SUN VALLEY ACADEMY 2023 - BOS AND BD SUMMARY LETTER.PDF
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Squire Patton Boggs (US) LLP 2325 E. Camelback Road, Suite 700 Phoenix, Arizona 85016 O +1 602 528 4000 F +1 602 253 8129 squirepattonboggs.com 1097513635\1\ September 26, 2023 To: Board of Supervisors Board of Directors Maricopa County, Arizona The Industrial Development Authority of the County of Maricopa Re: Not to Exceed $62,000,000 – The Industrial Development Authority of the County of Maricopa Education Revenue Bonds (Sun Valley Academy Projects), Series 2023 Ladies and Gentlemen: At the Board of Directors’ meeting of The Industrial Development Authority of the County of Maricopa (the “Maricopa IDA”) on October 10, 2023, the Maricopa IDA Board will be asked to grant final approval and adopt a resolution authorizing the issuance and sale of the bonds described above (the “2023 Bonds”). This letter provides a summary of the proposed financing. AUTHORITY The Maricopa IDA 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”). THE APPLICANT/BORROWER The Applicant/Borrower, Morrison Education Group, Inc. (“Borrower”) 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 (the “Code”). Each of its affiliates, Sun Valley Academy – South Mountain, Inc., Sun Valley Academy – Avondale, Inc. and Sun Valley Academy – Glendale, Inc. (collectively with the Borrower, the “Obligated Group”), is an Arizona nonprofit corporation and operates or will operate a separate charter school established under Arizona Revised Statutes Title 15, Chapter 1, Article 8, as amended (the “Charter School Act”). PRIOR BOND FINANCING Maricopa IDA previously issued its Education Revenue Bonds (Sun Valley Academy Projects), Series 2019 in the amount of $27,390,000 (the “2019 Bonds”) and loaned the proceeds thereof to the Borrower to assist the Borrower in, among other things, financing and refinancing, as applicable, the Board of Supervisors Board of Directors September 26, 2023 Page 2 1097513635\1\ costs of acquiring, constructing, improving and equipping charter school facilities located at the South Mountain Campus and the Avondale Campus. THE PROJECT The Borrower will use the proceeds of the 2023 Bonds to finance or refinance the costs of acquiring, constructing, improving and equipping, as applicable, (i) the South Mountain Campus and the Avondale Campus, including refunding the 2019 Bonds, and (ii) the new Glendale Campus. Each campus is or will be owned by the Borrower and leased to the other Obligated Group members, as applicable, for use in connection with their respective charter school operations. All the campuses are in Supervisorial District No. 5. The South Mountain Campus is located at 2675 West Baseline Road in Phoenix. The Avondale Campus is located at 1515 North 117th Avenue in Avondale. The Glendale Campus is located at the southeast corner of North 83rd Avenue and West Bethany Home Road in Glendale. NOTIFICATION TO ARIZONA ATTORNEY GENERAL As required by the provisions of Arizona Revised Statutes, Section 35-721.F, Maricopa IDA will notify the Arizona Attorney General of its intention to issue the 2023 Bonds. TAX EXEMPT FINANCING Pursuant to Section 147(f) of the Code, the Maricopa County Board of Supervisors must approve the issuance of the 2023 Bonds after a public hearing following reasonable public notice. On or prior to closing, Maricopa IDA will receive an opinion from Squire Patton Boggs (US) LLP, as bond counsel, to the effect that interest on any tax-exempt series of the 2023 Bonds will be exempt from federal and State income taxes. FINANCING PARTICIPANTS The major participants in the financing are as follows: Issuer: The Industrial Development Authority of the County of Maricopa Issuer/Bond Counsel: Squire Patton Boggs (US) LLP Borrower: Morrison Education Group, Inc. Applicant/Borrower Counsel: Warren Charter Law, PLC Underwriter: RBC Capital Markets, LLC Underwriter’s Counsel: Ballard Spahr LLP Master/Bond Trustee: BOKF, NA Board of Supervisors Board of Directors September 26, 2023 Page 3 1097513635\1\ PRINCIPAL FINANCING DOCUMENTS Document Parties Bond Indenture Issuer and Bond Trustee Loan Agreement Issuer and Borrower Deed(s) of Trust, Security Agreement, Assignment of Rents and Leases and Fixture Filing Borrower Master Indenture of Trust Borrower/Obligated Group and Master Trustee Supplemental Master Indenture for Obligation No. 1 Borrower and Master Trustee Limited Offering Memorandum Borrower Continuing Disclosure Undertaking Borrower Tax Certificate and Agreement Issuer and Borrower Bond Purchase Agreement Issuer, Borrower and Underwriter PLAN OF FINANCING The Borrower will enter into a Master Indenture, under which the Borrower and the other Obligated Group members will be permitted to issue obligations from time to time (the “Obligations”) secured equally by the revenues and other collateral pledged by the Obligated Group to the Master Trustee for the benefit of the holders of the Obligations in order to provide for the financing or refinancing of the acquisition, construction, renovation, equipping or improvement of charter school facilities. In connection with the issuance of the 2023 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 2023 Bonds. The 2023 Bonds will be issued in one or more tax-exempt and taxable series in an aggregate principal amount of not to exceed $62,000,000. The 2023 Bonds will be issued under and pursuant to the terms and provisions of the Bond Indenture. The proceeds from the sale of the 2023 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 2023 Bonds on their respective due dates. The obligations of the Borrower will be secured by the Deed(s) of Trust that will encumber the charter school facilities being financed or refinanced. The Bonds will be offered by it for sale in a public offering. Board of Supervisors Board of Directors September 26, 2023 Page 4 1097513635\1\ Finally, the Tax Certificate and Agreement will be executed by the Issuer and Borrower to evidence various representations and agreements aimed at establishing and preserving the tax-exempt status of the 2023 Bonds. FINAL APPROVAL At the Maricopa IDA Board meeting on October 10, 2023, the Maricopa IDA Board will be asked to grant final approval and adopt a resolution authorizing the issuance and sale of the 2023 Bonds and related matters. BOARD OF SUPERVISORS APPROVAL Under the provisions of A.R.S. § 35-721.B., the proceedings under which the 2023 Bonds are to be issued by Maricopa IDA require the approval of the Maricopa County Board of Supervisors. The Maricopa County Board of Supervisors is being requested, at its meeting on October 18, 2023, to act as required by law to adopt a resolution approving the proceedings for the issuance of the 2023 Bonds under the Act and with respect to Section 147(f) of the Code. 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 any bonds issued by Maricopa IDA or for the performance of any pledge, mortgage, obligation or agreement of any kind undertaken by Maricopa IDA, and none of the bonds or any of its obligations shall be construed to constitute an indebtedness of Maricopa County within the meaning of any constitutional or statutory provision. LEGAL COUNSEL RECOMMENDATION As bond counsel and legal counsel to Maricopa IDA, we have reviewed drafts of the principal financing documents and based upon our review of such and our review of the proceedings to date relating to the proposed issuance of the 2023 Bonds, we believe the principal financing documents are now in substantially final form, adequately meet the requirements of the Act, and are in both form and substance acceptable for the Maricopa IDA Board and Maricopa County Board of Supervisors to act upon, and that the Resolution of the Maricopa IDA Board authorizing the issuance and sale of the 2023 Bonds and related matters and the Resolution of the Maricopa County Board of Supervisors approving the proceedings under which the 2023 Bonds are to be issued and related matters, are in form and substance acceptable for adoption.