PARADISE SCHOOLS SUMMARY LETTER.PDF

A PROFESSIONAL CORPORATION
One North Central Avenue, Suite 1200
Phoenix, Arizona 85004-4417
P 602.440.4800 F 602.257.9582
Offices in Arizona & Colorado
www<.rcalave:corn
John J. Fries
Direct Line: 602-440-4819
Direct Fax: 602-257-6919
E-mail: jfries@rcalaw.com
August 5, 2019
To: Board of Supervisors Board of Directors
Maricopa County, Arizona The Industrial Development Authority
of the County of Maricopa
Re: Not to Exceed $15,500,000 — The Industrial Development Authority of the
County of Maricopa Education Revenue Bonds (Paradise Schools
Project), Series 2019
Ladies and Gentlemen:
At the Authority Board meeting on August 13, 2019, the Authority Board will be
asked to grant final approval to the financing for the Paradise Schools Project and to adopt a
resolution authorizing the issuance and sale of the bonds as described above (the "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, Paragon Management, Inc., dba Paradise Schools
("Paradise Schools"), 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. Paradise
Schools holds a charter issued by the Arizona State Board for Charter Schools, established under
Title 15, Chapter 1, Article 8, Arizona Revised Statutes, as amended and operates three Arizona
public charter schools located in Surprise, Arizona: (i) Paradise Honors Elementary School,
located at 15533 West Paradise Lane, Surprise, Arizona; (ii) Paradise Honors Middle School
located at 12805 North 175th Avenue, Surprise, Arizona; and (iii) Paradise Honors High School
located at 12775 North 175th Avenue, Surprise, Arizona.
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08/05/19

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
August 5,2019
Page 2
PRIOR FINANCING
In 2016, the Authority issued its Education Revenue Bonds (Paradise Schools
Projects), Series 2016 (the "Series 2016 Bonds -) in an aggregate amount of $45,530,000, and
loaned the proceeds of the Series 2016 Bonds to the Applicant (the "2016 Loan") pursuant to an
Indenture of Trust ("Original Indenture -), a Loan Agreement and other bond documents
(collectively, the "2016 Bond Documents"). The Applicant used the proceeds of the 2016 Loan,
in part, to: (i) refund bonds issued in 2003, 2006 and 2010; (ii) construct, improve and equip the
Middle School campus; (iii) make additions to the High School campus; (iv) fund capitalized
interest on a portion of the Series 2016 Bonds; (v) fund a debt service reserve fund; and (vi) pay
certain expenses related to the issuance of the Series 2016 Bonds.
THE PROJECT
The Applicant seeks to issue additional bonds as permitted under the Original
Indenture and the 2016 Bond Documents. The Applicant will use the proceeds of the Series
2019 Loan for the following (collectively, the "Project"):
a. to acquire, construct, improve and equip an approximately 9.5 acre parcel
of land adjacent to the Middle School (the "New Land") from A&B
Investments, Inc., an Arizona corporation and unrelated third party, for
approximately $1,100,000, with the closing scheduled for on or before
October 17, 2019;
b. to construct, improve and equip approximately 14,000 square-feet of new
buildings on the High School campus, including a performing arts
auditorium to be shared by the Middle School and the High School and 12
new classrooms for the High School, allowing the High School to accept
up to 200 new students;
c. fund capitalized interest on a portion of the Series 2019 Bonds;
d. fund a debt service reserve fund; and
e. pay certain expenses related to the issuance of the Series 2019 Bonds.
NOTIFICATION TO ARIZONA ATTORNEY GENERAL
As required by the provisions of Arizona Revised Statutes, Section 35-721.F. the
Authority has notified the Arizona Attorney General of the Authority's intention to issue the

