PRELIMINARY OFFICIAL STATEMENT DATED MARCH 18, 2014

Transcription

This Preliminary Official Statement and information contained herein are subject to completion or amendment without notice. These securities may not be sold nor may an offer to buy be accepted prior to the
time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
PRELIMINARY OFFICIAL STATEMENT DATED MARCH 18, 2014
NEW ISSUE – BOOK-ENTRY ONLY
RATINGS:
Standard & Poor’s Program Rating: “___”
Standard & Poor’s Underlying Rating: “___”
See “RATINGS” herein.
In the opinion of Ice Miller LLP, Indianapolis, Indiana under existing laws, regulations, judicial decisions and rulings, the Bonds are “Qualified Zone Academy
Bonds” as such term is defined in Section 54E of the Internal Revenue code of 1986, as amended (the “Code”), and the eligible holders of which are entitled to
quarterly federal income tax credits. The amount of the tax credit will be treated as interest for federal tax purposes and will be included in gross income for all
holders of the Bonds. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or receipt of the tax
credit on the Bonds. See “TAX MATTERS” and “TAX CREDIT BONDS” herein.
$2,000,000
MOORESVILLE CONSOLIDATED SCHOOL BUILDING CORPORATION
(Morgan County, Indiana)
TAXABLE AD VALOREM PROPERTY TAX FIRST MORTGAGE BONDS, SERIES 2014A
(QUALIFIED ZONE ACADEMY BONDS – TAX CREDIT BONDS)
Dated: As of Delivery
Maturity Date: As shown below
The Taxable Ad Valorem Property Tax First Mortgage Bonds, Series 2014A (Qualified Zone Academy Bonds – Tax Credit Bonds) (the
“Bonds”) will be issued only as fully registered bonds in the name of Cede & Co., as nominee for The Depository Trust Company
(“DTC”). The Bonds are being issued as “Qualified Zone Academy Bonds” as defined in Section 54A and 54E of the Code.
The holder of a Bond will be entitled to a tax credit. For federal income tax purposes, the taxpayer who owns the Bond on a Tax Credit
Allowance Date in each calendar year will be entitled to a credit against its federal income tax liability. See “TAX CREDIT BONDS”.
Purchases of beneficial interests in the Bonds will be made in book-entry-only form in the denomination of $5,000 or any integral
multiples thereof. Purchasers of beneficial interest in the Bonds (the “Beneficial Owners”) will not receive physical delivery of
certificates representing their interest in the Bonds. Principal will be disbursed on behalf of the Building Corporation as defined below,
by The Bank of New York Mellon Trust Company, N.A., Indianapolis, Indiana (the “Trustee”, “Registrar” and “Paying Agent”). The
principal of, interest on and premium, if any, on the Bonds will be paid directly to DTC by the Paying Agent so long as DTC or its
nominee is the registered owner of the Bonds. The final disbursement of such payments to the Beneficial Owners of the Bonds will be
the responsibility of the DTC Participants and the Indirect Participants. See “The Bonds - Book-Entry-Only System”. The Bonds are
subject to optional and extraordinary mandatory and optional redemption prior to maturity as described herein.
The Bonds are issued pursuant to a Trust Indenture dated as of March 1, 2013, as supplemented by a First Supplemental Trust
Indenture dated as of February 1, 2014, (as supplemented, the “Trust Indenture”) entered into between Mooresville Consolidated
School Building Corporation (the “Building Corporation”) and the Trustee. The Bonds constitute valid and legally binding obligations of
the Building Corporation and are payable from certain sources of income of the Building Corporation which have been specifically
pledged for the payment thereof including rental payments to be received from Mooresville Consolidated School Corporation, Morgan
County, Indiana (the “School Corporation”), under the terms of a Lease dated February 12, 2013, as amended (as amended, the
“Lease”) which rental payments are payable from ad valorem taxes to be levied and collected on all taxable property within the School
Corporation. The levy of ad valorem taxes by the School Corporation to pay rent due and payable under the Leases is mandatory and
not subject to annual appropriation. The rental payments will be paid directly to the Trustee for the Building Corporation (see
“Summary of the Lease” herein).
The Bonds will be issued on a parity basis with the Building Corporation’s Ad Valorem Property Tax First Mortgage Bonds, Series 2013B,
dated March 28, 2013 (the “2013B Bonds”).
THE BONDS WILL MATURE ON THE DATES AND IN THE AMOUNTS AS SHOWN ON THE INSIDE COVER.
The Bonds are offered when, as and if issued by the Building Corporation and received by the Underwriter, subject to prior sale, the withdrawal
or modification of the offer without notice, and to the unqualified approval as to the legality of the Bonds by Ice Miller LLP, Indianapolis,
Indiana. Certain legal matters will be passed on by Harris & Currens, Mooresville, Indiana, counsel for the Building Corporation and the School
Corporation. Certain legal matters will be passed on for the Underwriter by Quarles & Brady LLP, Milwaukee, Wisconsin. It is expected that
the Bonds will be delivered through Depository Trust Company in New York, New York, on or about March __, 2014.
This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire
Official Statement to obtain information essential to the making of an informed investment decision.
$2,000,000
(Base CUSIP ______) †
Tax Credit Bonds:
Maturity
Principal
Amount
7/15/30
1/15/31
7/15/31
1/15/32
7/15/32
1/15/33
7/15/33
1/15/34
$ 250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
Tax Credit
Rate
CUSIP
† The above-referenced CUSIP numbers have been assigned by an independent company not affiliated with the Building
Corporation, the School Corporation or the Underwriter, and are included solely for the convenience of the holders of the
Bonds. None of the Building Corporation, the School Corporation or the Underwriter is responsible for the selection or uses
of such CUSIP numbers, and no representation is made as to their correctness on the Bonds or as indicated above. The
CUSIP number for a specific maturity is subject to being changed after the issuance of the 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 such maturities.
(This area intentionally left blank.)
BOARD OF DIRECTORS
Ryan T. Goodwin, President
Michael R. Haskins, Secretary
Mark A. Allison, Member
MOORESVILLE CONSOLIDATED SCHOOL CORPORATION
BOARD OF SCHOOL TRUSTEES
Name
William Roberson, President
Mark Meadows, Vice President
Perry King, Secretary
Randy Davis, Member
Dave Oberle, Member
Term Expiration
12/31/2014
12/31/2016
12/31/2014
12/31/2016
12/31/2014
SCHOOL ADMINISTRATION
David Marcotte, Superintendent
11 W. Carlisle Street
Mooresville, IN 46158
317.831.0950
SCHOOL ATTORNEY
BOND COUNSEL
UNDERWRITER’S COUNSEL
Harris & Currens
9 West Main Street
Mooresville, IN 46158
317.831.4466
Ice Miller LLP
One American Square, Suite 2900
Indianapolis, IL 46282
317.236.2437
Quarles & Brady LLP
411 East Wisconsin Avenue, Suite 2040
Milwaukee, WI 53202
414.277.5000
UNDERWRITER
City Securities Corporation
30 South Meridian Street, Suite 600
Indianapolis, IN 46204
317.634.4400
This Official Statement is being distributed in connection with the sale of the Bonds referred to in this Official Statement
and may not be used, in whole or in part, for any other purpose. No dealer, broker, salesman or other person is authorized
to make any representations concerning the Bonds other than those contained in this Official Statement, and if given or
made, such other information or representations may not be relied upon as statements of the Mooresville Consolidated
School Building Corporation, Morgan County, Indiana (the “Building Corporation”) or Mooresville Consolidated School
Corporation, Morgan County, Indiana, (the “School Corporation”). This Official Statement does not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it
is unlawful to make such an offer, solicitation or sale.
For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may
be supplemented or amended by the School Corporation, from time to time (collectively, the “Official Statement”), may be
treated as a final Official Statement with respect to the Bonds described herein that is deemed final by the School
Corporation as of the date hereof (or of any such supplemental or amendment).
Unless otherwise indicated, the Building Corporation and the School Corporation are the sources of the information
contained in this Official Statement. Certain information in this Official Statement has been obtained by the Building
Corporation and the School Corporation or on their behalf from The Depository Trust Company and other non-Building
Corporation or School Corporation sources that the Building Corporation and the School Corporation believe to be reliable.
No representation or warranty is made, however, as to the accuracy or completeness of such information. Nothing
contained in this Official Statement is a promise of or representation by City Securities Corporation (the “Underwriter”).
The Underwriter has provided the following sentence of inclusion in this Official Statement. The Underwriter has 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 Underwriter does not guarantee
the accuracy or completeness of such information. The information and opinions expressed in this Official Statement are
subject to change without notice. Neither the delivery of this Official Statement nor any sale made under this Official
Statement shall, under any circumstances, create any implication that there has been no change in the financial condition
or operations of the Building Corporation and the School Corporation or other information in this Official Statement, since
the date of this Official Statement.
This Official Statement contains statements that are “forward-looking statements” as that term is defined in Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in
this Official Statement, the words “estimate,” “intend,” “project” or “projection,” “expect” and similar expressions are
intended to identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties, some
of which are discussed herein, that could cause actual results to differ materially from those contemplated in such forwardlooking statements. Investors and prospective investors are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date of this Official Statement.
This Official Statement should be considered in its entirety. No one factor should be considered more or less important
than any other by reason of its position in this Official Statement. Where statutes, ordinances, reports or other documents
are referred to in this Official Statement, reference should be made to those documents for more complete information
regarding their subject matter.
The Bonds will not be registered under the Securities Act of 1933, as amended, or the securities laws of any state of the
United States, and will not be listed on any stock or other securities exchange. Neither the Securities and Exchange
Commission nor any other federal, state, municipal or other governmental entity shall have passed upon the accuracy or
adequacy of this Official Statement.
In connection with the offering of the Bonds, the Underwriter may or may not over allot or effect transactions that stabilize
or maintain the market prices of the Bonds at levels above those which might otherwise prevail in the open market. Such
stabilizing, if commenced, may be discontinued at any time without notice. The prices and other terms respecting the
offering and sale of the Bonds may be changed from time to time by the Underwriter after the Bonds are released for sale
and the Bonds may be offered and sold at prices other than the initial offering prices, including sales to dealers who may
sell the Bonds into investment accounts.
TABLE OF CONTENTS
Page
Introduction
Purpose of Issue
The Leased Premises
Estimated Sources and Uses of Funds
Schedule of Semi-Annual Debt Service Requirements and Lease Payments
Tax Credit Bonds
The Bonds
Additional Bonds
Sources of Payment and Security for the Bonds
Intercept Program
Procedures for Property Assessment, Tax Levy and Collection
Circuit Breaker Tax Credit
The Building Corporation
Legal Matters
Litigation
Summary of the Trust Indenture
Summary of the Lease
Tax Matters
General Tax Matters
Legal Opinions and Enforceability of Remedies
Continuing Disclosure
Underwriting
Rating
Statement of Issuer
Mooresville Consolidated School Corporation
Mooresville Consolidated School Corporation Audit as of June 30, 2012
General Information About the Community
Continuing Disclosure Undertaking
Form of Opinion of Bond Counsel
1
1
2
2
3
4
6
11
11
12
12
14
16
16
17
17
23
26
28
31
31
32
32
32
Appendix A
Appendix B
Appendix C
Appendix D
Appendix E
(This page intentionally left blank.)
OFFICIAL STATEMENT
$2,000,000
INTRODUCTION
This Official Statement, including the cover page and appendices, is provided to set forth certain information
concerning the sale and delivery by the Mooresville Consolidated School Building Corporation (the “Building
Corporation”) of its Taxable Ad Valorem Property Tax First Mortgage Bonds, Series 2014A (Qualified Zone Academy
Bonds – Tax Credit Bonds) (the “Bonds”) in the aggregate principal amount of $2,000,000. The Bonds will be issued
under the provisions of the Indiana Code, Title 20, Article 47, Chapter 3 and in accordance with the terms of a Trust
Indenture dated March 1, 2013, as supplemented by a First Supplemental Trust Indenture dated February 1,
2014, (as supplemented, the “Trust Indenture”), between the Building Corporation and The Bank of New York
Mellon Trust Company, N.A., Indianapolis, Indiana, as Trustee (the “Trustee”, “Paying Agent” and “Registrar”).
The Bonds have been designated by the Building Corporation and the School Corporation as “qualified zone
academy bonds” pursuant to Section 54A and 54E of the Internal Revenue Code of 1986, as amended (the “Code”).
See “TAX CREDIT BONDS”.
Investors must read the entire Official Statement to obtain information essential to the making of an informed
investment decision.
For more information on the Mooresville Consolidated School Corporation, Morgan County, Indiana (the “School
Corporation” and the “Lessee”) and the community of the School Corporation, see “Appendix A - Mooresville
Consolidated School Corporation”, “Appendix B – Audit Report of Mooresville Consolidated School Corporation
as of June 30, 2012” and “Appendix C - General Information About the Community” attached hereto. All
financial and other information presented in this Official Statement has been provided by the School
Corporation from its records, except for information expressly attributed to other sources. The presentation of
information concerning the School Corporation, including financial information, is intended to show recent
historic information and is not intended to indicate or project future or continuing trends in the financial
position or other affairs of the School Corporation. No representation is made or implied hereby that any past
experience, as might be shown by the financial and other information, will necessarily continue in the future.
