BONESTA 2026 - SUMMARY LETTER.PDF
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8687 East Via de Ventura, Suite 306 Scottsdale, Arizona 85258 www.mcida.com February 5, 2026 To: Board of Supervisors Board of Directors Maricopa County, Arizona The Industrial Development Authority of the County of Maricopa Re: Not to Exceed $136,920,000 – The Industrial Development Authority of the County of Maricopa Senior Living Revenue Bonds (Bonesta Project), Series 2026 (the “Bonds”) Ladies and Gentlemen: At the meeting of the Board of Directors (the “Board”) of The Industrial Development Authority of the County of Maricopa (the “Authority”) on February 10, 2026, the Board will be asked to grant final approval and adopt a resolution authorizing the issuance and sale of the Bonds. This letter provides a summary of the proposed financing. AUTHORITY The Authority is an Arizona nonprofit corporation designated by law as a political subdivision of the State of Arizona. The Authority was formed with the permission of Maricopa County, Arizona (“Maricopa County”), and incorporated under and pursuant to the Arizona Industrial Development Financing Act, Title 35, Chapter 5, Arizona Revised Statutes, as amended (the “Act”). APPLICANT/BORROWER The Applicant/Borrower, SLF SE, LLC (the “Borrower”), is a Delaware limited liability company. Its sole member is Bonesta, Inc. (the “Parent”), a Delaware nonprofit corporation that is exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the “Code”), as an organization described in Section 501(c)(3) of the Code. PROJECT The Borrower has requested that the Authority issue its revenue bonds to: (i) finance and refinance the cost of acquiring short-term rehabilitation centers, including land, buildings, and equipment, located in the cities of Surprise, North Scottsdale, and Mesa (each, a “Project Facility” and collectively, the “Project Facilities”), in Arizona; (ii) pay for certain capital expenditures and startup costs related to the Project Facilities; (iii) fund one or more reserve funds; (iv) fund capitalized interest; and (v) cover a portion of the costs of issuing the Bonds (collectively, the “Project”). The projects are located in Supervisorial Districts 2 and 4. Board of Supervisors Board of Directors February 5, 2026 Page 2 NOTIFICATION TO ARIZONA ATTORNEY GENERAL As required by the provisions of Arizona Revised Statutes, Section 35-721.F, the Authority will notify the Arizona Attorney General of its intention to issue the Bonds. TAX EXEMPT FINANCING Pursuant to Section 147(f) of the Code, the Maricopa County Board of Supervisors must approve the issuance of the Bonds after a public hearing following reasonable public notice. A representative of the Authority will be conducting a public hearing regarding the issuance of the Bonds on or about February 10, 2026. No allocation of the Arizona “volume cap” is required for the issuance of the Bonds because the Bonds will be issued as “qualified 501(c)(3) bonds.” On or prior to closing, the Authority will receive an opinion from Bond Counsel that interest on the Bonds will be exempt from federal and State income taxes. A tax certificate and agreement will be executed by the Authority and Borrower to evidence various representations and agreements aimed at establishing and preserving the tax-exempt status of the Bonds. FINANCING PARTICIPANTS The financing professionals are as follows: Bond Counsel: Orrick, Herrington & Sutcliffe LLP Applicant/Borrower Counsel: Foley & Lardner LLP Underwriter/Placement Agent: Herbert J. Sims & Co. Inc Underwriter Counsel: Miles & Stockbridge, P.C. Trustee: U.S. Bank Trust Company, National Association Trustee Counsel: Thompson Hine LLP PRINCIPAL FINANCING DOCUMENTS Document Parties Trust Indenture (“Indenture”) Authority and Trustee Loan Agreement Authority and Borrower Bond Purchase and Placement Agreements Authority, Borrower and Underwriter Preliminary Official Statement Borrower Board of Supervisors Board of Directors February 5, 2026 Page 3 PLAN OF FINANCING The Authority will issue the Bonds under and pursuant to the terms and provisions of the Indenture in one or more tax-exempt or taxable series in the aggregate principal amount of not to exceed $136,920,000 and will loan the proceeds to the Borrower pursuant to the Loan Agreement. The Borrower will be obligated to make loan repayments in amounts and at such times as required to pay principal and interest on the Bonds. The obligations of the Borrower under the Loan Agreement will be secured pursuant to a master indenture entered into among the Borrower, the Borrower’s affiliates and a master trustee. FINAL APPROVAL At its meeting on February 10, 2026, the Authority Board will be asked to grant final approval and adopt a resolution authorizing the issuance and sale of the Bonds and related matters. BOARD OF SUPERVISORS APPROVAL Under the provisions of A.R.S. § 35-721.B., the Bonds to be issued by the Authority require the approval of the Maricopa County Board of Supervisors. The Maricopa County Board of Supervisors is being requested, at its meeting on February 25, 2026, to act as required by law to adopt a resolution approving the issuance of the Bonds under the Act and with respect to