ILLINOIS FINANCE AUTHORITY

Transcription

1 NEW ISSUE BOOK-ENTRY ONLY RATING: SEE RATING HEREIN In the opinion of Kutak Rock LLP, 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 2011A Bonds is excludable from gross income for federal income tax purposes. In addition, interest on the Series 2011A Bonds is not a specific preference item for purposes of the federal alternative minimum tax. Interest on the Series 2011 Bonds is not exempt from State of Illinois income taxes. Bond Counsel is of the opinion that interest on the Series 2011B Bonds is included in gross income for federal income tax purposes. For a more complete description of such opinion of Bond Counsel, see TAX MATTERS herein. ILLINOIS FINANCE AUTHORITY $36,775,000 CHARTER SCHOOL REFUNDING AND IMPROVEMENT REVENUE BONDS (UNO CHARTER SCHOOL NETWORK, INC. PROJECT) SERIES 2011A $730,000 CHARTER SCHOOL REFUNDING AND IMPROVEMENT REVENUE BONDS (UNO CHARTER SCHOOL NETWORK, INC. PROJECT) TAXABLE SERIES 2011B Dated: Date of Delivery Due: as shown on inside cover The Illinois Finance Authority (the Issuer ), a body politic and corporate created and existing under the Illinois Finance Authority Act (the Act ), is issuing its $36,775,000 Charter School Refunding and Improvement Revenue Bonds (UNO Charter School Network, Inc. Project) Series 2011A (the Series 2011A Bonds ) and its $730,000 Charter School Refunding and Improvement Revenue Bonds (UNO Charter School Network, Inc. Project) Taxable Series 2011B (the Series 2011B Bonds and, together with the Series 2011A Bonds, the Series 2011 Bonds ). The Series 2011 Bonds will be dated their date of delivery, will be in authorized denominations of $100,000 and integral multiples of $5,000 in excess thereof, and will mature on October 1 of the years as shown on the front inside cover hereof. The Series 2011 Bonds will accrue interest payable semi-annually on April 1 and October 1 of each year, commencing April 1, 2012, until maturity or earlier redemption. Interest on the Series 2011 Bonds will be calculated on the basis of a 360 day year consisting of twelve 30 day months. The Series 2011 Bonds are being issued pursuant to a Bond Trust Indenture dated as of October 1, 2011 (the Bond Indenture ), between the Issuer and Amalgamated Bank of Chicago, as trustee (the Bond Trustee ). The proceeds of the sale of the Series 2011 Bonds will be loaned to UNO Charter School Network, Inc. ( UCSN or the Borrower ), an Illinois not-for-profit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Code ), pursuant to the terms of a Loan Agreement dated as of October 1, 2011 (the Loan Agreement ). The Series 2011 Bonds and the interest thereon are payable solely out of the revenues and income derived under the Loan Agreement and Obligation No. 1A relating to the Series 2011A Bonds and Obligation No. 1B relating to the Series 2011B Bonds (collectively, Obligation No. 1 ) issued by the Borrower in amounts equal to the aggregate principal amount of the Series 2011 Bonds pursuant to a Master Trust Indenture dated as of October 1, 2011 (the Master Indenture ), as supplemented by Supplemental Master Trust Indenture No. 1 ( Supplemental Indenture No. 1 ) between the Borrower and Amalgamated Bank of Chicago, as Master Trustee (the Master Trustee ). Payment of principal of, premium, if any, and interest on the Series 2011 Bonds will be guaranteed by an affiliate of the Borrower, United Neighborhood Organization of Chicago ( UNO or the Guarantor ), an Illinois not-for-profit corporation and an organization described in Section 501(c)(3) of the Code, pursuant to a Guaranty Agreement dated as of October 1, 2011 (the Guaranty Agreement ) between UNO and the Bond Trustee. The Series 2011 Bonds are subject to optional, extraordinary optional, mandatory and mandatory sinking fund redemption prior to maturity. See THE SERIES 2011 BONDS Redemption. The Borrower will use the proceeds of the Series 2011 Bonds to (i) repay a portion of amounts owed by the Borrower pursuant to loan agreements between the Borrower and certain banks described herein (the Bank Loan ) and between the Borrower and IFF (the IFF Loan ), which loans were incurred to finance and refinance costs of multiple capital projects described herein (collectively, the Refunding Project ) and which will be repaid in part from proceeds of the Series 2011 Bonds and certain other financing sources described herein (see PLAN OF FINANCE ), (ii) make a deposit to a Reserve Account for the Series 2011 Bonds, (iii) pay certain costs of renovations and equipping of the Borrower s Humboldt Park campus (the Project ), and (iv) pay certain costs of issuance of the Series 2011 Bonds. The Borrower currently operates eleven schools throughout the Chicago, Illinois area including two schools at two locations recently opened for the school year (collectively, the Charter Schools ). The Charter Schools are operated pursuant to a charter school agreement, as amended, between the Borrower and the Board of Education of the City of Chicago, as approved by the Illinois State Board of Education. See APPENDIX B THE BORROWER, THE GUARANTOR AND THE CHARTER SCHOOLS. THE BORROWER MAY NOT CHARGE TUITION AND HAS NO TAXING AUTHORITY. The Series 2011 Bonds are special, limited obligations of the