The summaries of and references to all documents, statutes and other instruments referred to in this Official
Statement do not purport to be complete and are qualified in their entirety by reference to the full text of each
such document, statute or instrument. Terms not defined in this Official Statement shall have the meaning set
forth in the respective documents.
PURPOSE OF ISSUE
The proceeds from the sale of the Bonds, together with any funds of the Building Corporation held under the Trust
Indenture, will be used for the renovation of and improvements to Mooresville High School (the “Project) and
payment of the costs of issuance of the Bonds, including underwriter’s discount.
-1-
THE LEASED PREMISES
The Leased Premises consist of a portion of Mooresville High School, 500 North Indiana Street, Mooresville,
Indiana.
All construction for the project will be performed in accordance with plans and specifications prepared for and
approved by the School Corporation. Construction is scheduled to begin in April 2014 and is expected to be
substantially completed by August 2014.
ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds required for the Project are shown below:
Estimated Sources of Funds*
Principal Amount of the Bonds
$ 2,000,000
Total
$ 2,000,000
Estimated Uses of Funds
Construction Fund
Costs of Issuance & Underwriter’s Discount
$
Total
$
(The area intentionally left blank.)
___________________________
*Preliminary, subject to change.
-2-
SCHEDULE OF SEMI-ANNUAL DEBT SERVICE REQUIREMENTS AND LEASE PAYMENTS
Date
15-Jul-14
15-Jan-15
15-Jul-15
15-Jan-16
14-Jul-16
15-Jan-17
15-Jul-17
15-Jan-18
15-Jul-18
15-Jan-19
15-Jul-19
15-Jan-20
14-Jul-20
15-Jan-21
15-Jul-21
15-Jan-22
15-Jul-22
15-Jan-23
15-Jul-23
15-Jan-24
14-Jul-24
15-Jan-25
15-Jul-25
15-Jan-26
15-Jul-26
15-Jan-27
15-Jul-27
15-Jan-28
15-Jul-28
15-Jan-29
15-Jul-29
15-Jan-30
15-Jul-30
15-Jan-31
15-Jul-31
15-Jan-32
15-Jul-32
15-Jan-33
15-Jul-33
15-Jan-34
Principal*
Debt
Service
Interest
Lease
Payment *
(1)
$
$
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
(1) Interest for the period from the closing date to July 15, 2014.
(2) Lease payments are paid on the prior June 30 and December 31.
___________________________
-3-
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
(2)
TAX CREDIT BONDS
The Indiana Department of Education has allocated to the School Corporation the authority to issue Qualified
Zone Academy Bonds in an amount up to $2,000,000. The Building Corporation and School Corporation have
designated the Bonds as Qualified Zone Academy Bonds pursuant to Section 54E of the Code (“Qualified Zone
Academy Bonds”). A Bondholder is entitled to receive a tax credit (the “Tax Credit”) against the holder’s federal
tax liability.
A Qualified Zone Academy Bond generally includes a bond issued as part of an issue if 100% of the “available
project proceeds” are to be used for a “qualified purpose.” “Available project proceeds” means the proceeds
from the sale of the Bonds less costs of issuance (to the extent such costs of issuance do not exceed two percent
of such proceeds), plus any investment earnings on such amount. A “qualified purpose” with respect to any
Qualified Zone Academy Bond means the rehabilitation or repair of a public school facility (including costs of
acquiring equipment to be used in the portions of the public school facility that are being rehabilitated or
repaired with proceeds of such bonds).
Compliance with Section 54A of the Code will be established at the time of issuance of the Bonds. However, if
the Building Corporation is unable to actually spend 100% of the available projects proceeds of the Bonds for a
“qualified purpose” within the three-year period beginning on the date of issuance of the Bonds, and if the
Building Corporation does not receive an extension from the IRS, the Building Corporation must apply any
unspent proceeds to redeem pursuant to Extraordinary Mandatory Redemption (as described in Article IV of the
Indenture) a portion of the Bonds in order to preserve the qualification of the Bonds as Qualified Zone Academy
Bonds.
Under the Code, the holders of the Bonds on March 15, June 15, September 15 or December 15 of any tax year
(each is defined as a “Credit Allowance Date”) will be allowed a Tax Credit against the Bondholder’s federal
income tax liability until maturity or early redemption. The total Tax Credit with respect to the aggregate
principal amount of the Bonds is shown below:
-4-
Total Tax Credit at _____%
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
March 15
June 15
September 15
December 15
*The first and last credit (at maturity or redemption) shall be a ratable portion of the Tax Credit otherwise allowed
on a Credit Allowance Date.
The amount of the Tax Credit is equal to the product of the published credit rate for the date on which the
Bonds were sold (established as _____% per annum for the Bonds), times the outstanding principal amount of
the Bonds on the relevant Credit Allowance Date, divided by four. The Tax Credit allowed for the first Credit
Allowance Date of ______________, is the ratable portion of the Tax Credit otherwise allowed on such date
based on an initial issuance date of March ___, 2014. If a Bond is redeemed or matures on a date other than a
Credit Allowance Date, the associated tax credit will be a ratable portion of the tax credit otherwise allowed
based on the redemption date.
Generally, a taxpayer who owns a Bond or will recognize the amount of the Tax Credit as a credit against its
federal income tax liability on a given Credit Allowance Date, including estimated tax payments, if any. Tax
Credits will be treated by the Internal Revenue Service (the “IRS”) in a similar manner to the way in which
withheld taxes are treated for federal income tax purposes and will reduce the amount of either a taxpayer’s
subsequent estimated tax payments, if any, or its final tax liability, as reflected on its tax return for the related
tax year.
The Tax Credits are not refundable tax credits. If a Bondholder has gross income tax liability for a given year less
than the amount of the tax credit to which it is entitled for that year, the Bondholder will be required to carry
forward the excess Tax Credit to subsequent tax years, in any for which the Bondholder is able to take the credit.
The Tax Credit to which a Bondholder is entitled on a particular Credit Allowance Date is not transferable after
such Credit Allowance Date. Moreover, there can be no assurance that such an investor would be able to sell
the Bond prior to the Credit Allowance Date.
-5-
The amount of the Tax Credit will be treated as interest for federal income tax purposes and will be included in
the gross income of all Bondholders.
The discussion herein concerning certain tax consequences with respect to an investment in the Bonds is
included for general information only. All persons are urged to consult with their own tax advisors to
determine the specific tax consequences of making an investment in the Bonds, including any state, local or
non-U.S. tax consequences.
Potential investors are cautioned that there is currently no secondary market for qualified zone academy
bonds such as the Bonds. There can be no assurance that a secondary market will develop, or if a secondary
market does develop, that it will provide Bond holders with liquidity or that it will continue for the full term of
the Bonds. The developing nature of the tax treatment of qualified zone academy bonds such as the Bonds
may further limit liquidity.
THE BONDS
General
The Bonds will be issued in fully registered form in the denomination of $5,000 or any integral multiple of that
amount, will be dated as of delivery, and mature on January 15, 2034. However, upon a Determination of Loss of
Qualified Zone Academy Bonds Status (as defined herein), the Bonds will begin to accrue interest at an interest
rate equal to the sum of (i) __% per annum plus (ii) __% (the “Tax Credit Rate”) (computed on the basis of a 360day year twelve 30-day months) from March 15, June 15, September 15 or December 15 (each a “Tax Credit
Allowance Day”) immediately preceding the date fixed for redemption (the “Redemption Date”) determined in
accordance with the Indenture. Principal of the Bonds will be paid by wire transfer of immediately available funds
on the payment date to depositories shown as registered owners. In addition, the bondholder on one or more
quarterly Tax Credit Allowance Dates (as defined herein) will be allowed a credit under the Code against such
holder’s federal income tax liability.
So long as DTC or its nominee is the registered owner of the Bonds, principal of the Bonds will be paid directly to
DTC by the Paying Agent. Payment shall be made to the depository in whose name the Bond is registered on the
fifteenth day preceding an interest payment date. (The final disbursement of such payments to the Beneficial
Owners of the Bonds will be the responsibility of the DTC Participants and Indirect Participants, all as defined and
more fully described herein.)
Book-Entry-Only System
1.
The Depository Trust Company (“DTC”), New York, NY, will act as Bonds depository for the Bonds
(the “Bonds”). The Bonds will be issued as fully-registered Bonds registered in the name of Cede &
Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized
representative of DTC. One fully-registered Security certificate will be issued for each issue of the
Bonds, each in the aggregate principal amount of such issue, and will be deposited with DTC.
2.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under
the New York Banking Law, a “banking organization” within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the
New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for
over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and
-6-
money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”)
deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales
and other securities transactions in deposited securities, through electronic computerized bookentry transfers and pledges between Direct Participants’ accounts. This eliminates the need for
physical movement of securities certificates. Direct Participants include both U.S. and non-U.S.
securities brokers and dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation
(“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed
Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the
users of its regulated subsidiaries. Access to the DTC system is also available to others such as both
U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations
that clear through or maintain a custodial relationship with a Direct Participant, either directly or
indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules
applicable to its Participants are on file with the Securities and Exchange Commission. More
information about DTC can be found at www.dtcc.com.
3.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which
will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser
of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect
Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and
Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Bonds, except in the event that use of the
book-entry system for the Bonds is discontinued.
4.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered
in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by
an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the
name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not
be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
5.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take
certain steps to augment the transmission to them of notices of significant events with respect to
the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond
documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee
holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners.
In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar
and request that copies of notices be provided directly to them.
-7-
6.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being
redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
7.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds
unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to
whose accounts Bonds are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
8.
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede &
Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s
practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding
detail information from Issuer or Agent, on payable date in accordance with their respective
holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed
by standing instructions and customary practices, as is the case with Bonds held for the accounts of
customers in bearer form or registered in “street name,” and will be the responsibility of such
Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend
payments to Cede & Co. (or such other nominee as may be requested by an authorized
representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to
Direct Participants will be the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9.
A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered, through its
Participant, to Tender/Remarketing Agent, and shall effect delivery of such Bonds by causing the
Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to
Tender/Remarketing Agent. The requirement for physical delivery of Bonds in connection with an
optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the
Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of
tendered Bonds to Tender/Remarketing Agent’s DTC account.
10. DTC may discontinue providing its services as depository with respect to the Bonds at any time by
giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor
depository is not obtained, Bond certificates are required to be printed and delivered.
11. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a
successor securities depository). In that event, Bond certificates will be printed and delivered to
DTC.
12. The information in this section concerning DTC and DTC’s book-entry system has been obtained
from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy
thereof.
Revision of Book-Entry-Only System
In the event that either (1) the School Corporation receives notice from DTC to the effect that DTC is unable or
unwilling to discharge its responsibilities as a clearing agency for the Bonds or (2) the School Corporation elects to
discontinue its use of DTC as a clearing agency for the Bonds, then the School Corporation will do or perform or
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cause to be done or performed all acts or things, not adverse to the rights of the holders of the Bonds, as are
necessary or appropriate to discontinue use of DTC as a clearing agency for the Bonds and to transfer the
ownership of each of the Bonds to such person or persons, including any other clearing agency, as the holder of
such Bonds may direct. Any expenses of such a discontinuation and transfer, including any expenses of printing
new certificates to evidence the Bonds will be paid by the School Corporation.
Optional Redemption
The Bonds may be redeemed prior to maturity, at the option of the Building Corporation, in whole or in part, in
such order of maturity as determined by the Building Corporation, and by lot within maturities, on any date not
earlier than January 15, 2024, at face value, plus in each case accrued interest to the date fixed for redemption.
Extraordinary Mandatory Redemption from Unexpended Proceeds of the Bonds
In the event that the Building Corporation fails to expend all of the “available project proceeds” of the Bonds for
a “qualified purpose” within three years of issuance and no extension of the period for expenditure has been
granted by the IRS, the Bonds are subject to extraordinary mandatory redemption, in whole or in part, on June
15, 2017 or, in the event of an extension negotiated with the IRS, on a Tax Credit Allowance Date that occurs on
or before June 15, 2019, in authorized denominations, at a redemption price equal to the principal amount of
the Bonds called for redemption, in an amount equal to the unexpended proceeds from the sale of the Bonds
held by the Building Corporation, plus accrued interest to the date fixed for redemption.
Extraordinary Optional Redemption Due to Loss of Tax Credit Bond Status
Upon a Determination of Loss of Qualified Zone Academy Bond Status, the Bonds shall be subject to
extraordinary optional redemption prior to their fixed maturity date, in whole, on the date designated by the
School Corporation, which date shall be a date prior to January 15 following the next succeeding August 1 after
such extraordinary Redemption event. The Bonds shall be redeemed at a redemption price equal to the
principal amount of the Bonds called for redemption, plus accrued interest to the date fixed for redemption.