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
August 5, 2019
Page 3
Bonds. By letter dated July 31, 2019, the Arizona Attorney General has confirmed that the
Project qualifies as a financeable "project" 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.
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: Paragon Management. Inc.
Bond Trustee: U. S. Bank, N.A.
Master Trustee: U. S. Bank, N.A.
Bond Underwriter: RBC Capital Markets, LLC
Bond Counsel: Engelman Berger, PC
Applicant/Borrower Counsel: Warren Charter Law, PLC
Bond Underwriter Counsel: Ballard Spahr, LLP
PRINCIPAL FINANCING DOCUMENTS
Document Parties
Series 2016 Supplemental Indenture of Trust (the Issuer and Trustee
2019 Indenture")
Series 2019 Loan Agreement (the "2019 Loan Issuer and Borrower
Agreement")

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
August 5, 2019
Page 4
Series 2019 Promissory Note (the -2019 Note") Issuer and Borrower
Deed of Trust, Security Agreement, Assignment of Borrower
Rents and Leases and Fixture Filing (the "2019 Deed of
Trust")
Preliminary and Final Limited Offering Memorandum Borrower and Bond Underwriter
Tax Certificate and Agreement Issuer and Borrower
Various assignment of contract instruments Borrower
Bond Purchase Agreement Borrower, Issuer and Bond
Underwriter
PLAN OF FINANCING
The Bonds will be issued in one or more tax exempt and taxable series in an
aggregate principal amount of not to exceed $15,500,000.
The Bonds will be issued under and pursuant to the 2019 Indenture as permitted
under the terms and provisions of the 2016 Bond Documents, which permits additional bonds to
be issued provided the Borrower meets certain debt coverage ratios, obtains a favorable opinion
of bond counsel that the bonds will be tax exempt, the rating agency confirms that the investment
rating for the bonds will be maintained and the Applicant satisfies other terms and certifications
as detailed in the 2016 Bond Documents. The proceeds from the sale of the Bonds will be
loaned by the Authority to the Borrower pursuant to the terms of the 2019 Loan Agreement and
evidenced by the 2019 Note. The Borrower will be obligated to make loan repayments in
amounts and at such times as required to pay principal and interest on the Bonds on their
respective due dates.
The obligations of the Borrower to make periodic loan repayments as well as to
perform the other obligations of the Borrower as set forth in the 2016 Bond Documents and the
2019 Bond Documents will be secured by the 2019 Deed of Trust that will encumber the
property being acquired and financed.
The Bonds will be underwritten by the Bond Underwriter and offered by it for
sale in a public offering. The Tax Certificate and Agreement will be executed by the Bond
Issuer and Borrower to evidence various agreements aimed at establishing and preserving the tax
exempt status of the Bonds.

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
August 5, 2019
Page 5
Applicant is seeking credit enhancement from the Arizona Public School Credit
Enhancement Fund (the "Enhancement Fund") to provide additional financial support to the
transaction, subject to a Reimbursement Agreement between the Borrower and the Enhancement
Fund.
FINAL APPROVAL
At the Authority Board meeting on August 13, 2019, the Authority Board will be
asked by the Applicant/Borrower to grant final approval to the application for financing and to
adopt a resolution authorizing the issuance and sale of the Bonds.
BOARD OF SUPERVISORS APPROVAL
If the Authority Board acts to grant final approval for the financing and to adopt a
resolution authorizing the issuance and sale of the Bonds, the Maricopa County Board of
Supervisors will be requested, at its meeting on August 21, 2019, to act as required by law to
adopt a resolution approving the proceedings of the Authority for the issuance of the Bonds.
Under the provisions of the Act, specifically 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.
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.
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 Bonds will be issued in
October 2019. At the time the Bonds are issued, it is anticipated the designated Bond Counsel
will deliver its written opinion to the effect the Bonds have been validly issued and that as to the
portion of the Bonds designated as being tax-exempt, the interest on the Bonds is exempt from
federal and Arizona income taxation and that as to the portion of the Bonds that are not
designated as tax-exempt, the interest on such Bonds will be exempt from Arizona income
taxation.

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
August 5, 2019
Page 6
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 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 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.