2011-10-13T16:04:08-05:00 2010-12-31 DELOITTE TAX LLP 201 E KENNEDY BLVD SUITE 1200 TAMPA FL 33602 990 2010-01-01 203700526 SANTAFE SENIOR LIVING INC SANT 3523728400 SANTAFE HEALTHCAREINC PO BOX 749 GAINESVILLE FL 326270749 RANDALL L STUART 3523378730 2011-10-11 1 STEVEN E ROVNER 8132738300 2010 2016-03-07 17:11:31Z X MICHAEL P GALLAGHER SANTAFE HEALTHCAREINC PO BOX 749 GAINESVILLE FL 326270749 13372254 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 19675842 12574861 834385 797393 613 0 0 0 20510840 13372254 19675842 12574861 0 0 0 0 0 0 0 2080131 1822713 21755973 14397574 -1245133 -1025320 17205838 21114196 18450971 23384649 -1245133 -2270453 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 177389 150644 IN 2010, SANTAFE SENIOR LIVING, INC. DEVELOPED LONG RANGE PLANS FOR THE FUTURE CONSTRUCTION OF A CONTINUOUS CARE RETIREMENT COMMUNITY IN SOUTHWEST FLORIDA WHICH IS EXPECTED TO SERVE UP TO 300 SENIOR RESIDENTS UPON COMPLETION. 507484 480740 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 121 SENIOR CITIZEN RESIDENTS WITH ROUND THE CLOCK HOUSING, ASSISTED LIVING AND RELATED SERVICES DURING 2010. THE VILLAGE SERVED AN AVERAGE PER DAY OF 507 SENIOR CITIZEN RESIDENTS WITH ROUND THE CLOCK HOUSING, ASSISTED LIVING AND RELATED SERVICES DURING 2010. 444001 166009 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 303 SENIOR CITIZEN RESIDENTS WITH HOUSING, HEALTH CARE AND RELATED SERVICES DURING THE YEAR. 12604539 12574861 SANTAFE SENIOR LIVING, INC., THROUGH ITS SUPPORTING ORGANIZATION, SANTAFE HEALTHCARE, PROVIDED FINANCIAL ASSISTANCE TO BAYVIEW GARDENS FOR REDEVELOPMENT OF ITS RETIREMENT COMMUNITY. 12604539 12574861 13733413 1 1 0 1 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 14 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 2.00 X X 0 2382570 245651 STEPHEN J DEMONTMOLLIN 4.00 X X 0 574723 63105 TROY R HART 28.00 X X 0 361015 76044 CATHERINE E AYERS 3.00 X X 0 576433 131218 RANDALL L STUART 2.00 X 0 546816 127608 0 4441557 643626 0 0 1 0 0 12574861 12574861 MANAGEMENT FEES 561000 797393 797393 797393 13372254 797393 0 0 12574861 12574861 1378346 831469 546877 11094 4508 6586 3750 3750 146471 77081 69390 2248 2248 55859 28324 27535 2019 2019 4508 4508 CORPORATE DEVELOPMENT 217170 217170 DUES AND SUBSCRIPTIONS 748 748 COMMUNITY SUPPORT 500 500 14397574 13733413 664161 0 261978 238066 16943860 20876130 17205838 21114196 49140 19762 18401831 23364887 18450971 23384649 X 0 0 0 0 -1245133 -2270453 -1245133 -2270453 17205838 21114196 -1025320 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 12574861 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 12574861 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 IS UNDER THE COMMON CONTROL OF ITS SUPPORTED ORGANIZATIONS, WHICH IT IDENTIFIES 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 30544 30544 0 EXPLANATION OF OTHER LOBBYING ACTIVITIES: PART II-B, LINE 1I: 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 20876130 20876130 DUE TO AFFILIATES 23364887 23364887 13372254 14397574 -1025320 0 -1025320 797393 0 797393 12574861 12574861 13372254 1822713 0 1822713 12574861 12574861 14397574 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 2010, 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, 2010. SFHC AND AFFILIATES INCURRED NO INTEREST EXPENSE OR PENALTIES RELATED TO UNCERTAIN INCOME TAX PROVISIONS IN 2010 OR 2009. TAX YEARS 2007 THROUGH 2010 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 12,574,861. PART XIII, LINE 4B - OTHER ADJUSTMENTS: DISTRIBUTION TO BAYVIEW GARDENS 12,574,861. 1 BVG ACQUISITION INC DBA BAYVIEW GARDENS P O BOX 749 GAINESVILLE FL 326270749 203701186 501(C)3 12574861 SANTAFE SENIOR LIVING, INC., THROUGH ITS SUPPORTING ORGANIZATION, SANTAFE HEALTHCARE, INC, PROVIDED FINANCIAL ASSISTANCE IN THE AMOUNT OF $12,574,861 TO BAYVIEW GARDENS FOR REDEVELOPMENT OF ITS RETIREMENT COMMUNITY. 