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
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William F. Wilder
Direct Line: 602-440-4802
Direct Fax: 602-257-6902
E-mail: wwilder(i4rcalaw.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 $12,000.000 — The Industrial Development Authority of the
County of Maricopa Multifamily Housing Revenue Note (Heritage at
Surprise Project), Series 2018
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 Heritage at Surprise Project, which will be
owned by Heritage at Surprise, LLC, and to adopt a resolution authorizing the issuance and sale
of the Note as described above (the "Note"). 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
Heritage at Surprise, LLC is a Wisconsin limited liability company, qualified to
do business in the State of Arizona. One of the members of Heritage at Surprise, LLC is the
Housing Authority of Maricopa County ("HAMC").
THE PROJECT
The Project will consist of a newly constructed approximately 100 unit affordable
multifamily residential rental project to be known as Heritage at Surprise Apartments (or a
similar name) and to be located on a parcel of land owned by the City of Surprise and leased by
it to the Housing Authority of Maricopa County ("HAMC") and subleased by it to the Borrower
4460374.2
10/03/18

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
October 3, 2018
Page 2
("Heritage at Surprise, LLC"). The Project will be located at 15832 North Hollyhock Street in
Surprise, currently Maricopa County Tax Parcel No. 501-70-039A.
PLAN OF FINANCING
Pursuant to a Funding Loan Agreement among JP Morgan Chase Bank, NA. (the
"Initial Funding Lender"), the Authority (the "Governmental Lender") and U.S. Bank National
Association (the "Fiscal Agent"), the Governmental Lender will issue its Note (the
"Governmental Note") and it will be acquired by the Initial Funding Lender for $12,000,000.
Then, pursuant to a Project Loan Agreement among the Governmental Lender
(the "Authority"), the Fiscal Agent (U.S. Bank National Association, N.A.) and Heritage at
Surprise, LLC, the $12,000,000 received by the Governmental (the "Authority") from the sale of
the Note to the Initial Funding Lender (JP Morgan Chase Bank, N.A.), will be loaned to Heritage
at Surprise, LLC (the "Borrower") and applied to finance the construction of the Project.
At the time the construction of the Project is complete, and upon satisfaction of
certain conditions, JP Morgan Chase, N.A., as the Initial Funding Lender, will transfer the Note
to the Federal National Mortgage Association ("Freddie Mac") and it be the sole owner and
holder of the Note, going forward.
Under the terms of the Project Loan Agreement, the $12,000,000 Note proceeds
will be held by the Fiscal Agent and disbursed in periodic installments on a draw down basis to
pay certain costs associated with the construction of the Project, and Heritage at Surprise, LLC
will be unconditionally obligated to make periodic payments to provide for the payment of
interest and principal on the Note.
The obligation of Heritage at Surprise, LLC will be secured by one or more deed
of trust instruments and/or security agreements.
From the time of closing of the transaction for the issuance of the Note, the
property upon which the Project is located and the Project will be encumbered by a Regulatory
Agreement and Declaration of Restrictive Covenants.
PRELIMINARY APPROVAL
On November 14, 2017, the Authority Board considered the Application for
Financing submitted by Heritage at Surprise, LLC and adopted a Resolution granting preliminary
approval for the issuance of not to exceed $12,000,000 of the Authority's Revenue Notes/Bonds
to finance the Heritage at Surprise Project.

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
October 3, 2018
Page 3
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
Note/Bond.
PUBLIC HEARING
A public hearing pursuant to Section 147(0 of the Internal Revenue Code of
1986, as amended, will be held on October 8, 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
The Applicant/Borrower will be requested to obtain an allocation of Arizona 2018
"volume Cap" for the issuance of the Note.
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: Heritage at Surprise, LLC
Note/Bond Counsel: Kutak Rock LLP
Fiscal Agent U.S. Bank National Association
Note Purchaser: JP Morgan Chase Bank, N.A.

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
October 3, 2018
Page 4
PRINCIPAL FINANCING DOCUMENTS
Document Parties
Funding Loan Agreement The Authority, JP Morgan Chase
Bank, N.A. and U.S. Bank
National Association
Project Loan Agreement The Authority, U.S. Bank
National Association and
Heritage at Surprise, LLC
Regulatory Agreement and Declaration of Restrictive The Authority, U.S. Bank
Covenants National Association and
Heritage at Surprise, LLC
One or more Deeds of Trust and Security Agreement Heritage at Surprise, LLC
instruments
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 Note.
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 Note, 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 Note.
Under the provisions of the Act, specifically A.R.S. § 35-721.B., the proceedings
under which the bonds, notes or other debt instruments of the Authority are to be issued require
the approval of the Maricopa County Board of Supervisors for each issuance.
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, notes or other debt

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
October 3, 2018
Page 5
instruments 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 Note will be issued in November,
2018. At the time the Note is issued, it is anticipated the designated Bond Counsel will deliver
its written opinion to the effect the Note has been validly issued and that as to the portion of the
Note designated as being tax-exempt, the interest on the Note is exempt from federal and
Arizona income taxation and that as to the portion of the Note which is not designated as
tax-exempt, the interest on such Note 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 Note, 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 Note, 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.