Section 147(f) of the Code. Under the provisions of the Act, specifically A.R.S. § 35-742, Maricopa County is not in any event liable for the payment of principal or interest on any bonds, notes or other obligations issued by the Authority or for the performance of any pledge, mortgage, obligation or agreement of any kind undertaken by the Authority, and none of the bonds, notes or other obligations, or any of its obligations thereunder, shall be construed to constitute an indebtedness of Maricopa County within the meaning of any constitutional or statutory provision. TRANSACTION CLOSING If the required approvals of the Authority Board and the Maricopa County Board of Supervisors are received, it is currently anticipated that the Bonds will be issued in March, 2026. LEGAL COUNSEL RECOMMENDATION General Counsel to the Authority has reviewed drafts of the principal financing documents and, based upon her review of such and her review of the proceedings of the Authority to date relating to the proposed issuance of the Bonds, she believes the principal financing documents are in substantially final form, adequately meet the requirements of the Act, and are in both form and substance acceptable for the Authority Board to act upon, and that the Resolution of the Authority Board authorizing the issuance and sale of the Bonds and related matters and the Resolution of the Maricopa County Board of Supervisors approving the Bonds to be issued and related matters, are in form and substance acceptable for adoption. A RESOLUTION OF THE BOARD OF DIRECTORS OF THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE COUNTY OF MARICOPA AUTHORIZING AND APPROVING THE ISSUANCE AND SALE OF ONE OR MORE SERIES OF ITS SENIOR LIVING REVENUE BONDS (BONESTA PROJECT), SERIES 2026, IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $136,920,000, AND OTHER RELATED MATTERS WHEREAS, The Industrial Development Authority of the County of Maricopa (the “Authority”) is a nonprofit corporation designated as a political subdivision of the State of Arizona (the “State”), incorporated with the approval of Maricopa County, Arizona (the “County”), pursuant to the provisions of the Constitution and laws of the State and under the Industrial Development Financing Act, Arizona Revised Statutes §§ 35-701 et seq, as amended (the “Act”); WHEREAS, the Authority is authorized and empowered to issue its bonds for the purpose of carrying out any of its purposes, and to make secured or unsecured loans for the purpose of financing or refinancing the acquisition, construction, improvement, equipping or operating of a “project” (as defined in the Act), whenever the Board of Directors of the Authority (the “Board of Directors”) finds the loans to further advance the interest of the Authority or the public; WHEREAS, the Authority is also authorized and empowered to issue its bonds to refund outstanding obligations incurred by an enterprise to finance the costs of a project when the Board of Directors finds that the refinancing is in the public interest; WHEREAS, Bonesta, Inc., a Delaware nonprofit nonstock corporation (the “Parent”), is an entity exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the “Code”), as a nonprofit organization under Section 501(c)(3) of the Code; WHEREAS, the Parent is the sole member of SLF SE, LLC, a Delaware limited liability company (the “Borrower”); WHEREAS, the Act authorizes the Authority to issue bonds to provide financing or refinancing for projects (as defined in the Act) consisting of facilities owned or operated by a nonprofit organization described in Section 501(c) of the Code, which may be located within or without the State; WHEREAS, the Project Facilities (defined herein) will be indirectly owned and operated by the Parent through its subsidiaries, as further described below, and constitute facilities owned or operated by a nonprofit organization described in Section 501(c) of the Code and, as such, constitute “projects” for purposes of the Act; WHEREAS, the Borrower has applied to the Authority to issue the AZ Bonds (as defined below) on the Borrower’s behalf and to make one or more loans to the Borrower for the purpose of: (i) financing and refinancing the cost of the acquisition of short-term rehabilitation centers, including land, buildings, and equipment, located in the cities of Surprise, North Scottsdale and Mesa (each, a “Project Facility” and collectively, the “Project Facilities”), in the State of Arizona; (ii) paying certain capital expenditures and startup costs related to the Project Facilities; (iii) funding one or more reserve 2 funds; (iv) funding capitalized interest; and (v) paying a portion of the costs of issuing the AZ Bonds (collectively, the “Project”), and the Authority has accepted such application; WHEREAS, each Project Facility will be owned by an affiliate of the Borrower (each, an “AZ PropCo”) and leased by such AZ PropCo to a separate affiliate of the Borrower (each, an “AZ OpCo”), and each AZ PropCo and AZ OpCo are wholly-owned subsidiaries of another wholly-owned subsidiary of the Borrower (each, an “AZ HoldCo” and the AZ PropCos, AZ OpCos and AZ HoldCos are collectively, the “AZ Borrower Affiliates” and are as further