Issuer payable solely from payments to be made by the Borrower under the Loan Agreement and Obligation No. 1, all money and investments held for the credit of the funds and accounts established by or under the Bond Indenture (except the Rebate Fund) and as otherwise provided in the Bond Indenture and the Loan Agreement. The Borrower will pledge and grant a security interest to the Master Trustee in its Gross Revenues (as defined herein) as security for its obligations under Obligation No. 1 and all other Obligations which may be issued under the Master Trust Indenture. Notwithstanding the foregoing, the revenues generated from the Officer Donald Marquez and Gage Park Charter Schools will be excluded from the Gross Revenues pledge. In addition, the Borrower and the Guarantor will each grant a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of October 1, 2011 (collectively, the Mortgages ) in favor of the Bond Trustee, as additional security for the Series 2011 Bonds. The Borrower s Mortgage will grant a lien on the Borrower s leasehold interests in those Charter Schools leased by the Borrower from the Catholic Bishop of Chicago (excluding the Carlos Fuentes and Gage Park campuses), and the Guarantor s Mortgage will grant a lien on the three Charter Schools owned by the Guarantor and located at the Veterans Memorial campus which are leased to the Borrower. See SECURITY FOR THE SERIES 2011 BONDS - Mortgages. The Series 2011 Bonds shall never be payable out of any funds of the Issuer except from the limited sources referenced above. The Series 2011 Bonds and the interest thereon do not constitute an indebtedness or an obligation, general or moral, or a pledge of the full faith or Issuer, the State of Illinois or any political subdivision thereof, within the purview of any constitutional or statutory limitation or provision. The Issuer is obligated to pay the principal of, premium, if any, and interest on the Series 2011 Bonds and other costs incidental thereto only from the sources specified in the Bond Indenture and the Master Indenture. Neither the full faith and credit nor the taxing powers, if any, of the Issuer or the State of Illinois or any political subdivision thereof is pledged to the payment of the principal of, premium, if any, and interest on the Series 2011 Bonds or other costs incidental thereto, except as otherwise provided in the Bond Indenture. No owner of any Series 2011 Bond shall have the right to compel the taxing power, if any, of the Issuer, the State of Illinois or any political subdivision thereof to pay the principal of, premium, if any, or interest on the Series 2011 Bonds. The Issuer does not have the power to levy taxes for any purposes whatsoever. a loan of credit of the The Series 2011 Bonds will be issued as registered bonds in book-entry only form in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ), which will act as securities depository for the Series 2011 Bonds. Purchases of beneficial interests in the Series 2011 Bonds will be made in book-entry only form and purchasers will not receive physical certificates representing the ownership interest in the Series 2011 Bonds purchased by them. See BOOK-ENTRY ONLY SYSTEM. This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read this entire Official Statement 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 2011 Bonds are offered when, as and if issued by the Issuer and received and accepted by the Underwriters and subject to the approval of certain legal matters by Kutak Rock LLP, Denver, Colorado, Bond Counsel, and to certain other matters. Certain legal matters will be passed upon by Sanchez Daniels & Hoffman LLP, Chicago, Illinois, as counsel to the Issuer; by Burke, Burns & Pinelli, Ltd., Chicago, Illinois, as counsel to the Borrower; and by Greenberg Traurig, LLP, Chicago, Illinois, and Tristan & Cervantes, Chicago, Illinois, as co-counsel to the Underwriters. It is expected that the Series 2011 Bonds will be available for delivery through the facilities of DTC on or about October 26, Robert W. Baird & Co. Date: October 6, 2011 Cabrera Capital Markets, LLC

2 MATURITY SCHEDULE ILLINOIS FINANCE AUTHORITY $36,775,000 CHARTER SCHOOL REFUNDING AND IMPROVEMENT REVENUE BONDS (UNO CHARTER SCHOOL NETWORK, INC. PROJECT) SERIES 2011A October 1 Principal Amount Interest Rate Price CUSIP* 2031 $15,575, % 100% AA $21,200, % 100% AB2 $730,000 CHARTER SCHOOL REFUNDING AND IMPROVEMENT REVENUE BONDS (UNO CHARTER SCHOOL NETWORK, INC. PROJECT) TAXABLE SERIES 2011B October 1 Principal Amount Interest Rate Price CUSIP* 2013 $730, % 100% AC0 * CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein are provided by Standard & Poor s, CUSIP Service Bureau, a division of The McGraw Hill Companies, Inc. CUSIP numbers have been assigned by an independent company not affiliated with the Issuer, the Underwriters or the Borrower and are included solely for the convenience of the holders of the Series 2011 Bonds. None of the Issuer, the Underwriters or the Borrower are responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the Series 2011 Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after execution and delivery of the Series 2011 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of the Series 2011 Bonds.

