2012-11-14T10:42:02-06:00 2011-12-31 861065772 DELOITTE TAX LLP 201 E KENNEDY BLVD SUITE 1200 TAMPA FL 33602 990 2011-01-01 203700526 SANTAFE SENIOR LIVING INC SANT 3523728400 SANTAFE HEALTHCAREINC PO BOX 749 GAINESVILLE FL 326270749 RANDALL L STUART 3523378730 2012-11-14 1 STEVEN E ROVNER P00648526 8132738300 2011 2016-02-24 21:20:13Z MICHAEL P GALLAGHER SANTAFE HEALTHCAREINC PO BOX 749 GAINESVILLE FL 326270749 3847169 0 X SANTAFEHEALTHCAREFL.ORG X 2005 FL SANTAFE SENIOR LIVING, INC. CREATES AND SUSTAINS PREEMINENT SENIOR LIVING COMMUNITIES. THE PRIMARY EXEMPT PURPOSE OF SANTAFE SENIOR LIVING, INC. IS TO GOVERN AND CARRY OUT THE PURPOSES OF A SYSTEM OF TAX-EXEMPT CHARITABLE ORGANIZATIONS THAT ACQUIRE, OWN, OPERATE, AND MAINTAIN FACILITIES AND SERVICES DESIGNED TO MEET THE PHYSICAL, SOCIAL, EMOTIONAL AND SPIRITUAL NEEDS OF SUCH INDIVIDUALS. 5 0 0 0 0 0 12574861 3002571 797393 796259 0 48339 0 0 13372254 3847169 12574861 3002571 0 0 0 0 0 0 0 1822713 1676177 14397574 4678748 -1025320 -831579 21114196 12063924 23384649 15165956 -2270453 -3102032 X TO CREATE AND SUSTAIN PREEMINENT SENIOR LIVING COMMUNITIES THAT PROVIDE A CONTINUUM OF SERVICES IN HOUSING, HEALTH CARE AND OTHER PROGRAMS TO ENHANCE THE QUALITY AND DIGNITY OF LIFE. 0 0 258489 234574 IN 2011, SANTAFE SENIOR LIVING, INC. FINALIZED PLANS, OBTAINED FINANCING, AND BEGAIN CONSTRUCTION OF A CONTINUOUS CARE RETIREMENT COMMUNITY IN SOUTHWEST FLORIDA WHICH IS EXPECTED TO SERVE UP TO 300 SENIOR RESIDENTS UPON COMPLETION. 466075 442158 DURING THE YEAR, SANTAFE SENIOR LIVING, INC. PROVIDED OVERSIGHT GOVERNANCE AND DEVELOPMENT PLANNING SERVICES TO TWO RELATED EXISTING TAX-EXEMPT SENIOR LIVING COMMUNITIES: BVG ACQUISITION, INC. (DBA BAYVIEW GARDENS) AND NORTH FLORIDA RETIREMENT VILLAGE, INC. (DBA THE VILLAGE). BAYVIEW GARDENS SERVED AN AVERAGE PER DAY OF 149 SENIOR CITIZEN RESIDENTS WITH ROUND THE CLOCK HOUSING, ASSISTED LIVING AND RELATED SERVICES DURING 2011. THE VILLAGE SERVED AN AVERAGE PER DAY OF 519 SENIOR CITIZEN RESIDENTS WITH ROUND THE CLOCK HOUSING, ASSISTED LIVING AND RELATED SERVICES DURING 2011. 343809 119527 SANTAFE SENIOR LIVING, INC. PROVIDED OVERSIGHT GOVERNANCE AND REDEVELOPMENT PLANNING SERVICES TO A RELATED CONTINUOUS CARE RETIREMENT COMMUNITY, EAST RIDGE RETIREMENT VILLAGE, INC. THIS FACILITY PROVIDED AN AVERAGE PER DAY OF 291 SENIOR CITIZEN RESIDENTS WITH HOUSING, HEALTH CARE AND RELATED SERVICES DURING THE YEAR. 3026487 3002571 SANTAFE SENIOR LIVING, INC., THROUGH ITS SUPPORTING ORGANIZATION, SANTAFE HEALTHCARE, PROVIDED FINANCIAL ASSISTANCE TO BAYVIEW GARDENS FOR OPERATION OF ITS RETIREMENT COMMUNITY. 