This Limited Offering Memorandum is dated June 22, BOOK-ENTRY-ONLY

Transcription

1 TM NEW ISSUE BOOK-ENTRY-ONLY NON RATED In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Series 2016 Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. Interest on the Series 2016 Bonds is included in all taxation in the State of Wisconsin. For a more complete description, see TAX MATTERS herein. $6,580,000 PUBLIC FINANCE AUTHORITY Charter School Revenue Bonds, Series 2016 (Global Village Academy Project) A Charter School Created By Joint School District No. 28J, in Adams and Arapahoe Counties, Colorado Dated: Date of Delivery Due: December 15, as shown below The Series 2016 Bonds will be issued by the Authority as fully registered bonds without coupons in Authorized Denominations. Principal and interest payments on the Series 2016 Bonds will be made by UMB Bank, National Association, as trustee, to the Registered Owners as of the Regular Record Date. The Series 2016 Bonds bear interest payable semiannually on June 15 and December 15 of each year, commencing December 15, 2016, until maturity or earlier redemption. DTC will act as securities depository for the Series 2016 Bonds, and the Series 2016 Bonds will be registered in the name of Cede & Co., as nominee of DTC. Capitalized terms used on this cover page are defined in the Introduction to this Limited Offering Memorandum. $1,375, % Series 2016 Term Bond maturing December 15, 2026 Price: % CUSIP: BS0 1 $2,260, % Series 2016 Term Bond maturing December 15, 2036 Price: % CUSIP: BT8 1 $2,945, % Series 2016 Term Bond maturing December 15, 2044 Price: % CUSIP: BU5 1 The proceeds derived from the sale of the Series 2016 Bonds will be loaned by the Authority to the Corporation pursuant to the Amended and Restated Loan and Security Agreement, dated as of June 1, 2016, by and between the Authority and the Corporation for the following purposes: (a) acquiring an educational facility located at 403 S Airport Blvd, Aurora, Colorado (the New Facility ), (b) constructing improvements to and/or equipping of the New Facility and the existing facility located at East Alameda Place, Aurora, Colorado, if any (the Existing Facility and together with the New Facility, the Facilities ) (c) funding capitalized interest on the Series 2016 Bonds, if any, (d) funding a bond reserve fund, if any, and (e) paying the costs of issuance of the Series 2016 Bonds. The Authority, the Charter School, the Corporation and the Trustee intend to utilize the Colorado State Treasurer Charter School Intercept Program. The Series 2016 Bonds are subject to optional, extraordinary and mandatory sinking fund redemption prior to maturity as set forth herein. The Series 2016 Bonds are being issued on a parity with the $8,175,000 aggregate principal amount of the Authority s Charter School Revenue Bonds (Global Village Academy Project), Series 2011A and the $6,840,000 aggregate principal amount of the Authority s Charter School Revenue Bonds (Global Village Academy Project), Series 2014A. The Series 2016 Bonds constitute special, limited obligations of the Authority and except to the extent payable from the Series 2016 Bond proceeds and investment income, are payable solely from certain payments, revenues and other amounts derived by the Authority pursuant to the Agreement. The Series 2016 Bonds are secured by (a) a pledge of certain rights of the Authority under and pursuant to the Agreement, (b) a pledge of the Funds and Revenues (other than the Rebate Fund) and all trust accounts created under the Indenture by and between the Authority and the Trustee and (c) an assignment of the Authority s rights and interests under the Deed of Trust encumbering the Facilities and a security interest in certain Gross Revenue of the Corporation to the extent permitted by law. Payments to be received from the Charter School by the Corporation under the Lease will be the Corporation s sole expected source of Gross Revenue, and the Lease is subject to annual appropriation by the Charter School. THE SERIES 2016 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY AND ARE NOT A DEBT OR LIABILITY OF ANY MEMBER OF THE AUTHORITY, THE STATE OF WISCONSIN, OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OTHER THAN THE AUTHORITY TO THE LIMITED EXTENT SET FORTH HEREIN. THE SOURCE OF PAYMENT AND SECURITY FOR THE SERIES 2016 BONDS IS MORE FULLY DESCRIBED HEREIN. THE AUTHORITY HAS NO TAXING POWER. This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read this entire Limited Offering Memorandum to obtain information essential to the making of an informed investment decision, and should give particular attention to the material under the caption RISK FACTORS. THE SERIES 2016 BONDS ARE BEING ISSUED IN $5,000 DENOMINATIONS AND ANY INTEGRAL MULTIPLE OF $5,000 IN EXCESS THEREOF; PROVIDED, HOWEVER, THAT IF HAMLIN CAPITAL MANAGEMENT, LLC CEASES TO BE THE BONDHOLDER REPRESENTATIVE FOR A BENEFICIAL OWNER OF A SERIES 2016 BOND AND THE TRUSTEE HAS NOT THERETOFORE RECEIVED AN INVESTMENT GRADE NOTICE, SUCH DENOMINATIONS FOR THE SERIES 2016 BONDS FOR WHICH HAMLIN CAPITAL MANAGEMENT, LLC IS NOT THE BONDHOLDER REPRESENTATIVE SHALL BE $500,000 AND ANY INTEGRAL MULTIPLE OF $1,000 IN EXCESS THEREOF. THE BONDHOLDER REPRESENTATIVE FOR THE INITIAL PURCHASERS OF THE SERIES 2016 BONDS WILL BE REQUIRED TO EXECUTE A LETTER OF BONDHOLDER REPRESENTATIVE SUBSTANTIALLY IN THE FORM ATTACHED HERETO AS APPENDIX G LETTER OF BONDHOLDER REPRESENTATIVE. See RISK FACTORS Bondholder Representative. At the time of delivery of the Series 2016 Bonds, Hamlin Capital Management, LLC will represent 100% of the Beneficial Owners of the Series 2016 Bonds and be designated the Bondholder Representative. So long as the Bondholder Representative represents Beneficial Owners holding at least a majority of the aggregate principal amount of the Outstanding Series 2016 Bonds, such entity has substantial power, including the ability to modify the Indenture, the Agreement and the Lease and direct remedies following the occurrence of an Event of Default thereunder. Specifically, among other powers, the Bondholder Representative, representing only 66-2/3% of the Beneficial Owners of the Series 2016 Bonds, has the right to approve certain modifications involving an extension of the maturity of, or a reduction of the principal amount of, or a reduction of the rate of, or extension of the time of payment of interest on, or a reduction of a premium payable upon any redemption of, any Series 2016 Bond. For the avoidance of doubt, all such modifications approved by the Bondholder Representative shall apply equally and ratably to all Series 2016 Bonds of the same series and maturity then Outstanding regardless of the Beneficial Owner. Further, purchasers of the Series 2016 Bonds will be entitled to receive notices of default only upon the prior written direction of the Bondholder Representative. See RISK FACTORS Bondholder Representative, THE SERIES 2016 BONDS Security for the Series 2016 Bonds Bondholder Representative and APPENDIX B FORMS OF THE AGREEMENT, THE DEED OF TRUST, THE INDENTURE AND THE LEASE attached hereto. The Series 2016 Bonds are offered when, as, and if issued by the Authority subject to the approval of legality and certain other matters by Kutak Rock LLP, as Bond Counsel. Certain legal matters will be passed upon for the Corporation and the Charter School by their counsel, Kutz & Bethke LLC, and for the Authority by its counsel, von Briesen & Roper, s.c., Milwaukee, Wisconsin. Kutak Rock LLP has also acted as special counsel to the Authority, and in such capacity has assisted in the preparation of this Limited Offering Memorandum. It is expected that the Series 2016 Bonds will be available for delivery through the facilities of DTC on or about June 24, This Limited Offering Memorandum is dated June 22, The Authority, Charter School and Corporation take no responsibility for the accuracy of the CUSIP numbers, which are included solely for the convenience of Registered Owners and Beneficial Owners of the Series 2016 Bonds. Copyright 2016 CUSIP Global Services. CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services is managed on behalf of the American Bankers Association by S&P Capital IQ.