3 TABLE OF CONTENTS INTRODUCTION... 1 General... 1 Forward-Looking Statements... 3 THE ISSUER... 3 Description of the Issuer... 3 Bonds of the Issuer... 3 Issuer Advisor... 4 THE BORROWER... 4 THE GUARANTOR... 4 PLAN OF FINANCE... 4 Series 2011 Bonds... 4 Sources and Uses of Funds... 4 Bank Loan, Series 2007 Bonds and Series 2006 Bonds... 5 JPMorgan Chase/LISC Financing... 6 Extension of and Increase in Portion of Bank Loan; New Markets Tax Credit Financing... 7 IFF Loan... 7 Project... 7 Future Expansion... 7 RISK FACTORS... 8 Sufficiency of Revenues... 8 Operating History; Reliance on Projections; State Appropriation to Guarantor... 8 Competition for Students... 9 Annual Appropriation; Inadequate State Payments; No Taxing Authority... 9 Revocation or Non-Renewal of Charter Factors Associated with Education Failure to Provide Ongoing Disclosure State Financial Difficulties Future Changes to Charter School Laws Value of Facilities May Fluctuate; Foreclosure Deficiency and Delays Inability or Delay in Substituting Another Charter School in the Borrower Leased Facilities Special, Limited Obligations Damage or Destruction of the Facilities Compliance with the No Child Left Behind Act of Environmental Regulation Potential Effects of Bankruptcy Limited Assets of Guarantor Additional Debt and Additional Bonds Enforcement of the Pledge of Gross Revenues Enforcement of Remedies Modifications to Master Indenture Tax-Exempt Status of the Series 2011A Bonds Tax-Exempt Status of the Borrower and Guarantor Unrelated Business Income Risk of Failure to Comply with Certain Tax Covenants State and Local Tax Exemption Secondary Market Risk of Loss from Nonpresentment upon Redemption THE SERIES 2011 BONDS General Redemption SECURITY FOR THE SERIES 2011 BONDS General Master Indenture Reserve Account Custodial Agreement Intercept Guaranty Agreement Mortgages IFF Supplemental Reserve Account Additional Bonds BOOK-ENTRY ONLY SYSTEM DEBT SERVICE REQUIREMENTS LEGAL MATTERS General Pending and Threatened Litigation TAX MATTERS In General State Backup Withholding Changes in Federal and State Tax Law Series 2011B Bonds CONTINUING DISCLOSURE AGREEMENT FINANCIAL STATEMENTS RATING MISCELLANEOUS Underwriting Financial Advisor Amalgamated Bank of Chicago Additional Information Certification APPENDIX A-1 SUMMARY OF CERTAIN PROVISIONS OF ILLINOIS CHARTER SCHOOL LAW... A-1 APPENDIX A-2 CHARTER SCHOOL FINANCE IN ILLINOIS... A-2 APPENDIX B THE BORROWER, THE GUARANTOR AND THE CHARTER SCHOOLS... B-1 APPENDIX C FINANCIAL STATEMENTS... C-1 APPENDIX D FORM OF BOND COUNSEL OPINION... D-1 APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT... E-1 APPENDIX F DEFINITIONS OF CERTAIN TERMS AND SUMMARY OF CERTAIN DOCUMENTS... F-1 -iii-

4 REGARDING USE OF THIS OFFICIAL STATEMENT This Official Statement is being provided in connection with the sale of the Series 2011 Bonds as referred to herein and may not be reproduced for use, in whole or in part, for any other purpose. The information set forth herein under the captions THE ISSUER, and LEGAL MATTERS Pending and Threatened Litigation No Proceedings Against the Issuer has been obtained from the Issuer. The information set forth under BOOK-ENTRY ONLY SYSTEM has been obtained from The Depository Trust Company. All other information herein has been obtained by the Underwriters from the Borrower, the Guarantor, the Underwriters and other sources deemed by the Underwriters to be reliable, and is not to be construed as a representation by the Issuer or Underwriters. The Issuer has not reviewed or approved any information in this Official Statement except information relating to the Issuer under the captions THE ISSUER, and LEGAL MATTERS Pending and Threatened Litigation No Proceedings Against the Issuer, which has been obtained from the Issuer. 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 Official Statement, in connection with the offering of the Series 2011 Bonds, and, if given or made, such information or representation must not be relied upon as having been authorized by the Issuer, the Borrower, the Guarantor or the Underwriters. The information in this Official Statement is subject to change without notice, and neither the delivery of this Official Statement nor any sale hereunder will, under any circumstances, create any implication that there has been no change in the affairs of the Issuer, the Borrower, the Guarantor or the Underwriters since the date hereof. This Official Statement 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 Series 2011 Bonds are not being registered with the Securities and Exchange Commission in reliance upon an exemption from the Securities Act of 1933, as amended, nor has the Bond Indenture or the Master Indenture been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained in such acts. The registration or qualification of the Series 2011 Bonds in accordance with applicable provisions of securities laws of the states in which the Series 2011 Bonds have been registered or qualified, if any, and the exemption from registration or qualification in other states cannot be regarded as a recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of the Series 2011 Bonds or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE BORROWER, THE GUARANTOR AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY BODY, AND NO SUCH AUTHORITIES HAVE CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2011 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.

