The Evangelical Lutheran Good Samaritan Society

Transcription

1 NEW ISSUE Book-Entry Only RATINGS: Moody s: A3 Standard & Poor s: A- (See RATINGS herein.) In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel is also of the opinion that the Bonds, the transfer thereof and the income therefrom, including any profit made on the sale thereof, is exempt from all taxation and assessment in the State of Colorado under existing laws of the State of Colorado. For a more complete description of such opinions of Bond Counsel, see TAX MATTERS herein. Dated: Date of Delivery $63,675,000 COLORADO HEALTH FACILITIES AUTHORITY HEALTH FACILITIES REVENUE BONDS (THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY PROJECT) SERIES 2013 Due: June 1, as shown on the inside cover The above-captioned Bonds (the Bonds ) are special, limited obligations of the Colorado Health Facilities Authority (the Authority ), payable solely from certain amounts derived pursuant to the Loan Agreement, dated as of October 1, 2013 (the Agreement ), by and between the Authority and The Evangelical Lutheran Good Samaritan Society and from payments made by The Evangelical Lutheran Good Samaritan Society (the Society ) and The Evangelical Lutheran Good Samaritan Foundation (the Foundation ), as the current Members of the Obligated Group, on Obligation No. 46 (the Series 2013 Obligation ). The Series 2013 Obligation will be issued by the Society, as Obligated Group Representative, under and pursuant to the terms of the Second Amended and Restated Master Trust Indenture, dated as of October 1, 2013, as supplemented and amended from time to time, including by the Thirty-Third Supplement to Master Trust Indenture, dated as of October 1, 2013 (collectively, the Master Indenture ), among the Society, the Foundation and Wells Fargo Bank, National Association, as master trustee (the Master Trustee ). The Series 2013 Obligation will be issued to U.S. Bank National Association, as trustee (the Trustee ) under the Bond Indenture (as defined below). THE BONDS AND ALL OBLIGATIONS OF THE AUTHORITY UNDER OR WITH RESPECT TO THE BONDS, THE BOND INDENTURE AND THE AGREEMENT SHALL BE AND REMAIN SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY AND ONLY OUT OF THE SECURITY SPECIFICALLY PLEDGED THERETO BY THE SOCIETY AND BY THE FOUNDATION. NO RECOURSE SHALL BE HAD AGAINST ANY PROPERTIES, FUNDS OR ASSETS OF THE AUTHORITY (OTHER THAN THE SECURITY SPECIFICALLY PLEDGED THERETO BY THE SOCIETY AND BY OTHER MEMBERS OF THE OBLIGATED GROUP) OR THE STATE OF COLORADO FOR THE PAYMENT OF ANY AMOUNTS OWING UNDER OR WITH RESPECT TO THE BONDS, THE BOND INDENTURE, THE AGREEMENT OR ANY OBLIGATIONS OF THE AUTHORITY UNDER OR WITH RESPECT TO THE BONDS. NONE OF THE BONDS, THE BOND INDENTURE OR THE AGREEMENT, NOR THE OBLIGATIONS OF THE AUTHORITY UNDER OR WITH RESPECT THERETO, CONSTITUTE OR CREATE AN INDEBTEDNESS OF THE AUTHORITY OR THE STATE WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE REGISTERED OWNERS OF THE BONDS SHALL HAVE NO RIGHT TO COMPEL THE PAYMENT OF ANY AMOUNTS OWING UNDER OR WITH RESPECT TO THE BONDS, THE BOND INDENTURE OR THE AGREEMENT OUT OF ANY TAX REVENUES, FUNDS OR OTHER ASSETS OF THE AUTHORITY OR THE STATE. THE AUTHORITY HAS NO TAXING POWER. The Bonds are being issued pursuant to a Bond Trust Indenture, dated as of October 1, 2013 (the Bond Indenture ), by and between the Authority and the Trustee, the Colorado Health Facilities Authority Act, Article 25 of Title 25 of the Colorado Revised Statutes, as amended, the Supplemental Public Securities Act, Part 2 of Article 57 of Title 11 of the Colorado Revised Statutes, as amended, and a Resolution adopted by the Authority. The Bonds are being offered as fully registered bonds in denominations of $5,000 and integral multiples thereof. The Depository Trust Company ( DTC ), New York, New York will act as securities depository for the Bonds, and the Bonds will be registered in the name of Cede & Co., as nominee of DTC. Purchasers of the Bonds will not receive certificates evidencing their ownership interests in the Bonds. So long as Cede & Co. is the registered owner of the Bonds, principal and interest payments on the Bonds will be made by the Trustee directly to DTC, which will remit such payments to the Participants (as defined herein) for subsequent distribution to the Beneficial Owners (as defined herein). Interest on the Bonds is payable semiannually on the first day of June and December of each year until maturity or earlier redemption, commencing June 1, The Bonds bear interest at the rates and mature on the dates shown on the inside cover page of this Official Statement. The Bonds are subject to optional, mandatory and extraordinary redemption prior to maturity as more fully described herein. AN INVESTMENT IN THE BONDS INVOLVES A DEGREE OF RISK. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. INVESTORS MUST READ THIS ENTIRE OFFICIAL STATEMENT, INCLUDING THE SECTION CAPTIONED BONDHOLDERS RISKS AND THE APPENDICES, TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION. The Bonds are being offered, subject to prior sale, when, as and if issued by the Authority and accepted by the Underwriters named below. The issuance of the Bonds is subject to (a) the approval of legality by Kutak Rock LLP, as Bond Counsel, (b) the approval of certain legal matters by Leonard, Street and Deinard Professional Association, as counsel to the Society and the Foundation, by Ballard Spahr LLP, as counsel to the Authority, and by Kutak Rock LLP and Dentons US LLP, as counsel to the Underwriters, and (c) certain other conditions. It is expected that the Bonds will be available for delivery through the facilities of DTC in New York, New York, on or about October 2, 2013, against payment therefor. Citigroup The Date of this Official Statement is September 20, Herbert J. Sims & Co.