1 OTHER INFORMATION: PART IV: 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. 0 1 0 0 0 0 0 0 0 MICHAEL P GALLAGHER 0 801182 0 697001 0 884387 0 223059 0 22592 0 2628221 0 132300 STEPHEN J DEMONTMOLLIN 0 300994 0 159291 0 114438 0 47125 0 15980 0 637828 0 0 TROY R HART 0 262410 0 70974 0 27631 0 53885 0 22159 0 437059 0 11982 CATHERINE E AYERS 0 293770 0 163480 0 119183 0 103109 0 28109 0 707651 0 55810 RANDALL L STUART 0 341728 0 160964 0 44124 0 107796 0 19812 0 674424 0 19038 PART I, LINE 4B (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. 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 VESTED AND RECEIVED PAYMENTS FROM A FROZEN NONQUALIFIED DEFINED BENEFIT RESTORATION PLAN IN 2010. MR. GALLAGHER ALSO VESTED AND RECEIVED PAYMENTS FROM THE NONQUALIFIED DEFINED CONTRIBUTION RESTORATION AND THE SUPPLEMENTAL RETIREMENT PLANS IN 2010. THE TOTAL AMOUNT OF THESE PAYMENTS WAS $831,870. MR. HART VESTED AND RECEIVED $14,445 FROM THE SUPPLEMENTAL RETIREMENT PLAN IN 2010. MR. STUART VESTED AND RECEIVED $30,024 FROM THE SUPPLEMENTAL RETIREMENT PLAN IN 2010. STEPHEN J. DEMONTMOLLIN 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 $113,337 FROM THE DEFINED CONTRIBUTION RESTORATION AND SUPPLEMENTAL RETIREMENT INCOME PLANS IN 2010. MR. DEMONTMOLLIN RECEIVED $101,761 FROM THE DEFINED CONTRIBUTION RESTORATION AND SUPPLEMENTAL RETIREMENT INCOME PLANS IN 2010. SUPPLEMENTAL INFORMATION PART III SCHEDULE J, 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 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 CONSULTING FIRM. THE 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. COMPENSATION PAID BY RELATED ORGANIZATIONS: FORM 990, PART VII, SECTION A, LINE 1A: THE TOP MANAGEMENT OFFICIAL OF SANTAFE SENIOR LIVING, INC. (SENIOR LIVING), MICHAEL P. GALLAGHER, IS EMPLOYED BY SANTAFE HEALTHCARE, INC. (SANTAFE). SANTAFE IS THE PRINCIPAL SUPPORTING ORGANIZATION FOR SENIOR LIVING. MR. GALLAGHER'S COMPENSATION IS PAID DIRECTLY BY SANTAFE. SANTAFE CHARGES SENIOR LIVING A MANAGEMENT FEE WHICH IS INCLUSIVE OF AN ALLOCABLE PORTION OF MR. GALLAGHER'S SALARY. TWO OF SENIOR LIVING'S DIRECTORS, TROY R. HART AND RANDALL L. STUART, ARE EMPLOYED BY SANTAFE. SANTAFE IS THE PRINCIPAL SUPPORTING ORGANIZATION OF SENIOR LIVING. MR. HART AND MR. STUART'S COMPENSATION IS PAID DIRECTLY BY SANTAFE. SANTAFE CHARGES SENIOR LIVING A MANAGEMENT FEE WHICH IS INCLUSIVE OF AN ALLOCABLE PORTION OF THEIR SALARIES. TWO OF SENIOR LIVING'S OFFICERS, STEPHEN J. DEMONTMOLLIN AND CATHERINE E. AYERS, ARE EMPLOYED BY AVMED, INC. (AVMED), A RELATED TAX-EXEMPT ORGANIZATION. MR. DEMONTMOLLIN AND MS. AYERS' COMPENSATION IS PAID DIRECTLY BY AVMED. NONE OF THEIR COMPENSATION IS CHARGED TO SENIOR LIVING. 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 2010 FORM 990 BEGAN WITH PROFESSIONAL DEVELOPMENT OF STAFF (SEVERAL OF WHICH ARE CPAS) WHICH WERE INVOLVED IN THE PREPARATION OF THE 2010 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 2010 FORM 990, DELOITTE TAX LLP PERFORMED A DETAILED REVIEW OF THE 2010 FORM 990. A COPY OF THE 2010 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 2010 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 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 CONSULTING FIRM. THE 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 58 HOURS PER WEEK TO RELATED ORGANIZATIONS. STEPHEN J DEMONTMOLLIN DEVOTED AN AVERAGE OF 56 HOURS PER WEEK TO RELATED ORGANIZATIONS. TROY R HART DEVOTED AN AVERAGE OF 22 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 68 HOURS PER WEEK TO RELATED ORGANIZATIONS. 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