5 General ILLINOIS FINANCE AUTHORITY $36,775,000 CHARTER SCHOOL REFUNDING AND IMPROVEMENT REVENUE BONDS (UNO CHARTER SCHOOL NETWORK, INC. PROJECT) SERIES 2011A $730,000 CHARTER SCHOOL REFUNDING AND IMPROVEMENT REVENUE BONDS (UNO CHARTER SCHOOL NETWORK, INC. PROJECT) TAXABLE SERIES 2011B INTRODUCTION The purpose of this Official Statement is to provide certain information concerning the issuance and sale by Illinois Finance Authority (the Issuer ) of its $36,775,000 aggregate principal amount of Charter School Refunding and Improvement Revenue Bonds (UNO Charter School Network, Inc. Project) Series 2011A (the Series 2011A Bonds ) and its $730,000 Charter School Refunding and Improvement Revenue Bonds (UNO Charter School Network, Inc. Project) Taxable Series 2011B (the Series 2011B Bonds and, together with the Series 2011A Bonds, the Series 2011 Bonds ). The Series 2011 Bonds are being issued pursuant to a Bond Trust Indenture dated as of October 1, 2011 (the Bond Indenture ), between the Issuer and Amalgamated Bank of Chicago, as trustee (the Bond Trustee ). The proceeds of the sale of the Series 2011 Bonds will be loaned to UNO Charter School Network, Inc. ( UCSN or the Borrower ), an Illinois not-for-profit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Code ), pursuant to the terms of a Loan Agreement dated as of October 1, 2011 (the Loan Agreement ). The Series 2011 Bonds and the interest thereon are payable solely out of revenues and income derived under the Loan Agreement and Obligation No. 1A relating to the Series 2011A Bonds and Obligation No. 1B relating to the Series 2011B Bonds (collectively, Obligation No. 1 ) issued by the Borrower in an aggregate amount equal to the aggregate principal amount of the Series 2011 Bonds pursuant to a Master Trust Indenture dated as of October 1, 2011 (the Master Indenture ), as supplemented by Supplemental Master Trust Indenture No. 1 ( Supplemental Indenture No. 1 ) between the Borrower and Amalgamated Bank of Chicago, as Master Trustee (the Master Trustee ). Payment of principal of, premium, if any, and interest on the Series 2011 Bonds will be guaranteed by United Neighborhood Organization of Chicago, an affiliate of the Borrower, an Illinois not-for-profit corporation and an organization described in Section 501(c)(3) of the Code ( UNO or the Guarantor ) pursuant to a Guaranty Agreement dated as of October 1, 2011 (the Guaranty Agreement ) between UNO and the Bond Trustee. The Series 2011 Bonds are subject to optional, extraordinary optional, mandatory and mandatory sinking fund redemption prior to maturity. See THE SERIES 2011 BONDS Redemption. The Borrower will use the proceeds of the Series 2011 Bonds to (i) repay a portion of amounts owed by the Borrower pursuant to loan agreements between the Borrower and certain banks described herein (the Bank Loan ) and between the Borrower and IFF (the IFF Loan ), which loans were incurred to finance and refinance costs of multiple capital projects described herein (collectively, the Refunding Project ) and which will be fully repaid from proceeds of the Series 2011 Bonds and certain other financing sources described herein (see PLAN OF FINANCE ) (ii) make a deposit to a Reserve Account for the Series 2011 Bonds; (iii) pay certain costs of renovations and equipping at the Borrower s Humboldt Park campus, and (iv) pay certain costs of issuance of the Series 2011 Bonds. The Borrower currently operates eleven schools throughout the Chicago, Illinois area including two schools at two locations recently opened for the school year (collectively, the Charter Schools ). The Charter

6 Schools are operated pursuant to a charter school agreement, as amended, between the Borrower and the Board of Education of the City of Chicago (the Chicago Board of Education ), as approved by the Illinois State Board of Education (the Illinois Board of Education ). See APPENDIX B THE BORROWER, THE GUARANTOR AND THE CHARTER SCHOOLS. THE BORROWER MAY NOT CHARGE TUITION AND HAS NO TAXING AUTHORITY. The Series 2011 Bonds are special, limited obligations of the Issuer payable solely from payments to be made by the Borrower under the Loan Agreement and Obligation No. 1, all money and investments held for the credit of the funds and accounts established by or under the Bond Indenture (except the Rebate Fund) and as otherwise provided in the Bond Indenture and the Loan Agreement. The Borrower will pledge and grant a security interest to the Master Trustee in its Gross Revenues (as defined herein) as security for its obligations under Obligation No. 1 supporting the Series 2011 Bonds, Obligation No. 2 referenced below under PLAN OF FINANCE - Extension of Bank Loan; New Markets Tax Credit Financing and any future Obligations issued under the Master Trust Indenture (collectively, the Obligations ). Notwithstanding the foregoing, the revenues generated from the Officer Donald Marquez and Gage Park Charter Schools will be excluded from the Gross Revenues pledge. See also SECURITY FOR THE SERIES 2011 BONDS - Covenant Regarding Future Related Campus Facilities for a description of the treatment under the Master Trust Indenture of certain future Charter Schools of the Borrower. In addition, the Borrower and the Guarantor will each grant a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of October 1, 2011 (collectively, the Mortgages ) in favor of the Bond Trustee, as additional security for the Bonds. The Borrower s Mortgage will grant a lien on the Borrower s leasehold interests in certain of its Charter Schools which are leased by the Borrower from the Catholic Bishop of Chicago (the Archbishop of Chicago ), and the Guarantor s Mortgage will grant a lien on the three Charter Schools owned by the Guarantor and located at the Veterans Memorial campus which are leased to the Borrower. The Series 2011 Bonds shall never be payable out of any funds of the Issuer except from the limited sources referenced above. The offering of the Series 2011 Bonds is made only by way of this Official Statement, which supersedes any other information or materials used in connection with the offer or sale of the Series 2011 Bonds. This Official Statement speaks only as of its date, and the information contained herein is subject to change. Capitalized terms