2 $63,675,000 COLORADO HEALTH FACILITIES AUTHORITY HEALTH FACILITIES REVENUE BONDS (THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY PROJECT) SERIES 2013 Stated Maturity (June 1) Principal Amount Interest Rate Yield Price CUSIP 1, $875, % 4.000% A L , A L94 $5,280, % Bonds Due June 1, 2028 Yield: 5.100% Price: CUSIP 1, A M28 $6,845, % Bonds Due June 1, 2033 Yield: 5.500% Price: CUSIP 1, A M36 $49,760, % Bonds Due June 1, 2043 Yield: 5.800% Price: CUSIP 1, A M44 1 The Society, the Authority and the Underwriters take no responsibility for the accuracy of the CUSIP numbers, which are included solely for the convenience of the owners of the Bonds. 2 CUSIP is a registered trademark of the American Bankers Association, Standard & Poor s, CUSIP Service Bureau, a division of The McGraw- Hill Companies, Inc.

3 This Official Statement has been prepared from information furnished by the Society, the Authority and others, and has been reviewed and approved by the Society, the Authority or counsel to each of those parties, to the extent of information provided by each such party. No person is authorized to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such information or representations may not be relied upon as having been made by the Society, the Authority or the Underwriters. The Bond Trustee will provide a final copy of the documents referred to herein to each investor who makes a written request accompanied with evidence of beneficial ownership of a Bond. Requests for such documents should be directed to U.S. Bank Corporate Trust, EP-MN-WS3C, 60 Livingston Avenue, Saint Paul, MN , Attention: Judith Foley. NONE OF THE INFORMATION IN THIS OFFICIAL STATEMENT, OTHER THAN WITH RESPECT TO INFORMATION CONCERNING THE AUTHORITY CONTAINED UNDER THE CAPTIONS SUMMARY STATEMENT THE AUTHORITY, THE AUTHORITY AND LITIGATION THE AUTHORITY HEREIN, HAS BEEN SUPPLIED BY THE AUTHORITY, AND THE AUTHORITY MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION NOT SUPPLIED BY THE AUTHORITY. Neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Society, the Obligated Group, the Authority or any other party since the date of this Official Statement or the earliest date as of which such information is given, or, in the case of the financial statements of the Society and the Obligated Group included herein, since the date of such financial statements, or that information herein is correct as of any time since the date of this Official Statement. IN CONNECTION WITH THE SALE OF THE BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION BY REASON OF THE PROVISIONS OF SECTION 3(a)(2) OF THE SECURITIES ACT OF 1933, AS AMENDED. THE REGISTRATION, IF ANY, OR QUALIFICATION OF THESE SECURITIES IN ACCORDANCE WITH APPLICABLE PROVISIONS OF SECURITIES LAWS OF THE STATES IN WHICH THESE SECURITIES HAVE BEEN REGISTERED, IF ANY, OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES SHALL NOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE SECURITIES OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE UNDERWRITERS HAVE REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH AND AS A PART OF THEIR RESPONSIBILITIES TO INVESTORS UNDER FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITERS DO NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. The CUSIP numbers included in this Official Statement are for the convenience of the holders and potential holders of the Bonds. No assurance can be given that the CUSIP numbers for the Bonds