The term “Determination of Loss of Qualified Zone Academy Bond Status” shall mean (a) a final determination
by the IRS (after the Building Corporation has exhausted all administrative appeal remedies) determining that an
Accountable Event of Loss of Qualified Zone Academy Bond Status has occurred and specifying the Date of Loss
of Qualified Zone Academy Bond Status; (b) a non-appealable holding by a court of competent jurisdiction
holding that an Accountable Event of Loss of Qualified Zone Academy Bond Status has occurred and specifying
the Date of Loss of Qualified Zone Academy Bond Status; (c) the occurrence of a material adverse change under
Section 54E or 6431 of the Code; (d) the publication by the IRS or the United States Treasury of any guidance
with respect to such sections; or (e) any other determination by the IRS or the United State Treasury, which
determination is not the result of a failure of the Building Corporation to satisfy certain requirements of the
Trust Indenture, if as result of an event described in (c), (d), or (e) of this sentence, the tax credits expected to be
received with the respect to the Bonds are eliminated or reduced.
The term “Accountable Event of Loss of Qualified Zone Academy Bond Status” shall mean (a) any act or any
failure to act on the part of the Building Corporation, which act or failure to act is a breach of a covenant or
agreement contained in the Trust Indenture, the Tax Certificate or the Bonds and which act or failure to act
causes the Bonds to lose their status, or fail to qualify, as Qualified Zone Academy Bonds under Section 54E of
the Code, or (b) the making by the Building Corporation of any representation contained in the Trust Indenture,
the Tax Certificate or the Bonds, which representation was untrue when made and the untruth of which
representation at such time causes the Bonds to lose their status, or fail to qualify, as Qualified Zone Academy
Bonds.
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The term “Date of Loss of Qualified School Construction Bond Status” means the date specified in a
Determination of Loss of Qualified School Construction Bond Status as the date from and after which the Bonds
lost their status, or failed to qualify, as “qualified school construction bonds” as defined in Section 54F of the
Code as a result of an Accountable Event of Loss of Qualified School Construction Bond Status, which date could
be as early as the date of initial issuance and delivery of the Bonds.
Notice and Effect of Redemption
Notice of redemption shall be given by the Trustee by mailing a copy of the redemption notice, by first class mail,
not more than sixty (60) days nor less than thirty (30) days prior to the redemption date to the owners of the
Bonds to be redeemed as the names appear as of the date of mailing the notice. No failure or defect in that notice
with respect to any Bonds shall affect the validity of the proceedings for the redemption of any other Bonds for
which notice has been properly given.
If notice of redemption has been given and provisions for payment of the redemption price, and accrued interest
has been made, the Bonds to be redeemed shall be due and payable on the redemption date at the redemption
price, and from and after the redemption date interest on the Bonds will cease to accrue, and the owners of the
Bonds shall have no rights in respect thereof, except to receive payment of the redemption price including unpaid
interest accrued to the redemption date.
Upon written notice from the Building Corporation or School Corporation that the Building Corporation or the
School Corporation has cured the conditions that caused the Bonds to be subject to extraordinary mandatory
redemption, the Trustee may rescind any extraordinary mandatory redemption and notice thereof on any date
prior to the date fixed for redemption by causing written notice of the rescission to be given to the Owners of the
Bonds so called for redemption. Notice of rescission of redemption shall be given in the same manner in which
notice of redemption was originally given. The actual receipt by the owner of any Bond of notice of such rescission
shall not be a condition precedent to rescission, and failure to receive such notice or any defect in such notice shall
not affect the validity of the rescission.
The Trustee shall effect each extraordinary mandatory redemption of the Bonds by redeeming pro rata from each
registered Owner of a Bond to be redeemed, an amount of such Bonds determined by multiplying the principal
amount of the Bonds to be redeemed on the applicable redemption date by a fraction, the numerator of which is
the principal amount of the Bonds owned by such registered Owner and the denominator of which is the principal
amount of the Bonds outstanding immediately prior to such date of redemption, and then rounding the product
down to the next lower integral multiple of $5,000. The Paying Agent will apply, to the extent possible, any
remaining amount of proceeds to redeem such Bonds in Authorized Denominations and will select, by lot, the units
to be redeemed from al such registered Owners, which selection shall be conclusive. Redemption by lot shall be in
such manner as the Paying Agent shall determine; provided, however, that the portion of any Bond to be
redeemed shall be in Authorized Denominations and all Bonds to remain outstanding after any redemption in part
shall be in Authorized Denominations.
Registration, Transfer and Exchange
The Bonds will be registered at and are transferable by the registered owners at the principal corporate trust office
of Registrar, upon surrender and cancellation and on presentation of a duly executed written instrument of
transfer. A new bond or bonds of the same aggregate principal amount and maturity and in authorized
denominations will be issued to the transferee or transferees in exchange therefor.
If any Bond is mutilated, lost, stolen or destroyed, the Registrar may execute, subject to the provisions of the Trust
Indenture, a replacement bond or bonds of the same date, maturity and denomination. In the case of a mutilated
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bond, the Registrar may require that the mutilated bond be presented and surrendered as a condition to executing
a replacement. In the case of loss, theft or destruction, the Registrar may require evidence of the destruction or
indemnity satisfactory to the Registrar in its discretion. The Registrar may charge the owner for reasonable fees
and expenses in connection with replacements.
ADDITIONAL BONDS
The Building Corporation may issue Additional Bonds (“Additional Bonds”) on a parity with the Bonds, as well as
the Building Corporation’s Ad Valorem Property Tax First Mortgage Bonds, Series 2013B, dated March 28, 2013
(the “2013B Bonds”), from time to time to provide for the partial or full refunding of Outstanding Bonds and for
certain other purposes. Any series of Additional Bonds shall have maturities, interest rates, interest payment
dates, denominations and other terms as provided in the supplemental indenture entered into in connection with
the issuance of such Additional Bonds, provided that such terms and provisions shall not be otherwise inconsistent
with the Trust Indenture. The Bonds and the 2013B Bonds, together with any Additional Bonds as may be issued
on a parity therewith under the Trust Indenture, are to be equally and ratably secured and entitled to the
protection given under the Trust Indenture.
SOURCES OF PAYMENT AND SECURITY FOR THE BONDS
The Bonds are secured on a parity with the 2013B Bonds by (i) a first mortgage lien on and security interest in
certain property described in the Indenture, including the Leased Premises, and (ii) semi-annual lease rental
payments to be paid by the School Corporation directly to the Trustee (for the account of the Building Corporation)
(“Rent”) pursuant to the terms of a Lease Agreement dated February 12, 2013, as amended by an Amendment to
Lease dated November 12, 2013, (as amended, the “Lease”), and extending for a term ending December 31, 2035,
which has been executed by the Building Corporation and the School Corporation. The Rent payable by the School
Corporation under the Lease is payable from ad valorem taxes to be levied by the School Corporation on all of the
taxable property within the School Corporation. The levy of taxes by the School Corporation to pay the Rent due
and payable under the Lease is mandatory and is not subject to annual appropriation. (See “Summary of the
Lease – Lease Term and Rental”).
The Trustee shall deposit each rental payment received by the Trustee pursuant to the Lease (less $1,500 for
trustee fees and other costs of the Building Corporation) into the Lease Revenue Account of the Sinking Fund.
The Trustee shall invest all deposits into the Lease Revenue Account of the Sinking Fund in United States
Government Obligations, State and Local Government Series issued by the Bureau of Public Debt (“SLGS”) with a
maturity date of one day prior to January 15, 2034 at a yield at or below __% (the yield as provided by the
United States Treasury on the date the bond purchase contract for the Bonds is executed).
While the pledge of other sources and revenues is made, such as the first mortgage on all of the real estate
relating to the Leased Premises, pledged funds, interest earnings or property insurance proceeds, no significant
source of payment exists other than the Rent payments by the School Corporation.
Under the Lease, if for any reason the Leased Premises is partially or totally destroyed or unfit for occupancy,
the Rent payments shall be proportionately abated. In accordance with the Lease, the School Corporation is
required to maintain rental value insurance insuring Rent payments in connection with the loss of use of the
facilities due to casualty for a period of two years. In addition, the School Corporation is required to insure the
Leased Premises against physical damage, however caused, in an amount equal to 100% of the full replacement
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cost. The proceeds of any property or casualty insurance would be used either to repair and reconstruct the
Leaded Premises or to retire obligations issued to finance the Leased Premises.
During the term of the Lease, the School Corporation assumes all responsibility for the maintenance, repair, and
alterations to the Leased Premises. At the end of the term of the Lease, the School Corporation will deliver the
Leased Premises to the Building Corporation in as good a condition as at the beginning of the Lease, reasonable
wear and tear excepted.
For more detailed discussion of the provisions of the Lease, see “Summary of the Lease” in this Official
Statement.
INTERCEPT PROGRAM
Indiana Code Title 20, Article 48, Chapter 1, Section 11 (the “Intercept Act”) provides that the Department of Local
Government Finance (the “DLGF”) shall review levies and appropriations of school corporations for general
obligation bonds and lease rental purposes. In the event a school corporation fails to levy and appropriate
sufficient funds for such purpose, the DLGF shall establish levies and appropriations which are sufficient to pay
such obligations.
The Intercept Act further provides that upon failure of any school corporation to make general obligation bond and
lease rental payments when due and upon notice and claim, the Treasurer of the State of Indiana shall make such
payments from the funds of the State to be paid to such school district (the “State Intercept Program”). Such
payments are limited to the amounts appropriated by the General Assembly for distribution to the school
corporation from State funds in the calendar year. Such general obligation bond and lease rental payments made
by the State Treasurer would then be deducted from monthly state distributions being made to the school
corporation. The State distributions for 2013 and resulting debt service coverage levels are as follows:
2013 State Grants:
Combined Maximum Annual Debt Service (See page A-12) (1) *
State distributions required to provide two-times coverage *
State distributions above two-times coverage amount *

$ 26,891,741
4,422,034
8,844,068
18,047,673
(1) Based upon the total debt service for 2014.
PROCEDURES FOR PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION
The lease rental payments are payable from ad valorem property taxes required by law to be levied or on behalf
of the School Corporation. The Indiana General Assembly enacted legislation (Indiana Code Title 6, Article 1.1,
Chapter 20.6), which provides taxpayers with a tax credit for all property taxes in an amount that exceeds a
certain percentage of the gross assessed value of eligible property. See “Circuit Breaker Tax Credit” herein for
further details on the levy and collection of property taxes.
Real and personal property in the State is assessed each year as of March 1. On or before August 1 of each year,
the County Auditor must submit to each underlying taxing unit a statement containing (i) information
concerning the assessed valuation in the taxing unit for the next calendar year; (ii) the estimated assessed value
of the taxing unit as of March 1st of that year, and (iii) an estimate of the taxes to be distributed to the taxing
___________________________
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unit during the last six months of the current calendar year; (iv) the current assessed valuation as shown on the
abstract of charges; (v) the average growth in assessed valuation in the taxing unit over the preceding three
budget years, adjusted according to procedures established by the Department of Local Government Finance
(“DLGF”) to account for reassessment under certain provisions of the Indiana Code; and (vi) any other
information at the disposal of the County Auditor that might affect the assessed value used in the budget
adoption process. The estimated value is based on property tax lists delivered to the Auditor by the County
Assessor on or before July 1.
The estimated value is used when the governing body of a local taxing unit meets to establish its budget for the
next fiscal year (January 1 through December 31), and to set tax rates and levies. By statute, the budget, tax rate
and levy must be established no later than November 1. The budget, tax levy and tax rate are subject to review
and revision by the DLGF which, under certain circumstances, may revise, reduce or increase the budget, tax
rate, or levy of a taxing unit. The DLGF may increase the tax rate and levy if the tax rate and levy proposed by
the School Corporation is not sufficient to make its lease rental payments. The DLGF must complete its actions
on or before February 15. Taxing units have until December 31st of the calendar year immediately preceding
the ensuing calendar year to file a shortfall appeal.
On or before March 15, the County Auditor prepares and delivers the tax duplicate, which is a roll of property
taxes payable in that year, to the County Treasurer. Upon receipt of the tax duplicate, the County Treasurer
publishes notice of the tax rate in accordance with Indiana statutes. The County Treasurer mails tax statements
at least 15 days prior to the date that the first installment is due (due dates may be delayed due to a general
reassessment or other factors). Property taxes are due and payable to the County Treasurer in two installments
on May 10 and November 10, unless the mailing of tax bills is delayed or a later due date is established by order
of the DLGF. Effective January 1, 2008, if an installment of property taxes is not completely paid on or before
the due date, a penalty of 10% of the amount delinquent is added to the amount due; unless the installment is
completely paid within thirty (30) days of the due date and the taxpayer is not liable for delinquent property
taxes first due and payable in a previous year for the same parcel, the amount of the penalty is five percent (5%)
of the amount of the delinquent taxes. On May 11 and November 11 of each year after one year of delinquency,
an additional penalty equal to 10% of any taxes remaining unpaid is added. The penalties are imposed only on
the principal amount of the delinquency. Property becomes subject to tax sale procedures after 15 months of
delinquency. The County Auditor distributes property tax collections to the various taxing units on or about June
30 after the May 10 payment date and on or about December 31 after the November 10 payment date.
Pursuant to State law, personal property is assessed at its actual historical cost less depreciation. Pursuant to
State law, real property is valued for assessment purposes at its “true tax value” as defined in the Real Property
Assessment Rule, 50 IAC 2.3, the 2011 Real Property Assessment Manual (“Manual”), as incorporated into 50
IAC 2.3 and the 2011 Real Property Assessment Guidelines, Version A (“Guidelines”), as adopted by the DLGF.
