HIGHLAND PREP 2021 REPORT SUMMARY LETTER.PDF

A P R O F E S S I O N A L C O R P O R A T I O N
3200 North Central Avenue, Suite 1600
Phoenix, Arizona 85012
P 602.440.4800 F 602.257.9582
www.rcalaw.com
John J. Fries
Direct Line: 602-440-4819
Direct Fax: 602-257-6919
E-mail: jfries@rcalaw.com
March 31, 2021
To: Board of Supervisors Board of Directors
Maricopa County, Arizona The Industrial Development Authority
of the County of Maricopa
Re: Not to Exceed $19,000,000 – The Industrial Development Authority of the
County of Maricopa Education Revenue Bonds (Highland Prep
Projects), Series 2021
Ladies and Gentlemen:
At the Authority Board meeting on April 13, 2021, the Authority Board will be
asked to grant final approval to the financing for the Highland Prep Projects and to adopt a
resolution authorizing the issuance and sale of the bonds as described above (the “2021 Bonds”).
This letter provides a summary of the proposed financing.
THE AUTHORITY
The Authority is an Arizona nonprofit corporation, formed with the permission of
Maricopa County and incorporated under and pursuant to the Arizona Industrial Development
Financing Act, Title 35, Chapter 5, Arizona Revised Statutes, as amended (the “Act”), and the
Authority is designated by law to be a political subdivision of the State of Arizona.
THE APPLICANT/BORROWER
The Applicant/Borrower, Highland Prep (“Highland Prep”), is an Arizona
nonprofit corporation and a tax-exempt organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended. In 2019, the Authority issued $10,290,000 in
bonds (the “2019 Bonds”) under a Master Indenture of Trust (“Master Indenture”) and loaned the
proceeds under a 2019 Loan Agreement to Highland Prep to acquire, furnish and operate a
charter high school at 15600 West Hearn Road, Surprise, Arizona (the “Surprise Campus”).
Highland Prep is current on all payments due under the 2019 Loan Agreement.
Highland Prep and Madison Highland Prep (“MHP”), an affiliate that operates a
charter school at 1431 East Campbell Avenue, Phoenix, Arizona, seek to open a new charter high
school in Avondale, Arizona, to be known as “Highland Prep West.” Highland Prep West will
acquire approximately 12 acres of land at the southeast corner of West Van Buren Street and
4808959.2
03/31/21

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
March 31, 2021
Page 2
North Fairway Drive in Avondale, Arizona (the “Avondale Campus”) from an unrelated third
party. Highland Prep West will be operated under a replication charter school contract through
MHP.
Highland Prep will use the proceeds of the 2021 Bonds to finance a portion of the
costs to (1) finance the costs of acquiring the real property and constructing, improving,
equipping and operating the Highland Prep West charter school facilities on the Avondale
Campus; (2) finance the costs of constructing, renovating, improving, equipping and operating
the Highland Prep charter school on the Surprise Campus; (3) reimburse Highland Prep and/or
MHP for capital expenditures for the Projects; (4) fund any required reserve funds; (5) pay
capitalized interest on all or a portion of the 2021 Bonds; and (6) pay the costs incurred in
connection with the authorization, issuance and sale of the 2021 Bonds (collectively, the
“Projects”).
PLAN OF FINANCING
The 2021 Bonds will be issued in one or more tax-exempt and taxable series in an
aggregate principal amount of not to exceed $19,000,000. The 2021 Bonds will be issued under
and pursuant to the terms and provisions of the Bond Indenture. The Authority will loan the
proceeds from the sale of the 2021 Bonds to Highland Prep pursuant to the terms of a 2021 Loan
Agreement. The obligations of Highland Prep under the 2021 Loan Agreement will be secured
by a Deed of Trust on the Avondale Campus.
Pursuant to a First Supplemental Indenture of Trust, MHP will be added as a
member of the Obligated Group under the Master Indenture, solely with respect to Highland
Prep West. In addition, Highland Prep will enter into First Amendment to the Deed of Trust on
the Surprise Campus to secure the obligations under the 2021 Loan Agreement. Highland Prep,
as Obligated Group representative under the Master Indenture, will enter into a Supplemental
Master Indenture for Obligation No. 2 which, together with the 2021 Loan Agreement, will
evidence the obligations of the Obligated Group to make loan repayments in amounts necessary
to pay the principal and interest on the 2021 Bonds.
The Bonds will be underwritten by the Bond Underwriter and offered by it for
sale in a public offering. Highland Prep hopes to obtain credit enhancement from the Arizona
Public School Enhancement Board.
Finally, the parties will enter into a Tax Certificate and Agreement to evidence
various agreements aimed at establishing and preserving the tax exempt status of the 2021
Bonds.

