Approve an Amended Promissory Note for an additional advance of funds to St. John's Retirement Village in the amount of $150,000, secured by a deed of trust, related to the County's purchase of APNs 005-720-028-000 and 005-720-027-000 (135 Woodland Avenue, Woodland, CA) and approve first amendment to Agreement No. 22-113 Purchase and Sale Agreement to reflect the increased advance. (No general fund impact) (Pogledich/Hood)

In late January 2022, County staff were approached by facility leaders and board members of St. John's Retirement Village with an opportunity to acquire their property located at 135 Woodland Avenue in Woodland. The property has operated as a retirement community which included assisted living and memory care. The property is located in north Woodland and bounded by Woodland Avenue to the south and N. Cleveland Street to the East. The property contains the retirement village (about 9.83 developed acres) and an adjacent undeveloped parcel to the north (3.68 acres). These parcels are APN 005-720-028 and APN 005-720-027. 

The Board approved an Exclusive Negotiating Agreement with St. John's on April 12, 2022, which included an advance of $400,000 that would be applied to the purchase price for the property.  The advance was memorialized with a promissory note secured by a deed of trust that would be forgiven if the County successfully purchased the property. This allowed the County to advance funds to St. John's earlier to assist with an orderly wind down of the St. John's facilities, but also provided the County with the ability to recover the loan proceeds at the time the property sold to another buyer if the County opted not to buy the property or the deal fell through for any other reason. 

The Board held a noticed public hearing on April 26, 2022, which public hearing was continued at the request of St. John's to May 10, 2022.  On May 6, 2022, a lawsuit was filed naming members of St. John's Board and the County as defendants and pursuing, among other relief, an injunction against the purchase of property (Turner v. St. Johns Retirement Village, et al., Yolo County Superior Court Case No. CV2022-0723) (“Lawsuit”).  Following the filing of the Lawsuit, the continued public hearing was held on May 10, 2022 and further continued by the Board to May 24, 2022 to allow for consideration of a revised draft of the proposed purchase and sale agreement that accounted for the pending Lawsuit.  On May 24, 2022, the Board approved the purchase and sale agreement, which has since been fully executed and escrow has been opened.  Efforts are underway to try proceed with closing in a timely fashion and no later than the September 30, 2022 outside closing date agreed to in the purchase and sale agreement.

In the meantime, St. John's has continued to incur additional costs and expenses with no revenue since the residential care facilities have been closed and is seeking an additional advance so that it may pay existing debt service obligations and maintain/secure the property pending closing of the sale to the County.  St. John's has requested an additional advance of $150,000 for a total advance of $550,000.  The additional advance would be memorialized with an amended and restated promissory note (Attachment A) secured by an amended and restated deed of trust (Attachment B) that would be forgiven if the purchase of the property successfully closes by September 30, 2022. This allows the County to advance funds to St. John's earlier while maintaining the same total purchase price ($2.9 million) approved by the Board on May 24, 2022, but also provides the County with the ability to recover the loan proceeds at the time the property is sold to another buyer if the County opts not to buy the property or upon another event of default (such as a breach of the purchase and sale agreement).  Included as Attachment C is a First Amendment of the purchase and sale agreement reflecting the increased advance and reduced amount the County would owe at closing to complete the property purchase.