3026487 3002571 4094860 1 1 0 1 0 0 0 0 0 0 0 0 0 1 1 1 0 1 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 8 0 1 0 0 0 0 0 0 0 0 0 0 0 X 5 0 0 0 0 0 0 1 1 1 1 0 0 1 1 1 1 0 0 1 1 0 X JOSEPH GIRARDI 3523378740 4300 NW 89TH BLVD GAINESVILLE FL 326065688 X MICHAEL P GALLAGHER 1.00 X X 0 2101549 252885 TROY R HART 5.00 X X 0 388703 85387 CATHERINE E AYERS 3.00 X X 0 620740 136667 RANDALL L STUART 1.00 X X 0 610873 153972 STEVEN M ZIEGLER 1.00 X 0 261721 76912 STEHPHEN J DEMONTMOLLIN 0.00 X 0 480468 23983 0 4464054 729806 0 1 1 0 0 3002571 3002571 MANAGEMENT FEES 561000 796259 796259 796259 48339 48339 3847169 796259 0 48339 3002571 3002571 1331828 796259 535569 355 355 3750 3750 59168 52063 7105 4309 4309 66123 40134 25989 4261 3467 794 4988 4988 CORPORATE DEVELOPMENT 200669 200366 303 DUES AND SUBSCRIPTIONS 726 726 4678748 4094860 583888 0 238066 449933 6000737 20876130 5613254 21114196 12063924 19762 38150 23364887 15127806 23384649 15165956 X -2270453 -3102032 -2270453 -3102032 21114196 12063924 -831579 0 X X 0 1 1 X 0 X X X X 0 0 0 SANTAFE SENIOR LIVING FOUNDATION INC 264464727 7 0 1 0 BVG ACQUISITION INC 203701186 9 0 1 1 3002571 EAST RIDGE RETIREMENT VILLAGE INC 590903331 9 0 1 0 BONITA SPRINGS RETIREMENT VILLAGE INC 262386152 9 0 1 0 NORTH FLORIDA RETIREMENT VILLAGE INC 591912330 9 0 1 0 5 3002571 SCHEDULE A, PART IV, SUPPLEMENTAL INFORMATION: SCHEDULE A, PART I, LINE 11H, COLUMN (IV): SANTAFE SENIOR LIVING, INC. IS A TYPE I SUPPORTING ORGANIZATION THAT IDENTIFIES ITS SUPPORTED ORGANIZATIONS BY CLASS OR PURPOSE IN ITS ARTICLES OF INCORPORATION IN ACCORDANCE WITH TREASURY REGULATION SECTION 1.509(A)4(D)(2)(B). RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 0 0 0 0 0 0 0 0 1 30123 30123 0 EXPLANATION OF LOBBYING ACTIVITIES: PART II-B, LINE 1: SANTAFE SENIOR LIVING, INC. ENGAGED REPRESENTATION TO LOBBY THE FLORIDA STATE LEGISLATURE ON ITS BEHALF REGARDING GENERAL ISSUES OF IMPORTANCE TO THE SENIOR LIVING INDUSTRY. 0 DUE FROM AFFILIATES 5613254 5613254 DUE TO AFFILIATES 15127806 15127806 3847169 4678748 -831579 -831579 844598 0 844598 3002571 3002571 3847169 1676177 0 1676177 3002571 3002571 4678748 DESCRIPTION OF UNCERTAIN TAX POSITIONS UNDER FIN 48: PART X: EXPLANATION FOR UNCERTAIN TAX POSITIONS UNDER FIN 48: SANTAFE SENIOR LIVING, INC. (SFSL) DID NOT OBTAIN SEPARATE, INDEPENDENT AUDITED FINANCIAL STATEMENTS FOR 2011, BUT WAS INCLUDED IN THE