2 PUBLIC FINANCE AUTHORITY (Global Village Academy Project) Global Village Academy-Aurora Board of Directors Ken Ramos, President Kyria Brown, Vice President Jodi Duke, Secretary Cindy Nesseth, Treasurer Charlie Cummings, Member Global Village Academy Building Corporation Board of Directors Kirk D. Loadman-Copeland, President Terry Gogerty, Secretary/Treasurer Mary Vedra, Member Global Village Academy-Aurora Administration Lori Deacon, Chief Financial Officer Courtney Black, Principal Barbara Ridenour, Academic Coordinator Corporation and Charter School Counsel Kutz & Bethke LLC Denver, Colorado Underwriter D.A. Davidson & Co. Denver, Colorado Trustee and Paying Agent UMB Bank, National Association Denver, Colorado Bond Counsel Kutak Rock LLP Denver, Colorado Authority Counsel von Briesen & Roper, s.c., Milwaukee, Wisconsin i

3 No dealer, salesman, or other person has been authorized to give any information or to make any representation, other than the information contained in this Limited Offering Memorandum, in connection with the offering of the Series 2016 Bonds, and, if given or made, such information or representation must not be relied upon as having been authorized by the Authority, the Charter School, the Corporation or the Underwriter. The information in this Limited Offering Memorandum is subject to change without notice, and neither the delivery of this Limited Offering Memorandum nor any sale hereunder will, under any circumstances, create any implication that there has been no change in the affairs of the Authority, the Charter School, the Corporation or the Underwriter since the date hereof. This Limited Offering Memorandum does not constitute an offer or solicitation in any jurisdiction in which such offer or solicitation is not authorized, or in which any person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation. The Underwriter has reviewed the information in this Limited Offering Memorandum in accordance with, and as part of, their responsibility to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. EXCEPT FOR THE INFORMATION CONTAINED UNDER THE CAPTIONS THE AUTHORITY AND LEGAL MATTERS NO PROCEEDINGS AGAINST THE AUTHORITY, THE AUTHORITY NEITHER HAS NOR WILL ASSUME ANY RESPONSIBILITY AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION IN THIS LIMITED OFFERING MEMORANDUM. INTRODUCTION... 1 RISK FACTORS... 7 General... 7 Nonrenewal of the Lease... 8 Revocation or Nonrenewal of Charter... 8 Bondholder Representative... 8 Damage or Destruction of the Facilities... 9 Completion of the Construction of the 2016 Improvements... 9 The Appraisal... 9 Foreclosure Delays and Deficiency... 9 Environmental Regulation Nonrecourse Obligation Key Personnel Competition for Students Constitutional Provisions Affecting Revenues and Spending Changes to Charter Schools Act Factors Associated with Education Potential Effects of Bankruptcy Covenant To Maintain Tax-Exempt Status of the Series 2016 Bonds Additional Bonds Enforcement of Remedies Secondary Market Failure To Provide Ongoing Disclosure Risk of Loss from Nonpresentment Upon Redemption THE SERIES 2016 BONDS Description of the Series 2016 Bonds Investor Letter Requirement Direct Payment of Lease Amounts Prior Redemption Use of Series 2016 Bond Proceeds Security for the Series 2016 Bonds Debt Service Requirements THE AUTHORITY TABLE OF CONTENTS Formation and Governance of the Authority...24 Powers...24 Local and TEFRA Approvals...24 Board of Directors of the Authority...25 The Series 2016 Bonds are Limited Obligations of the Authority...25 Other Obligations...26 Limited Involvement of the Authority...26 THE CORPORATION...26 THE CHARTER SCHOOL...27 LEGAL MATTERS...27 Sovereign Immunity...27 Pending and Threatened Litigation...28 TAX MATTERS...29 State Tax Matters...29 Changes in Federal and State Tax Law...30 MISCELLANEOUS...30 Underwriting...30 Registration of Series 2016 Bonds...30 Continuing Disclosure Agreements...30 Interest of Certain Persons Named in This Limited Offering Memorandum...31 Independent Auditors...31 Additional Information...31 Limited Offering Memorandum Certification...32 APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E APPENDIX F APPENDIX G APPENDIX H APPENDIX I THE CHARTER SCHOOL CHARTER SCHOOL FINANCIAL INFORMATION CHARTER SCHOOL AUDITED FINANCIAL STATEMENT FOR THE FISCAL YEAR ENDED JUNE 30, 2015 THE INDENTURE, THE LOAN AGREEMENT, THE DEED OF TRUST, AND THE LEASE FORM OF BOND COUNSEL OPINION FORMS OF CONTINUING DISCLOSURE AGREEMENTS LETTER OF BONDHOLDER REPRESENTATIVE ECONOMIC AND DEMOGRAPHIC INFORMATION BOOK-ENTRY-ONLY SYSTEM NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE HAS APPROVED OR DISAPPROVED THE SERIES 2016 BONDS OR THIS LIMITED OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL ii

4 INTRODUCTION The purpose of this Limited Offering Memorandum is to provide certain information concerning the issuance and sale by the Public Finance Authority (the Authority ) of its $6,580,000 aggregate principal amount of Charter School Revenue Bonds (Global Village Academy Project) Series 2016 (the Series 2016 Bonds ). The Series 2016 Bonds are being issued on a parity with the Authority s Charter School Revenue Bonds (Global Village Academy Project), Series 2011A (the Series 2011A Bonds ) and the Authority s Charter School Revenue Bonds (Global Village Academy Project), Series 2014A (the Series 2014A Bonds ). The Series 2016 Bonds, the Series 2014A Bonds and the Series 2011A Bonds are collectively referred to herein as the Bonds. The Series 2016 Bonds are being issued pursuant to an Amended and Restated Indenture of Trust, dated as of June 1, 2016 (the Indenture ), by and between the Authority and UMB Bank, National Association, as trustee thereunder (the Trustee ). Capitalized terms used but not defined in this Limited Offering Memorandum have the meanings assigned to them in APPENDIX D hereto. The offering of the Series 2016 Bonds is made only by way of this Limited Offering Memorandum, which supersedes any other information or materials used in connection with the offer or sale of the Series 2016 Bonds. This Limited Offering Memorandum speaks only as of its date, and the information contained herein is subject to change. This Limited Offering Memorandum contains statements relating to future results that are forward looking statements as defined in the Private Litigation Reform Act of When used in this Limited Offering Memorandum and the appendices hereto, the words estimate, intend, expect and similar expressions identify forward looking statements. Any forward looking statement is subject to uncertainty and risks that could cause actual results to differ, possibly materially, from those contemplated in such forward looking statements. Inevitably, some assumptions used to develop forward looking statements will not be realized or unanticipated events and circumstances may occur. Therefore, investors should be aware that there are likely to be differences between forward looking statements and actual results; those differences could be material. The following introductory material is only a brief description of, and is qualified by, the more complete information contained throughout this Limited Offering Memorandum. A full review should be made of the entire Limited Offering Memorandum and the documents summarized or described herein. Purpose of the Issue... The proceeds from the sale of the Series 2016 Bonds will be loaned to Global Village Academy Building Corporation, a Colorado nonprofit corporation (the Corporation ) pursuant to the terms of the Amended and Restated Loan and Security Agreement, dated as of June 1, 2016 (the Agreement ), by and between the Authority and the Corporation, for the purpose of: (a) acquiring an educational facility located at 403 South Airport Blvd., Aurora, Colorado (the New Facility ), (b) constructing improvements to and/or equipping of the New Facility and the existing facility located at East Alameda Place, Aurora, Colorado (the Existing Facility ), (c) funding capitalized interest on the Series 2016 Bonds, if any, (d) funding a bond reserve fund, if any, and (e) paying the costs of issuance of the Series 2016 Bonds (collectively, the Project ). The Charter School currently leases the New Facility from East Tech Center, LLC, a State of Colorado limited liability company ( East Tech ), pursuant to a Lease Agreement dated as of May 18, 2007 (as subsequently amended, the Existing Lease ). Pursuant to the Existing Lease, the Charter School pays monthly lease payments ranging from $35,212 to $50,453 through July 31, 2017.