The Manual defines “true tax value” for all real property, other than agricultural land, as “the market value-inuse of property for its current use, as reflected by the utility received by the owner or a similar user, from the
property.” In the case of agricultural land, true tax value shall be the value determined in accordance with the
Guidelines and IC 6-1.1-4-13. The Manual permits assessing officials in each county to choose any acceptable
mass appraisal method to determine true tax value, taking into consideration the ease of administration and the
uniformity of the assessments produced by that method. The Guidelines were adopted to provide assessing
officials with an acceptable appraisal method, although the Manual makes it clear that assessing officials are
free to select from any number of appraisal methods, provided that they produce “accurate and uniform values
throughout the jurisdiction and across all classes of property”. The Manual specifies the standards for accuracy
and validation that the DLGF uses to determine the acceptability of any alternative appraisal method.
“Net Assessed Value” or “Taxable Value” represents the “Gross Assessed Value” less certain deductions for
mortgages, veterans, the aged, the blind, economic revitalization areas, resource recovery systems, rehabilitated
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residential property, solar energy systems, wind power devices, hydroelectric systems, geothermal devices and
tax-exempt property. The “Net Assessed Value” or “Taxable Value” is the assessed value used to determine tax
rates.
Changes in assessed values of real property occur periodically as a result of general reassessments scheduled by
the State legislature, as well as when changes occur in the property value due to new construction or demolition
of improvements. Before July 1, 2013, and before July 1 of every fourth year thereafter, the county assessor will
prepare and submit to the DLGF a reassessment plan for each county. The DLGF must complete its review and
approval of the reassessment plan before March 1 of the year following the year in which the reassessment plan
is submitted by the county. The reassessment plan must divide all parcels of real property in the county into
four (4) different groups of parcels. Each group of parcels must contain approximately twenty-five percent (25%)
of the parcels within each class of real property in the county. All real property in each group of parcels shall be
reassessed under the county’s reassessment plan once during each four (4) year cycle. The reassessment of a
group of parcels in a particular class of real property shall begin on July 1 of a year, and must be completed on or
before March 1 of the year after the year in which the reassessment of the group of parcels begins. For real
property included in a group of parcels that is reassessed, the reassessment is the basis for taxes payable in the
year following the year in which the reassessment is to be completed. The county may submit a reassessment
plan that provides for reassessing more than twenty-five percent (25%) of all parcels of real property in the
county in a particular year. A plan may provide that all parcels are to be reassessed in one (1) year. However, a
plan must cover a four (4) year period. All real property in each group of parcels shall be reassessed under the
county’s reassessment plan once during each reassessment cycle. The reassessment of the first group of parcels
under a county’s reassessment plan shall begin on July 1, 2014, and shall be completed on or before March 1,
2015. Effective with the tax year payable 2007, all real property assessments are revalued annually to reflect
market value based on comparable sales data (“Trending”). When a change in assessed value occurs, a written
notification is sent to the affected property owner. If the owner wishes to appeal this action, the owner may file
a petition requesting a review of the action. This petition must be filed with the county assessor in which the
property is located within 45 days after the written notification is given to the taxpayer or May 10 of that year,
whichever is later. While the appeal is pending, the taxpayer may pay taxes based on the current year’s tax rate
and the previous or current year’s assessed value.
Effective with the tax year payable 2009, the standard deduction for homesteads was increased from the lesser
of $45,000 or 50% of assessed value to the lesser of $45,000 or 60% of assessed value. Additionally, a
supplemental homestead deduction equal to 35% of the next $600,000 of assessed value remaining after the
standard deduction and 25% of the remaining assessed value over $600,000 was implemented beginning in
2009.
CIRCUIT BREAKER TAX CREDIT
Description of Circuit Breaker:
Article 10, Section 1 of the Constitution of the State of Indiana (the “Constitutional Provision”) provides that, for
property taxes first due and payable in 2012 and thereafter, the Indiana General Assembly shall, by law, limit a
taxpayer’s property tax liability to a specified percentage of the gross assessed value of the taxpayer’s real and
personal property. Indiana Code § 6-1.1-20.6 (the “Statute”) authorizes such limits in the form of a tax credit for
all property taxes in an amount that exceeds the gross assessed value of real and personal property eligible for
the credit (the “Circuit Breaker Tax Credit”). For property assessed as a homestead (as defined in Indiana Code
§ 6-1.1-12-37), the Circuit Breaker Tax Credit is equal to the amount by which the property taxes attributable to
the homestead exceed 1% of the gross assessed value of the homestead. Property taxes attributable to the
gross assessed value of other residential property, agricultural property, and long-term care facilities are limited
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to 2.0% of the gross assessed value; property taxes attributable to other non-residential real property and
personal property are limited to 3.0% of the gross assessed value. The Statute provides additional property tax
limits for property taxes paid by certain senior citizens.
If applicable, the Circuit Breaker Tax Credit will result in a reduction of property tax collections for each political
subdivision in which the Circuit Breaker Tax Credit is applied. School corporations are authorized to impose a
referendum tax levy, if approved by voters, to replace property tax revenue that the school corporation will not
receive due to the application of the Circuit Breaker Tax Credit. Otherwise school corporations and other
political subdivisions may not increase their property tax levy or borrow money to make up for any property tax
revenue shortfall due to the application of the Circuit Breaker Tax Credit.
The Constitutional Provision excludes from the application of the Circuit Breaker Tax Credit property taxes first
due and payable in 2012, and thereafter, that are imposed after being approved by the voters in a referendum.
The Statute codifies this exception, providing that, with respect to property taxes first due and payable in 2012
and thereafter, property taxes imposed after being approved by the voters in a referendum will not be
considered for purposes of calculating the limits to property tax liability under the provisions of the Statute. In
accordance with the Constitutional Provision, the General Assembly has, in the Statute, designated Lake County
and St. Joseph County as “eligible counties” and has provided that property taxes imposed in these eligible
counties to pay debt service and make lease rental payments for bonds or leases issued or entered into before
July 1, 2008, will not be considered for purposes of calculating the limits to property tax liability under the
provisions of the Statute, through and including December 31, 2019.
The Statute requires political subdivisions to fully fund the payment of outstanding debt service or lease rental
obligations payable from property taxes (“Debt Service Obligations”), regardless of any reduction in property tax
collections due to the application of the Circuit Breaker Tax Credit. For school corporations, any shortfall could
also be funded through the State Intercept Program (herein defined); however, application of the State
Intercept Program will result in a shortfall in distributions to the school corporation’s general fund so schools are
encouraged by the DLGF to fund any shortfall directly from the school corporation’s general fund and avoid the
application of the State Intercept Program. Upon: (i) the failure of a political subdivision to pay any of its Debt
Service Obligations; and (ii) notification of that event to the treasurer of the State by a claimant; the treasurer of
State is required to pay the unpaid Debt Service Obligations from money in the possession of the State that
would otherwise be available to the political subdivision under any other law. A deduction must be made: (i)
first, from distributions of county adjusted gross, option, or economic development income taxes that would
otherwise be distributed to the county; and (ii) second, from any other undistributed funds of the political
subdivision in possession of the State.
The Statute categorizes property taxes levied to pay Debt Service Obligations as “protected taxes,” regardless of
whether the property taxes were approved at a referendum, and all other property taxes as “unprotected
taxes.” For property taxes due and payable in 2013, a political subdivision may allocate property tax reductions
due to the Circuit Breaker Tax Credit to funds of such political subdivision which receive only unprotected taxes
and not to the funds of other political subdivisions. The allocation of property tax reductions is to be made only
to the taxing districts within such political subdivision. If the allocation of property tax reductions to funds
receiving only unprotected taxes is insufficient to offset the amount of the Circuit Breaker Tax Credit, the
revenue for a fund receiving protected taxes will also be reduced. If a fund receiving protected taxes is reduced,
the statute provides that a political subdivision may transfer money from any other available source in order to
meet its Debt Service Obligations. The amount of this transfer is limited to the amount by which the protected
taxes are insufficient to meet Debt Service Obligations.
The School Corporation cannot predict the timing, likelihood or impact on property tax collections of any future
actions taken, amendments to the Constitution of the State of Indiana or legislation enacted, regulations or
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rulings promulgated or issued to implement any such regulations, statutes or the Constitutional Provision
described above or of future property tax reform in general. There has been no judicial interpretation of this
legislation. In addition, there can be no assurance as to future events or legislation that may affect the Circuit
Breaker Tax Credit or the collection of property taxes by the School Corporation.
Estimated Circuit Breaker Tax Credit for the School Corporation:
According to the Morgan County abstracts, the Circuit Breaker Tax Credit allocable to the School Corporation for
budget year 2010, when the Circuit Breaker Tax Credit was fully implemented, was $3,845. In budget years
2011, 2012 and 2013, the Circuit Breaker Tax Credits are $5,277, $5,663 and $2,659, respectively, and are
scheduled to aggregate $3,961 in 2014. These estimates do not include the estimated debt service on the Bonds
and lease rentals on the Lease securing the Bonds.
The Circuit Breaker Tax Credit amounts above do not reflect the potential effect of any further changes in the
property tax system or methods of funding local government that may be enacted by the Indiana General Assembly
in the future. The effects of these changes could affect the Circuit Breaker Tax Credit and the impact could be
material. Other future events, such as the loss of a major taxpayer, reductions in assessed value, increases in
property tax rates of overlapping taxing units or the reduction in local option income taxes applied to property tax
relief could increase effective property tax rates and the amount of the lost revenue due to the Circuit Breaker Tax
Credit, and the resulting increase could be material.
THE BUILDING CORPORATION
The Building Corporation was organized pursuant to Article 17 of Title 23 of the Indiana Code for the purpose of
acquiring land and constructing school facilities to be leased to the School Corporation. In order to provide the
funds necessary to undertake projects, the Building Corporation has issued bonds secured by lease agreements
and a mortgage. The Building Corporation also has the power to issue bonds to refund its outstanding bonds and
to execute amended lease agreements with the School Corporation based on terms of the refinancing.
During its existence, the Building Corporation will operate entirely without profit to the Building Corporation, its
officers, directors and members. Its officers and directors serve without compensation.
LEGAL MATTERS
Certain legal matters incident to the issuance of the Bonds and with regard to the tax status of the interest thereon
(see “Tax Matters”) will be passed upon by Ice Miller LLP (“Bond Counsel”). A signed copy of that opinion, dated
and premised on facts and laws existing as of the date of original delivery of the Bonds, will be delivered to the
Underwriter at the time of that original delivery. A copy of the opinion proposed to be delivered by Bond Counsel
for the Bonds is attached as Appendix E. Certain legal matters will be passed on for the School Corporation and the
Building Corporation by Harris & Currens, Mooresville, Indiana.
The engagement of Ice Miller LLP as Bond Counsel is limited generally to the examination of the documents
contained in the transcript of proceedings, and examination of such transcript of proceedings and the law incident
to rendering the approving legal opinion referred to above, and the rendering of such approving legal opinion. In
its capacity as Bond Counsel, said firm has reviewed those portions of this Official Statement under the captions:
“TAX CREDIT BONDS”, “SOURCES OF PAYMENT AND SECURITY FOR THE BONDS”, “THE BONDS” except for the
Sections entitled “Book-Entry-Only System” and “Revision of Book-Entry-Only System”, “ADDITIONAL BONDS”,
“SUMMARY OF THE LEASE”, “SUMMARY OF THE TRUST INDENTURE”, “LEGAL OPINIONS AND ENFORCEABILITY OF
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REMEDIES”, “TAX MATTERS”, “GENERAL TAX MATTERS” and “CONTINUING DISCLOSURE”. Bond Counsel has not
been retained to pass upon any other information in this Official Statement, or in any other reports, financial
information, offering or disclosure documents or other information that may be prepared or made available by the
School Corporation, the Trustee, the Underwriter or others to the prospective purchasers of the Bonds or to
others.
Quarles & Brady LLP has been retained by the Underwriter to serve as counsel to the Underwriter with respect to
the Bonds. Although, as counsel to the Underwriter, Quarles & Brady LLP has assisted the Underwriter with certain
matters, Quarles & Brady has not undertaken to independently verify the accuracy, completeness or sufficiency of
this Official Statement or other offering material relating to the Bonds and assumes no responsibility whatsoever
nor shall have any liability to any other party for the statements or information contained or incorporated by
reference in this Official Statement. Further, Quarles & Brady LLP makes no representation as to the suitability of
the Bonds for any investor.
LITIGATION
No litigation or administrative action or proceeding is pending or, to the knowledge of the Building Corporation
and the School Corporation, threatened restraining or enjoining, or seeking to restrain or enjoin, the levy and
collection of taxes to pay the Rent to be paid under the Lease, or contesting or questioning the proceedings or
authority under which the Lease was authorized, or the validity of the Lease. No litigation or administrative action
or proceeding is pending or, to the knowledge of the Building Corporation and the School Corporation, threatened
concerning the issuance, validity and delivery of the Bonds. Certificates to such effect will be delivered at the time
of the original delivery of the Bonds.
SUMMARY OF THE TRUST INDENTURE
The following is a brief summary of certain provisions of the Indenture, as supplemented, and does not purport
to comprehensively describe that document in its entirety.