COMBINED AUDITED FINANCIAL STATEMENTS OF SANTAFE HEALTHCARE, INC. (SFHC). THE TEXT OF THE FIN 48 FOOTNOTE IN THE COMBINED FINANCIAL STATEMENTS IS AS FOLLOWS: SFHC AND THE AFFILIATES HAVE NO UNCERTAIN TAX POSITIONS AS OF DECEMBER 31, 2011. SFHC AND AFFILIATES INCURRED NO INTEREST EXPENSE OR PENALTIES RELATED TO UNCERTAIN INCOME TAX PROVISIONS IN 2011 OR 2010. TAX YEARS 2008 THROUGH 2011 ARE SUBJECT TO EXAMINATION BY FEDERAL AND STATE TAXING AUTHORITIES. THERE ARE NO INCOME TAX EXAMINATIONS IN PROCESS AS OF THE DATE OF THIS REPORT. PART XII, LINE 4B - OTHER ADJUSTMENTS: DISTRIBUTION FROM SANTAFE HEALTHCARE 3,002,571. PART XIII, LINE 4B - OTHER ADJUSTMENTS: DISTRIBUTION TO BAYVIEW GARDENS 3,002,571. 1 BVG ACQUISITION INC DBA BAYVIEW GARDENS P O BOX 749 GAINESVILLE FL 326270749 203701186 501(C)3 3002571 SANTAFE SENIOR LIVING, INC., THROUGH ITS SUPPORTING ORGANIZATION, SANTAFE HEALTHCARE, INC, PROVIDED FINANCIAL ASSISTANCE IN THE AMOUNT OF $3,002,571 TO BAYVIEW GARDENS FOR OPERATION OF ITS RETIREMENT COMMUNITY. 1 PART I, LINE 2: SANTAFE SENIOR LIVING, INC. AND BAYVIEW GARDENS SHARE COMMON MANAGEMENT. AS A RESULT, MANAGEMENT ENSURES THE USE OF GRANT FUNDS BY BAYVIEW GARDENS IS CONSISTENT WITH THEIR INTENDED PURPOSE. 1 1 0 0 0 0 0 0 0 MICHAEL P GALLAGHER 0 825126 0 795972 0 480451 0 229162 0 23723 0 2354434 0 0 TROY R HART 0 293836 0 64980 0 29887 0 61873 0 23514 0 474090 0 0 CATHERINE E AYERS 0 300387 0 182761 0 137592 0 104957 0 31710 0 757407 0 0 RANDALL L STUART 0 351966 0 203275 0 55632 0 133041 0 20931 0 764845 0 0 STEVEN M ZIEGLER 0 252730 0 0 0 8991 0 59043 0 17869 0 338633 0 0 STEHPHEN J DEMONTMOLLIN 0 25426 0 0 0 455042 0 23677 0 306 0 504451 0 0 PART I, LINE 3 PART I, LINE 3: MICHAEL P. GALLAGHER IS THE CHIEF EXECUTIVE OFFICER (CEO) OF SANTAFE SENIOR LIVING, INC. MR. GALLAGHER IS COMPENSATED BY SANTAFE HEALTHCARE, INC. (SANTAFE), A RELATED SUPPORTING ORGANIZATION. SANTAFE UTILIZES THE FOLLOWING PROCESS TO ESTABLISH THE CEO'S COMPENSATION AND BENEFITS: ANNUALLY, THE SANTAFE BOARD OF DIRECTORS RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS CONSULTING FIRM TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE CEO'S TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISON TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. THE INDEPENDENT CONSULTING FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS ESTABLISHES THE FINAL COMPENSATION AND BENEFIT PACKAGE FOR THE CEO TAKING INTO CONSIDERATION THE MARKET COMPETITIVENESS REVIEW AND FINAL RECOMMENDATION OF THE INDEPENDENT CONSULTING FIRM. THE INDEPENDENT CONSULTING FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE CEO'S FINAL COMPENSATION AND BENEFITS PACKAGE. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. PART I, LINES 4A-B (RELATES TO PART I, LINE 4A): LISTED PERSONS ARE EMPLOYEES OF RELATED ORGANIZATIONS AND ARE COVERED BY A SEVERANCE POLICY FOR THEIR RESPECTIVE ORGANIZATION. THE SEVERANCE POLICY INCLUDES MONTHLY PAYMENTS UP TO A MAXIMUM OF 12 MONTHS UNDER QUALIFYING CIRCUMSTANCES. LISTED PERSONS RECEIVING A SEVERANCE PAYMENT OR CHANGE OF CONTROL PAYMENT IN THE YEAR: STEPHEN DEMONTMOLLIN RECEIVED $370,540 IN COMPENSATION PAYMENTS DUE TO HIS RESIGNATION AND RETIREMENT FROM EMPLOYMENT IN ACCORDANCE WITH BOARD-APPROVED RESIGNATION AND RETIREMENT AGREEMENTS . PART I, LINE 4B: LISTED PERSONS PARTICIPATING IN A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN THE YEAR: MICHAEL P. GALLAGHER, TROY R. HART AND RANDALL L. STUART ARE EMPLOYEES OF SANTAFE HEALTHCARE, INC. (SANTAFE), A RELATED SUPPORTING ORGANIZATION. MR. GALLAGHER, MR. HART, AND MR. STUART PARTICIPATE IN TWO NONQUALIFIED DEFERRED COMPENSATION RETIREMENT PLANS SPONSORED BY SANTAFE FOR A CERTAIN GROUP OF EXECUTIVES. ONE PLAN RESTORES RETIREMENT BENEFITS EQUIVALENT TO QUALIFIED 401(K) BENEFITS ON INCOME EARNED IN EXCESS OF THE INTERNAL REVENUE SERVICE CODE SECTION 401(A)(17) RECOGNIZABLE PAY LIMITS (A DEFINED CONTRIBUTION RESTORATION PLAN)VESTING FOR THIS PLAN IS ACHIEVED AT AGE 55 AND 10 YEARS OF SERVICE OR AT AGE 65 AND 5 YEARS OF SERVICE. THE SECOND SUPPLEMENTAL DEFINED CONTRIBUTION PLAN PROVIDES ADDITIONAL RETIREMENT INCOME BASED ON A PERCENTAGE OF BASE SALARY AND VESTS AT THREE AND FIVE YEARS OF SERVICE. MR. GALLAGHER RECEIVED PAYMENTS FROM THE NONQUALIFIED DEFINED CONTRIBUTION RESTORATION AND THE SUPPLEMENTAL RETIREMENT PLANS IN 2011. THE TOTAL AMOUNT OF THESE PAYMENTS WAS $373,453. MR. HART VESTED AND RECEIVED $16,645 FROM THE SUPPLEMENTAL RETIREMENT PLAN IN 2011. MR. STUART VESTED AND RECEIVED $39,583 FROM THE SUPPLEMENTAL RETIREMENT PLAN IN 2011 . STEVEN M. ZIEGLER AND CATHERINE E. AYERS ARE EMPLOYEES OF AVMED, INC. (AVMED), A RELATED TAX-EXEMPT ORGANIZATION. THEY PARTICIPATE IN TWO NONQUALIFIED DEFERRED COMPENSATION RETIREMENT PLANS SPONSORED BY AVMED FOR A CERTAIN GROUP OF EXECUTIVES. ONE PLAN RESTORES RETIREMENT BENEFITS EQUIVALENT TO QUALIFIED 401(K) BENEFITS ON INCOME EARNED IN EXCESS OF THE INTERNAL REVENUE SERVICE CODE SECTION 401(A)(17) RECOGNIZABLE PAY LIMITS (DEFINED