used but not defined in this Official Statement have the meanings provided in the Bond Indenture, the Master Indenture and the Loan Agreement. See APPENDIX F DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN DOCUMENTS Definition of Certain Terms. Pursuant to an IFF Supplemental Reserve Account Agreement dated as of October 1, 2011 (the IFF Supplemental Reserve Account Agreement ) among the Borrower, the Guarantor, IFF, an Illinois not for profit corporation ( IFF ) and the Bond Trustee, IFF will deposit with the Bond Trustee $3,750,000, which amount may be withdrawn by the Bond Trustee solely for the purpose of making up a deficiency in the Interest Account or Principal Account in the Bond Fund created under the Indenture on any date that principal of or interest on the Series 2011 Bonds is due, but only under the conditions described under SECURITY FOR THE SERIES 2011 BONDS- IFF Supplemental Reserve Account. The amount deposited shall be reduced and/or entirely released as described herein under SECURITY FOR THE SERIES 2011 BONDS- IFF Supplemental Reserve Account. -2-

7 Forward-Looking Statements This Official Statement contains statements relating to future results that are forward-looking statements of the type defined in the Private Litigation Reform Act of When used in this Official Statement, the words estimate, expect, project, intend, anticipate, believe, may, will, continue 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, and that those differences could be material. Description of the Issuer THE ISSUER The Issuer is a body politic and corporate of the State of Illinois (the State ). The Issuer was created under the Illinois Finance Authority Act (the Act ), which consolidated seven of the State s previously existing financing authorities (the Predecessor Authorities ). All bonds, notes or other evidences of indebtedness of the Predecessor Authorities were assumed by the Issuer effective January 1, Under the Act, the Issuer may not have outstanding at any one time bonds for any of its corporate purposes in an aggregate principal amount exceeding $28,500,000,000 excluding bonds issued to refund the bonds of the Issuer or bonds of the Predecessor Authorities. Pursuant to the Act, the Issuer is governed by a 15-member board appointed by the Governor of the State of Illinois with the advice and consent of the State Senate. Presently, 13 members have been duly appointed, and 2 vacancies exist. The members receive no compensation for the performance of their duties but are entitled to reimbursement for all necessary expenses incurred in connection with the performance of such duties. Bonds of the Issuer The Issuer may from time to time issue bonds as provided in the Act for the purposes set forth in the Act. Any bonds issued by the Issuer (and any interest thereon) shall not be or become an indebtedness or obligation, general or moral, of the State of Illinois or any political subdivision thereof nor be or become a pledge of the full faith and credit of the State of Illinois or any political subdivision thereof, other than the Issuer. The Series 2011 Bonds of the Issuer as described herein are limited obligations of the Issuer payable solely from the specific sources and revenues of the Issuer specified in the resolution of the Issuer relating to the Series 2011 Bonds and Bond Indenture authorizing the issuance of such bonds. No owner of any Series 2011 Bond shall have the right to compel any taxing power of the State of Illinois or any political subdivision thereof to pay the principal of, premium, if any or interest on the Series 2011 Bonds. The Issuer has no taxing power. The Issuer makes no warranty or representation, whether express or implied, with respect to the Refunding Project or the Project (as defined herein under PLAN OF FINANCE - The Project ) or the use thereof. Further, the Issuer has not prepared any material for inclusion in this Official Statement, except that material under the headings THE ISSUER and LEGAL MATTERS Pending and Threatened Litigation No Proceedings Against the Issuer. The distribution of this Official Statement has been duly approved and authorized by the Issuer. Such approval and authorization does not, however, constitute a representation or approval by the Issuer of the accuracy or sufficiency of any information contained herein except to the extent of the material under the headings referenced in this paragraph. The offices of the Issuer are located at Two Prudential Plaza, 180 North Stetson Avenue, Suite 2555, Chicago, Illinois 60601, and its telephone number is (312)

8 Issuer Advisor Certain legal matters with respect to the Series 2011 Bonds will be passed upon for the Issuer by its special counsel, Sanchez Daniels & Hoffman LLP, Chicago, Illinois. THE BORROWER The Borrower is an Illinois not-for-profit corporation which was incorporated on October 3, The Borrower is an organization described under Section 501(c)(3) of the Code. The Borrower currently operates eleven Charter Schools throughout the Chicago, Illinois area including two Charter Schools at two locations recently opened for the school year. The Charter Schools operate pursuant to a charter school agreement, as amended, between the Borrower and the Chicago Board of Education, as approved by the Illinois Board of Education under the Charter Schools Law, 105 ILCS 5/27A-1 et seq., as amended (the Charter Schools Act ). For more information regarding the Borrower and the Charter Schools, see generally APPENDIX B THE BORROWER, THE GUARANTOR AND THE CHARTER SCHOOLS. THE GUARANTOR The Guarantor, a corporate affiliate of the Borrower, is an Illinois not-for-profit corporation which was incorporated on February 10, The Guarantor is an organization described under Section 501(c)(3) of the Code. For more information regarding the Guarantor, see generally APPENDIX B THE BORROWER, THE GUARANTOR AND THE CHARTER SCHOOLS. Series 2011 Bonds PLAN OF FINANCE The Borrower will use a portion of the proceeds of the Series 2011 Bonds to repay a portion of the Bank Loan the proceeds of which were used for the purposes described below (see Bank Loan, Series 2007 Bonds and Series 2006 Bonds ). The Bank Loan will be repaid in part on the date of issuance of the Series 2011 Bonds with a portion of the proceeds of the Series 2011 Bonds (approximately $31,268,986) and a portion of the proceeds of the JPMorgan Chase/LISC Financing (as defined and described below under JPMorgan Chase/LISC Financing ) (approximately $11,800,000) (see - JPMorgan Chase/LISC Financing ). The portion of the Bank Loan which will not be repaid from such sources (approximately $18,665,000) will be extended through approximately April 26, 2013 as described below (and is expected to be refinanced with proceeds of the New Markets Tax Credit Financing by March 1, 2012 described below) (see Extension of and Increase in Bank Loan; New Markets Tax Exempt Financing ). In addition, the existing subordinate IFF Loan (as described and defined below) (see IFF Loan ) will be repaid in full from proceeds of the Series 2011 Bonds. Sources and Uses of Funds The estimated sources and uses of the proceeds of the Series 2011 Bonds and other fund sources are set forth below. -4-