Application of Bond Proceeds
Proceeds in an amount equal to a portion of costs of issuance, which amount does exceed two percent of the
proceeds of the Bonds, shall be deposited in the 2014A Bond Issuance Expense Account of the Construction
Fund. The remaining proceeds of the Bonds shall be deposited in the 2014A Construction Account of the
Construction Fund and used to pay costs of construction.
Construction Fund, Sinking Fund, Operation and Reserve Fund and Rebate Fund
There are created under the Trust Indenture the following funds: (1) the Mooresville Consolidated School
Building Corporation Construction Fund (the “Construction Fund”), (2) the Mooresville Consolidated School
Building Corporation Sinking Fund (the “Sinking Fund”), (3) the Mooresville Consolidated School Building
Corporation Operation and Reserve Fund (the “Operation and Reserve Fund”), and (4) the Mooresville
Consolidated School Building Corporation Rebate Fund (the “Rebate Fund”).
The 2014A Construction Account of the Construction Fund will be used to finance the renovation of and
improvements to Mooresville High School (the “Project”) and will be spent within 3 years from the date of
issuance of the Bonds on the rehabilitation or repair of a public school facility (including costs of acquiring
equipment to be used in such facilities) as required by Section 54E(d) of the Code. The 2014A Bond Issuance
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Expense Account of the Construction Fund will be used to pay costs of issuance of the Bonds in an amount not
to exceed two percent of the proceeds.
The Trustee shall deposit into the 2014A Lease Revenue Account of the Sinking Fund each lease rental payment
received pursuant to the Lease which is allocable to the Bonds (less $1,500 for trustee fees and other costs of
the Corporation). The aforementioned $1,500 shall be deposited into the Operation and Reserve Fund. At the
written direction of the Lessor Representative or the Corporation, the Trustee shall invest all such deposits into
the 2014A Lease Revenue Account of the Sinking Fund in United States Government Obligations, State and Local
Government Series, issued by the Bureau of Public Debt (“SLGS”) with a maturity date of one day prior to
January 15, 2034 at a yield at or below the Permitted Sinking Fund Yield, as provided by the United States
Treasury on the date the Bond Purchase Contract for the Bonds was executed. If, at the time of such deposit
into the 2014A Lease Revenue Account the Trustee is unable to invest the deposit in SLGS, then at the written
direction of the Lessor Representative or the Corporation, the Trustee shall invest all such deposits in United
States Treasury obligations with a maturity date of one day prior to January 15 of the subsequent year. Upon
the maturity of such United States Treasury obligations, the Trustee shall on the subsequent January 15 invest
such proceeds, and any interest earnings thereon, in SLGS with a maturity date of one day prior to January 15,
2034 at a yield at or below the Permitted Sinking Fund Yield. If the maturity of such United States Treasury
obligations occurs on or after January 15, 2034, the Trustee shall not invest such proceeds, but shall apply such
proceeds, and any interest earnings thereon, to the payment of principal on the Bonds. On January 15 of each
year, the Trustee shall provide the Corporation and Lessee with a report indicating the amount of interest
earned on the 2014A Lease Revenue Account of the Sinking Fund during the previous year and provide a credit
toward the Lease payments otherwise due in that current year equal to the amount of interest earned during
the previous year. The Trustee shall from time to time pay from the 2014A Lease Revenue Account of the
Sinking Fund the principal of the Bonds at maturity or upon mandatory redemption.
Whenever the amounts contained in the 2014A Lease Revenue Account of the Sinking Fund and Operation and
Reserve Fund are sufficient, together with any other funds deposited with the Trustee by the Corporation, to
pay the principal amount due at maturity and the interest due through redemption, and upon a certificate of an
independent financial advisor or the Original Purchasers verifying such sufficiency, the Trustee will send a notice
to the School Corporation stating that such available funds are sufficient to pay the Bonds at maturity.
The Operation and Reserve Fund shall be used only (a) to pay necessary incidental expenses of the Building
Corporation, including Trustee’s fees, (b) if the amount in the Sinking Fund at any time is less than the required
amount, to transfer funds to the Sinking Fund in an amount sufficient to raise the amount in the Sinking Fund to
the required amount, (c) if the Bonds are called for redemption, to pay the principal, interest and redemption
premium, if any, on the Bonds and (d) to purchase Bonds in the open market. The incidental expenses may be
paid by the Trustee upon the presentation of an affidavit executed by two executive officers of the Building
Corporation or the Lessor Representative together with the creditor’s statement as to the amount owing.
Investment of Funds
The Trustee shall invest the moneys in funds created in the Trust Indenture in (i) direct obligations (other than
an obligation subject to variation in principal repayment) of the United States of America (“United States
Treasury Obligations”), (ii) obligations fully and unconditionally guaranteed as to timely payment of principal and
interest by the United States of America, (iii) obligations fully and unconditionally guaranteed as to timely
payment of principal and interest by any agency or instrumentality of the United States of American when such
obligations are backed by the full faith and credit of the United States of America, (iv) Federal Housing
Administration debentures, (v) Federal Home Loan Mortgage Corporation participation certificates and senior
debt obligations (excluded are stripped mortgage securities which are purchased at prices exceeding their
principal amounts), (vi) Farm Credit Bank consolidated system wide bonds and notes, (vii) Federal Home Loan
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Banks consolidated debt obligations, (viii) Federal National Mortgage Association senior debt obligations and
mortgage backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding
their principal amounts), (ix) unsecured certificates of deposit, demand deposits, time deposits and bankers’
acceptances of any depository institution or trust company (including the Trustee and its affiliates) the short
term obligations of which are rated “A-1+” or better by Standard and Poor’s Ratings Group having an original
maturity of not more than 360 days, (x) commercial paper (having original maturities of not more than 270 days)
rated “A-1+” by Standard and Poor’s Ratings Group and “Prime-1” by Moody’s at the time of purchase, (xi)
evidence of ownership of proportionate interests in future interest and principal payments on obligations
described above held by a bank or trust company as custodian, under which the owner of the investment is the
real party in interest and has the right to proceed directly and individually against the obligor and the underlying
government obligations are not available to any person claiming through the custodian or to whom the
custodian may be obligated, (xii) deposits the aggregate amount of which are fully insured by the Federal
Deposit Insurance Corporation (FDIC), (xiii) money market funds rated “Aam” or “Aam-G” by Standard & Poor’s
Corporation, which funds may be funds of the Trustee or its affiliates, including those for which the Trustee or
an affiliate performs services for a fee, whether as a custodian, transfer agent, investment advisor or otherwise,
(xiv) repurchase and reverse repurchase agreements collateralized with Government Securities, including those
of the Trustee of any of its affiliates, (xv) investment deposit agreements constituting an obligation of a bank, as
defined by the Indiana Banking Act (including the Trustee and its affiliates), whose outstanding unsecured long
term debt is rated at the time of such agreement in any of the two highest rating categories by each Rating
Agency, and (xvi) U.S. dollar denominated deposit accounts, federal funds and bankers’ acceptances with
domestic banks whose short term certificates of deposit are rated on the date of the purchase in any of the two
highest rating categories by any rating agency and maturing no more than 360 days after the date of the
purchase, including the Trustee or any of its affiliates. Moneys in the Construction Fund shall be invested
without restriction as to yield during an applicable temporary period pending their use. Moneys in the
Operation and Reserve Fund, Interest Account and Principal Account of the Sinking Fund shall be invested at a
yield not exceeding the Sinking Fund yield on the Bonds as determined on the date of the execution of the bond
purchase contract.
Covenants
The Building Corporation covenants, among other things that:
(a) it has entered into a valid and binding lease of the mortgaged property to the School Corporation,
and that a full, true and correct copy of the Lease is on file with the Trustee; that construction will
begin promptly upon receipt by the Trustee of bond proceeds and that it will complete such
construction with all expedition practicable in accordance with the plans and specifications referred
to in the Lease;
(b) it will faithfully perform all provisions contained in each Bond and the Trust Indenture and will
punctually pay the principal of and premium, if any, and interest on the Bonds;
(c) it is duly authorized under the laws of the State of Indiana to create and issue the Bonds, to execute
and deliver the Trust Indenture, and to mortgage and pledge the real estate and rentals and other
income of the mortgaged property as provided in the Trust Indenture;
(d) it will promptly make, execute, and deliver all indentures supplemental to the Trust Indenture and
to take all action deemed advisable and necessary by the Trustee for the better securing of the
Bonds;
(e) it now has and will preserve good title to the property;
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(f) it will maintain the priority of the lien created under the Trust Indenture, that it will not permit any
waste of said property, and that it will at all times maintain the property in good working condition;
(g) it will maintain proper books and records and: (i) furnish statements showing earnings, expenses
and financial condition of the Building Corporation and such information as the Trustee may
reasonably request, (ii) within 90 days of each calendar year, file with the Trustee, a certificate
signed by officers of the Building Corporation stating that all insurance premiums required under the
Trust Indenture have been paid by the Building Corporation and that all taxes then due have been
paid, subject to permissible contests, (iii) upon the request of any bondholder, will request from the
Lessee the current financial statements of the Lessee for review by the bondholder;
(h) it will not incur any indebtedness payable from the Lease other than the Bonds permitted by the
Trust Indenture, and Additional Bonds, as long as the Bonds are outstanding;
(i) it will, upon any default in payment of lease rentals, file a claim with the Treasurer of the State of
Indiana, bring suits to mandate the appropriate officers of the School Corporation to levy the
necessary tax to pay rents under the Lease or to take such other appropriate action necessary to
enforce and collect the rentals due;
(j) in order to preserve the treatment of the Bonds as “Qualified Zone Academy Bonds” pursuant 54E
of the Code and as an inducement to purchasers of the Bonds, the Building Corporation covenants
that it will not take any action nor fail to take any action with respect to the Bonds that would result
in the loss of treatment as “Qualified Zone Academy Bonds” pursuant to the Code.
Insurance
The Building Corporation covenants that during construction of the Project it will carry or cause the School
Corporation to carry the following kinds of risks insurance (a) builders risk insurance in the amount of 100% of
the insurable value of the mortgaged property against physical loss or damage, and (b) bodily injury and
property damage insurance for damages for bodily injury, including accidental death, as well as claims for
property damages which may arise from such construction.
The Building Corporation further covenants that all contracts for the construction of the Project will or do
require the contractor to carry such insurance as will protect the contractor from liability under the Indiana
Worker’s Compensation and Worker’s Occupational Disease Act.
The Building Corporation covenants to carry or cause the School Corporation to carry the following kinds of
insurance after completion of construction: (a) physical loss or damage insurance on the mortgaged property in
the amount of 100% of the full replacement cost of the property as certified by the Lessor Representative or the
option purchase price as described in the Lease, whichever is less, and (b) rental value insurance against physical
loss or damage for a period of two years.
The proceeds of any insurance shall be applied by the Building Corporation to the repair, replacement or
reconstruction of any damaged or destroyed property, if the cost of such repair, replacement or reconstruction
does not exceed the proceeds of insurance. In addition, the Trustee may repair, replace, or reconstruct the
mortgaged property if the Building Corporation fails to do so. If, at any time, the mortgaged property is totally
or substantially destroyed, and the amount of insurance moneys received on account thereof by the Trustee is
sufficient to redeem all of the outstanding Bonds, the Building Corporation with the written approval of the
School Corporation may direct the Trustee to use said money for the purpose of calling for redemption all of the
Bonds issued and then outstanding under the Trust Indenture at the then current redemption price.
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Events of Default and Remedies
Events of default under the Trust Indenture include: failure to pay the principal of, or the redemption premiums,
if any, on any of the Bonds; failure to pay interest on the Bonds as it becomes due and payable; occurrence of
certain events of bankruptcy or insolvency of the Building Corporation; default in the performance or
observance of any other of the covenants, agreements or conditions by the Building Corporation under the Trust
Indenture and the continuance of such default for sixty (60) days after written notice; failure of the Building
Corporation to bring suit to mandate the appropriate officials of the School Corporation to levy a tax to pay the
rentals provided under the Lease; and nonpayment of the lease rental within 90 days of when due as provided
under the Lease.
Upon the happening and continuance of any event of default, the Trustee may, and upon written request of the
holders of twenty-five percent (25%) in principal amount of the Bonds then outstanding and upon being
indemnified to its reasonable satisfaction shall, declare the principal amount of and interest accrued on all
outstanding Bonds immediately due and payable; subject, however, to the rights of the holders of the majority
in principal amount of all the outstanding Bonds to annul such declaration if all such events have been cured, all
arrears have been paid and all other indebtedness secured by the Trust Indenture except the principal and
interest not then due has also been paid. In an instance of default and the remedies related thereto, any funds
in the 2014A Lease Revenue Account of the Sinking Fund shall be applied towards payments to the holders of
the Bonds. Any funds otherwise held or deposited in the Sinking Fund shall be applied on a parity basis among
all bonds outstanding under this Indenture.
Upon the occurrence of one or more events of default, the Building Corporation, upon demand of the Trustee,
shall forthwith surrender the possession of the property and the Trustee may take possession of all the
mortgaged property and hold, operate and manage the same for the purpose of insuring payments on the
Bonds until the event of default has been cured.