CONTRIBUTION RESTORATION PLAN). VESTING IS ACHIEVED AT AGE 55 AND 10 YEARS OF SERVICE OR AT AGE 65 AND 5 YEARS OF SERVICE. THE SECOND SUPPLEMENTAL DEFINED CONTRIBUTION PLAN PROVIDES ADDITIONAL RETIREMENT INCOME BASED ON A PERCENTAGE OF BASE SALARY AND VESTS AT THREE AND FIVE YEARS OF SERVICE. MS. AYERS RECEIVED $114,039 FROM THE DEFINED CONTRIBUTION RESTORATION AND SUPPLEMENTAL RETIREMENT INCOME PLANS IN 2011. MR. DEMONTMOLLIN RECEIVED $35,992 FROM THE DEFINED CONTRIBUTION RESTORATION AND SUPPLEMENTAL RETIREMENT INCOME PLANS IN 2011 . SUPPLEMENTAL INFORMATION PART III SCHEDULE J, PART II: CERTAIN SENIOR EXECUTIVES ARE ACCOUNTABLE FOR AND PERFORM SERVICES FOR SANTAFE HEALTHCARE, INC. AND EACH OF ITS AFFILIATES. SANTAFE HEALTHCARE AND AFFILIATES REPRESENT A DIVERSIFIED FAMILY OF NOT-FOR-PROFIT ORGANIZATIONS WITH $2 BILLION IN REVENUE AND APPROXIMATELY 2,000 EMPLOYEES. THESE SENIOR EXECUTIVES ARE PAID DIRECTLY BY EITHER SANTAFE HEALTHCARE, INC. OR AVMED, INC. AND THEIR COMPENSATION AND BENEFITS ARE APPORTIONED AND CHARGED TO THE RESPECTIVE AFFILIATE BASED ON THE ESTIMATED AMOUNT OF TIME SPENT ON EACH AFFILIATE'S ACTIVITIES. FOR 2011, THE FOLLOWING PERCENTAGES OF EACH EXECUTIVE'S COMPENSATION AND BENEFITS (FOR THOSE SENIOR EXECUTIVES PAID BY A RELATED ORGANIZATION) IS APPORTIONED AND CHARGED TO SENIOR LIVING, AS FOLLOWS: << 2% - MICHAEL P. GALLAGHER, CHIEF EXECUTIVE OFFICER << 10% - TROY R. HART, PRESIDENT << 2% - STEVEN M. ZIEGLER, DIRECTOR << 5% - CATHERINE E. AYERS, SECRETARY << 2% - RANDALL L. STUART, TREASURER COMPENSATION PAID BY RELATED ORGANIZATIONS: FORM 990, PART VII, SECTION A, LINE 1A: CERTAIN SENIOR EXECUTIVES ARE ACCOUNTABLE FOR AND PERFORM SERVICES FOR SANTAFE HEALTHCARE, INC. AND EACH OF ITS AFFILIATES. SANTAFE HEALTHCARE AND AFFILIATES REPRESENT A DIVERSIFIED FAMILY OF NOT-FOR-PROFIT ORGANIZATIONS WITH $2 BILLION IN REVENUE AND APPROXIMATELY 2,000 EMPLOYEES. THESE SENIOR EXECUTIVES ARE PAID DIRECTLY BY EITHER SANTAFE HEALTHCARE, INC. OR AVMED, INC. AND THEIR COMPENSATION AND BENEFITS ARE APPORTIONED AND CHARGED TO THE RESPECTIVE AFFILIATE BASED ON THE ESTIMATED AMOUNT OF TIME SPENT ON EACH AFFILIATE'S ACTIVITIES. FOR 2011, THE FOLLOWING PERCENTAGES OF EACH EXECUTIVE'S COMPENSATION AND BENEFITS (FOR THOSE SENIOR EXECUTIVES PAID BY A RELATED ORGANIZATION) IS APPORTIONED AND CHARGED TO SENIOR LIVING, AS FOLLOWS: << 2% - MICHAEL P. GALLAGHER, CHIEF EXECUTIVE OFFICER << 10% - TROY R. HART, PRESIDENT << 2% - STEVEN M. ZIEGLER, DIRECTOR << 5% - CATHERINE E. AYERS, SECRETARY << 2% - RANDALL L. STUART, TREASURER FORM 990, PART VI, SECTION A, LINE 7A SANTAFE HEALTHCARE, INC. HAS RESERVED POWERS AS DELINEATED IN THE ARTICLES OF INCORPORATION AND BYLAWS THAT PERMITS IT TO ELECT ONE OR MORE MEMBERS OF THE GOVERNING BODY OF SANTAFE SENIOR LIVING, INC. FORM 990, PART VI, SECTION A, LINE 7B THE RESERVED POWERS OF SANTAFE HEALTHCARE, INC., AS DELINEATED IN THE ARTICLES OF INCORPORATION AND BYLAWS, PERMIT IT TO APPROVE OR RATIFY THE GOVERNING BODY'S DECISIONS RELATED TO BOARD MEMBER ELECTIONS OR REMOVALS, THE DECISION TO DISSOLVE THE ORGANIZATION AND OTHER MATTERS THAT MAY COME BEFORE THE BOARD OF DIRECTORS. FORM 990, PART VI, SECTION B, LINE 11 THE ORGANIZATION'S PROCESS FOR ENSURING THE ACCURATE PREPARATION, REVIEW AND APPROVAL OF THE 2011 FORM 990 BEGAN WITH PROFESSIONAL DEVELOPMENT OF STAFF (SEVERAL OF WHICH ARE CPAS) WHICH WERE INVOLVED IN THE PREPARATION OF THE 2011 FORM 990. IN ADDITION TO STAFF DEVELOPMENT, WHICH INCLUDED ATTENDING TAX SEMINARS AND CLASSES, MANAGEMENT ALSO CONSULTED WITH INDEPENDENT ACCOUNTING FIRMS AND TAX LEGAL COUNSEL REGARDING THE IRS FORM 990 CODE AND FILING REQUIREMENTS. THE ORGANIZATION ALSO PREVIOUSLY EDUCATED ITS MANAGEMENT TEAM, OFFICERS AND DIRECTORS, WITH THE ASSISTANCE OF DELOITTE TAX LLP, REGARDING THE FORM 990 AND THEIR INVOLVEMENT IN REVIEWING THE RETURN. FOLLOWING MANAGEMENT'S PREPARATION OF THE 2011 FORM 990, DELOITTE TAX LLP REVIEWED THE 2011 FORM 990. A COPY OF THE 2011 FORM 990 AND ATTACHMENTS WERE PROVIDED TO THE ORGANIZATION'S CURRENT BOARD OF DIRECTORS FOR THEIR REVIEW AND COMMENT. EXECUTIVE MANAGEMENT ADDRESSED ANY QUESTIONS RAISED BY THE BOARD MEMBERS PRIOR TO FILING THE 2011 FORM 990 AND ATTACHMENTS WITH THE IRS. FORM 990, PART VI, SECTION B, LINE 12C SANTAFE SENIOR LIVING, INC. HAS A POLICY FOR MONITORING AND ENFORCING COMPLIANCE WITH ITS CONFLICT OF INTEREST POLICY. THE POLICY DETAILS THAT THE CORPORATE SECRETARY HAS RESPONSIBILITY FOR DELIVERY AND RECEIPT OF DIRECTOR AND OFFICER CONFLICT OF INTEREST STATEMENTS. ANNUAL CONFLICT OF INTEREST STATEMENTS ARE REVIEWED BY THE CORPORATE SECRETARY TO ENSURE RECORDS ARE COMPLETE. AS PART OF THE CORPORATE CONTRACT REVIEW PROCESS, CONSIDERATION IS GIVEN TO ANY POTENTIAL CONFLICTS OF INTEREST INVOLVING OPERATIONAL OR FINANCIAL TRANSACTIONS. ALL OFFICERS AND BOARD MEMBERS ARE EXPECTED TO NOTIFY THE CHAIRMAN OF THE BOARD IF A POTENTIAL CONFLICT EXISTS. IF A CASE IS DISCOVERED OR REPORTED, A REPORT TO CORPORATE COUNSEL AND/OR THE CHAIRMAN OF THE BOARD