5 The Corporation utilized proceeds from the Series 2011A Bonds to purchase and to construct and equip the Existing Facility located adjacent to the New Facility. The Existing Facility includes approximately 31,131 total square feet of space with 19 classrooms, a curriculum resource room, an English Language Learner resource room, an art room, teacher s lounge, computer room, conference room, reception area, special education room, three administrative offices, a cafeteria/common area, music room, restrooms, storage space, an outside playground area and approximately 38 parking spaces located on an 11.0 acre site. The Corporation utilized proceeds from the Series 2014A Bond proceeds to finance an expansion to the Existing Facility encompassing approximately 21,500 square feet, adding a gym, 12 classrooms (six of which have movable walls that allow classrooms to become larger or smaller), two sets of student restrooms and two adult restrooms (the 2014 Expansion ). The 2014 Expansion accommodated approximately additional students with 150 of these students moving from the New Facility to relieve overcrowding. The 2014 Expansion also provided for an expansion of the middle school program and allowing additional languages to incoming middle school students. The proceeds of the Series 2016 Bonds are expected to be used to finance the acquisition of the New Facility and reconfigure the front entryway, increase security, add natural lighting, and refresh finishes throughout the New Facility including flooring and paint (the 2016 Improvements, together with the New Facility and the Existing Facility are referred to herein as the Facilities. ) The Corporation leases the Facilities to Global Village Academy-Aurora (the Charter School ) pursuant to a Lease Agreement, dated as of January 15, 2011, as amended and restated by, among other things, the Amended and Restated Lease Agreement, dated as of June 1, 2016 (the Lease ), each by and between the Corporation and the Charter School. See THE SERIES 2016 BONDS Use of Series 2016 Bond Proceeds. The Authority... The Authority is a unit of government and a body corporate and politic separate and distinct from, and independent of, the State of Wisconsin and Adams County, Wisconsin, Bayfield County, Wisconsin, Marathon County, Wisconsin, Waupaca County, Wisconsin, and the City of Lancaster, Wisconsin (each a Member and, collectively, the Members ). The Authority was created in 2010 pursuant to Section of the State of Wisconsin State Statutes and is authorized to issue tax-exempt, taxable, and tax credit conduit bonds for public and private entities in all 50 states. See THE AUTHORITY. The Series 2016 Bonds are special limited obligations of the Authority payable solely from the Trust Estate (as defined in the Indenture) and, except from such source, none of the Authority, any Sponsor, any Member, any Authority Indemnified Person, the State of Wisconsin or any political subdivision or agency thereof or any political subdivision approving the issuance of the Series 2016 Bonds shall be obligated to pay the principal of, premium, if any, or interest thereon or any costs incidental thereto. The Series 2016 Bonds do not, directly, indirectly or contingently, obligate, in any manner, any Member, the State of Wisconsin or any 2

6 political subdivision or agency thereof or any political subdivision approving the issuance of the Series 2016 Bonds to levy any tax or to make any appropriation for payment of the principal of, premium, if any, or interest on, the Series 2016 Bonds or any costs incidental thereto. Neither the faith and credit nor the taxing power of any Member, the State of Wisconsin or any political subdivision or agency thereof or any political subdivision approving the issuance of the Series 2016 Bonds, nor the faith and credit of the Authority or of any Sponsor or Authority Indemnified Person, shall be pledged to the payment of the principal of, premium, if any, or interest on, the Series 2016 Bonds or any costs incidental thereto. The Authority has no taxing power. The Corporation... The Charter School... The Corporation is a State of Colorado nonprofit corporation organized for the purposes of serving as borrower under the Agreement, owner of the Facilities and lessor under the Lease, in connection with the Series 2016 Bonds. See THE CORPORATION. The Charter School is a State of Colorado Charter School established pursuant to the State of Colorado Charter Schools Act, Title 22, Article 30.5, CRS, as amended from time to time (the Charter Schools Act ), under a charter previously granted by Joint School District No. 28J, in Adams and Arapahoe Counties, Colorado (the District ). The Charter School was incorporated in 2005 as Alliance for Universal Education, Inc. d/b/a Global Village Academy, changing its name to Global Village Academy on July 12, 2010 and to Global Village Academy-Aurora on March 23, The Charter School opened for the school year pursuant to the Charter School s original charter contract, by and between the District and the Charter School, dated as of November 21, 2006 and terminating on June 30, A Renewal Contract was entered into between the District and the Charter School in 2010 for a period of five years expiring on June 30, 2015 (collectively, the Charter ). On December 16, 2014, the District s Board of Education voted to renew the Charter School s charter for a term of five years commencing in the fall of See THE CHARTER SCHOOL and RISK FACTORS Revocation or Nonrenewal of Charter. For the school year, the Charter School has an enrollment of 1,178 students in kindergarten through the eighth grade. The Charter School currently has a wait list of 792 students. A portion of the proceeds of the Series 2016 Bonds are expected to be used to construct the 2016 Improvements which would then be leased by the Corporation to the Charter School for use by the Charter School pursuant to the terms of the Lease. The Charter School may terminate its obligations under the Lease on an annual basis. The Lease is triple net and requires the Charter School to pay all expenses, taxes, fees and operational costs associated with the Facilities. See APPENDIX A THE CHARTER SCHOOL Facilities and Capital Improvement Plan and THE SERIES 2016 BONDS Use of Series 2016 Bond Proceeds. Security... The Series 2016 Bonds are special, limited obligations of the Authority as described under Limited Obligations herein. Under the Agreement, 3

