No aged care provider reserves 100% of these funds. Blue Haven has used the Refundable Accommodation Deposits (RADs) and Independent Living Unit (ILU) entry payments in the same way other Aged Care Providers in our area use theirs. With any new aged care or independent living development of significant cost, the first use of RADs and ILU loans is to repay external financiers such as the bank or in our case, TCorp. Cash reserves in the first 10-15 years of that specific development are generally low or tight.
Under legislation, repayment of capital or using RADs for capital purposes is allowed. It is also perfectly legal to only reserve certain amounts of these deposits. The RADs are covered by Council’s Aged Care Prudential Standards Policy with the amount reserved as $4.4m.
There is no policy or legislative requirement for ILU reserves. The TCorp loan, borrowed for the construction of Blue Haven Bonaira, has a requirement for the restriction of all ILU entry payments at the Bonaira site to be used as payment on the loan.
As noted in the State of the Organisation report, auditing of Blue Haven’s Prudential requirements and its representation in Council’s financial statements have been insufficient or not complete.
This year’s auditing process, currently being undertaken, has recently highlighted that our Aged Care Prudential Standards Policy for Blue Haven (latest version 2018) states “Kiama Municipal Council holds all refundable deposits and accommodation bonds in Trust.” We understand this wording may imply the funds are held in a separate account (Trust) and not used. This is not true.
We apologise unreservedly for this. It was not our intention to mislead our clients or residents.
The Policy also lists as a requirement that Kiama Council: “Maintain at all times access to refundable deposits and bond monies required to be refunded. The minimum amount to be held at all times is $4,400,000.” This is correct and has been done.
Council will be updating our Aged Care Prudential Standards Policy for Blue Haven. In doing so, we will undertake consultation with our residents, clients and community, in the same way we do for all council policy updates. This process will ensure transparency and will outline clearly how the RADs and ILU entry payments are held and used.