4 will remain the same after the date of issuance and delivery of the Bonds. CUSIP is a trademark of the American Bankers Association. The CUSIP numbers are provided by Standard and Poor s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. These numbers are not intended to create a database and do not serve in any way as a substitute for the CUSIP Service. The CUSIP numbers shown on the inside cover hereof have been assigned to the issue by an organization not affiliated with the Authority, the Underwriters or the Society and are included for convenience only. Neither the Authority, the Underwriters nor the Society is responsible for the selection of the CUSIP numbers, nor is any representation made as to their correctness on the Bonds or as indicated herein. THE INFORMATION SET FORTH HEREIN HAS BEEN OBTAINED FROM SOURCES WHICH ARE BELIEVED TO BE RELIABLE BUT IT IS NOT GUARANTEED AS TO ACCURACY AND IS NOT TO BE CONSTRUED AS A REPRESENTATION OF SUCH BY THE AUTHORITY OR THE OBLIGATED GROUP. THIS OFFICIAL STATEMENT IS NOT TO BE CONSTRUED AS A CONTRACT WITH THE PURCHASERS OF THE BONDS. STATEMENTS CONTAINED IN THIS OFFICIAL STATEMENT WHICH INVOLVE ESTIMATES, FORECASTS OR MATTERS OF OPINION, WHETHER OR NOT EXPRESSLY SO DESCRIBED IN THIS OFFICIAL STATEMENT, ARE INTENDED SOLELY AS SUCH AND ARE NOT TO BE CONSTRUED AS REPRESENTATIONS OF FACTS. THE INFORMATION AND EXPRESSIONS OF OPINION CONTAINED IN THIS OFFICIAL STATEMENT ARE SUBJECT TO CHANGE WITHOUT NOTICE. THE ORDER AND PLACEMENT OF MATERIALS IN THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES, ARE NOT TO BE DEEMED A DETERMINATION OF RELEVANCE, MATERIALITY OR IMPORTANCE, AND THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES, MUST BE CONSIDERED IN ITS ENTIRETY. THE CAPTIONS AND HEADINGS IN THIS OFFICIAL STATEMENT ARE FOR CONVENIENCE ONLY AND IN NO WAY DEFINE, LIMIT OR DESCRIBE THE SCOPE OR INTENT, OR AFFECT THE MEANING OR CONSTRUCTION, OF ANY PROVISIONS OR SECTIONS IN THIS OFFICIAL STATEMENT. THE OFFERING OF THE BONDS IS MADE ONLY BY MEANS OF THIS ENTIRE OFFICIAL STATEMENT. THIS OFFICIAL STATEMENT IS BEING PROVIDED TO PROSPECTIVE PURCHASERS EITHER IN BOUND PRINTED FORM ( ORIGINAL BOUND FORMAT ) OR IN ELECTRONIC FORMAT ON THE WEBSITE THIS OFFICIAL STATEMENT MAY BE RELIED UPON ONLY IF IT IS IN ITS ORIGINAL BOUND FORMAT OR IF IT IS PRINTED IN FULL DIRECTLY FROM SUCH WEBSITE. In accordance with disclosure requirements, this Official Statement may be amended or supplemented to indicate material changes.

5 TABLE OF CONTENTS SUMMARY STATEMENT... i The Bonds... i Book-Entry Only... i Use of Bond Proceeds... i Security and Sources of Payment... i Redemption... ii The Authority... ii The Obligated Group... iii INTRODUCTION... 1 THE AUTHORITY... 2 THE OBLIGATED GROUP... 2 THE PROJECT... 3 BONDHOLDERS RISKS... 4 General... 4 Federal Health Care Legislation... 4 National Labor Relations Act... 5 Other Governmental Regulation... 5 Evolving Industry... 6 Weakness in Senior Housing... 6 Malpractice Insurance... 7 Potential Environmental Risks... 7 Staffing... 7 Covenant to Maintain Tax Exempt Status of Interest on the Bonds... 7 Security for the Bonds; Security for Other Debt... 8 Dependence on Investment Portfolio Earnings... 9 Certain Matters Relating to the Enforceability of the Master Indenture and Other Documents... 9 Enforceability of Remedies, Bankruptcy, Limitations on Security Interests and Other Matters Relating to the Security for the Bonds Obligated Group Debt; Ability to Incur Future Indebtedness Ratings Certain Other Risks FORWARD-LOOKING STATEMENTS UNDERTAKING TO PROVIDE ONGOING DISCLOSURE THE BONDS General Description Book-Entry System Successor Securities Depository; Discontinuation of Book Entry System Debt Service REDEMPTION Optional Redemption Mandatory Sinking Fund Redemption Extraordinary Redemption Notice of Redemption Purchase of Bonds in Lieu of Redemption SECURITY AND SOURCES OF PAYMENT General The Master Indenture SOURCES AND USES OF FUNDS ENFORCEMENT OF REMEDIES TAX MATTERS THE UNDERWRITERS RATINGS APPROVAL OF LEGAL MATTERS CONFLICTS LITIGATION The Authority The Society and the Foundation AUDITORS ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT MISCELLANEOUS APPENDIX A INFORMATION REGARDING THE SOCIETY AND THE FOUNDATION APPENDIX B THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES AUDITED, CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR ITS FISCAL YEARS ENDED DECEMBER 31, 2012 AND DECEMBER 31, 2011 APPENDIX C THE OBLIGATED GROUP S UNAUDITED FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2013 APPENDIX D DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS APPENDIX E PROPOSED FORM OF BOND COUNSEL OPINION

6 [THIS PAGE INTENTIONALLY LEFT BLANK]

