STEPPING STONE SUMMARY LETTER.PDF

A PROFESSIONAL CORPORATION
RYLEYCARLOCK 70 One North Central Avenue, Suite 1200
&APPLEWHIT YEARS Phoenix, Arizona 85004-4417
P 602.440.4800 F 602.257.9582
Offices in Arizona & Colorado
www.rcalaw.com
William F. Wilder
Direct Line: 602-440-4802
Direct Fax: 602-257-6902
E-mail: wwilder@rcalaw.com
June 6,2019
To: Board of Supervisors Board of Directors of
Maricopa County, Arizona The Industrial Development Authority
of the County of Maricopa
Re: Not to Exceed $7,300,000 The Industrial Development Authority of the County of
Maricopa Multifamily Housing Revenue Bond (Stepping Stone Phase III Project),
Series 2019
Ladies and Gentlemen:
At the Authority Board meeting on June 11, 2019, the Authority Board will be
asked to grant final approval to the financing for the Stepping Stone Phase III Project and to
adopt a resolution authorizing the issuance and sale of the bond as described above (the "Bond").
The purpose of this letter is to provide a summary review 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 as a political subdivision of the State of Arizona.
THE APPLICANT/BORROWER
The Applicant for financing is Native American Connections, an Arizona
nonprofit corporation ("NAC"). NAC is the sole member of Stepping Stone Place, LLC, which
in turn is the sole member of Stepping Stone Phase III, LP, an Arizona limited partnership (the
"Borrower").
THE PROJECT
The "Project" consists of using bond proceeds, together with other funds available
to:
4599553.1

Board of Supervisors RYLEYCARLOCK 70
Maricopa County, Arizona &APPLEWHITE YEARS
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
June 6, 2019
Page 2
(a) finance or refinance, as applicable, the construction, improvement and
equipping of a 42-unit apartment complex to be located at 1325 North 14th Street, Phoenix,
Arizona 85006;
(b) fund any required reserve funds;
(c) pay capitalized interest on a portion of the Bond; and
(d) pay costs incurred in connection with the authorization, issuance and sale
of the Bond.
The Project will be managed and operated by the Borrower.
PRELIMINARY APPROVAL
At the Authority Board meeting on January 8, 2019, the Authority Board acted by
Resolution to grant preliminary approval for the Project and the issuance of the Bond.
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
Bond.
PUBLIC HEARING
A public hearing pursuant to Section 147(f) of the Internal Revenue Code of
1986, as amended, was held by a representative of the Authority on May 14, 2019, and a Report
of Public Hearing will be delivered to the Maricopa County Board of Supervisors.
ALLOCATION FOR TAX EXEMPT FINANCING
An allocation of the Arizona "volume cap" is required for the issuance of the
Bond and the Borrower will apply for and obtain the required allocation.
FINANCING PARTICIPANTS
The major participants in the financing are as follows:
Issuer: The Industrial Development Authority of the County of
Maricopa

Board of Supervisors RYLEYCARLOCK 70
Maricopa County, Arizona &APPLEWHITE YEARS
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
June 6,2019
Page 3
Issuer Counsel: Ryley Carlock & Applewhite, a professional corporation
Borrower: Stepping Stone Phase III, LP
Bond Purchaser: JPMorgan Chase Bank, N.A.
Bond Purchaser Counsel: Phillips Lytle LLP
Bond/Borrower Counsel: Lotzar Law Firm, P.C.
Bond Special Tax Counsel: Law Office of Perry Israel
PRINCIPAL FINANCING DOCUMENTS
Document Parties
Financing Agreement Issuer, Borrower and Bond
Purchaser
Bond Purchase Agreement Issuer, Borrower and Bond
Purchaser
Multifamily Deed of Trust, Fixture Filing, Assignment Borrower
of Rents and Security Agreement ("Security
Instrument")
Tax Certificate and Agreement Issuer and Borrower
Various assignment of contract instruments Borrower
Continuing Covenant Agreement Borrower and Bond Purchaser
Completion Guaranty Native American Connections,
Inc.
Regulatory Agreement and Declaration of Restrictive Issuer, Borrower and Bond
Covenants Purchaser
Environmental Guaranty Borrower

Board of Supervisors RYLEY CARLOCK 70
Maricopa County, Arizona &APPLEWHITE YEARS
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
June 6, 2019
Page 4
PLAN OF FINANCING
The Bond will be issued under and pursuant to the Financing Agreement and
Bond Purchase Agreement and will be purchased by JPMorgan Chase Bank, N.A., which will be
purchasing the Bond for its own account.
The proceeds of the Bond will be used to finance the construction, improvement
and equipping of the Project.
It is anticipated that the Bond will be issued as a single tax-exempt bond.
The obligation of Stepping Stone Phase III, LP, as the Borrower to make loan
payments in amounts sufficient to pay the Bond will be secured by the Security Instrument
described above.
JPMorgan Chase Bank, N.A. and Stepping Stone Phase III, LP will enter into the
Continuing Covenant Agreement.
Under the provisions of the Regulatory Agreement and Declaration of Restrictive
Covenants, the Borrower is obligated to maintain and manage the Project as affordable
multifamily housing.
The Issuer and Stepping Stone Phase III, LP will enter into a Tax Certificate and
Agreement in a form prescribed by the Bond Counsel and Bond Special Tax Counsel.
Upon the completion of the Project, the Bond will be paid off with permanent
financing from a consortium which will include LISC, ADOH Gap Funds, City of Phoenix
HOME Loan, Low Income Housing Tax Credits Equity, Mercy Care Loan Subordinated Seller
Carryback Note and Native American Connections Deferred Developer Fee and General Partners
Equity.
FINAL APPROVAL
At the Authority Board meeting on June 11, 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 RYLEYCARLOCK 70
Maricopa County, Arizona &APPLEWHITE EARS
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
June 6, 2019
Page 5
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 June 26, 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 late June
or July 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 which are not
designated as tax-exempt, the interest on such 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 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 RYLEYCARLOCK
Maricopa County, Arizona &APPLEWHITE
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
June 6,2019
Page 6
Board of Supervisors will be asked to adopt are in form and substance acceptable for the
adoption.