described in the Loan Agreement defined below); and WHEREAS, in furtherance of the purposes and interests of the Authority under the Act, the Authority has determined to authorize the issuance of its Senior Living Revenue Bonds (Bonesta Project), Series 2026, in one or more series or sub-series, on a tax-exempt and/or federally taxable basis, as senior bonds (the “AZ Senior Bonds”) or subordinate bonds (the “AZ Subordinate Bonds” and, together with the AZ Senior Bonds, the “AZ Bonds”), in an aggregate principal amount not to exceed $136,920,000, for the purpose of making one or more loans to the Borrower, to assist the Borrower in financing the Project; WHEREAS, the AZ Bonds will be issued pursuant to the terms of one or more trust indentures (individually and collectively, the “Indenture”), between the Authority and U.S. Bank Trust Company, National Association, as bond trustee (the “Trustee”), and the proceeds thereof loaned to the Borrower pursuant to one or more loan agreements (individually and collectively, the “Loan Agreement”), between the Authority and the Borrower; WHEREAS, pursuant to the Indenture, the Authority will pledge, and grant a lien on and security interest in, the Trust Estate (as defined in the Indenture) to the Trustee; WHEREAS, the AZ Bonds will be payable solely from the amounts paid by the Borrower and/or the AZ Borrower Affiliates in accordance with the terms of the Indenture and the Loan Agreement, and the Borrower’s obligations under the Loan Agreement will be secured pursuant to certain collateral documents as described in the Indenture; WHEREAS, the Borrower has also requested that the Washington State Housing Finance Commission (“WA Issuer”) issue one or more series of bonds (collectively, the “WA Bonds”), as senior bonds (the “WA Senior Bonds” and, together with the AZ Senior Bonds, the “Senior Bonds”) or subordinate bonds (the “WA Subordinate Bonds” and, together with the AZ Subordinate Bonds, the “Subordinate Bonds”), concurrently with the issuance of the AZ Bonds to finance and refinance certain projects in the state of Washington; WHEREAS, the obligations of the Borrower under the Loan Agreement will be secured pursuant to a master trust indenture entered into among the Borrower, the AZ Borrower Affiliates, other affiliates of the Borrower and a master trustee, which master trust indenture shall establish the priorities of the respective liens and security interests securing the Senior Bonds and the Subordinate Bonds, and contain other agreements with respect to the Senior Bonds and the Subordinate Bonds, including financial covenants tested against the Borrower across both the AZ Bonds and the WA Bonds; 3 WHEREAS, pursuant to one or more Bond Purchase and Placement Agreements, to be dated the date of sale of the AZ Bonds (collectively, the “Purchase Agreement”), among the Authority, the Borrower and Herbert J. Sims & Co. Inc., acting in respect of the Senior AZ Bonds, as underwriter, or as representative for itself and any other underwriter named therein (the “Underwriter”) and, in respect of the Subordinate AZ Bonds, as placement agent (the “Placement Agent), one or more series or subseries of (a) Senior AZ Bonds will be sold to the Underwriter for resale to investors in a public offering, and (b) Subordinate AZ Bonds will be placed with certain purchasers, such investors and purchasers in either case being “qualified institutional buyers” within the meaning of Rule 144A, promulgated under the Securities Act of 1933, as amended (the “Securities Act”) or “accredited “investors” within the meaning of Rule 501 of Regulation D of the Securities Act (“Qualified Institutional Buyers” and “Accredited Investors,” respectively), and the proceeds of such sale will be used as set forth in the Indenture to finance a portion of the Project; WHEREAS, a form of one or more Official Statements in preliminary and final forms to be distributed in connection with the public offering of the Senior AZ Bonds and the Senior WA Bonds has been prepared (each such Official Statement in preliminary and final form, substantially in the form of the preliminary Official Statement presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being collectively referred to herein as the “Official Statement”); WHEREAS, the Authority, the Borrower and the AZ Borrower Affiliates will enter into a tax certificate/agreement that will govern the Borrower's compliance with pertinent sections of the Internal Revenue Code of 1986, as amended (the “Code”); WHEREAS, there has been prepared and presented to the Board of Directors the following documents, in substantially final forms, which the Authority proposes to approve or authorize (the “Authority Documents”): (a) the Indenture, including the form of the AZ Bonds attached thereto; (b) the Loan Agreement; (c) the Purchase Agreement; and (d) a proposed preliminary form of an Official Statement to be used by the Underwriter in connection with the offering and sale of the Senior AZ Bonds, concurrently with the offering and sale of the Senior WA Bonds (the “Offering Document”). NOW, THEREFORE, BE IT RESOLVED, by the Board of Directors of The Industrial Development Authority of the County of Maricopa, as follows: Section 1. Ratification of Actions. All actions (not inconsistent with the provisions of this Resolution) heretofore taken by or at the direction of the Authority and its directors, officers, counsel, advisors or agents directed toward the issuance and sale of the AZ Bonds are hereby approved and ratified. 