7 SUMMARY STATEMENT This Summary Statement is subject in all respects to more complete information contained elsewhere in this Official Statement, including the Appendices to this Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Official Statement, including the Appendices attached hereto. No person is authorized to detach this Summary Statement from this Official Statement or to otherwise use it without the entire Official Statement, including the Appendices attached hereto. All capitalized terms used in this Summary Statement shall have the meanings assigned to them under the heading DEFINITIONS OF CERTAIN TERMS in APPENDIX D to this Official Statement. The Bonds The offering consists of $63,675,000 Colorado Health Facilities Authority Health Facilities Revenue Bonds (The Evangelical Lutheran Good Samaritan Society Project), Series 2013 (the Bonds ), dated the date of their delivery and issued by the Colorado Health Facilities Authority (the Authority ) pursuant to a Bond Trust Indenture, dated as of October 1, 2013 (the Bond Indenture ), by and between the Authority and U.S. Bank National Association, as trustee (the Trustee ), a Resolution adopted by the Authority on September 13, 2013 (the Resolution ), the Colorado Health Facilities Authority Act, Article 25 of Title 25 of the Colorado Revised Statutes, as amended (the Act ), and the Supplemental Public Securities Act, Part 2 of Article 57 of Title 11 of the Colorado Revised Statutes, as amended. See the caption THE BONDS herein. Book-Entry Only The Bonds are being issued in book-entry form only under the book-entry system maintained by The Depository Trust Company, New York, New York ( DTC ). So long as DTC or its nominee is the Registered Owner of the Bonds, disbursements and payments of principal and interest to the Participants (as defined herein) is the responsibility of DTC and disbursement of such payments to the ultimate purchasers (the Beneficial Owners ) is the responsibility of the Participants. See THE BONDS Book-Entry System herein for a description of the book-entry system of payment and transfer. Use of Bond Proceeds Proceeds from the sale of the Bonds will be used, together with moneys available to The Evangelical Lutheran Good Samaritan Society (the Society ), (a) to finance or refinance the costs of the acquisition, construction, improvement and equipping of certain skilled nursing facility and other health care and senior housing facility improvements in various locations, (b) to fund the Reserve Fund, and (c) to pay certain costs of issuance associated with the Bonds. See the captions SOURCES AND USES OF FUNDS and THE PROJECT herein. Security and Sources of Payment The Bonds do not constitute a debt or liability or a charge against the general credit or taxing power of the Authority, the State, or any political subdivision thereof and neither the Authority, the State nor any agency thereof nor any political subdivision thereof shall be liable on the Bonds. Neither the faith and credit nor the taxing power of the State or any agency or political subdivision thereof is pledged to the payment of the principal of or the interest on the Bonds. The Authority has no taxing powers. The Bonds do not constitute a debt or liability or charge against the general credit or taxing power of any other state, city, town, county, authority or agency of any of them, or of any other political subdivision which held a public hearing and approved the issuance of the Bonds by the Authority.

8 The Bonds are special, limited obligations of the Authority, payable solely from loan repayments and certain other amounts derived from the Loan Agreement, dated as of October 1, 2013 (the Agreement ), by and between the Authority and the Society, from payments made by the Obligated Group (presently consisting of the Society and The Evangelical Lutheran Good Samaritan Foundation (the Foundation )) on Obligation No. 46, as described below, and from certain funds held under the Bond Indenture. Obligation No. 46 (also referred to herein as the Series 2013 Obligation ) will be issued to the Trustee by the Society, as Obligated Group Representative, under the Second Amended and Restated Master Trust Indenture, dated as of October 1, 2013, as supplemented and amended from time to time, including by the Thirty-Third Supplement to Master Trust Indenture, dated as of October 1, 2013 (collectively, the Master Indenture ), among the Society, the Foundation and Wells Fargo Bank, National Association, as master trustee (the Master Trustee ), to secure payments under the Bonds. The Series 2013 Obligation will be secured under the Master Indenture on a parity with the other outstanding Obligations. The Obligated Group may incur additional indebtedness, including additional Obligations under the Master Indenture, provided that the Obligated Group meets certain financial tests and other requirements prescribed by the Master Indenture. See APPENDIX D THE MASTER INDENTURE Amount of Indebtedness and Limitations on Indebtedness. Additional Obligations will be secured under the Master Indenture on a parity with the Series 2013 Obligation and the other outstanding Obligations. The obligation of the Society to make payments under the Agreement sufficient to pay when due the principal of and interest on the Bonds is a general obligation of the Society. See the caption SECURITY AND SOURCES OF PAYMENT herein. A Reserve Fund of $6,367,500 will be funded with cash to serve as security for the payment of principal of and interest on the Bonds. Under the Master Indenture, the Members of the Obligated Group agree to make any and all payments with respect to Obligations (including the Series 2013 Obligation) issued thereunder. The Society and the Foundation constitute the current Members of the Obligated Group. Payments on the Series 2013 Obligation are required to be in an amount sufficient to pay when due the principal of and interest on the Bonds. The Society, the Foundation and any other future Members of the Obligated Group will be jointly and severally liable with respect to such payments as provided in the Master Indenture. All Obligations, including the Series 2013 Obligation, are secured under the Master Indenture by a pledge of the Gross Revenues of the Members of the Obligated Group, subject to Permitted Liens. See SECURITY AND SOURCES OF PAYMENT herein and APPENDIX D THE MASTER INDENTURE Security; Payment of Principal and Interest. Redemption The Bonds are subject to redemption prior to maturity as described under the caption REDEMPTION herein. The Authority The Authority is an independent public body politic and corporate constituting a public instrumentality. The Authority is a political subdivision of the State of Colorado (the State ). The Authority is not an agency of State government and is not subject to administrative direction by any department, commission, board or agency of the State. The Authority was created by the Act, and its purpose is to provide financing for health facilities and to provide alternative methods by which health institutions in the State or their affiliates may finance health facilities located in the State and other states and refund or refinance outstanding indebtedness incurred for such health facilities. See the caption THE AUTHORITY herein for a more detailed description of the Authority. ii