7 the Corporation is obligated unconditionally to pay amounts sufficient to provide for the payment of the principal of, premium, if any, and interest on the Series 2016 Bonds. The Series 2016 Bonds are secured by (a) a pledge of certain rights of the Authority under and pursuant to the Agreement; (b) a pledge of the Funds and Revenues (other than the Rebate Fund) and all trust accounts created under the Indenture and the Agreement; and (c) an assignment of the Authority s rights and interests under the Amended and Restated Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as of June 1, 2016 (the Deed of Trust ), encumbering the Facilities and a security interest in all of the revenues, rentals, fees, third party payments, receipts, contributions or other income derived from the Facilities, including the rights to receive such revenues (each subject to Permitted Encumbrances as defined in APPENDIX D hereto (the Gross Revenue )). The Series 2016 Bonds are being issued on a parity with the Series 2011A Bonds and Series 2014A Bonds; provided, however, that separate reserve funds secure each of the Series 2011A Bonds, the Series 2014A Bonds and the Series 2016 Bonds, as provided below. Payments received from the Charter School by the Corporation under the Lease will be the Corporation s sole expected source of Gross Revenue. The Lease is subject to annual appropriation by the Charter School and, unless such annual appropriations are made, can expire at the end of any annual renewal term. See THE SERIES 2016 BONDS Security for the Series 2016 Bonds. A bond reserve fund in an amount equal to $712,125 was established in 2011 for the Series 2011A Bonds (the Series 2011 Bond Reserve Fund ) and a bond reserve fund in the amount of $527,018 was established in 2014 for the Series 2014A Bonds (the Series 2014 Bond Reserve Fund ), and are held under the Indenture. Upon issuance of the Series 2016 Bonds a separate reserve fund will be established for the Series 2016 Bonds in the amount of $237,535 (the Series 2016 Bond Reserve Fund ). The Authority, the Charter School, the Corporation and the Trustee intend to utilize the Colorado State Treasurer Charter School Intercept Program. See THE SERIES 2016 BONDS Security for the Series 2016 Bonds and APPENDIX D THE INDENTURE, THE LOAN AGREEMENT, THE DEED OF TRUST, AND THE LEASE. The State of Colorado provides funding to school districts, which in turn provide funding to charter schools. The Charter School is to enter into an agreement with the State of Colorado Treasurer to provide for the direct payment of the debt service on the Series 2016 Bonds, pursuant to Section , CRS (the Charter Intercept Statute ). The Charter Intercept Statute shall not be construed to create a debt of the State of Colorado or any State of Colorado financial obligation whatsoever with respect to any Series 2016 Bonds which qualify for direct payment pursuant to its provisions and no moneys can otherwise be paid by the State of Colorado Treasurer under the Charter Intercept Statute unless an allocable portion of the State of Colorado share of total program funding which the Charter School is entitled to receive equals or exceeds the 4

8 amount of the payments which the State of Colorado Treasurer is directed to make. Further, the Charter Intercept Statute shall not be construed to require the State of Colorado to continue the payment of state assistance to any school district or to limit or prohibit the State of Colorado from repealing or amending any law relating to the amount of State of Colorado assistance to school districts or the manner or timing of the payment of such assistance. If direct payment of the Series 2016 Bonds is not made through the Charter Intercept Statute, the Charter School is required to make such payments pursuant to the Lease and the Corporation is required to make such payments pursuant to the Agreement. The information set forth in this Limited Offering Memorandum has not been verified or approved by the State of Colorado and the State of Colorado has no responsibility with respect to any disclosure matters relating to the offer or sale of the Series 2016 Bonds. See THE SERIES 2016 BONDS Security for the Series 2016 Bonds. Risk Factors... Payment Provisions... Book-Entry-Only Registration... Purchase of the Series 2016 Bonds involves a high degree of risk and the Series 2016 Bonds are a speculative investment. A prospective purchaser is advised to read this entire Limited Offering Memorandum and the Appendices attached hereto in their entirety, particularly the section RISK FACTORS herein, for a discussion of certain risk factors, which should be considered in connection with an investment in the Series 2016 Bonds. The Series 2016 Bonds mature and bear interest (computed on the basis of a 360-day year of twelve 30-day months) at the rates set forth on the cover page hereof. Interest on the Series 2016 Bonds is payable semiannually on June 15 and December 15 each year, commencing on December 15, The Series 2016 Bonds will be issued in fully registered form and will be registered initially in the name of Cede & Co. as nominee for The Depository Trust Company, New York, New York ( DTC ), a securities depository. Beneficial ownership interests in the Series 2016 Bonds may be acquired in Authorized Denominations through participants in the DTC system (the Participants ). Such beneficial ownership interests will be recorded in the records of the Participants. Persons for which Participants acquire interests in the Series 2016 Bonds (the Beneficial Owners ) will not receive certificates evidencing their interests in the Series 2016 Bonds so long as DTC or a successor securities depository acts as the securities depository with respect to the Series 2016 Bonds. So long as DTC or its nominee is the Registered Owner of the Series 2016 Bonds, payments of principal, premium, if any, and interest on the Series 2016 Bonds, as well as notices and other communications made by or on behalf of the Authority pursuant to the Indenture, will be made to DTC or its nominee only. Disbursement of such payments, notices, and other communications by DTC to Participants, and by Participants to the Beneficial Owners, is the responsibility of DTC and the Participants pursuant to rules and procedures established by such entities. See APPENDIX I BOOK ENTRY ONLY SYSTEM for a discussion of 5

9 the operating procedures of the DTC system with respect to payments, registration, transfers, notices, and other matters. Investor Letter Requirement... Prior Redemption... Registration and Denominations... Exchange and Transfer... Tax Status... Authority for Issuance... Delivery Information... The Bondholder Representative for the initial purchasers of the Series 2016 Bonds will be required to execute a Letter of Bondholder Representative substantially in the form attached hereto as APPENDIX G LETTER OF BONDHOLDER REPRESENTATIVE. See RISK FACTORS Bondholder Representative. The Series 2016 Bonds are subject to optional, extraordinary and mandatory sinking fund redemption. The terms and provisions regarding such prior redemption are set forth in THE SERIES 2016 BONDS Prior Redemption. $5,000 denominations and any integral multiple of $5,000 in excess thereof; provided, however, that if Hamlin Capital Management, LLC ceases to be the Bondholder Representative for a Beneficial Owner of Series 2016 Bonds and the Trustee has not theretofore received an Investment Grade Notice, Authorized Denominations for such Series 2016 Bonds for which Hamlin Capital Management, LLC is not the Bondholder Representative shall mean $500,000 and any integral multiple of $1,000 in excess thereof ( Authorized Denominations ). While the Series 2016 Bonds remain in book-entry-only form, transfer of ownership by Beneficial Owners (as defined by the rules of DTC, defined below) may be made as described in APPENDIX I BOOK ENTRY ONLY SYSTEM. In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Series 2016 Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. Interest on the Series 2016 Bonds is included in all taxation in the State of Wisconsin. See the caption TAX MATTERS herein. The Series 2016 Bonds are issued in accordance with the constitution and laws of the State of Wisconsin, and pursuant to an authorizing resolution (the Bond Resolution ) adopted by the Authority s Board of Directors (the Authority s Board ) at a meeting held on April 27, 2016 and pursuant to the terms of the Indenture. The Series 2016 Bonds are offered when, as, and if issued by the Authority and accepted by the Underwriter, subject to prior sale and the approving legal opinion of Bond Counsel and certain other conditions. It is expected that the Series 2016 Bonds will be available for delivery through the facilities of DTC on or about June 24,