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
March 31, 2021
Page 3
FINANCING PARTICIPANTS
The major participants in the financing are as follows:
Issuer: The Industrial Development Authority of the County of
Maricopa
Issuer Counsel: Ryley Carlock & Applewhite, a professional corporation
Applicant/Borrower: Highland Prep
Bond Trustee: BOKF, N.A.
Master Trustee: BOKF, N.A.
Bond Underwriter: B.C. Ziegler and Company
Bond Counsel: Engelman Berger, PC
Applicant/Borrower Counsel: Warren Charter Law, PLC
Bond Underwriter Counsel: Nixon Peabody LLP
PRINCIPAL FINANCING DOCUMENTS
Documents Parties
Bond Indenture (the “Indenture”) Issuer and Trustee
Loan Agreement (the “2021 Loan Agreement”) Issuer and Highland Prep
Deed of Trust, Security Agreement, Assignment of MHP or Owner
Rents and Leases and Fixture Filing (Avondale
Campus)
First Amendment to Deed of Trust (Surprise Campus) Highland Prep
First Supplemental Master Indenture of Trust Highland Prep, MHP and Trustee
Supplemental Master Indenture for Obligation No. 2 Highland Prep and Trustee
Preliminary and Final Limited Offering Memorandum Highland Prep and Bond
Underwriter

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
March 31, 2021
Page 4
Tax Certificate and Agreement Issuer and Highland Prep
Various assignment of contract instruments Highland Prep
Bond Purchase Agreement Highland Prep, Issuer and Bond
Underwriter
FINAL APPROVAL
At the Authority Board meeting on April 13, 2021, the Authority Board will be
asked to grant final approval to the application for financing and to adopt a resolution
authorizing the issuance and sale of the 2021 Bonds.
BOARD OF SUPERVISORS APPROVAL
Under the provisions of A.R.S. § 35-721.B., the proceedings under which the
Bonds of the Authority are to be issued require the approval of the Maricopa County Board of
Supervisors for each issuance of bonds. If the Authority Board acts to grant final approval for
the financing and to adopt a resolution authorizing the issuance and sale of the 2021 Bonds, the
Maricopa County Board of Supervisors will be requested, at its meeting on April 21, 2021, to
adopt a resolution approving the proceedings of the Authority for the issuance of the 2021
Bonds.
NOTIFICATION TO ARIZONA ATTORNEY GENERAL
As required by the provisions of Arizona Revised Statutes, Section 35-721.F, the
Authority will notify the Arizona Attorney General of the Authority’s intention to issue the 2021
Bonds to confirm that the Project qualifies as a financeable “projects” under the Arizona statute.
ALLOCATION FOR TAX EXEMPT FINANCING
No allocation of the Arizona “volume cap” is required for the issuance of the
Bonds since the Bonds are being issued and treated as governmental bonds that are exempt from
the requirements of obtaining volume cap.
Under the provisions of the Act, specifically A.R.S. § 35-742, Maricopa
County is not in any event liable for the payment of principal or interest on bonds issued by
the Authority or for the performance by the Authority of any pledge, mortgage, obligation
or agreement of any kind undertaken by the Authority and bonds of the Authority or any
of its agreements or obligations shall not be construed to constitute an indebtedness of
Maricopa County within the meaning of any constitution or statutory provision.

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
March 31, 2021
Page 5
TRANSACTION CLOSING
If the required approvals of the Authority Board and the Maricopa County Board
of Supervisors are received, it is currently anticipated that the 2021 Bonds will be issued in June
of 2021. At the time the 2021 Bonds are issued, it is anticipated the designated Bond Counsel
will deliver its written opinion to the effect the 2021 Bonds have been validly issued and that as
to the portion of the 2021 Bonds designated as being tax-exempt, the interest on the 2021 Bonds
is exempt from federal and Arizona income taxation and that as to any portion of the 2021 Bonds
that are not designated as tax-exempt, the interest on such 2021 Bonds will be exempt from
Arizona income taxation.
LEGAL COUNSEL RECOMMENDATION
As counsel to the Authority, we have reviewed drafts of the principal financing
documents, we have been advised that these documents are now in substantially final form, and
based upon our review of such and our review of the proceedings to date relating to the proposed
issuance of the 2021 Bonds, we believe the financing documents and proceedings are in
substantial conformance with the policies and guidelines of the Authority and are in both form
and substance acceptable for the Authority Board and Maricopa County Board of Supervisors to
act upon, and that the Resolution presented to the Authority Board relating to authorizing the
issuance and sale of the 2021 Bonds, and related matters, and the Resolution of the Maricopa
County Board of Supervisors will be asked to adopt are in form and substance acceptable for the
adoption.