Upon the occurrence of one or more events of default, the Trustee may, and shall upon written request of the
holders of at least twenty-five percent (25%) in principal amount of the Bonds then outstanding and upon being
indemnified to its reasonable satisfaction, pursue any available remedy by suit at law or in equity, whether for
specific performance of any covenant or agreement contained in the Trust Indenture or in aid of any power
granted therein, or for any foreclosure of the Trust Indenture including, to the extent permitted by law, the
appointment of a receiver.
Any sale made either under the Trust Indenture, to the extent permitted by law, or by judgment or decree in any
judicial proceeding for foreclosure shall be conducted as required by the Trust Indenture. The proceeds of any
such sale shall be applied to pay the costs and expenses of the sale or judicial proceedings pursuant to the sale,
the expenses of the Trustee and the holders of the Bonds with interest at the highest rate of interest on any of
the Bonds when sold, and the payment of the installments of interest which are due and unpaid in the order of
their maturity, next, if the principal of the Bonds is due, to the payment of the principal thereof and the accrued
interest thereon pro rata. No holder of all of the Bonds shall have the right to institute any proceeding in law or
in equity for the foreclosure of the Trust Indenture, the appointment of a receiver, or for any other remedy
under the Trust Indenture without complying with the provisions of the Trust Indenture.
Supplemental Indentures
The Building Corporation and the Trustee may, without obtaining the approval of the holders of the Bonds,
enter into supplemental indentures to cure any ambiguity or formal defect or omission in the Trust Indenture; or
to grant to the Trustee for the benefit of such holders any additional rights, remedies, powers, authority or
security that may be lawfully granted; or to provide for the issuance of additional parity bonds to finance (i) the
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payment of claims of contractors, subcontractors, materialmen or laborers or fees; (ii) the completion of
construction; (iii) the payment of costs of improvements to the mortgaged property; and (iv) a partial refunding
of the Bonds.
The holders of not less than a majority in aggregate principal amount of the Bonds then outstanding shall have
the right, from time to time except when contrary to the Trust Indenture, to approve the execution by the
Building Corporation and the Trustee of such supplemental indentures, except no supplemental indenture shall
permit:
(a) An extension of the maturity of the principal of or interest on any Bond;
(b) A reduction in the principal amount of any Bond or the rate of interest;
(c) The creation of a lien upon the mortgaged property taking priority or on a parity with the lien
created by the Trust Indenture;
(d) A preference or priority of any Bond or Bonds over any other Bond or Bonds; or
(e) A reduction in the aggregate principal amount of the Bonds required for consent to supplemental
indentures.
If the owners of not less than a majority in aggregate principal amount of the bonds outstanding at the time of
the execution of such supplemental indenture shall have consented to and approved the execution thereof as
provided in the Trust Indenture, no owner of any bond shall have any right to object to the execution of such
supplemental indenture or to object to any of the terms and provisions contained therein or the operation
thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee
or the Building Corporation from executing the same, or from taking any action pursuant to the provisions
thereof.
Upon the execution of any supplemental indenture pursuant to the provisions of the Trust Indenture, the Trust
Indenture shall be, and shall be deemed, modified and amended in accordance therewith, and the respective
rights, duties and obligations under the Trust Indenture of the Building Corporation, the Trustee, and all owners
of bonds then outstanding shall thereafter be determined, exercised and enforced hereunder, subject in all
respects to such modifications and amendments.
Possession Until Default, Defeasance, Payment, Release
Subject to the rights of the Trustee and the holders of the Bonds in the event of the occurrence and continuance
of an event of default, the Building Corporation shall have the right of full possession, enjoyment and control of
all the mortgaged property. While in possession of the mortgaged property, and while not in default under the
Trust Indenture, the Building Corporation shall have the right at all times to alter, change, add to, repair, or
replace any of the property constituting a part of the mortgaged property so long as the value of the mortgaged
property and the security of the Bonds shall not be substantially impaired or reduced. The Trustee may release
any mortgaged property which has become unfit or unnecessary for use pursuant to the Trust Indenture. If new
property is purchased or acquired in substitution for the mortgaged property so released, the new property shall
become subject to the lien and the operation of the Trust Indenture. If no new property is purchased with the
proceeds of any sale or mortgaged property within ninety (90) days after the receipt of the proceeds, the
proceeds shall be deposited in the Operation and Reserve Fund.
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The Building Corporation may pay and discharge the entire indebtedness on all Bonds outstanding:
(a) by paying the whole amount of the principal and interest and the premium if any, due and payable
upon all of the Bonds then outstanding; or
(b) by depositing with the Trustee (i) sufficient money, (ii) direct obligations of the United States of
America (the “Government Securities”) or (iii) time certificates of deposit of a bank or banks secured
as to both principal and interest by Government Securities in amounts sufficient to pay or redeem
all Bonds outstanding.
If the whole amount of the principal, premium, if any, and interest so due and payable upon all of the Bonds
then outstanding shall be paid or provision made for payment, then the right, title and interest of the Trustee
shall thereupon cease, terminate and become void. Upon termination of the Trustee’s title, the Trustee shall
release the Trust Indenture and return to the Building Corporation any surplus in the Sinking Fund and
Operation and Reserve Fund and any other funds other than moneys held for redemption or payment of Bonds.
SUMMARY OF THE LEASE
The following is a summary of certain provisions of the Lease and does not purport to comprehensively describe
that document in its entirety.
Acquisition and Construction of the Lease Premises
The Building Corporation is to cause the Leased Premises to be completed in accordance with the contract
documents and the plans and specifications which have been prepared by or at the direction of the Building
Corporation and approved by the School Corporation and applicable agencies. The plans and specifications may
be changed at any time prior to the completion of the Leased Premises by mutual agreement of the Building
Corporation and the School Corporation, except that such changes may not alter the character of the building or
reduce the value thereof nor be used for a something not deemed a “qualified purpose” under Section 54E of
the Code.
Lease Term and Rental
The Lease term has been extended to December 31, 2035. By each rent payment date, the School Corporation
is to pay the installment of rent due under the Lease. Each installment of rent is payable in advance for the
following six-month period on June 30 and December 31. The annual lease rental has been increased by
$525,000 beginning on June 30, 2015. The annual rent to be paid is the amounts shown in this Official
Statement. Completion of the Leased Premises is to be certified to the School Corporation by a representative
of the Building Corporation pursuant to the Lease. The date the building was substantially completed and ready
for occupancy was to be endorsed on the end of the Lease by the parties thereto as soon as can be done after
the completion of the construction. The endorsement was to be recorded as an addendum to the Lease.
The School Corporation shall receive a credit equal to the interest earned on the Lease rental deposited in the
Sinking Fund under the Indenture. Such credit will be applied to the remaining Lease payments otherwise due,
after receipt of notice from the Trustee that it holds sufficient funds equal to the principal and interest due on
the Bonds at maturity.
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Maintenance and Modification
During the term of the Lease, the School Corporation is required to keep the Leased Premises in good repair and
in good operating condition, ordinary wear and tear excepted. The School Corporation may, at its own expense
and as part of the Leased Premises, make modifications of, additions and improvements to and substitutions for
the Leased Premises, all of which become the property of the Building Corporation and are included as part of
the Leased Premises under the terms of the Lease.
The School Corporation may, at its own expense, replace worn out or obsolete property and may install on the
property on which the Leased Premises are situated personal property which is not an addition or improvement
to, modification of or substitution for the Leased Premises, which will be the sole property of the School
Corporation and in which the Building Corporation shall have no interest. The School Corporation may discard
worn out or obsolete property and need not replace it. Equipment or other personal property which becomes
worn out or obsolete may be discarded or sold by Lessee. The proceeds of the sale of any personal property
shall be paid to the Trustee. Lessee may trade in any obsolete or worn out personal property or replacement
property which replacement property will belong to Lessee upon payment to the Trustee of an amount equal to
the trade-in value of such property. Lessee need not replace worn out or obsolete personal property, but may
replace such property at its own expense, and the replacement property shall belong to Lessee.
Property and Liability Insurance
The School Corporation is required to carry at its own expense, property insurance on the Leased Premises
against physical loss or damage to the Leased Premises, however caused, with such exceptions only as are
ordinarily required by insurers of buildings or facilities of a similar type, in an amount equal to 100% of the full
replacement cost of the Leased Premises. Any property insurance policy shall be so written or endorsed as to
make any losses payable to the Building Corporation or to such other person or persons as the Building
Corporation under the Lease may designate.
During the full term of the Lease, the School Corporation is required to maintain rent or rental value insurance in
an amount equal to the full rental value of the Leased Premises for a period of two years. The insurance will
protect against physical losses or damages similar to those covered under the property insurance policy held by
the School Corporation.
Damage or Destruction
If the Leased Premises are damaged or destroyed (in whole or in part) by fire, windstorm or other casualty at
any time during the term of the Lease, the Building Corporation is to promptly repair, rebuild or restore the
portion of the Leased Premises damaged or destroyed with such changes, alterations and modifications
(including substitutions and additions) as may be designated by the School Corporation for administration and
operation of the Leased Premises and as shall not impair the character and significance of the Leased Premises
as furthering the purposes of the Code.
If the Leased Premises are totally or substantially destroyed and the amount of insurance money received is
sufficient to redeem all of the outstanding Bonds and all such Bonds are then subject to redemption, the
Building Corporation, with the written approval of the School Corporation, may direct the Trustee to use net
proceeds of insurance to call for redemption all of the Bonds then outstanding at the then current redemption
price.
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Rent Abatement and Rental Value Insurance
If the Leased Premises or a portion thereof are damaged or destroyed or is taken under the exercise of the
power of eminent domain, the rent payable by the School Corporation shall be abated or reduced, provided
there is rental value insurance in force as required by the Lease. The rent shall be totally abated during that
portion of the Lease terms that the Leased Premises is totally unfit for use or occupancy. It shall be partially
abated for the period and to the extent that the Leased Premises are partially unfit for use or occupancy in the
same proportion that the floor area of the Leased Premises so unfit for use or occupancy bears to the total floor
area of the Leased Premises.
Taxes and Utility Charges
The School Corporation is to pay, as further rent, taxes and assessments lawfully assessed or levied against or
with respect to the Leased Premises or any personal property or fixtures installed or brought in or on the Leased
Premises, and all utility and other charges for or incurred in connection with the Leased Premises. The School
Corporation may, at its own expense, in good faith contest any such taxes and assessments. The School
Corporation shall also pay as additional rent, any amount required by the Building Corporation to rebate to the
United States Government to prevent the Building Corporation’s bonds from becoming arbitrage bonds.
Events of Default
The Lease provides that either of the following constitutes an “event of default” under the Lease:
(a) Failure to pay any rentals or other sums payable to the Building Corporation under the Lease, or
failure to pay any other sum therein required to be paid to the Building Corporation; or
(b) Failure to observe any other covenant, agreement or condition under the Lease, and such default
shall continue for sixty (60) days after written notice to correct the same.
Remedies
On the occurrence of an event of default under the Lease, the Trustee may proceed to protect and enforce its
rights by suit or suits in equity or at law in any court of competent jurisdiction, whether for specific performance
or any covenant or agreement contained therein, or for the enforcement of any other appropriate legal or
equitable remedy; file a claim with the Treasurer of the State of Indiana for an amount equal to an amount in
default, and may authorize or delegate the authority to file such claim; or the Building Corporation, at its option,
without further notice, may terminate the estate and interest of the School Corporation thereunder, and it shall
be lawful for the Building Corporation forthwith to resume possession of the Leased Premises and the School
Corporation covenants to surrender the same forthwith upon demand. The exercise by the Building Corporation
of the right to terminate the Lease shall not release the School Corporation from the performance of any
obligation thereof maturing prior to the Building Corporation’s actual entry into possession. No waiver by the
Building Corporation of any right to terminate this Lease upon any default shall operate to waive such right upon
the same or other default subsequently occurring.
The School Corporation may not assign the Lease or sublet the Leased Premises without the written consent of
the Building Corporation. In the Lease, the School Corporation has covenanted to use and maintain the Leased
Premises in accordance with the laws and ordinances of the United States of America, the State of Indiana, and
all other proper governmental authorities. The School Corporation has also covenanted that it will not enter
into any lease, management contract or other contractual arrangement which would allow the use of the Leased
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Premises by a nongovernmental person which would have the effect of making the Building Corporation’s bonds
private activity bonds under Section 141 of the Internal Revenue Code of 1986.
Option to Purchase
The School Corporation has the option to purchase the Leased Premises on any rental payment date at a price
which is sufficient to allow the Building Corporation to liquidate by paying or providing for the payment in full of
the then outstanding bonds pursuant to the redemption provisions.
Option to Renew
The School Corporation has an option to renew the Lease for a further like or lesser term upon the same terms
and conditions provided in the Lease.
TAX MATTERS
The following discussion of federal tax credits was written to support the promotion and marketing of the
Bonds and was not intended or written to be used, and cannot be used, by a taxpayer for the purpose of
avoiding United States federal income tax penalties that may be imposed. Each taxpayer should seek advice
based on the taxpayer’s particular circumstance from an independent tax advisor.