10 Financial Statements... Agents and Advisors... Additional Information... The Charter School s audited financial statement for the fiscal year ended June 30, 2015, by John Cutler & Associates, LLC, Denver, Colorado, is attached as Appendix C hereto. See APPENDIX B CHARTER SCHOOL FINANCIAL INFORMATION Historical and Budgeted Financial Information. Kutak Rock LLP has acted as Bond Counsel. Certain legal matters will be passed on for the Corporation and the Charter School by their counsel, Kutz & Bethke LLC, and for the Authority by its counsel, von Briesen & Roper, s.c., Milwaukee, Wisconsin. D.A. Davidson & Co. will serve as the underwriter for the Series 2016 Bonds (the Underwriter ). See MISCELLANEOUS Underwriting. UMB Bank, National Association, Denver, Colorado will serve as the Trustee for the Series 2016 Bonds. Certain fees that are payable by the Authority with respect to the Series 2016 Bonds to various counsel, the Underwriter and the Trustee are contingent upon the issuance and delivery of the Series 2016 Bonds. The summaries of or references to constitutional provisions, statutes, resolutions, agreements, contracts, financial statements, reports, publications and other documents or compilations of data or information set forth in this Limited Offering Memorandum do not purport to be complete statements of the provisions of the items summarized or referred to and are qualified in their entirety by the actual provisions of such items, copies of which are either publicly available or available upon request and the payment of a reasonable copying, mailing and handling charge from the Charter School s administrative offices, 403 South Airport Boulevard, Unit 2, Aurora, Colorado 80017, (303) or D.A. Davidson & Co. at 1550 Market Street, Suite 300, Denver, Colorado 80202, (303) RISK FACTORS General The Series 2016 Bonds do not constitute debt or indebtedness of the Authority within the meaning of any provision or limitation of the constitution or statutes of the State of Wisconsin and shall never constitute or give rise to a pecuniary liability of the Authority. The Series 2016 Bonds are special and limited obligations of the Authority. They are secured by and payable solely from funds payable by the Corporation under the terms and conditions of the Agreement and as otherwise described herein. Except as provided in the Agreement with respect to certain fees, expenses and indemnity rights of the Authority and the Trustee, recovery against the Corporation for any event of default under the Agreement is limited to the Gross Revenue and amounts realized from the foreclosure of the Deed of Trust encumbering the Facilities. The Series 2016 Bonds are being issued on a parity with the Series 2011A Bonds and the Series 2014A Bonds and all four series are secured by the same Trust Estate; provided, however, the Series 2011 Bond Reserve Fund secures the Series 2011A Bonds only, the Series 2014 Bond Reserve Fund secures the Series 2014A Bonds only and the Series 2016 Bond Reserve Fund secures the Series 2016 Bonds only. 7

11 Nonrenewal of the Lease The expected source of Gross Revenue for the repayment of the Series 2016 Bonds is the rental payments made by the Charter School under the Lease. The Lease will be subject to annual renewal by the Charter School. It is anticipated that amounts payable pursuant to the Lease will be sufficient to pay debt service on the Series 2016 Bonds. However, the Charter School s obligation to pay such amounts is subject to: (a) the continued existence of the Charter School, see Revocation or Nonrenewal of Charter hereafter; (b) the level of annual appropriations by the District to the Charter School; and (c) specific appropriations and allocations for such purpose by the Charter School. In the event the Charter School determines not to appropriate or allocate funds in order to make payments under the Lease, or in the event the Charter School does not receive adequate funds, from the District for such purpose, it is highly likely that no proceeds will be generated by the Trustee from the reletting or sale of the Facilities (which have been designated and built specifically for the purpose of operating a charter school). Pursuant to the Agreement, the Corporation covenants and agrees to transfer and convey fee simple title and its ownership interest in the Facilities to the Charter School at such time as the Bonds are no longer outstanding; provided that if the Lease has been terminated or not renewed, or the Charter School is no longer existing and operating as a public charter school, the Corporation covenants and agrees in the Agreement to transfer fee simple title and its ownership interest in the Facilities to (a) a governmental unit; or (b) an organization described under Section 501(c)(3) of the Code, if such transfer and conveyance, according to a written opinion of Bond Counsel, will not adversely effect the exclusion from gross income for federal income tax purposes of interest on the Series 2011A Bonds, the Series 2014A Bonds and the Series 2016 Bonds. Pursuant to the Lease, the Charter School is responsible for paying the costs of operating, insuring and maintaining the Facilities and the Corporation has no independent source of revenues to meet such costs, see Damage or Destruction of the Facilities. Nonrenewal of the Lease is not an Event of Default under the Agreement or the Indenture. If the Charter School chooses to not renew the Lease, the only likely tenants for the Facilities will be the District or another charter school of the District, if any. Revocation or Nonrenewal of Charter Pursuant to the Charter Schools Act and the Charter, the Charter School s Charter expires on June 30, The Charter can be earlier terminated (a) by the District for the grounds set forth in the Charter Schools Act and/or for any material breach of the Charter (after giving the Charter School 30 days written notice of such breach and an opportunity to cure such breach); or (b) by the Charter School, with the approval of the Board of Education of the District, upon 60 days advance notice. No assurance can be given that the Charter School will be able to maintain its Charter, and if the Charter School s Charter is revoked or not renewed, the Charter School will be prohibited from renewing the Lease. See Nonrenewal of the Lease. Bondholder Representative The Bondholder Representative is defined under the Indenture as initially, Hamlin Capital Management, LLC, a registered investment advisor under the Investment Advisors Act of 1940, as amended, and any successors or assigns thereto and thereafter for those Beneficial Owners owning at least a majority in the aggregate of the Outstanding Series 2016 Bonds indicating such by written appointment delivered to the Trustee, such entity designated as their Bondholder Representative. Such written appointments shall be reaffirmed to the Trustee on or prior to such time Bondholder Representative direction or consent is exercised (the Bondholder Representative ). So long as the Bondholder Representative represents Beneficial Owners holding at least majority of the aggregate principal amount 8

