Lifespace Communities Inc.

“Management performs a thorough review of the form 990. The audit committee of the board of directors reviews and approves the form 990 prior to filing. Any concerns or suggestions identified by the audit committee are reported to the full board of directors. A copy of the form 990 will be distributed to the entire board of directors prior to filing. Members of the board of directors direct any questions or concerns to the chief financial officer to be resolved prior to filing.”

“Officers and members of the board of directors of lifespace communities, inc. And all related organizations must conduct their personal affairs in such a manner as to avoid any possible conflicts of interest with duties and responsibilities as officers and members of the board of directors. All new board members and officers are required to complete a conflicts of interest statement. This is reviewed by the management development committee of the board of directors for approval. Officers and members of the board of directors annually are required to complete a conflicts of interest statement. These statements are reviewed by the management development committee to determine if any conflicts of interest exist prior to reappointment to the board and officer positions. Any director having a conflict of interest shall not vote or use his or her personal influence on the matter, and shall not be counted in determining the quorum for the meeting. The minutes of the meeting shall reflect that a disclosure was made, the abstention from voting, and the quorum situation.”

“Compensation for officers and directors is reviewed by the management development committee annually. An outside consultant is used every other year to determine the reasonableness of officer and director compensation. A report is provided to the board of directors by the consultant. In years when an outside consultant is not used, the management development committee reviews survey information to determine the reasonableness of officer and director compensation. The board of directors approves the annual compensation based on these reviews. Officers for which this process is used are the ceo, coo and cfo. The salaries and benefits listed contain the total salaries and benefits paid to each individual through lifespace communities, inc. And all related entities.”

“Requests from third parties for governing documents, conflict of interest policy and financial statements are referred to the chief financial officer. Annual returns and the application for exemption are made available for public inspection and are provided to individuals who request them. Copies are provided within 30 days of a written request or the same day if requested in person.”

“The process of overseeing the audit and selecting an independent accountant has not changed from the prior year.”

“In july 2012, the financial accounting standards board (fasb) issued accounting standards update (asu) 2012-01, health care entities: continuing care retirement communities - refundable advance fees. The amendments in this asu clarify that an entity should classify an advance fee as deferred revenue when a ccrc has a resident contract that provides for payment of the refundable advance fee upon re-occupancy by a subsequent resident, which is limited to the proceeds of re-occupancy by a subsequent resident. The amendments also clarify that refundable advance fees that are contingent upon re-occupancy by a subsequent resident but are not limited to the proceeds of re-occupancy should be accounted for and reported as a liability. The amendments in the asu are effective for fiscal periods beginning after december 15, 2012 for public entities, as defined, with early adoption permitted. Therefore the amendments were effective for our consolidated financial statements for the year ending december 31, 2013. Upon adoption the purchase price of oak trace was reallocated and is reflected as goodwill on the balance sheet. The total amount of the prior period adjustment was ($204,986,345) as is shown on form 990, part xi, line 8. The prior period adjustment is shown in order to conform to the form 990 instructions which state that the organization should generally use the same accounting method on the return to report revenue and expenses that it regularly uses to keep its books and records.”