9 The Obligated Group The Obligated Group currently consists of the Society and the Foundation. Subject to certain conditions specified in the Master Indenture, other entities may become Members of the Obligated Group or, once Members, may withdraw from the Obligated Group; provided that neither the Society nor the Foundation may withdraw from the Obligated Group. The Society is a nonprofit corporation founded in 1922 under the laws of the State of North Dakota. The Society is engaged primarily in owning and operating skilled nursing facilities and residential housing for seniors. The residential housing facilities are generally operated in conjunction with skilled nursing facilities at the same location. Revenues from skilled nursing operations (excluding residential housing operated in conjunction with skilled nursing facilities) constituted between 79% and 84% of the Society s operating revenues for each of the five years ended December 31, As of December 31, 2012, the Society owned and operated skilled nursing facilities and residential housing in 177 locations, managed one residential housing facility and one sub-acute care unit where the Society has partial ownership, and managed 10 and leased 3 skilled nursing facilities and residential housing facilities owned by others, in 24 states. There have been no material changes to these statistics since December 31, The Foundation is a Minnesota nonprofit corporation organized in 1992 exclusively for the purpose of providing support, assistance and aid to and for the exclusive benefit of the Society, in connection with the mission of the Society. The sole member of the Foundation is the Society, and the Chairperson of the Board of Directors of the Foundation is the President of the Society. The Executive Director of the Foundation is chosen by its Board of Directors. Set forth below is certain financial information that summarizes the financial status of the Obligated Group. Reference is hereby made to the caption THE OBLIGATED GROUP herein and to Appendices A, B and C for a discussion of the Society, the Foundation and their businesses and for interim, unaudited financial information of the Obligated Group and for the most recent audited financial statements of the Society. Unaudited consolidating financial information for the Obligated Group is included as part of a supplement to the Society s audited financial statements attached as APPENDIX B. [Remainder of page intentionally left blank] iii

10 Summary Operating Statement 1 (in thousands) Six months Ended June 30 Years Ended December 31 (Unaudited) Operating Revenues $952,705 $941,395 $910,267 $481,195 $480,175 Operating Expenses 947, , , , ,615 Operating Income (loss) $5,062 $15,456 $17,333 $2,207 $1,560 Nonoperating Revenue (Net) 15,265 25,128 17,842 12,921 6,630 Net Unrealized Gains (Losses) 16,098 (11,746) 10,677 (3,253) 8,512 Other Changes in Net Assets (7,532) (7,308) (907) (2,596) (1,543) Change in Unrestricted Net Assets $28,893 $21,530 $44,945 $9,279 $15,159 Condensed Summary Balance Sheet 1 (in thousands) June 30 (Unaudited) December Cash and Investments $ 254,795 $ 229,333 $ 244,462 $ 339,376 Other Current Assets 117, , , ,031 Assets Limited As To Use 229, , , ,534 Net Property, Plant & Equipment 901, , , ,530 Other Assets 74,854 75,461 69,126 92,428 Total Assets $1,577,631 $1,471,974 $1,456,136 $1,638,899 Total Current Liabilities $149,104 $187,466 $200, ,959 Long-Term Debt 575, , , ,763 Other Liabilities 102,228 96,800 96, ,388 Total Net Assets 750, , , ,789 Total Liabilities and Net Assets $1,577,631 $1,471,974 $1,456,136 $1,638,899 1 These financial summaries present information for the Obligated Group only, drawn from the audited financial statements of the Society for the annual figures and from the unaudited financial statements for the Obligated Group for the interim periods indicated. The unaudited financial information includes all adjustments which the Society considers necessary for a fair presentation of the results of operations for such periods. Operating results for the six months ended June 30, 2013 are not necessarily indicative of results which may be expected for the full fiscal year ending December 31, The Society s individual financial results are consolidated with its related HUD housing corporations, its captive insurance company, Good Samaritan Holdings, LLC and the Foundation for purposes of the audited financial statements included as APPENDIX B. Neither the HUD housing corporations, the captive insurance company nor Good Samaritan Holdings (which has no assets), however, is a Member of the Obligated Group and none of them is obligated to make any payments with respect to the Bonds or any Obligations under the Master Indenture. Moreover, the Obligated Group does not have any legal right to the assets or revenues of those companies to support payments required of the Obligated Group. Similarly, none of those companies has any legal right to compel payments from any Member of the Obligated Group on its behalf. As of December 31, 2012, the net operating revenue of Members of the Obligated Group constituted approximately 99.2% of the Society s annual consolidated net operating revenue and the Members assets constituted approximately 95.3% of the Society s total consolidated assets as shown in the audited consolidated financial statements included as APPENDIX B. Unaudited consolidating financial information for the Obligated Group is included as part of a supplement to the Society s audited financial statements. See Appendices A, B and C for more information. iv