9 SOURCES AND USES OF FUNDS Series 2011A Bonds Sources Series 2011B Bonds Extension of Portion of Bank Loan JPMorgan Chase/ LISC Financing Par Amount of Series 2011 Bonds $36,775,000 $730,000 $37,505,000 Extended/New Bank Loan $19,915,804 19,915,804 JPMorgan Chase/LISC Financing $13,665,000 13,665,000 TOTAL SOURCES $36,775,000 $730,000 $19,915,804 $13,665,000 $71,085,804 Total Uses Repay Portion of Bank Loan $31,268,986 $11,800,000 $43,068,986 Extension of Portion of Bank Loan $18,665,000 $18,665,000 Project Fund 850, ,000 Reserve Account 2,981,411 $59,182 3,040,593 Costs of Issuance Fund (1) 294, , ,258 Underwriter s Discount 441,300 8, ,060 Repay IFF Loan 939, ,103 Capital Improvements 756, ,747 Other Costs 494,057 1,865,000 2,359,057 TOTAL USES $36,775,000 $730,000 $19,915,804 $13,665,000 $71,085,804 (1) Includes underwriting, legal and accounting fees, fees of the Issuer, initial fees of the Bond Trustee and the Master Trustee, publication costs and printing expenses. Bank Loan, Series 2007 Bonds and Series 2006 Bonds The Bank Loan was originally incurred on June 27, 2008 and extended on June 27, 2011 to January 5, The Bank Loan consists of a loan in the original principal amount of $65,000,000 from Cole Taylor Bank and MB Financial Bank, N.A., as co-lead banks among a consortium of banks (collectively, the Banks ), to the Borrower and the Guarantor, as co-borrowers pursuant to a Refinancing and Construction Loan Agreement dated June 27, 2008, as subsequently amended and modified (the Bank Loan Agreement ) under which the Borrower and the Guarantor issued their promissory notes to the Banks in two tranches aggregating $65,000,000. It is expected that the portion of the Bank Loan which is not refinanced with proceeds of the Series 2011 Bonds and the JPMorgan Chase/LISC Financing (approximately $18,665,000) will be extended through a date eighteen months following the date of such extension (the date of issuance of the Series 2011 Bonds) during which period such portion is expected to be taken out with the New Market Tax Credits Financing as described below under Extension of and Increase in Portion of Bank Loan; New Markets Tax Credits Financing. Proceeds of the Bank Loan were applied as follows: (1) $23,039,559 was deposited into an irrevocable escrow account to defease the remaining outstanding principal amounts of the Series 2006 Bonds (as defined below) and the Series 2007 Bonds (as defined below) in their entirety, which bonds -5-

10 will, from the moneys deposited in escrow, either be paid at maturity or called for redemption in advance of their maturity; and (2) $41,960,441 was used to acquire, construct and equip the Borrower s Veteran s Memorial campus and for related costs (the Veterans Project ). Proceeds of the Series 2007 Bonds were used by the Borrower to finance or refinance the acquisition, construction and equipping of the Officer Donald J. Marquez Charter School which opened in September 2007 and which is owned by the Guarantor and leased to the Borrower (the Series 2007 Project ). The Series 2007 Bonds were not issued under the Bond Indenture, nor was the repayment obligation of the Borrower thereunder issued under the Master Trust Indenture. The Series 2007 Bonds are no longer outstanding under their authorizing documents and the holders thereof have no right against or lien upon any assets of the Borrower, the Guarantor or the Issuer, other than the irrevocable defeasance escrow referenced above. Proceeds of the Series 2006 Bonds were used by the Borrower to finance or refinance renovations to two Charter Schools then being opened by the Borrower the Bartolomé de Las Casas Charter School and the Carlos Fuentes Charter School (both campuses being leased by the Borrower from the Archdiocese of Chicago) and the refinancing of a loan which financed renovations at the Octavio Paz Primary School and at the Octavio Paz Intermediate Charter School (which have since been consolidated) (collectively, the Series 2006 Project ). The Series 2006 Bonds were not issued under the Bond Indenture, nor was the repayment obligation of the Borrower thereunder issued under the Master Trust Indenture. The Series 2006 Bonds are no longer outstanding under their authorizing documents and the holders thereof have no right against or lien upon any assets of the Borrower, the Guarantor or the Issuer, other than the irrevocable defeasance escrow referenced above. The outstanding principal amount of the Bank Loan as of the date of this Official Statement is $61,733,986. The Veterans Project, the Series 2007 Project and the Series 2006 Project are referred to collectively herein as the Refunding Project. For tax purposes and for certain other purposes described herein under SECURITY FOR SERIES 2011 BOND - IFF Supplemental Reserve Account, the proceeds of the Series 2011 Bonds are being deemed to refinance the Veterans Project only. JPMorgan Chase/LISC Financing This financing component (the JPMorgan Chase/LISC Financing ) is expected to close on the same date as the issuance of the Series 2011 Bonds. It will consist of three loans (a senior loan and two subordinate loans). The aggregate principal amount of the loans will total approximately $13,665,000 and will be made to an affiliate of the Borrower and the Guarantor utilizing a combination of federal new markets tax credits