Tax Opinion
In the opinion of Ice Miller LLP, Indianapolis, Indiana, Bond Counsel, under existing laws, regulations, judicial
decisions and rulings, the Bonds are “Qualified Zone Academy Bonds” as such term is defined in Section 54E of
the Internal Revenue Code of 1986, as amended (the “Code”). The eligible holders of the Bonds are entitled to
quarterly federal income tax credits on the applicable credit allowance dates as set forth in Section 54A of the
Code, subject to the limitation of Section 54A of the Code. The amount of such tax credits will be treated as
interest for federal income tax purposes and will be included in the eligible holder’s gross income pursuant to
Section 54A(f) of the Code. See Appendix E for the form of opinion of Bond Counsel.
The Code imposes certain requirements which must be met subsequent to the issuance of the Bonds as a
condition of the treatment of such Bonds as Qualified Zone Academy Bonds and the resulting tax credit pursuant
to Section 54A of the Code. The Issuer will covenant to comply with certain restrictions, conditions and
requirements designed to ensure that the Bonds continue to qualify as Qualified Zone Academy Bonds
(collectively, the “Tax Covenants”). The Trust Indenture and certain certificates and agreements to be delivered
on the date of delivery of the Bonds establish procedures under which compliance with the requirements of the
Code can be met. Inaccuracy of these representations or failure to comply with these covenants may result in
termination of the tax credit, possibly from the original date of issuance of the Bonds. The opinion of Bond
Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or
events occurring, or any other matters coming to Bond Counsel’s attention after the date of issuance of the
Bonds may adversely effect the value of, or the availability of the tax credit with respect to the Bonds.
Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any
such actions, events or matters.
IC 6-5.5 imposes a franchise tax on certain taxpayers (as defined in IC 6-5.5) which, in general, include all
corporations which are transacting the business of a financial institution in Indiana. Taxpayers should consult
their own tax advisors regarding the impact of this legislation on their ownership of the Bonds.
- 26 -
Although Bond Counsel will render an opinion in the form attached hereto, the accrual or receipt of a tax credit
may otherwise affect a bondholder’s federal income tax or state tax liability. The nature and extent of these
other tax consequences will depend upon the bondholder’s particular tax status and a bondholder’s other items
of income or deduction.
Taxpayers who may be affected by such other tax consequences include, without limitation, financial
institutions, certain insurance companies, S corporations, certain foreign corporations, individual recipients of
Social Security or railroad retirement benefits and taxpayers who may be deemed to have incurred (or
continued) indebtedness to purchase or carry the Bonds. Bond Counsel expresses no opinion regarding any
other such tax consequences. Prospective purchasers of the Bonds should consult their own tax advisors with
regard to the other tax consequences of owning the Bonds.
Future legislative proposals, if enacted into law, clarification of the Code or court decisions may prevent owners
from realizing the full current benefit of the tax status of the Bonds. The introduction or enactment of any such
future legislative proposals, clarification of the Code or court decisions may also affect the market price for, or
marketability of, the Bonds. Prospective purchasers of the Tax Credit Bonds should consult their own tax
advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which
Bond Counsel expresses no opinion.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed
by such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Tax Credit Bonds
for federal income tax purposes. The legal authorities setting forth and interpreting sections 54A and 54E of the
Code are new and, in many areas, incomplete. The opinion of Bond Counsel is not binding on the IRS or the
courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future
activities of the Building Corporation or School Corporation or about the effect of future changes in the Code,
the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Building
Corporation and School Corporation have covenanted, however, to comply with the requirements of the Code.
Bond Counsel’s engagement with respect to the Tax Credit Bonds ends with the issuance of the Tax Credit
Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Building Corporation,
School Corporation or the owners regarding the tax status of the Tax Credit Bonds in the event of an audit
examination by the IRS. Under current procedures, parties other than the Building Corporation and School
Corporation and their appointed counsel, including the owners, would have little, if any, right to participate in
the audit examination process. Moreover, because achieving judicial review in connection with an audit
examination of tax credit bonds is difficult, obtaining an independent review of IRS positions with which the
School Corporation legitimately disagrees may not be practicable. Any action of the IRS, including but not limited
to selection of the Tax Credit Bonds for audit, or the course or result of such audit, or an audit of bonds
presenting similar tax issues may affect the market price for, or the marketability of, the Tax Credit Bonds and
may cause the School Corporation or the owners to incur significant expense.
Amount of Tax Credit
The amount of the Tax Credit with respect to a Tax Credit Bond is equal to the product of the published credit
rate for the date on which the Tax Credit Bond is sold (_____%), times the outstanding principal amount of the
Tax Credit Bond on the relevant Credit Allowance Date, divided by four. The credit allowance dates are March
15, June 15, September 15, and December 15. The Tax Credit allowed for the first credit allowance date of
_________________ is the ratable portion of the tax credit otherwise allowed on such date based on an initial
issuance date of March ___, 2014 (as opposed to the full credit period starting ______________). If a Tax Credit
Bond is redeemed or matures on a date other than March 15, June 15, September 15, or December 15, the
redemption or maturity date will be a credit allowance date and the amount of the associated Tax Credit, will be
- 27 -
a ratable portion of the tax credit otherwise allowed based on the earlier credit allowance date. Owners of Tax
Credit Bonds as of the applicable credit allowance date will receive the Tax Credit.
Limitation on Tax Credit
The Tax Credit allowed may not exceed the sum of the taxpayer’s regular tax liability and alternative minimum
tax liability under Section 55 of the Code less, in general, the taxpayer’s other tax credits (except refundable tax
credits set forth in subparts C (Sections 31-37) and J (Section 54A) of part IV of subchapter A of the Code). The
Tax Credit is not considered a passive activity credit under Code Section 469(d), and therefore, such credit is not
subject to the limitations with respect to passive activity credits.
Carryover of Unused Tax Credit Amount
If an owner of a Tax Credit Bond cannot use all of the Tax Credit otherwise allocable for the taxable year, such
owner is allowed to carry forward to a subsequent tax year the unused portion of the credit deemed paid on
such credit allowance date.
Tax Credit Amount Included in Income as Deemed Interest
Section 54A of the Code requires the owners of Tax Credit Bonds to include the amount of the Tax Credit
(determined without reference to the limitation described above under “Limitation on Credit”) in gross income.
It is expected that Treasury Regulations will provide that such amount must be treated as if it were a payment of
“qualified stated interest” on each credit allowance date. Unless subject to the stripping rules described in “TAX
MATTERS,” a cash method taxpayer would take the deemed interest payment into account on the credit
allowance date, while an accrual method taxpayer would accrue such amount as income over the three month
period that ends on the credit allowance date (or a shorter period for a short first or last credit allowance date).
If such an accrual method owner of a Tax Credit Bond sells or exchanges such Tax Credit Bond before any given
credit allowance date, the owner must accrue such interest income up to the date of the sale or exchange but
would not qualify for any of the Tax Credit for such credit allowance date. It would appear that because the
subsequent purchaser would obtain the full credit for that credit allowance date, the purchase price would
reflect the accrual of the deemed interest amount. It would also appear that the receipt of such amount by the
taxpayer primarily would constitute a return of capital (tax basis) and not be subject to additional (i.e., double)
taxation to the taxpayer. See also “TAX MATTERS.”
Tax Credit’s Effect on Estimated Income Tax Payments
The credit under Section 54A of the Code may be taken into account by a taxpayer in computing the amount of
quarterly estimated tax payments required to be paid by such taxpayer. Individual calendar year taxpayers
should note that the March 15 and December 15 credit allowance dates do not correspond to the regular
estimated tax payment dates of April 15 and January 15.
GENERAL TAX MATTERS
The following discussion of General Tax Matters was written to support the promotion and marketing of the
Tax Credit Bonds and was not intended or written to be used, and cannot be used, by a taxpayer for the
purpose of avoiding United States federal income tax penalties that may be imposed. Each taxpayer should
seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
- 28 -
This section summarizes certain material federal income tax consequences relating to an investment in the Tax
Credit Bonds. The summary only addresses such consequences to initial purchasers of the Tax Credit Bonds and is
based upon the current provisions of the Code, its legislative history, treasury regulations, administrative
pronouncements and judicial decisions, all of which are subject to change, possibly with retroactive effect. This
summary does not purport to be a complete discussion of all federal income tax consequences relating to making
an investment in the Tax Credit Bonds. The discussion herein concerning certain tax consequences with respect to
an investment in the Tax Credit Bonds is included for general information only. All persons are urged to consult
their own tax advisors to determine the specific tax consequences of making an investment in the Tax Credit
Bonds, including any state, local or non-U.S. tax consequences.
Tax Status of the Tax Credit Bonds
The Tax Credit Bonds will be treated, for federal income tax purposes, as debt instruments. Accordingly,
amounts treated as interest will be included in the income of the owner as it is paid or deemed to be paid (or, if
the owner is an accrual method taxpayer, as it is accrued) as interest.
Owners of the Tax Credit Bonds that allocate a basis in the Tax Credit Bonds that is greater than the principal
amount of the Tax Credit Bonds should consult their own tax advisors with respect to whether or not they
should elect to amortize such premium under section 171 of the Code.
If a holder purchases the Tax Credit Bonds for an amount that is less than the principal amount of the Tax Credit
Bonds, and such difference is not considered to be de minimis, then such discount will represent market
discount that ultimately will constitute ordinary income (and not capital gain). Further, absent an election to
accrue market discount currently, upon a sale or exchange of a Tax Credit Bond, a portion of any gain will be
ordinary income to the extent it represents the amount of any such market discount that was accrued through
the date of sale. In addition, absent an election to accrue market discount currently, the portion of any interest
expense incurred or continued to carry a market discount bond that does not exceed the accrued market
discount for any taxable year, will be deferred.
Tax Basis
An owner’s initial tax basis in a Tax Credit Bond generally will be equal to the purchase price paid by such owner
for such Tax Credit Bond. An owner’s tax basis in a Tax Credit Bond will be increased by the amount of OID, if
any, that is included in the owner’s income, and decreased by the amount of premium, if any, amortized as a
reduction to interest income, pursuant to the foregoing rules.
Sale of Tax Credit Bonds
Upon the sale of a Tax Credit Bond, or a component thereof, for cash, an owner will recognize gain or loss equal
to the difference between the amount of cash received (other than cash attributable to accrued interest) and
such owner’s adjusted tax basis in the Tax Credit Bond, or component. Such gain or loss will be capital gain or
loss if the Tax Credit Bond is a capital asset to such owner. Cash received attributable to accrued interest will
constitute ordinary interest income to a cash method owner, and a return of capital with respect to interest
accrued as income by an accrual method owner.
Tax Reporting
The Trustee shall prepare such tax information returns as may be required by the IRS. To date, the IRS has not
issued any rulings or regulations or otherwise provided any guidance with respect to the mechanics of reporting
of the Tax Credits as the equivalent of interest income, the reporting of the availability of the Tax Credits to the
- 29 -
owners thereof, or the accrual of OID on the Tax Credit Bonds. The failure of the Trustee to furnish a tax
reporting form to an owner does not necessarily mean that the owner has no taxable income. In addition, any
form furnished to an owner may specify an amount of taxable income different from the actual amount of
taxable income reportable by such owner if such owner is not the original purchaser of a Tax Credit Bond. The
owner of a Tax Credit Bond must include on its income tax return information with respect to the amount of
taxable interest accrued as original issue discount during the taxable year.
U.S. Federal Information Reporting and Backup Withholding
Under current United States federal income tax law, a 28% backup withholding tax requirement may apply to
certain payments of interest and original issue discount on, and the proceeds of a sale, exchange or redemption of,
the Tax Credit Bonds. The IRS has not provided guidance regarding how the 28% backup withholding tax
requirement will apply to the deemed interest payments represented by the Tax Credits. Therefore, it is not clear
how or whether such withholding would occur. In addition, certain persons making such payments are required to
submit information returns (i.e., IRS Forms 1099) to the IRS with regard to those payments. Backup withholding and
information reporting will generally not apply with respect to payments made to certain exempt recipients such as
corporations or certain exempt entities.
Other State, Local or Foreign Taxation
The Issuer makes no representations regarding the tax consequences of purchase, ownership or disposition of the
Bonds under the tax laws of any other state, locality or foreign jurisdiction. Investors considering an investment in
the Bonds should consult their own tax advisors regarding such tax consequences.
Proposed Legislation
Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may
cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or
exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current
benefit of the tax status of such interest. As an example, the School Corporation previously issued or had issued
on its behalf a series of Direct Payment Qualified School Construction Bonds (“Outstanding Direct Pay Bonds”) as
taxable bonds in reliance on the provisions of the Internal Revenue Code of 1986, as amended (the “Code”) that
provided for a subsidy to the Issuer from the United States of all or a portion of the interest due on the
Outstanding Direct Pay Bonds. As a result of the continuing federal budget discussions, moneys owed by the
United States to the School Corporation with respect to the Outstanding Direct Pay Bonds will be reduced by
7.2% for fiscal year 2014. Future payments may be similarly reduced. Under current law, such reduction in the
subsidy is scheduled to continue through and including fiscal year 2023. At this time, the School Corporation is
unable to project if and when the subsidy payments on the Outstanding Direct Pay Bonds from the United States
will be restored in whole or in part or what further action the United States may take with respect to future
subsidy payments. To the extent the issuer receives less in subsidy payments than expected, it will need to pay
more from property taxes to pay the lease rental. The introduction or enactment of any such legislative
proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of,
the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or
proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no
opinion.