11 OFFICIAL STATEMENT $63,675,000 COLORADO HEALTH FACILITIES AUTHORITY HEALTH FACILITIES REVENUE BONDS (THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY PROJECT) SERIES 2013 INTRODUCTION This Official Statement, including the Appendices attached hereto (collectively, this Official Statement ), is furnished to provide information in connection with the offering and sale of the Bonds. All capitalized terms herein not otherwise defined shall have the meanings assigned to them under the caption DEFINITIONS OF CERTAIN TERMS in APPENDIX D to this Official Statement. The Bonds are issued by the Colorado Health Facilities Authority (the Authority ) under and pursuant to the authority of the Colorado Health Facilities Authority Act, Article 25 of Title 25 of the Colorado Revised Statutes, as amended (the Act ) and the Supplemental Public Securities Act, Part 2 of Article 57 of Title 11 of the Colorado Revised Statutes, as amended, as well as a Bond Trust Indenture dated as of October 1, 2013 (the Bond Indenture ), by and between the Authority and U.S. Bank National Association, as Trustee (the Trustee ) and a Resolution approved and adopted by the Authority on September 13, 2013 (the Resolution ). On the date of delivery of the Bonds, the Authority will enter into a Loan Agreement, dated as of October 1, 2013 (the Agreement ), with The Evangelical Lutheran Good Samaritan Society (the Society ), under which the Authority will loan the proceeds of the Bonds to the Society and the Society will agree to pay when due the principal of and interest on the Bonds. In addition, the Society, The Evangelical Lutheran Good Samaritan Foundation (the Foundation ) and Wells Fargo Bank, National Association, as master trustee (the Master Trustee ), will enter into a Second Amended and Restated Master Trust Indenture dated as of October 1, 2013, as supplemented and amended from time to time, including by the Thirty-Third Supplement to Master Trust Indenture, dated as of October 1, 2013 (collectively, the Master Indenture ). The Society, as Obligated Group Representative under the Master Indenture, will issue Obligation No. 46 (the Series 2013 Obligation ) of the Society and the Foundation, as the current Members of the Obligated Group (as defined in the Master Indenture), to the Trustee to secure payments on the Bonds. The payments required of the Obligated Group on the Series 2013 Obligation will be equivalent to the payments required of the Society on the Bonds, and credit will be given on payments made under the Series 2013 Obligation for payments made on the Bonds. The Bonds and all obligations of the Authority under or with respect to the Bonds, the Bond Indenture and the Agreement shall be and remain special, limited obligations of the Authority payable solely and only out of the security described herein (and defined under the caption SECURITY AND SOURCES OF PAYMENT ) and specifically pledged thereto. No recourse shall be had against any properties, funds or assets of the Authority (other than such security) or the State of Colorado (the State ) for the payment of any amounts owing under or with respect to the Bonds, the Bond Indenture or the Agreement. The Bonds are not general obligations of the State or the Authority. The full faith and credit and taxing powers of the State are not and may not be pledged for the payment of the Bonds. No person may compel the levy of a tax for the payment or compel the appropriation of money of the State or the Authority for the payment of the Bonds. The Authority has no taxing powers. In addition, no other state or political subdivision thereof which approved the issuance by the Authority of any portion of the Bonds is obligated to make any payments on the Bonds.

12 Brief descriptions of the Authority, the Society, the Foundation, the Bonds, the Master Indenture, the Bond Indenture, the Agreement and the Series 2013 Obligation are included in this Official Statement. All references herein to such documents are qualified in their entirety by reference to such documents, and references herein to the Bonds are qualified in their entirety by reference to the form thereof included in the Bond Indenture and the information with respect thereto included in such documents, all of which will be available for inspection until the issuance of the Bonds at the office of the Society in Sioux Falls, South Dakota, and thereafter at the offices of the Trustee in Saint Paul, Minnesota. THE AUTHORITY The Authority, created July 1, 1977, is an independent public body politic and corporate constituting a public instrumentality and a political subdivision of the State of Colorado. The Authority is not an agency of the State of Colorado government and is not subject to administrative direction by any department, commission, board or agency of the State. The Authority was created by the Act, and its purpose is to provide financing for health facilities and to provide alternative methods by which health institutions in the State or their affiliates may finance health facilities located in the State and other states and refund or refinance outstanding indebtedness incurred for such health facilities. The Act provides that the governing body of the Authority will be a Board of Directors consisting of seven members appointed for staggered, four-year terms by the Governor of the State with the consent of the State Senate. Each member must be a resident of the State, and no more than four members may be of the same political party. The Authority has offered and plans to offer other obligations from time to time to finance other health care facilities. Such obligations have been and will be issued pursuant to and secured by instruments separate and apart from the Bond Indenture. Payments on these other obligations will be payable solely from revenue pledged under the separate instruments relating to such obligations and not from any revenue pledged under the Bond Indenture. The Authority has not prepared or assisted in the preparation of this Official Statement, except the statements under this Section and the information with respect to the Authority under the caption LITIGATION The Authority and the information with respect to the Authority under the caption SUMMARY STATEMENT The Authority and, except as aforesaid, the Authority is not responsible for any statements made in this Official Statement. Except for the execution and delivery of documents required to effect the issuance of the Bonds, the Authority has not otherwise assisted in the public offer, sale or distribution of the Bonds. Accordingly, except as aforesaid, the Authority disclaims responsibility for the disclosures set forth in this Official Statement or otherwise made in connection with the offer, sale and distribution of the Bonds. The Authority has engaged Ponder & Co. of Chicago, Illinois to serve as its financial advisor. THE OBLIGATED GROUP The Obligated Group currently consists of the Society and the Foundation. Subject to certain conditions specified in the Master Indenture, other entities may become Members of the Obligated Group or, once Members, may withdraw from the Obligated Group; provided that neither the Society nor the Foundation may withdraw from the Obligated Group. There is no present intention to add Members to the Obligated Group. The Society is a nonprofit corporation founded in 1922 under the laws of the State of North Dakota. The Society is engaged primarily in owning and operating skilled nursing facilities and 2