12 of the Outstanding Series 2016 Bonds, such entity has substantial power, including the ability to modify the Indenture, the Agreement and the Lease and direct remedies following the occurrence of an Event of Default thereunder. Specifically, among other powers, the Bondholder Representative, representing only 66-2/3% of the Beneficial Owners of the Series 2016 Bonds, has the right to approve certain modifications involving an extension of the maturity of, or a reduction of the principal amount of, or a reduction of the rate of, or extension of the time of payment of interest on, or a reduction of a premium payable upon any redemption of, any Series 2016 Bond. For the avoidance of doubt, all such modifications approved by the Bondholder Representative shall apply equally and ratably to all Series 2016 Bonds of the same series and maturity then Outstanding regardless of the Beneficial Owner. Further, purchasers of the Series 2016 Bonds will be entitled to receive notices of default only upon the prior written direction of the Series 2016 Bondholder Representative. See THE SERIES 2016 BONDS Security for the Series 2016 Bonds Bondholder Representative and APPENDIX D THE INDENTURE, THE LOAN AGREEMENT, THE DEED OF TRUST, AND THE LEASE attached hereto. Damage or Destruction of the Facilities The Agreement and the Lease require that the Facilities be insured against certain risks. There can be no assurance that the amount of insurance required to be obtained with respect to the Facilities will be adequate or that the cause of any damage or destruction to the Facilities will be as a result of a risk which is insured. Further, there can be no assurance of the ongoing creditworthiness of the insurance companies with which the Corporation or the Charter School obtain insurance policies. The Charter School may choose to terminate the Lease if a casualty renders the Facilities totally or partially untenantable or unfit for its purposes, and if insurance proceeds are insufficient to restore the Facilities to a tenantable condition. The Charter School believes that the risks associated with its properties and its operations are adequately provided for through the standard commercial insurance policies it maintains. The Charter School is required under the Lease to provide property insurance on the Facilities through a standard commercial hazard insurance policy, provided by the District, if available, or purchased commercially. Completion of the Construction of the 2016 Improvements Construction on the 2016 Improvements has not yet begun and will need to be completed for an amount not exceeding the amount deposited to the Project Fund from the Series 2016 Bonds. In addition to the acquisition of the New Facility, a portion of Series 2016 Bond proceeds will also be used to reconfigure the front entryway, increase security, add natural lighting, and refresh finishes throughout the New Facility. No assurance can be given that the planned renovations to the Facilities will be constructed on time. The Appraisal No Appraisal has been or will be done on the Facilities. Foreclosure Delays and Deficiency Should Gross Revenue be insufficient to pay the principal of and interest on the Bonds, the Trustee may seek to foreclose the Deed of Trust securing the Bonds. No assurance can be given that the value of the Facilities at the time of such foreclosure would be sufficient to meet all remaining principal and interest payments on the Bonds, and the restrictions described herein may reduce or prolong the foreclosure process. In addition, the time necessary to institute and complete foreclosure proceedings 9

13 could substantially delay receipt of funds from a foreclosure. There could also be delays in regaining possession of the Facilities from the Charter School in the event of any nonrenewal of or default or dispute under the Lease. Environmental Regulation The Facilities are subject to various federal, State of Colorado and local laws and regulations governing health and the environment. In general, these laws and regulations could result in liability to the owner of the Facilities (and to any mortgagee holding a mortgage lien on the Facilities, particularly following any foreclosure proceeding) for remediation of adverse environmental conditions on or relating to the Facilities, whether arising from preexisting conditions or conditions arising as a result of the activities conducted in connection with the ownership and operation of the Facilities. Costs incurred by the Corporation with respect to environmental remediation or liability could adversely impact its financial condition and its ability to own and operate the Facilities. Certain environmental costs might be the responsibility of the Charter School, but such costs would be subject to appropriation and might be a factor in the Charter School s decision concerning the continuation of the Lease. If excessive costs are incurred by the Corporation or the Charter School in connection with remediation of environmental problems or from liability to third parties, such costs could make it impractical for the Lease to be continued pursuant to its current terms or such costs could make it more difficult to successfully re-let the Facilities if the Lease were not renewed. In conjunction with the issuance of the Series 2014 Bonds, Terracon Consultants, Inc., Wheat Ridge, Colorado ( Terracon ) conducted a Phase I Environmental Site Assessment (the Phase I ) on the 11-acre site located at 403 South Airport Boulevard, Aurora, Colorado. As set forth in the report dated November 14, 2014, the Phase I did not reveal evidence of any recognized environmental conditions. Koch Environmental Health, Inc., Morrison, Colorado ( Koch ) conducted a Phase I Environmental Site Assessment (the Koch Phase I ) on the property consisting of the K-8 school building, three satellite trailers, parking lot and playground, located at 403 South Airport Boulevard, Aurora, Colorado (the Subject Property ). As set forth in the report dated May 5, 2016, the Koch Phase I did not identify any recognized environmental conditions on the Subject Property. As referenced in the Koch Phase I, on April 16, 2016, Koch had completed asbestos bulk sampling at the Subject Property addressing potential asbestos containing building materials within the K-8 building. Based on the findings of this assessment Koch recommended no further investigation of the Subject Property at this time. Nonrecourse Obligation The Series 2016 Bonds are limited obligations of the Authority and are not a debt or liability of any Member, any Sponsor, any Authority Indemnified Person, the State of Wisconsin, or any political subdivision or agency thereof other than the Authority to the limited extent set forth herein. The source of payment and security for the Series 2016 Bonds is more fully described herein. The Authority has no taxing power. Key Personnel The Charter School s creation, curriculum and educational philosophy reflect the vision and commitment of members of the Charter School s Board of Directors (the Charter School Board ) and certain key personnel who comprise the upper management of the Charter School ( Key Personnel ). Loss of any Charter School Board members or Key Personnel could adversely affect the Charter School s 10

14 operations, its ability to attract and retain students and its financial results. For more information regarding the Charter School Board and its administrative staff and management see APPENDIX A THE CHARTER SCHOOL Charter School Board and Administrative Staff and Management. Competition for Students The majority of the Charter School s students currently attend the Charter School to obtain the type of education and instruction set forth in the Charter. The Charter School will be competing for students within the District, other surrounding districts and private schools within or near the District. The Charter School s students come primarily from the District. The District has 67 neighborhood schools, including 36 elementary or K-8 schools and 7 middle schools. Within the District s boundaries there are 129 private schools serving K-8 grades. There are 6 other charter schools located in the District, however, due to the Charter School s unique educational mission and focus on foreign languages, the Charter School does not consider any of these charter schools as competition. There can be no assurance that the Charter School will attract and retain the number of students that are needed to produce the Gross Revenue that are necessary to pay the debt service on the Series 2016 Bonds. Constitutional Provisions Affecting Revenues and Spending In 1992, the electors of the State of Colorado approved an amendment to the State of Colorado Constitution, Article X, Section 20, which imposed certain spending, revenue and other limitations upon the State of Colorado and its political subdivisions (including the Charter School). One of the subsections of Article X, Section 20 limited the maximum annual percentage change in the Charter School s fiscal year spending to an amount equal to inflation in the prior calendar year plus annual population growth, adjusted for changes approved by voters after The Lease is subject to annual appropriation by the Charter School. There can be no assurances that Article X, Section 20 spending limitations would not impede the ability of the Charter School to make such appropriation. In addition, Article X, Section 20, contains many undefined or unclear terms and provisions which will require judicial interpretation or legislative action to clarify. Although certain clarifying judicial interpretations and legislative action have already occurred, the effect upon the Series 2016 Bonds of any future interpretations or actions is impossible to determine at this time. Changes to Charter Schools Act Future changes to either the Charter Schools Act or the Public School Finance Act by the State of Colorado General Assembly could be adverse to the financial interests of the Charter School and could adversely impact upon the security for the Series 2016 Bonds. There can be no assurance given that the State of Colorado General Assembly will not in the future amend either the Charter Schools Act or the Public School Finance Act in a manner which is adverse to the interests of the Beneficial Owners of the Series 2016 Bonds. The State of Colorado has from time to time experienced, and is currently experiencing a severe downturn in its economy and tax revenues and may experience additional downturns in the future. While constitutional provisions cannot be amended by the General Assembly, Public School Finance Act provisions, such as the capital funding for charter schools, are subject to amendment, including the reduction of funding, which could adversely affect the Charter School. STATE OF COLORADO BUDGET CONSIDERATIONS MAY ADVERSELY AFFECT APPROPRIATIONS FOR CHARTER SCHOOL FUNDING. 11