and leveraged loans. The affiliate will then lease the financed schools to the Borrower. This financing is being provided by both JPMorgan Chase Bank, N.A. and Local Initiatives Support Corporation as part of a national lending initiative to charter schools. This financing will be for an initial term of approximately 8 years with a final maturity in October, The terms of this financing will include a forgivable note (the third loan) in the amount of approximately $2,800,000, which represents the equity received by the affiliate of the Borrower and the Guarantor through the new markets tax credit program. In addition, a sinking fund accumulating to a total of approximately $2,700,000 will be applied to refinance the senior loan. As a result, it is expected that at the maturity in October, 2019, only approximately $8,100,000 principal amount (net of the sinking fund) of the remaining loan balance will need to be refinanced, the likely source of which will include an issuance of tax exempt bonds (which may or may not be supported by an Obligation issued under the Master Trust Indenture). Prior to any such refinancing, the JPMorgan Chase/LISC Financing will be secured by a pledge of the facilities and revenues derived from the Borrower s Donald Marquez and Gage Park campuses, and will not be secured by any assets or revenues pledged under the Master Trust Indenture, -6-

11 the Bond Indenture or the Mortgages securing the Series 2011 Bonds. Conversely, prior to any such refinancing, the assets and revenues accruing from the JPMorgan Chase/LISC Financing will not secure the Series 2011 Bonds. Extension of and Increase in Portion of Bank Loan; New Markets Tax Credit Financing The remaining unpaid principal balance of the Bank Loan (in the approximate amount of $18,665,000) together with new funding to pay certain capital renovation costs at certain Charter Schools in the amount of $756,747 and other costs in the amount of $494,057 (together, $19,915,804) will be extended on the date of issuance of the Series 2011 Bonds by two banks (Cole Taylor Bank and MB Financial Bank, N.A) for a term expected to end on or about April 26, The Bank Loan, as extended and increased, will be secured by Obligation No. 2 issued by the Borrower under the Master Indenture and thus will be secured on parity with Obligation No. 1 securing the Series 2011 Bonds, including the pledge of the Borrower s Gross Revenues. The Bank Loan will also be secured by a mortgage and security agreement on two of the Borrower s Charter School campuses-- the Soccer Academy and Carlos Fuentes. The Borrower expects, but cannot guarantee, that the amount of the extended Bank Loan will be refinanced with the proceeds of a new markets tax credit financing (the New Markets Tax Credit Financing ) by March 1, The likely terms of this financing will include both an equity component (forgivable note) and leveraged loans, with a final term of The New Markets Tax Credit Financing will likely be secured by an additional Obligation issued by the Borrower under the Master Indenture and thus secured on parity with Obligation No. 1. IFF Loan The Borrower borrowed $1,000,000 from IFF, an Illinois not for profit corporation, on June 27, 2008 in connection with the Bank Loan. Proceeds of the IFF loan (the IFF Loan ) were used to pay additional costs of construction and equipping of the Veterans Memorial Campus. The $939,103 outstanding principal amount of the IFF Loan will be refinanced with proceeds of the Series 2011 Bonds and the IFF Loan will no longer be outstanding following such refinancing. Project Approximately $850,000 of the Series 2011A Bond proceeds will be deposited in the Project Fund and disbursed to pay costs of certain capital renovations the Borrower s Humboldt Park Charter School campus (the Project ). The Issuer makes no warranty or representation, whether express or implied, with respect to the Refunding Project or the Project or the location, use, operation, design, workmanship, merchantability, fitness, suitability or use for particular purpose, condition or durability thereof or title thereto. Future Expansion The Borrower intends to acquire, construct, renovate and equip additional charter schools. To finance such charter schools, it may incur additional indebtedness which may or may not be on a parity basis with Obligation No. 1. The amount of any such additional indebtedness is undetermined at this point. See APPENDIX B THE BORROWER, THE GUARANTOR AND THE CHARTER SCHOOLS Growth Strategy and SECURITY FOR THE SERIES 2011 BONDS - Master Indenture - Covenant Regarding Future Related Campus Facilities. -7-

12 RISK FACTORS This Official Statement contains summaries of pertinent portions of the Series 2011 Bonds, the Bond Indenture, the Master Indenture, the Loan Agreement, the Mortgages, the Continuing Disclosure Agreement and other relevant documents. Such summaries and references are qualified in their entirety by reference to the full text of such documents. The following discussion of some of the risk factors associated with the Series 2011 Bonds is not, and is not intended to be, exhaustive, and such risks are not necessarily presented in the order of their magnitude. Sufficiency of Revenues The Series 2011 Bonds are payable solely from certain payments, revenues and other amounts derived from the Borrower pursuant to the Loan Agreement and Obligation No. 1, and are secured only by such revenues and a pledge of certain funds and accounts created under the Bond Indenture (excluding a rebate fund), and as otherwise provided in the Bond Indenture and the Loan Agreement. Based on present circumstances, and based on its projections regarding enrollment, the Borrower believes it will generate sufficient revenues to make payments on Obligation No. 1 representing debt service on the Series 2011 Bonds. However, the Borrower s charter may be revoked (see APPENDIX A-1 SUMMARY OF CERTAIN PROVISIONS OF ILLINOIS CHARTER SCHOOL LAW - Charter Term; Renewal; Revocation ) or the bases of the assumptions used by the Borrower to formulate its beliefs may otherwise change. No representation or assurance can be made that the Borrower will continue to generate sufficient revenues to make payments on Obligation No. 1 representing debt service on the Series 2011 