13 residential housing for seniors, usually in conjunction with skilled nursing facilities. Revenues from skilled nursing operations (excluding residential housing operated in conjunction with skilled nursing facilities) constituted between 79% and 84% of the Society s gross operating revenues for each of the five years ended December 31, As of December 31, 2012, the Society owned and operated skilled nursing facilities and residential housing in 177 locations, managed one residential housing facility and one sub-acute care unit where the Society has partial ownership, and managed 10 and leased 3 skilled nursing facilities and residential housing facilities owned by others, in 24 states. These statistics have not changed materially as of the date of this Official Statement. The skilled nursing facilities operated by the Society provide long term health care for adults, including those who are admitted as an intermediate step after hospitalization and before returning to their homes. Admission is ordinarily under the supervision of the resident s personal physician. Charges for services normally consist of a per diem room rate. Such charges are reimbursed to the Society by Medicaid and Medicare for approximately 69% of the residents of the Society s various skilled nursing facilities and by other third party payers and private residents for the other 31%. The Foundation is a Minnesota nonprofit corporation organized in 1992 exclusively for the purpose of providing support, assistance and aid to and for the exclusive benefit of the Society, in connection with the mission of the Society. The sole member of the Foundation is the Society, and the Chairperson of the Board of Directors of the Foundation is the President of the Society. The Executive Director of the Foundation is chosen by its Board of Directors. The executive offices of the Society and the Foundation are located at 4800 West 57th Street, Sioux Falls, South Dakota See APPENDIX A for further discussion of the management, capitalization, revenues and expenditures, facilities, expansion policies and plans, and other information relating to the Society and the Foundation. See APPENDIX B for the Society and its affiliates audited, consolidated financial statements as of and for the years ended December 31, 2012 and December 31, 2011, which includes supplemental information concerning the Obligated Group, and APPENDIX C for the Obligated Group s unaudited financial statements for the six months ended June 30, After the close of this offering, for information on the Society, including its audited financial reports (which includes supplemental information on the Obligated Group), its current and most recent Official Statements, and the most recent reports from Standard & Poor s Ratings Services and Moody s Investors Service, please see the Finances link on the Society website, This information is not included by reference in this Official Statement, and the Society disclaims any obligation to keep the information current on its website. THE PROJECT The Project consists of (a) financing or refinancing the costs of the acquisition, construction, improvement and equipping of certain skilled nursing facility and other health care and senior housing facility improvements in various locations; (b) funding the Reserve Fund; and (c) paying the costs of issuance related to the Bonds. The skilled nursing facility and other health care and senior housing facility improvements referenced in clause (a) above are located in: Mesa, Arizona; Windsor, Colorado; Kissimmee, Florida; Jasper, Indiana; Davenport, Iowa; Indianola, Iowa; International Falls, Minnesota; Pine River, Minnesota; St. Paul, Minnesota; Waconia, Minnesota; Warren, Minnesota; Omaha, Nebraska; Albuquerque, New Mexico; Rapid City, South Dakota; Denton, Texas; and El Paso, Texas. 3

14 BONDHOLDERS RISKS General The Society and other long-term care providers face numerous challenges. Consumer demands for alternatives to traditional long-term care, declining resident census and declining average length of stay in skilled nursing facilities, increased need for care of persons seeking services, staff shortages and inadequate reimbursement from the federal and state governments require creative, timely responses as the Society seeks to continue to provide high quality care. Some of the Society s responses to these and other challenges are discussed in APPENDIX A. Some are discussed in this Section. Federal Health Care Legislation General. Approximately 55.7% of the total residents served by the Society live in the Society s skilled nursing facilities. Approximately 69% of those residents are covered by Medicaid or Medicare. In 2012, the Society received approximately 39.2% of its total revenues from various states Medicaid programs and approximately 18.9% through Medicare (a total of 58.1% of the Society s total revenues). Medicaid is a governmental program which pays for medical care for certain indigents. Currently, the Medicaid program is jointly funded by states and the federal government, but administered by the individual states. Medicare is a health care program for seniors that is funded by the federal government. For a discussion of the Medicare and Medicaid programs, see THE SOCIETY AND THE FOUNDATION Sources of Payment for Resident Services in APPENDIX A. Throughout the last 10 years or more, Congress has established programs and proposed programs generally intended to reduce federal contributory payments to states under the Medicaid program and to reduce federal obligations under Medicare. The Society expects further changes and/or reductions in Medicaid and Medicare funding and reimbursement patterns, which may have a materially adverse effect upon the operations and financial condition of the Society. In addition, the Medicaid program is a state block grant program, under which the individual states have complete discretion over the eligibility requirements and the method of provision of health services pursuant to the program. In such a situation, especially with federally provided per capita dollars declining in real terms, there is a possibility that states will limit eligibility and/or reimbursement to nursing care providers such as the Society. Such limitations may have a materially adverse effect upon the operations and financial condition of the Society. Certainly, as the states develop and evolve their individual programs, the administrative cost of compliance will increase for the Society. Affordable Care Act. Over the past few years, health care reform at both the federal and state levels has been identified as a priority by political leaders and candidates, business leaders and public advocates. In March 2010, federal health care reform efforts culminated in the enactment of H.R. 3590, the Patient Protection and Affordable Care Act, amended by H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (collectively, the Affordable Care Act ). The constitutionality of some elements of the Affordable Care Act has been challenged in courts around the country. In June 2012, the Supreme Court upheld the Affordable Care Act while also substantially limiting the law s expansion of Medicaid, effectively allowing states to choose between participating in the expansion while receiving additional federal payments or foregoing the expansion and retaining existing payments. As of the first of September, 13 of the 24 states in which the Society operates have opted in to the Affordable Care Act s expansion of the Medicaid program. Each state s status, however, is subject to change as legislators consider their options under the Affordable Care Act and as currently states can choose to opt in or out in the future. Attempts to amend and repeal provisions of the Affordable Care Act were introduced in previous Congressional sessions and certain amendments to the Affordable Care Act were contained in the American Taxpayer Relief Act of 2012 signed into law by President Obama on January 2, The 4

