non-published research poster presentations were written by physicians and staff of Totally Kids@, the Hope School, and Success for Kids, and are available upon request. 6. King P, van Stralen D. Rao R, Padgett D, Petersen F. Daniel A: Change in referral patterns for a pediatric subacute facility. Poster presentations: Ken-Crest National Conference, 200 I; American Medical Directors Association Annual Symposium, 2001 7. Calderon R, van Stralen D, Newsom H, Clements P, King P, Beckham G: A multidisciplinary team for initiation of mechanical ventilation. Poster presentations: 8'" International Conference on Home Mechanical Ventilation, Lyon, France, 2001; American Medical Directors Association Annual Symposium, 2001 8. Hoffman M, Calderon R, van Stralen D: Patient-parent ventilator rounds. Abstract submitted: California Respiratory Care Annual Conference, 2002 9. Applegate R, van Stralen D, Calderon R. Newsom H: Use of a five-point respiratory exam treating patients. Poster presentation: CHEST Annual Meeting, 2001 10. Valdepena 1, King P,.van Stralen D. Lewis J, Rao R: Treatment of bloodstream infection in a skilled nursing facility. Poster presentation: American Medical Directors Association Annual Symposium, 2002 11. Eachus T: Development of educational programs for children in subacute care. Poster presentation: American Medical Directors Association Annual Symposium, 200 I 12. Eachus T: Linking educational and clinical services in a sub-acute pediatric facility. Poster presentation: American Medical Directors Association Annual Symposium, 2002. Page 8 of 8 , .. -' 9093880844 ~UL.Ol'2004 13:59 9093880844 5BGO EcaN & C01"~ r.EV #5835 P. 0011 002 REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS OF SAN BERNARDINO COUNTY, CALIFORNIA AND RECORD OF ACTION 13 FROM: June 29, 2004 THOMAS R. LAURIN, DIRECTOR DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT SUBJECT: SUBSTANTIAL AMENDMENT TO THE COUNTY'S 2000-2005 CONSOLIDATED PLAN AND 2003-2004 ACTION PLAN - CDBG PROGRAM' RECOMMENDATION: Approve a substantial amendment to the 2003-2004 Community Development Block Grant (CDBG) Action Plan for the County's 2000-2005 Consolidated Plan, to initiate a new Float Funded Activity, in the amount of $1,500,000 for expansion of the Totally KidS@ Specialty Healthcare Center (#300-29223) to provide land purchase funds and pre- development capital to SVCC Properties. LLC from the County's undisbursed balance of CDBG funds, for a term of thirty (30) months. BACKGROUND INFORMATION: Each year, the County receives an entitlement grant under the Community Development Block Grant (CDBG) program to allow the funding of activities that benefit low-and moderate-income persons. To receive this grant, the County submits a five-year Consolidated Plan. The fourth year increment of the five-year plan is the 2003-2004 Action Plan portion of the Consolidated Plan. The Action Plan identifies how the County will allocate its CDBG funds. . The County's 2003-2004 Action Plan was approved by the Board of Supervisors on April 15, 2003. item #65, and submitted to the U.S. Department of Housing and Urban Development (HUD) on May 30. 2003. Since the date of the Action Plan approval, changing community needs and priorities have arisen. This substantial change' to the Action Plan is recommended in response to changing community development conditions'. The recommended action identifies a specifiC project under the CDBG Float Loan .authotlzation provided in the Final 2000-2005 Consolidated Plan and 2003-2004 Action Plan: The CDSG funding for this Float Funded Activity will come from undisbursed funds in the County's CDBG Line of Credit at the U.S. Treasury, and from COBG Revolving Loan Funds. . The federal regulations at 24 CFR 570.301(b), permit the County to use its COBG funds for a Float Funded Activity. The CDSG funds are undisbursed from the County's Line of Credit and CDBG program account that are budgeted for one or more other activities that do not need the funds immediately. The COBG funds for this Float Funded Activity will be provided as a loan with interest at 2.25% per annum. As a safeguard, the loan will be secured by a commercial-rated due-on-demand irrevocable AA-rated Letter of Credit, to be obtained by the City of San Bernardino. The Letter of Credit will ensure repayment of the loan within thirty (30) months, as well as ensure County access to the funds in the event that the funds are needed for projects before the end of the loan term. ,--:.;t;... " Record of Action of the Board of Supervisors .... F.. " 13 Rev 07/97 ., . '. JUL.Ol'2001 13:59 9093880811 SBCO ECON . COI"! DEV #5835 P.002/002 SUBSTANTIAL AMENDMENT TO THE COUNTY'S 2000-2005 cONSOLIDATED PLAN AND 2003-2004 ACTION PLAN - CDBG PROGRAM June 29. 2004 Page 2 of 2 13 The CDBG funding for this Float Funded Activity will be used by the project sponsors. SVCC properties. LLC, for the acquisition of property and for payment of pre-deve1opment non- construction costs. The loan will be paid into an escrow account to purchase 2.98 acres of land and to pay pre-development costs including architectural design, engineering, and permit fees for a 37,544 square foot expansion of the Totally Kids@) Specialty Healthcare center at 1720 Mountain View Avenue, San Bernardino. The expanded facility will be leased by SVCC Properties, LLC to Mountain View Child Care, Inc., dba Totally Kids@) Specialty Healthcare Center to provide pediatric sub-acute medical services. and day care services for physically impaired children. This $10,800,000 project will include a six-unit.. 30-bed pediatric sub-acute care facility for medically fragile children, and an 80-unit "Kidship" day health and daycare center to provide after- school infant care, therapies and early start programs. Owner equity and bank financing will pay the project costs, and will re-pay the Float Funded Activity loan within thirty (30) months. Private financing in excess of 59,300,000 will be obtained by the project sponsors for the remainder of the project budget. The completed facility improvements will allow Totally Kids@ to expand their operations and create 150 new jobs, of which at least 76 jobs will be made available to low-and moderate-income persons. A contract for the Float Funded Activity loan will be presented to the Board of SupervisOrs for approval in late July 2004. As required by the County's Citizen Participation Plan for the CDBG program adopted on February 25, 2003. item #102, the public has been notified of the proposed amendment through a display advertisement published in the following local and minority newspapers on or about June 14, 2004: EI Chicano. Precinct Reporter, The San Bernardino American News, Westside Story, Hispanic NewS, the Redlands Daily Facts. and The Sun. The notice provides a thirty (30) day citizen comment period that ends on July 13. 2004. This comment period permits citizens b comment on the proposed action fifteen (15) days prior to and fifteen (15) days following approval of the substantial amendment by the Board of Supervisors. To date. no comments have been received regarding the proposal. REVIEW AND APPROVAL BY OTHERS: This action was reviewed and approved by County Counsel (Michelle D. Blakemore, Deputy County Counsel 387-5455) on June 15.2004: and the County Administrative Office (Patricia M. Cole, Administrative Analyst III 387-5346) on June 18, 2004. FINANCIAL IMPI'CT: The proposed amendment to the Consolidated Plan involves CDBG funds only, and will not affect the County General Fund. SUPERVISORIAL DISTRICT(S): All. PRESENTER: Thomas R. Laurin, Director. 388-0808. 13 ..-t~ .