15 Although constitutional provisions cannot be changed by the General Assembly, the General Assembly may, by resolution, submit reductions or limitations to the electorate. Adverse State of Colorado budget considerations could result in the General Assembly seeking voter approval to reduce constitutional requirements for public school funding. Additional information relating to State of Colorado Charter Schools is available at The internet address is provided as a matter of convenience for the purchasers of the Series 2016 Bonds. None of the Authority, the Charter School or the Corporation incorporate herein any information provided at such internet address or any other internet addresses that may be contained therein, and the information at such internet address or internet addresses is not to be construed or incorporated as part of this Limited Offering Memorandum. Factors Associated with Education There are a number of factors affecting schools in general, including the Charter School and the Corporation, that could have an adverse effect on the Corporation s and the Charter School s financial position and their ability to make the payments required under the Agreement and the Lease. These factors include, but are not limited to, the ability to attract a sufficient number of students; increasing costs of compliance with federal or State of Colorado regulatory laws or regulations, including, without limitation, laws or regulations concerning environmental quality, work safety and accommodating persons with disabilities; any unionization of the Charter School s work force with consequent impact on wage scales and operating costs of the Corporation or the Charter School; changes in existing statutes pertaining to the powers of the Charter School and legislation or regulations which may affect program funding. Neither the Corporation nor the Charter School can assess or predict the ultimate effect of these factors on their operations or financial results of operations. Potential Effects of Bankruptcy If the Corporation were to file a petition for relief (or if a petition were filed against the Corporation as a debtor) under the United States Bankruptcy Code, 11 U.S.C. 101 et seq., as amended, or other similar laws that protect creditors, the filing could operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the property of the debtor. If the bankruptcy court so ordered, the debtor s property and revenues could be used for the benefit of the debtor despite the claims of its creditors (including the Registered Owners of the Series 2016 Bonds). In a bankruptcy proceeding, the debtor could file a plan for the adjustment of its debts which modifies the rights of creditors generally or the rights of any class of creditors, secured or unsecured (including the Registered Owners of the Series 2016 Bonds). The plan, when confirmed by the court, binds all creditors who had notice or knowledge of the plan and discharges all claims against the debtor provided for in the plan. No plan may be confirmed unless, among other conditions, the plan is in the best interest of creditors, is feasible and has been accepted by each class of claims impaired thereunder. Each class of claims has accepted the plan if at least two thirds in dollar amount and more than one half in number of the allowed claims of the class that are voted with respect to the plan are cast in its favor. Even if the plan is not so accepted, it may be confirmed if the court finds that the plan is fair and equitable with respect to each class of non-accepting creditors impaired thereunder and does not discriminate unfairly. 12

16 Covenant To Maintain Tax-Exempt Status of the Series 2016 Bonds The excludability from gross income for federal income taxation purposes of the interest on the Series 2016 Bonds is based on the continuing compliance by the Corporation, the Trustee, the Charter School and the Authority with certain covenants contained in the Indenture, Lease, Agreement and Tax Certificate, dated as of June 24, 2016 (the Tax Certificate ), by and among the Authority, the Corporation and the Charter School, as to Arbitrage and the provisions of Sections 103, 141 and 150 of the Internal Revenue Code of These covenants relate generally to restrictions on the use of the Facilities financed with proceeds of the Series 2016 Bonds, restrictions on reletting the Facilities to organizations other than tax exempt organizations under the Code, arbitrage limitations, and rebate of certain excess investment earnings, if any, to the federal government. Failure to comply with such covenants could cause interest on the Series 2016 Bonds to become subject to federal income taxation retroactive to the date of issuance of the Series 2016 Bonds. Additional Bonds The Indenture provides that additional bonds may be issued by the Authority payable from the Trust Estate on a parity with the Series 2016 Bonds, the Series 2014A Bonds and the Series 2011A Bonds, if certain conditions are met; provided, however, that each series of bonds issued under the Indenture will be secured by a separate bond reserve fund. See the Additional Bonds requirements set forth in APPENDIX D hereto. Enforcement of Remedies The remedies available to the Trustee or the Registered Owners of the Series 2016 Bonds upon an Event of Default under the Indenture, the Agreement or the Lease are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, the remedies provided in the Indenture, the Agreement and the Lease may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2016 Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by the valid exercise of the sovereign powers of the State of Colorado and the constitutional powers of the United States of America, bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. Secondary Market There is no guarantee that a secondary trading market will develop for the Series 2016 Bonds. Consequently, prospective bond purchasers should be prepared to hold their Series 2016 Bonds to maturity or prior redemption. Subject to applicable securities laws and prevailing market conditions, the Underwriter intends but is not obligated to make a market in the Series 2016 Bonds. Failure To Provide Ongoing Disclosure The Charter School and the Corporation have agreed to enter into the Continuing Disclosure Agreements pursuant to Rule 15c2-12 (as such terms are defined herein). Failure to comply with the Continuing Disclosure Agreements and Rule 15c2-12 may adversely affect the liquidity of the Series 2016 Bonds and their market price in the secondary market. See MISCELLANEOUS Continuing Disclosure Agreements for a list of past failures and APPENDIX F. 13

17 Risk of Loss from Nonpresentment Upon Redemption The rights of the Registered Owners of the Series 2016 Bonds to receive interest will terminate on the date, if any, on which the Series 2016 Bonds are to be redeemed pursuant to a call for redemption, notice of which has been given under the terms of the Indenture. Description of the Series 2016 Bonds THE SERIES 2016 BONDS The Series 2016 Bonds will be dated as of the date of delivery, will be issued in the aggregate principal amounts and will bear interest at the rates and mature on the dates, subject to redemption as described below, set forth on the cover page hereof. The Series 2016 Bonds will be issued as fully registered bonds without coupons in Authorized Denominations. Interest on the Series 2016 Bonds is payable semiannually on June 15 and December 15 each year, commencing on December 15, 2016 (each an Interest Payment Date ), by check or draft mailed to the Registered Owners of the Series 2016 Bonds as of the Regular Record Date, which shall be the 1 st day of the month in which the Interest Payment Date occurs (the Regular Record Date ). The principal, and premium, if any, of the Series 2016 Bonds shall be payable, without exchange or collection charges, in lawful currency of the United States of America. Interest on the Series 2016 Bonds will be computed on the basis of a year of 360 days of 12 months of 30 days each until payment of principal has been made or provided for, payable on each Interest Payment Date, except that Series 2016 Bonds which are reissued upon transfer, exchange or other replacement will bear interest from the most recent Interest Payment Date to which interest has been paid or duly provided for, or if no interest has been paid, from the date of the Series 2016 Bonds. Except in the case of overdue interest, the record date for interest due will be the Regular Record Date. Interest which is due and payable on any Interest Payment Date, but cannot be paid on such date from available sources, ceases to be payable to the Registered Owner otherwise entitled thereto as of such date. At such time as sufficient funds are available for the payment of such overdue interest, the Trustee is required to establish a special payment date and a Special Record Date in respect thereof. The Trustee is required to mail a notice specifying each date so established to each Registered Owner of the Series 2016 Bonds, such notice to be mailed at least 10 days prior to the Special Record Date. Investor Letter Requirement The Bondholder Representative for the initial purchasers of the Series 2016 Bonds will be required to execute a Letter of Bondholder Representative substantially in the form attached hereto as APPENDIX G LETTER OF BONDHOLDER REPRESENTATIVE. See RISK FACTORS Bondholder Representative. Direct Payment of Lease Amounts The State of Colorado provides funding to school districts, which in turn provide funding to charter schools. Pursuant to the terms of the Lease, the Charter School is required to make application for the direct payment of Series 2016 Bonds by the State of Colorado Treasurer pursuant to Section , C.R.S., as amended (the Charter Intercept Statute ). The Series 2016 Bonds qualify for such program and the Charter School s application is expected to be submitted to the State of Colorado Treasurer prior to the first Interest Payment Date for the Series 2016 Bonds. The Charter Intercept Statute shall not be construed to create a debt of the State of Colorado or any State of Colorado financial 14