4 Section 2. Findings. The Board of Directors finds and determines that the Project Facilities constitute “projects” as defined in the Act and that the issuance of the AZ Bonds by the Authority and the loan of the proceeds of the AZ Bonds to the Borrower to finance all or a portion of the Project, are in furtherance of the purposes and interests of the Act and the Authority, and are in the public interest. Section 3. Authorization. The Authority hereby authorizes the issuance and sale of Bonds, in one or more series or subseries, on a tax-exempt and/or federally taxable basis, as Senior AZ Bonds or Subordinate AZ Bonds, which shall be named as set forth herein or as otherwise set forth in the Indenture, in an aggregate principal amount not to exceed $136,920,000, to be dated, to mature (no later than 40 years after their date of issuance), to bear interest (not in any event to exceed 11 percent per year as of the date of closing and such rate shall be subject to adjustment as set forth in the Indenture, provided that such rate will not exceed the maximum rate permitted by law), to be subject to redemption, to be payable as to principal and interest, and with such other terms, all as provided in the executed Indenture. Section 4. Conditions. The issuance of the AZ Bonds shall be contingent upon the following conditions occurring on or prior to closing: (a) The Board of Supervisors of the County has approved the issuance of the AZ Bonds. (b) The Arizona Attorney General does not inform the Authority that the Project being financed with the issuance of the AZ Bonds does not come within the purview of the Act in the manner contemplated by Arizona Revised Statutes § 35-721.F. (c) The Authority receives an opinion from bond counsel, in an acceptable form, to the effect that interest on any tax-exempt series of the AZ Bonds will be exempt from federal and State income taxes. (d) Satisfaction of all requirements of the Code, including compliance with Section 147(f) of the Code. (e) The Borrower makes arrangements satisfactory to the Authority as to the payment of the Authority’s administrative fee. (f) The Authority, its officers and directors, and the County, must be provided with full indemnification in connection with the issuance and sale of the AZ Bonds, in form and substance satisfactory to the Authority’s counsel, from a credit-worthy source acceptable to the Authority. (g) The Authority must receive an investment letter from each initial purchaser of the AZ Bonds, in form and substance satisfactory to the Authority’s counsel and any subsequent transfers of the AZ Bonds must be limited to Qualified Institutional Buyers or Accredited Investors. (h) The Authority must receive such consents, legal opinions, certificates, documents and other proceedings in connection with the AZ Bonds as are necessary and advisable to evidence compliance by the Borrower and other financing participants with the Authority’s policies and procedures and applicable federal and State laws. (i) The legal opinions, certificates, agreements and other documents are in all material respects satisfactory to the Authority’s counsel. 5 Section 5. Form of AZ Bonds. The form of the AZ Bonds is approved, with only such changes as are approved by the persons executing the AZ Bonds (which approval will be conclusively established by their execution thereof). Upon satisfaction of the conditions set forth in Section 4 hereof, any director of the Authority and its Executive Director (each, an “Authorized Officer”) are each hereby authorized to execute and deliver the AZ Bonds. Any signature of an Authorized Officer on the AZ Bonds may be by facsimile. The Bonds shall be delivered in accordance with the Indenture upon payment of the purchase price thereof. Section 6. Limited Obligations. The Bonds shall be payable solely from the property held and receipts and revenues received by, or on behalf of, the Authority pursuant to the Indenture. Nothing contained in (a) this Resolution, (b) any of the Authority Documents, or (c) any other agreement, certificate, document, or instrument executed in connection with the issuance of the AZ Bonds shall be construed as obligating the Authority (except as a special limited obligation to the extent provided in such documents or instruments) or obligating the County or the State, or as incurring a charge upon the general credit of the Authority, the County or the State, nor shall the breach of any agreement contemplated by this Resolution, the Authority Documents, or any other agreement, certificate, document or instrument executed in connection therewith impose any charge upon the general credit of the Authority, the County or the State. The Authority has no taxing power. Section 7. Approval and Authorization of Authority Documents; Consent to Distribution of Offering Document. The forms, terms, and provisions of each of the Authority Documents in