Bonds. Operating History; Reliance on Projections; State Appropriation to Guarantor The Borrower s ability to make payments on Obligation No. 1 representing debt service on the Series 2011 Bonds depends on its receipt of payments to support its operations as described herein under APPENDIX A-2 CHARTER SCHOOL FINANCE IN ILLINOIS and in APPENDIX B THE BORROWER, THE GUARANTOR AND THE CHARTER SCHOOLS. The projections of revenues and expenses contained in APPENDIX B herein were prepared by the Borrower with assistance from its financial advisor and have not been independently verified by any party other than the Borrower. No feasibility studies have been conducted with respect to operations of the Borrower pertinent to the Series 2011 Bonds. The projections prepared by the Borrower are forward-looking statements and are subject to the general qualifications and limitations described under INTRODUCTION Forward-Looking Statements with respect to such statements. The Underwriters have not independently verified such projections, and make no representation nor give any assurances that such projections or the assumptions underlying them, are complete or correct. Further, the projections relate only to a limited number of fiscal years and consequently do not cover the entire period that the Series 2011 Bonds will be outstanding. The projections are derived from the actual operations of the Borrower and from assumptions made by the Borrower about its future student enrollment and expenses. There can be no assurance that the actual enrollment, revenues and expenses for the Borrower will be consistent with the assumptions underlying the projections contained herein. Refer to APPENDIX B THE BORROWER, THE GUARANTOR AND THE CHARTER SCHOOLS to review certain of the projections and to consider the various factors that could cause actual results to differ significantly from projected results. Refer to INTRODUCTION Forward-Looking Statements, above, for qualifications and limitations applicable to forward-looking statements. In addition, the projections contained in APPENDIX B THE BORROWER, THE GUARANTOR AND THE CHARTER SCHOOLS Projected Revenues and Expenditures are based on the assumption that the Guarantor will receive a sufficient amount of grants from the remaining portion of -8-

13 the State Appropriation (as defined therein) for the construction of three new charter schools as described in APPENDIX B under State Appropriation, which charter schools, upon completion of construction, will be designated as Related Campus Facilities as described herein under SECURITY FOR THE SERIES 2011 Bonds Master Trust Indenture - Covenant Regarding Future Related Campus Facilities. While the Borrower and the Guarantor expect to receive grants of the full remaining portion of the State Appropriation, neither the Borrower nor the Guarantor can give any assurances that such grants will be made and, if they are, the schedule on which such grants will be received. NO GUARANTEE CAN BE MADE THAT THE PROJECTED INFORMATION CONTAINED HEREIN WILL CORRESPOND WITH THE RESULTS ACTUALLY ACHIEVED IN THE FUTURE BECAUSE THERE CAN BE NO ASSURANCE THAT ACTUAL EVENTS WILL CORRESPOND WITH THE ASSUMPTIONS MADE BY THE BORROWER. ACTUAL OPERATING RESULTS MAY BE AFFECTED BY MANY FACTORS, INCLUDING, BUT NOT LIMITED TO, DIFFICULTY WITH OR FAILURE OF THE BORROWER S GROWTH PLANS, INCREASED COSTS, LOWER THAN ANTICIPATED REVENUES (AS A RESULT OF INSUFFICIENT ENROLLMENT, REDUCED PAYMENTS FROM THE STATE, THE CHICAGO BOARD OF EDUCATION, THE FEDERAL GOVERNMENT OR OTHERWISE), EMPLOYEE RELATIONS, CHANGES IN TAXES, CHANGES IN APPLICABLE GOVERNMENT REGULATION, CHANGES IN DEMOGRAPHIC TRENDS, FACTORS ASSOCIATED WITH EDUCATION, COMPETITION FOR STUDENTS, AND CHANGES IN LOCAL OR GENERAL ECONOMIC CONDITIONS. Competition for Students The Borrower serves students in the City of Chicago, Illinois. There are currently 37 organizations operating charter schools (with 71 individual campuses) in the City of Chicago, approximately 611 traditional public schools operated by the Chicago Board of Education and numerous private schools serving grades pre-k-12 in City of Chicago. See APPENDIX B THE BORROWER, THE GUARANTOR AND THE CHARTER SCHOOLS Service Area and Competing Schools. Potential purchasers should be aware that the Borrower faces constant competition for students and there can be no assurance that the Borrower will continue to attract and retain the number of students that are needed to generate revenues sufficient to make payments on Obligation No. 1 representing debt service on the Series 2011 Bonds. Annual Appropriation; Inadequate State Payments; No Taxing Authority Illinois charter schools such as those operated by the Borrower may not charge tuition and have no taxing authority. Payments from the Chicago Board of Education to the Borrower that the Borrower receives for educating students comprise the primary source of revenue generated by Borrower. The amount of such payments the Borrower receives is based on a variety of factors, including the Charter Schools enrollment. The overall amount of education payments provided in the State in any year is also subject to many factors discussed herein under APPENDIX A-2 CHARTER SCHOOL FINANCE IN ILLINOIS. Certain decisions about charter school funding are based on many factors, including the State s economic performance. Further, because some public officials, their constituents, commentators and others have viewed charter schools as controversial, political factors may also come to bear on charter school funding, and such factors are subject to change. As a result, the payments from the Chicago Board of Education may not be available in a sufficient amount for the Borrower to generate sufficient revenue to meet its operating expenses and to make payments on Obligation No. 1 under the Loan Agreement. No liability would accrue to the State or the Chicago Board of Education in such event, and neither the State nor the Chicago Board of Education would be obligated or liable for any future payments or any damages. If the Chicago Board of Education were to withhold payments to the Borrower for any reason, even for a reason that is ultimately determined to be invalid or unlawful, the Borrower could be forced to cease operations. -9-