18 obligation whatsoever with respect to any bonds which qualify for direct payment pursuant to its provisions and no moneys can otherwise be paid by the State of Colorado Treasurer under the Charter Intercept Statute unless an allocable portion of Colorado share of Total Program (as defined herein) funding which the Charter School is entitled to receive equals or exceeds the applicable amount of the payments which the State of Colorado Treasurer is directed to make. Further, the Charter Intercept Statute shall not be construed to require the State of Colorado to continue the payment of state assistance to any school district or to limit or prohibit the State of Colorado from repealing or amending any law relating to the amount of State of Colorado assistance to school districts or the manner or timing of the payment of such assistance. If direct payment of the Series 2016 Bonds is not made through the Charter Intercept Statute, the Charter School is required to make such payments pursuant to the Lease and the Corporation is required to make such payments pursuant to the Agreement. The information set forth in this Limited Offering Memorandum has not been verified or approved by the State of Colorado and the State of Colorado has no responsibility with respect to any disclosure matters relating to the offer or sale of the Series 2016 Bonds. Prior Redemption Optional Redemption of Series 2016 Bonds. The Series 2016 Bonds maturing on and after December 15, 2021, are subject to redemption prior to maturity, at the option of the Authority, as a whole or in part in Authorized Denominations, in any order of maturity and in whole or partial maturities of the same maturity, on December 15, 2020, and on any date thereafter, upon direction by the Corporation and upon payment of par plus accrued interest to the date of redemption. No Partial Redemption in Event of Default. Notwithstanding any redemption provision set forth in the Indenture, the Series 2016 Bonds are not subject to partial redemption pursuant to the optional prior redemption provisions discussed above if an Event of Default has occurred under the Indenture and has not been cured or otherwise waived by the Trustee. Mandatory Sinking Fund Redemption-Series 2016 Bonds. The Series 2016 Bonds maturing December 15, 2026 are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest thereon to the redemption date. Pursuant to the provisions of the Agreement, the Corporation is required to provide funds for deposit into the Bond Principal Fund and Bond Interest Fund sufficient to redeem the following principal amount of the Series 2016 Bonds maturing December 15, 2026 plus accrued interest thereon to the redemption date: December 15 of the Year Principal Amount 2017 $110, , , , , , , , , ,000 1 Maturity Date. 15

19 The Series 2016 Bonds maturing December 15, 2036 are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest thereon to the redemption date. Pursuant to the provisions of the Agreement, the Corporation is required to provide funds for deposit into the Bond Principal Fund and Bond Interest Fund sufficient to redeem the following principal amount of the Series 2016 Bonds maturing December 15, 2036 plus accrued interest thereon to the redemption date: December 15 of the Year Principal Amount 2027 $175, , , , , , , , , ,000 1 Maturity Date. The Series 2016 Bonds maturing December 15, 2044 are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest thereon to the redemption date. Pursuant to the provisions of the Agreement, the Corporation is required to provide funds for deposit into the Bond Principal Fund and Bond Interest Fund sufficient to redeem the following principal amount of the Series 2016 Bonds maturing December 15, 2044 plus accrued interest thereon to the redemption date: December 15 of the Year Principal Amount 2037 $300, , , , , , , ,000 1 Maturity Date. Not more than 45 days nor less than 30 days prior to the sinking fund payment date for the Series 2016 Bonds, the Trustee is required to proceed to select for redemption (by lot in such manner as the Trustee may determine) from all outstanding Series 2016 Bonds, a principal amount of Series 2016 Bonds equal to the aggregate principal amount of Series 2016 Bonds, redeemable with the required sinking fund payment and is required to call such Series 2016 Bonds for redemption from the sinking fund on the next December 15 and give notice of such call. 16

20 Extraordinary Redemption. (a) The Series 2016 Bonds are also redeemable at the option and upon the written direction of the Corporation in whole at any time or in part (only Net Proceeds of insurance or a condemnation award shall be used for a partial redemption of Series 2016 Bonds pursuant to paragraphs (a) or (b) of this Section) on any interest payment date from and to the extent of funds on deposit under the Indenture and available for this purpose at a redemption price equal to the principal amount of each Series 2016 Bond redeemed and accrued interest to the redemption date upon the occurrence of any of the following events: (i) The Facilities shall have been damaged or destroyed in whole or in part to such extent that, as expressed in a Consulting Architect s Certificate filed with the Trustee (A) the Facilities cannot reasonably be restored within a period of six consecutive months to the condition thereof immediately preceding such damage or destruction; or (B) the Corporation or its lessee are thereby prevented from carrying on its normal operations for a period of six consecutive months; or (C) the cost of restoration thereof would exceed the Net Proceeds of insurance carried thereon pursuant to the requirements of Section 6.03 of the Agreement. (ii) Title to, or the temporary use of, all or any substantial part of the Facilities shall have been taken under the exercise of the power of eminent domain by any governmental authority, or Person acting under governmental authority or because of a defect in title. (iii) As a result of any changes in the Constitution of the State of Colorado or the Constitution of the United States of America or of legislative or administrative action (whether state or federal) or by final decree, judgment or order of any court or administrative body (whether state or federal) entered after the contest thereof by the Corporation in good faith, the Agreement, the Lease or the Deed of Trust shall have become void or unenforceable or impossible of performance in accordance with the intent and purposes of the parties as expressed in the Agreement, or unreasonable burdens or excessive liabilities shall have been imposed on the Corporation in respect to the Facilities, including, without limitation, federal, state or other ad valorem, property, income or other taxes not being imposed on the date of the Agreement. Redemption pursuant to this paragraph (iii) shall be in whole only. (b) Upon the occurrence of a Determination of Taxability, the Series 2016 Bonds are subject to mandatory redemption in whole at a redemption price equal to 103% of the outstanding principal amount thereof, plus interest accrued to the redemption date, at the earliest practicable date selected by the Trustee, after consultation with the Corporation, but in no event later than 45 days following receipt by the Trustee of written notice of the Determination of Taxability. The occurrence of a Determination of Taxability will not constitute an Event of Default under the Indenture. Within five Business Days after receipt by the Trustee of written notice of a Determination of Taxability, the Trustee shall give written notice thereof to the holders of all Series 2016 Bonds then outstanding and shall also give written notice to the Corporation, the Bondholder Representative and the Authority. (c) Upon receipt of monies by the Corporation, on behalf of Charter School, pursuant to the provisions of the Lease described under the subheading Security for the Series 2016 Bonds Claims of Overpayment below, the Series 2016 Bonds are subject to mandatory redemption in whole or in part, in Authorized Denominations, at a redemption price equal to 17