the forms of such documents, including the exhibits thereto, presented to this meeting, are hereby approved, with such insertions, deletions, and changes as are approved by an Authorized Officer, which approval will be conclusively established by their execution thereof. The Authority consents to the Underwriter’s distribution of the Offering Document in preliminary form to persons who may be interested in the purchase of the AZ Senior Bonds and the Underwriter’s delivery of the Offering Document in final form to the purchasers of the AZ Senior Bonds, in each case with such changes as may be approved by an Authorized Officer. Upon satisfaction of the conditions set forth in Section 4 hereof, any Authorized Officer of the Authority is hereby authorized and directed to execute and deliver, for and on behalf of the Authority, the Authority Documents. Section 8. Authority To Execute and Deliver Additional Documents. Upon satisfaction of the conditions set forth in Section 4 hereof, any Authorized Officer of the Authority is each hereby authorized to execute and deliver, for and on behalf of the Authority, any and all additional agreements, certificates, documents, assignments, amendments and other instruments, in forms satisfactory to the Authority’s counsel, and to perform all other acts as they may deem necessary or appropriate for the issuance of the AZ Bonds, the making of the loan to the Borrower, or to implement and carry out and comply with the purposes and intent of this Resolution or the provisions of the Authority Documents as executed and delivered, including, without limitation, documents and certificates relating to the tax-exempt status of interest on the AZ Bonds. Execution of any such additional agreements, certificates, documents, assignments or other instruments, or any amendments to the Authority Documents, by an Authorized Officer of the Authority, shall constitute conclusive evidence of the approval of such Authorized Officer on behalf of the Authority. Section 9. Sale of Bonds. The sale of the AZ Senior Bonds to the Underwriter, and the placement of the AZ Subordinate Bonds with the Placement Agent, each pursuant to the terms and provisions of the Indenture, are hereby authorized and approved. 6 Section 10. Open Meeting Laws. It is found and determined that all formal actions of the Authority and its Board of Directors concerning and relating to the adoption of this Resolution were adopted in an open meeting and that all deliberations that resulted in those formal actions were in meetings open to the public, in compliance with all legal requirements of the State and the Authority. Section 11. No Personal Liability. No director, officer, employee or agent of the Authority shall be subject to any personal liability or accountability by reason of the issuance of the AZ Bonds. The liability of the Authority with respect to the Authority Documents, or any other document executed in connection with the transactions contemplated hereby, shall be limited as provided in the Act and the Authority Documents. Section 12. Irrepealability. After the AZ Bonds are delivered by the Authority, this Resolution shall be and remain irrepealable until the AZ Bonds and interest thereon shall have been fully paid, canceled, and discharged. Section 13. Severability. If any section, paragraph, clause, or provision of this Resolution shall, for any reason, be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause, or provision shall not affect any of the remaining provisions of this Resolution. Section 14. Waiver. Any provisions of the Authority’s Bylaws, procedural policies, and/or prior resolutions inconsistent herewith are waived to the extent only of such inconsistency. This waiver shall not be construed as repealing any such Bylaws, procedural policies, or resolutions or any part thereof. Section 15. Headings. Subject headings included in this Resolution are included for the purpose of convenience only and shall not affect the construction or interpretation of any of its provisions. Section 16. Notice of Arizona Revised Statutes Section 38-511 – Cancellation. Notice of the Arizona Revised Statutes Section 38-511 is hereby given. The provisions of said statute are by this reference incorporated herein to the extent of their applicability to matters contained herein under the laws of the State. Section 17. Resolution Not to be Construed as Providing Advice Concerning Municipal Securities. None of this Resolution, any of the Authority Documents or any action taken by the Authority, any member of the Board of Directors, the Executive Director or the Authority’s counsel in connection with issuance of the AZ Bonds is intended to provide, and shall not be construed as providing, advice of any kind to the Borrower with respect to the issuance of the AZ Bonds for purposes of 15 United States Code Section 78o-4(e)(4)(A)(i). The Authority is a conduit issuer and none of the Authority, the Board of Directors, the Executive Director or the Authority’s counsel is acting or will act as a municipal advisor, financial advisor or fiduciary to any party involved in the issuance of the AZ Bonds. Section 18. Effectiveness. This Resolution shall be effective immediately.