15 ultimate outcomes of any legislative attempts to repeal, amend or eliminate or reduce funding for the Affordable Care Act are unknown. Different aspects of the Affordable Care Act are to take effect at different times over the next several years, including an array of coverage expansion, health insurance regulation and tax increase measures. Medicaid eligibility and services will be expanded in 2014, and the federal government will provide additional Medicaid funding. However, the Affordable Care Act also contains provisions (some of which are effective immediately) aimed at reducing Medicare and Medicaid reimbursements to providers. The Affordable Care Act makes changes aimed at reducing projected growth of the Medicare program, including reducing Medicare Advantage payments and tying provider payments more closely to efficiency and quality outcomes. The Affordable Care Act also provides for new methods and increased resources to combat waste, fraud and abuse, as well as demonstration programs relating to alternative approaches for medical malpractice disputes. Since many aspects of the Affordable Care Act will be the subject of federal regulations that have not yet been promulgated, it is impossible to predict precisely how the Society will be affected. Many states have also enacted or are considering health care reform measures. The purpose of much of the statutory and regulatory activity has been to control health care costs, particularly costs paid under the Medicaid and Medicare programs. It is not known which additional proposals may be adopted or, if adopted, what effect such proposals would have on the Society's operations or revenue. However, the increase in focus and interest on federal and state health care reform may increase the likelihood of further significant changes affecting the health care industry in the near future. Recently enacted, currently proposed or future health care legislation, regulation or other changes in the administration or interpretation of governmental health care programs may have a materially adverse effect upon the operations and financial condition of the Society. Moreover, reductions in funding levels of the Medicare or Medicaid program, changes in payment methods under the Medicare and Medicaid programs, reductions in state funding, or other legislative or regulatory changes may have a materially adverse effect upon the operations and financial condition of the Society. National Labor Relations Act Skilled nursing facilities and their employees fall within the scope of, and are subject to, the National Labor Relations Act. See the caption THE SOCIETY AND THE FOUNDATION Employees in APPENDIX A hereto. Accordingly, labor relations with skilled nursing facility employees are regulated by the federal government. Employees may organize, bargain collectively and strike. Employees at nine of the Society s centers currently are represented by unions. Most of these centers are in Minnesota. Such employees represent approximately 3.2% of the Society s total employees. Procedures are provided to aid in the resolution of disputes and to attempt to avoid strikes, including review of the disputes and recommendations for their resolution by the Federal Mediation and Conciliation Service and a mandatory cooling off period. There are no pending or threatened labor disputes, and the Society believes its relations with its employees are good. Other Governmental Regulation Various states and the federal government regularly consider increasing (and do increase) the regulation of skilled nursing facilities and retirement housing, in an effort to protect seniors. Although such additional regulations, if adopted, would be intended to prevent abuses, there can be no assurance 5

16 that they would not have the effect of limiting the ability of skilled nursing facilities and retirement housing to generate revenues or of increasing their expenses, thereby impairing the ability of the Society to make payments in an amount sufficient to pay the principal of and interest on the Bonds. In additional efforts to reduce costs, some states have implemented allowable cost systems where skilled nursing facilities receive fixed payments regardless of the actual costs of providing the service. Certain states, including Minnesota and North Dakota, have adopted regulations requiring operators of skilled nursing facilities, including the Society, to limit their charges to private pay patients to the Medicaid reimbursement level, which has the general effect of limiting the Society s revenues. In addition, as stated above, Congress and the President regularly attempt to curb the growth of federal spending on health care programs. In addition to reducing spending for such programs, other recent actions include elimination of funding for health planning agencies and an increased emphasis on competition, managed care and other programs which may have a materially adverse effect upon the operations and financial condition of the Society. Evolving Industry The Society reports that occupancy percentages at skilled nursing facilities around the country have been falling generally for several years, even though, according to LeadingAge (an industry association comprised of approximately 6,000 nonprofit organizations), there has been stagnation in the number of available beds. The Society believes that this is primarily because of the increased availability of assisted living, senior living with services and other types of senior housing and of home health care, as well as other advances in the care of seniors. The Society anticipates that this trend will continue. The Society s immediate response to this situation was to develop more residential housing units for seniors and to reduce the number of skilled nursing beds where it seems economically efficient to do so, and it has continued in this direction. This tends to reduce the Society s reliance on Medicare and Medicaid reimbursement programs for payments for services to residents and provides a greater continuum of care for seniors. The Society has adopted a strategic direction which will inform the allocation of its resources for the foreseeable future: To lead the way in supporting well-being at your place or ours. In recognition of this strategic directive, the Society (a) has been developing home health care initiatives and establishing or acquiring home health care agencies in various geographic areas where it already has campuses, (b) has established a center at its national campus for developing new technology for maintaining well-being while staying at home under its Vivo and LivingWell@Home initiatives, and (c) joined the Mayo Clinic and a small number of other supporting companies in a Healthy Aging and Independent Living (HAIL) Lab Consortium. Weakness in Senior Housing Even as the Society attempts to diversify its senior care alternatives, senior housing operations have been weak and the Society s management believes that they may continue to be weak until the equity and real estate markets substantially improve. The equity and real estate markets affect the financial ability of seniors living in their own homes to sell those homes to move into, and pay for, other, communal senior living situations. Also, in recent years there has been significant construction cost escalation as the global cost of construction materials has increased. These costs may continue to increase as the real estate market in the United States improves. 6