Level-6 ARF Capitalization & Funding Timeline
Projected lease start: Month 0 — July 2027.
This page models a Level-6 Adult Residential Facility from lease control in July 2027 through licensing, vendorization, and the early Regional Center payment delay. The lease is structured as a runway: $3,200 per month for the first 12 lease months, then $4,000 per month after Month 12. The large totals are intentionally shown later because they are cumulative projected capital calls over time, not a one-time capital injection.
```Security deposit, first month runway lease, and $65,000 CDSS proof-of-funds reserve.
Reduced rent for the first 12 lease months to support licensing, vendorization, and pre-revenue runway.
Rent steps up after the 12-month runway period, starting July 2028 under this projection.
The partnership does not need the full projected total upfront. Capital is injected phase by phase.
The starting point is manageable because the capital is phased.
The first capital call is the July 2027 launch capital. After that, the model becomes a month-by-month runway plan. The larger project totals include recurring lease, utilities, licensing labor, Level-6 admin support, vendorization carrying costs, and proof-of-funds reserves over time.
What the major expenses are for
These are the major expense categories in the capitalization model. Some costs are true expenses, some are temporary proof-of-funds reserves, and some are labor compensation paid to the people doing the work.
The landlord supports the licensing and vendorization runway with $3,200/month for the first 12 lease months, then $4,000/month after Month 12.
$65,000 is held for CDSS licensing. During vendorization, the reserve increases to $90,000 because the Level-6 model is payroll-heavy.
Furniture, bedding, office setup, licensing, insurance, and business setup needed to make the home inspection-ready.
Paid during licensing for light-to-moderate involvement, preparation, coordination, inspection readiness, and CDSS follow-through.
Budgeted during vendorization at $3,000 to $6,000/month, likely for a Level-6-specific administrator or consultant.
After vendorization, Regional Center payments may not arrive immediately, so the reserve may need to cover early payroll and operating costs.
The payroll burden is the reason the reserve must be strong.
The biggest operating pressure in a Level-6 ARF is not the lease. It is payroll. The minimum DSP staffing assumption alone can create approximately $24,000 of monthly payroll exposure before food, utilities, lease, insurance, supplies, payroll taxes, benefits, or administrative support.
Runway lease structure
The lease is structured to protect the facility during the pre-revenue phase. The reduced rent gives the business more runway while the ARF license and vendorization are being pursued.
This covers the first 12 lease months, including licensing and much of the vendorization runway.
Rent steps up to the standard lease amount after the initial 12-month runway period.
The reduced lease saves $800/month for 12 months compared with starting immediately at $4,000/month.
Month-by-month capital timeline
The table below shows the capital call by month, including Dean, Marky, and Kelvin’s share based on the ownership percentages selected above. Month 0 is July 2027. Month 12 is July 2028 and represents the earliest 9-month vendorization completion scenario. Month 15 is October 2028 and represents the more conservative 12-month vendorization scenario.
| Month | Milestone + Expense Detail | Total Capital Call | Dean Share | Marky Share | Kelvin Share | Notes |
|---|
The $90k reserve is not an automatic refund.
During licensing and vendorization, the reserve functions as proof of funds. After vendorization, that same reserve may need to function as working capital because Regional Center payments may not arrive until 30 to 90 days after the first client admission.
Only the remaining balance after the working-capital bridge and minimum operating buffer may be redistributed to the owners according to ownership percentage.
Post-vendorization reserve bridge
This section estimates how much of the $90,000 reserve could remain after the facility begins admissions but waits for Regional Center payment timing to stabilize.
| Payment Delay Scenario | Estimated Bridge Used | Remaining Reserve | Additional Shortfall | Dean Possible Return | Marky Possible Return | Kelvin Possible Return |
|---|
Total projected capital calls over time
These larger totals are shown here near the end because they are not one-time capital injections. They represent cumulative projected funding across the timeline, including monthly lease, utilities, licensing labor, Level-6 admin compensation, vendorization carrying costs, and proof-of-funds reserves.
This is the estimated Month 0 capital call for July 2027: security deposit, first month runway lease, and CDSS proof of funds.
This is the cumulative projected cost through licensing, including setup, lease carry, proof-of-funds bump, and Marky/Kelvin licensing labor.
This is the cumulative projected capital need if vendorization completes around Month 12 / July 2028.
This is the cumulative projected capital need if vendorization extends to Month 15 / October 2028.
Partner capital responsibility
These cards show each partner’s capital responsibility under both the 9-month and 12-month vendorization scenarios. These totals include temporary proof-of-funds reserves and operating carry costs before admissions.
Based on Dean’s ownership percentage.
Based on Marky’s ownership percentage.
Based on Kelvin’s ownership percentage.
Important planning disclosures
This page is a planning model, not a final budget, legal agreement, tax advice, securities offering, or guarantee of actual costs.
The timeline assumes a proposed lease start of July 2027. Licensing, fire clearance, vendorization, and admissions may occur earlier or later.
The runway lease structure is a planning assumption until confirmed in a signed lease agreement between landlord and tenant.
The $65,000 to $90,000 reserve may need to remain in the business or be used as working capital before any owner redistribution.
The DSP payroll estimate uses 312 weekly hours at $19/hour. Actual staffing costs may change based on final program design, wage rates, overtime, payroll taxes, benefits, and staffing requirements.
Any compensation to Marky, Kelvin, or outside Level-6 administrative support should be documented and approved according to the partnership agreement.
The 30 to 90 day payment bridge is an estimate. Actual payment timing depends on vendorization, client admission timing, authorization, invoicing, and payment processing.
The model assumes capital contributions follow ownership percentages. Any different arrangement should be documented in writing before funds are accepted.
This is the cleaner investor story.
The partnership does not simply raise startup money and immediately return the proof-of-funds reserve. It raises capital in a timeline: lease control in July 2027, licensing, setup, light-to-moderate Marky/Kelvin licensing labor, vendorization, Level-6 admin support, and finally a working-capital bridge while waiting for Regional Center payments. Any reserve return should happen only after the business is stable, payment timing is clear, and the operating buffer is protected.