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I•I A PROFESSIONAL CORPORATION One North Central Avenue, Suite 1200 Phoenix, Arizona 85004-4417 P 602.440.4800 = 602.257.9582 Offices in Arizona & Colorado WNW rc.aalAf.com: William F. Wilder Direct Line: 602-440-4802 Direct Fax: 602-257-6902 E-mail: wwilder@rcalaw.com October 3, 2018 To: Board of Supervisors Board of Directors Maricopa County, Arizona The Industrial Development Authority of the County of Maricopa Re: Not to Exceed $80,000,000 — The Industrial Development Authority of the County of Maricopa Education Revenue Bonds (Benjamin Franklin Charter School Projects), Series 2018 A & B Ladies and Gentlemen: At the Authority Board meeting on October 9, 2018, the Authority Board will be asked to grant final approval to the financing for the Benjamin Franklin Charter School Projects and to adopt a resolution authorizing the issuance and sale of the bonds as described above (the "Bonds"). 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 to be a political subdivision of the State of Arizona. THE APPLICANT/BORROWER The Applicant/Borrower for financing is Benjamin Franklin Charter School — Queen Creek, an Arizona nonprofit corporation which has applied for a determination that it is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, and which was established under Title 15, Chapter 1, Article 8, Arizona Revised Statutes, as amended, and which holds a charter issued by the Arizona State Board for Charter Schools to operate four charter schools located in Gilbert and Queen Creek, Arizona, known as Crismon, Power, Gilbert and Benjamin Franklin High School. THE PROJECT The Applicant/Borrower will use the proceeds of the Bonds to finance a portion of the costs of (i) acquiring from Benjamin Franklin Charter School, Ltd. the land, facilities, 4457148.1 1 (1/02/18 Board of Supervisors Maricopa County, Arizona Board of Directors of The Industrial Development Authority of the County of Maricopa October 3,2018 Page 2 improvements, furniture, fixtures and equipment which comprise the school campuses generally known as the Crismon Campus, the Gilbert Campus, the Power Campus and the existing High School Campus (all located in either Gilbert or Queen Creek, Arizona); (ii) constructing, improving and equipping of a fine arts facility and additional classrooms at the existing High School Campus; (iii) funding any required reserve funds; (iv) paying capitalized interest, if any, on the Bonds; and (v) paying costs incurred in connection with the issuance of the 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 Bonds. PUBLIC HEARING A public hearing pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended, will be held on October 16, 2018, ahead of the Maricopa County Board of Supervisors meeting on October 24, 2018, and a Report of Public Hearing will be delivered to the Maricopa County Board of Supervisors. 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 which 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: Benjamin Franklin Charter School — Queen Creek Bond Trustee: Zions First National Bank Master Trustee: Zions First National Bank Board of Supervisors Maricopa County, Arizona Board of Directors of The Industrial Development Authority of the County of Maricopa October 3, 2018 Page 3 Bond Underwriter: Robert W. Baird & Co. Bond Counsel: Engelman Berger, PC Applicant/Borrower Counsel: Ballard Spahr LLP Bond Underwriter Counsel: Squire Patton Boggs (US) LLP PRINCIPAL FINANCING DOCUMENTS Document Parties Bond Indenture (the "Indenture") Issuer and Trustee Loan Agreement (the "Loan Agreement") Issuer and Borrower Deed of Trust, Security Agreement, Assignment of Borrower Rents and Leases and Fixture Filing (the "Deed of Trust") Supplemental Master Indenture for Obligation No. 1 Borrower and Master Trustee 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 $80,000,000. The Bonds will be issued under and pursuant to the terms and provisions of the Bond Indenture. The proceeds from the sale of the Bonds will be loaned by the Authority to the Borrower pursuant to the terms of the Loan Agreement. 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. Board of Supervisors Maricopa County, Arizona Board of Directors of The Industrial Development Authority of the County of Maricopa October 3, 2018 Page 4 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 Loan Agreement will be secured by the Deed of Trust which will encumber the property being acquired and financed. The Bonds will be underwritten by the Bond Underwriter and offered by it for sale solely to "Qualified Institutional Buyers" as defined in Rule 144A under the Securities Act of 1933 or to "Accredited Investors" as defined in Regulation D under the Securities Act of 1933. In connection with the issuance and sale of the Bonds the Preliminary and Final Offering Memorandums are being prepared and will be used. The Borrower has entered into a Master Indenture, as to which it is the sole obligated group member and in connection with the issuance of the Bonds, the Borrower and Master Trustee will enter into a Supplemental Master Indenture for Obligation No. 1 which, together with the Loan Agreement, will evidence the obligations of the Borrower to make loan repayments in amounts necessary to pay the principal and interest on the Bonds. Finally, 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. FINAL APPROVAL At the Authority Board meeting on October 9, 2018, 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 October 24. 2018, 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 Board of Supervisors Maricopa County, Arizona Board of Directors of The Industrial Development Authority of the County of Maricopa October 3, 2018 Page 5 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 November, 2018. 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 will be asked to adopt are in form and substance acceptable for the adoption.