IS MADE AS TO THE FACTS AND CIRCUMSTANCES SURROUNDING THE INCIDENT. MEMORANDUMS (OR MINUTES) ARE MADE OF EVERY FINAL DECISION, INCLUDING THE REASONS THEREFORE AND THE ACTION TAKEN, WHETHER THE QUESTION IS DETERMINED TO BE SUBSTANTIAL OR NOT. A COPY OF SUCH MEMORANDUM (OR MINUTES) IS FILED WITH THE CORPORATE SECRETARY FOR EXAMINATION BY THE BOARD OF DIRECTORS. FORM 990, PART VI, SECTION B, LINE 15 LINE 15A: MICHAEL P. GALLAGHER IS THE CHIEF EXECUTIVE OFFICER (CEO) OF SANTAFE SENIOR LIVING, INC. MR. GALLAGHER IS COMPENSATED BY SANTAFE HEALTHCARE, INC. (SANTAFE), A RELATED SUPPORTING ORGANIZATION. SANTAFE UTILIZES THE FOLLOWING PROCESS TO ESTABLISH THE CEO'S COMPENSATION AND BENEFITS: THE SANTAFE BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS CONSULTING FIRM TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE CEO'S TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISON TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. THE INDEPENDENT CONSULTING FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS ESTABLISHES THE FINAL COMPENSATION AND BENEFIT PACKAGE FOR THE CEO TAKING INTO CONSIDERATION THE MARKET COMPETITIVENESS REVIEW AND FINAL RECOMMENDATION OF THE INDEPENDENT CONSULTING FIRM. THE INDEPENDENT CONSULTING FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE FINAL COMPENSATION AND BENEFITS PACKAGE. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. FORM 990, PART VI, SECTION B, LINE 15B: PROCESS FOR DETERMINING COMPENSATION FOR THE OFFICERS AND DIRECTORS OF SANTAFE SENIOR LIVING, INC. IS AS FOLLOWS: THE SANTAFE HEALTHCARE, INC. (SANTAFE) BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS FIRM (FIRM) TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF ALL OFFICERS AND DIRECTORS' TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG-TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISONS TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. AFTER COMPLETION OF ITS REVIEW, THE FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE SANTAFE BOARD OF DIRECTORS. THE FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF CASH COMPENSATION AND EXECUTIVE BENEFITS. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETINGS. FORM 990, PART VI, SECTION C, LINE 19 SANTAFE SENIOR LIVING'S PROCEDURE FOR MAKING VARIOUS DOCUMENTS AVAILABLE TO THE PUBLIC: SANTAFE SENIOR LIVING,INC. MAKES ITS GOVERNING DOCUMENTS AVAILABLE TO THE PUBLIC ON A CASE BY CASE BASIS IF REQUESTED DIRECTLY FROM THE ORGANIZATION. THE ARTICLES OF INCORPORATION CAN BE ACCESSED DIRECTLY THROUGH THE FLORIDA DEPARTMENT OF STATE, DIVISION OF CORPORATIONS WEBSITE AT WWW.SUNBIZ.ORG. THE CORPORATE CONFLICT OF INTEREST POLICY AND AUDITED COMBINED FINANCIAL STATEMENTS, WHICH INCLUDE SANTAFE SENIOR LIVING, CAN BE OBTAINED DIRECTLY FROM THE ORGANIZATION UPON WRITTEN REQUEST. AVERAGE HOURS PER WEEK DEVOTED TO RELATED ORGANIZATIONS: FORM 990, PART VII, SECTION A, COLUMN B: MICHAEL P GALLAGHER DEVOTED AN AVERAGE OF 59 HOURS PER WEEK TO RELATED ORGANIZATIONS. STEVEN M ZIEGLER DEVOTED AN AVERAGE OF 62 HOURS PER WEEK TO RELATED ORGANIZATIONS. TROY R HART DEVOTED AN AVERAGE OF 45 HOURS PER WEEK TO RELATED ORGANIZATIONS. CATHERINE E AYERS DEVOTED AN AVERAGE OF 57 HOURS PER WEEK TO RELATED ORGANIZATIONS. RANDALL L STUART DEVOTED AN AVERAGE OF 64 HOURS PER WEEK TO RELATED ORGANIZATIONS. BALANCE SHEET LINE ITEM RECLASS: FORM 990, PART X, LINE 27: SANTAFE SENIOR LIVING, INC. FOLLOWS SFAS 117 (ASC 958 - NOT-FOR-PROFIT ENTITIES) AND HAS CHECKED THE APPROPRIATE BOX FOR 2011. THUS, UNRESTRICTED NET ASSETS ARE REPORTED ON LINE 27. THE 2010 AMOUNT REPORTED ON LINE 32 OF THE PRIOR YEAR FORM 990 HAS BEEN RECLASSIFIED TO COLUMN A, LINE 27 ON THE 2011 FORM 990. AUDIT OVERSIGHT PROCESS: FORM 990, PART XII, LINE 2C: THE COMPANY'S AUDIT COMMITTEE HAS NOT CHANGED ITS PROCESS FOR SELECTION OF THE INDEPENDENT ACCOUNTANT OR ITS PROCESS FOR MANAGING THE AUDIT. SANTAFE HEALTHCARE INC PO BOX 749 GAINESVILLE FL 326270749 592317607 MANAGEMENT AND FINANCIAL SUPPORT FOR NOT-FOR-PROFIT AFFILIATES FL 501(C)(3) 11B TYPE II N/A 0 NORTH FLORIDA RETIREMENT VILLAGE INC PO BOX 749 GAINESVILLE FL 326270749 591912330 RETIREMENT COMMUNITY FL 501(C)(3) 9 N/A 0 NORTH CENTRAL FLORIDA HOSPICE INC PO BOX 749 GAINESVILLE FL 326270749 592490893 HOSPICE CARE FL 501(C)(3) 9 N/A 0 BVG ACQUISITION INC PO BOX 749 GAINESVILLE FL 326270749 203701186 RETIREMENT COMMUNITY FL 501(C)(3) 9 N/A 0 EAST RIDGE RETIREMENT VILLAGE INC PO BOX 749 GAINESVILLE FL 326270749 590903331 RETIREMENT COMMUNITY FL 501(C)(3) 9 N/A 0 AVMED INC PO BOX 749 GAINESVILLE FL 326270749 592742907 HEALTH CARE FL 501(C)(4) N/A N/A 0 BONITA SPRINGS RETIREMENT VILLAGE INC PO BOX 749 GAINESVILLE FL 326270749 262386152 RETIREMENT COMMUNITY FL 501(C)(3) 9 N/A 0 SANTAFE SENIOR LIVING FOUNDATION INC PO BOX 749 GAINESVILLE FL 326270749 264464727 CHARITABLE AND EDUCATIONAL PURPOSES FL 501(C)(3) 7 N/A 0 SF HOLDING CORPINC & SUBSIDIARY PO BOX 749 GAINESVILLE FL 326270749 592903901 HOLDING COMPANY FL N/A C 0 1 1 1 0 0 0 0 0 0 1 1 0 0 1 1 0 0