Legislation affecting municipal bonds is considered from time to time by the United States Congress and the
Executive Branch, including some proposed changes under consideration at the time of issuance of the
Bonds. Bond Counsel’s opinion is based upon the law in existence on the date of issuance of the Bonds. It is
possible that legislation enacted after the date of issuance of the Bonds or proposed for consideration will have
- 30 -
an adverse effect on the excludability of all or a part of the interest on the Bonds from gross income, the manner
in which such interest is subject to federal income taxation or the market price of the Bonds.
Legislation affecting municipal bonds is considered from time to time by the Indiana legislature and Executive
Branch. It is possible that legislation enacted after the date of the Bonds or proposed for consideration will have
an adverse effect on payment or timing of payment or other matters impacting the Bonds.
The Building Corporation and the School Corporation cannot predict the outcome of any such federal or state
proposals as to passage, ultimate content or impact if passed, or timing of consideration or passage. Purchasers
of the Bonds should reach their own conclusions regarding the impact of any such federal or state proposals.
LEGAL OPINIONS AND ENFORCEABILITY OF REMEDIES
The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional
judgment of the attorneys rendering the opinions on the legal issues explicitly addressed therein. By rendering a
legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional
judgment, of the transaction opined upon, or of the future performance of parties to such transaction. Nor does
the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.
The remedies available to the bondholders upon a default under the Trust Indenture, or to the Building
Corporation under 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, including specifically
Title 11 of the United States Code (the federal bankruptcy code), the remedies provided in the Trust Indenture and
the Lease may not be readily available or may be limited. Under federal and State environmental laws certain liens
may be imposed on property of the Building Corporation from time to time, but the Building Corporation has no
reason to believe, under existing law, that any such lien would have priority over the lien on the property taxes
pledged to owners of the Bonds.
The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified as to the
enforceability of the various legal instruments by limitations imposed by the valid exercise of the constitutional
powers of the State of Indiana and the United States of America and bankruptcy, reorganization, insolvency or
other similar laws affecting the rights of creditors generally, and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
These exceptions would encompass any exercise of federal, State or local police powers (including the police
powers of the School Corporation), in a manner consistent with the public health and welfare. Enforceability of the
Trust Indenture and the Lease in a situation where such enforcement may adversely affect public health and
welfare may be subject to these police powers.
CONTINUING DISCLOSURE
Pursuant to continuing disclosure requirements promulgated by the Securities and Exchange Commission in
Securities and Exchange Commission Rule 15c2-12, as amended, the School Corporation will enter into a
Continuing Disclosure Undertaking. The Continuing Disclosure Undertaking is set forth as Appendix D. The School
Corporation hereby represents that it has, in the previous five years, failed to consistently comply in all material
respects, with its previous undertakings. Specifically, the School Corporation failed to timely file its audited
financial statements for the periods ended June 30, 2008, June 30, 2010 and June 30, 2012 and its unaudited
financial statements and operating data for the years ended December 31, 2008 through 2012. The School
- 31 -
Corporation has since filed such information and has reviewed its continuing disclosure undertakings to help
ensure compliance in the future.
UNDERWRITING
The Bonds are being purchased, subject to certain conditions, by City Securities Corporation (the “Underwriter”).
The Underwriter has agreed to purchase all, but not less than all, of the Bonds at an aggregate amount of
$____________, which includes an underwriter’s discount of $____________.
The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into unit
investment trusts, certain of which may be sponsored or managed by the Underwriter) at prices lower than the
initial public offering prices stated on the cover page. The initial public offering prices of the Bonds may be
changed, from time to time, by the Underwriter.
RATING
Standard & Poor’s Corporation, a Division of the McGraw-Hill Companies, has assigned a rating of “___” to the
Bonds based upon the Indiana State Intercept Program (see “Intercept Program” above) and an underlying rating
of “___”. Such ratings reflect only the view of Standard & Poor’s and any explanation of the significance of such
rating may be obtained from Standard & Poor’s.
Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations,
studies and assumptions of its own. There is no assurance that any rating will continue for any given period of time
or that it will not be revised downward or withdrawn entirely by such rating agency if in the judgment of such
rating agency circumstances so warrant. Any such downward revision or withdrawal of the rating may have an
adverse effect on the market price of the Bonds. No other ratings have been applied for.
Such ratings are not to be construed as a recommendation of the rating agency to buy, sell or hold the Bonds, and
the rating assigned by any rating agency should be evaluated independently. Except as may be required by the
undertaking described under the heading “Continuing Disclosure” none of the Building Corporation, the School
Corporation or the Underwriter undertakes responsibility to bring to the attention of the owners of the Bonds any
proposed change in or withdrawal of such ratings or to oppose any such revision or withdrawal.
STATEMENT OF ISSUER
The information and descriptions of documents included in this Official Statement do not purport to be complete
and are expressly made subject to the exact provisions of the complete documents. Prospective purchasers of the
Bonds are referred to the documents for details of all terms and conditions thereof relating to the Leased Premises
and the Bonds.
Neither this Official Statement, nor any statement which may have been made orally or in writing is to be
construed as a contract with the owners of any of the Bonds. Any statements in this Official Statement involving
matters of opinion whether or not expressly so stated, are intended as such and not as representations of fact.
During the initial offering period for the Bonds, copies of the forms of the Lease and Trust Indenture may be
obtained from the Public Finance Department of City Securities Corporation, 30 South Meridian, Suite 600,
Indianapolis, Indiana 46204, upon request.
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This Official Statement has been authorized and approved by Mooresville Consolidated School Building
Corporation and is deemed to be nearly final in form. The Building Corporation will provide the Underwriter with
sufficient copies of the Final Official Statement in a timely manner to be distributed to the purchasers of the Bonds.
Mooresville Consolidated School Building Corporation
- 33 -
APPENDIX A
General
Mooresville Consolidated School Corporation, Morgan County, Indiana (the “School Corporation”) is organized
under the provisions of I. C. 20-4. The School Corporation is located in Morgan County and includes Brown,
Harrison and Madison Townships, and the Town of Mooresville. Total land area is approximately 60 square miles
and makes up 15% of the land area of Morgan County.
A five member board of school trustees, elected to four year staggered terms, governs the School Corporation.
Administrative functions are carried out by a superintendent of schools, appointed by the board. A central office
staff complements the leadership of the superintendent. The central office facilities are located in the Town of
Ossian.
School Board
Name
William Roberson, President
Mark Meadows, Vice President
Perry King, Secretary
Randy Davis, Member
Dave Oberle, Member
Term Expiration
12/31/2014
12/31/2016
12/31/2014
12/31/2016
12/31/2014
Source: Mooresville Consolidated School Corporation
Administration
Name
David Marcotte
Randy Taylor
Holly Frye
Title
Superintendent
Assistant Superintendent
Director of Curriculum Instruction
Years of
Service
0 (1)
0 (2)
12.5
(1) Prior administrative service includes: M.S.D. of Wayne Township, 12.5 years; Danville Community School
Corporation, 6 years; School City of Hobart, 3 years; M.S.D. of Decatur Township, 5 years; Avon Community
School Corporation, 1 year; and Tri County Area Schools, Michigan, 2 years.
(2) Prior administrative service includes: M.S.D. of Martinsville, 39.5 years.
A-1
Personnel
The School Corporation, as of February 1, 2014, had a total staff of 497 personnel, 488 full time and 9 part-time,
allocated in categories as follows:
Staffing Category
Administration
Teachers
Counselors
Librarians
Technology
Secretarial/Clerical
Nurses
Maintenance/Custodial
Food Service/Cafeteria
Aides
Transportation
Totals
Full-Time
16
211
4
1
13
28
7
44
45
69
50
488
Part-Time
---7
---------2
---------------9
Employment Relations
The School Corporation’s employees are represented by the following labor organizations. The School Corporation
considers its relationship with the employee groups to be good.
Organization
Mooresville Consolidated Teacher’s Assn.
Represents
Teachers
Expiration
Date
8/01/2014
Facilities
In addition to the administration and transportation centers, seven school buildings are currently housing
educational programs for the School Corporation. Summary information about the schools presented by selected
category follows:
Building Name
Neil Armstrong Elementary
Newby Elementary
North Madison Elementary
Northwood Elementary
Waverly Elementary
Paul Hadley Middle
Mooresville High
Age
Original
Structure
1971
1936
1958
1964
1964
1965
1958
A-2
Date(s) of
Additional
Renovation(s)
2013
2011
2012
2011
2013
2010
2013
Grades
K-6
K-6
K-6
K-6
K-6
7-8
9-12
Enrollments
The average daily membership enrollments are as follows and the projected enrollments are based on school
demographics study and enrollment trends.
Academic
Year
2009-10
2010-11
2011-12
2012-13
2013-14
Actual
Enrollment
4,286
4,343
4,334
4,333
4,555
Academic
Year
2014-15
2015-16
2016-17
Projected
Enrollment
4,565
4,575
4,585
Net Assessed Valuation
Annual net assessed valuation totals of the School Corporation are shown below. In Indiana, statutory provisions
for assessment of land, improvements, and personal property specify true tax value as assessed valuation. Criteria
for determination of true tax value are established by the Indiana Department of Local Government Finance.
Assessed valuation is reduced by various exemptions for homesteads, mortgages, and abatements.
Tax Payment
Year
2005
2006 (1)
2007 (1)
2008
2009 (2)
Net Assessed
Valuation
$ 965,915,170
981,221,060
1,120,586,855
1,151,016,405
960,309,564
Tax Payment
Year
2010
2011
2012
2013
2014
Net Assessed
Valuation
$ 978,092,784
1,006,737,176
998,611,461
989,876,267
1,010,229,008
(1) Reflects statewide reassessment of all real property and, in 2007, adoption of new assessment rules designed
to reflect more accurate true tax value.
(2) House Enrolled Act 1001 (HEA 1001) of the 2008 session of the General Assembly changed the calculation of
homestead deductions for Homestead-Eligible Residential properties. The standard deduction calculation was
changed slightly, but an additional Supplemental Deduction for taxes due in 2009 and thereafter allows for an
additional 35% deduction to the assessed valuation net of the standard deduction for all assessed values up to
$600,000 and 25% of assessed valuation remaining above the net $600,000 amount. This change has reduced
the taxable net assessed value in 2009 and thereafter by approximately 25%. Gross Assessed Valuation for the
Tax Payment Years 2009 through 2013 was: $1,763,312,050; $1,800,925,450; $1,839,449,280; $1,720,872,142;
and $1,713,568,561, respectively.
Source: Indiana Department of Local Government Finance
A-3
Largest Taxpayers
The ten largest taxpayers for the payment year 2014 in the School Corporation account for approximately 12.8% of
the Net Assessed Valuation of the School Corporation and are listed below:
Type of Business
Taxpayer
TOA (USA) Inc.
Nice-Pak Products
Meadow Lake of Mooresville, LLC
Rockies Express Pipeline LLC
General Shale Products of IN
Lowe’s Home Center
Pacmoore Assets, LLC
MMM Invest Inc.
Indianapolis Power & Light
Package Company, Inc.
Assessed Valuation
Auto parts Mfg.
Pre-Moistened Wipe Mfg.
Long-Term Health Care Facility
Natural Gas Pipeline
Brick Mfg.
Retail Shopping
Contract Food Mfg.
Long Term Nursing Care Provider
Electric Utility
Retail Grocery
$
31,051,720
21,967,890
16,932,300
14,134,200
11,691,420
10,198,640
7,684,080
5,898,700
5,236,870
4,620,200
$ 129,416,020
Source: Morgan County Auditor
School Tax Rates
The following tax rates (per $100 of assessed valuation) are gross rates. Prior to 2010, a portion of the taxes were
actually paid by the State in the form of a property tax replacement credit.
Fund
General Fund
Debt Service
Pension Debt Service
Capital Projects
Transportation
Bus Replacement
State Loan
Total
2010
$ 0.0000
0.2438
0.0341
0.2809
0.1712
0.0574
0.0000
$ 0.7874
2011
$ 0.0000
0.2826
0.0309
0.2758
0.1637
0.0344
0.0000
$ 0.7874
A-4
Tax Rate
2012
$ 0.0000
0.2968
0.0323
0.2375
0.1828
0.0380
0.0000
$ 0.7874
2013
$ 0.0000
0.2563
0.0349
0.2727
0.1792
0.0388
0.0055
$ 0.7874
2014
$ 0.0000
0.3347
0.0064
0.2191
0.1881
0.0391
0.0000
$ 0.7874
Taxes Levied and Collected
Total property tax levies for the School Corporation and collections against those levies for the past five completed
years are as follows:
Collection
Year
2009
2010
2011
2012
2013
2014
Taxes
Levied
$ 7,970,569 (1)
7,701,503
7,927,049
7,863,067
7,794,286
7,954,544
Circuit
Breaker
Credits
$
1,584
3,845
5,277
5,663
2,659
In Process
Net
Taxes
Levied
$ 7,968,985
7,697,658
7,921,772
7,857,404
7,791,627
In Process
Taxes
Collected
$ 8,508,174
7,992,576
7,958,851
8,062,720
8,062,924
In Process
Percent
Collected
106.8%
103.8%
100.5%
102.6%
103.5%
----
(1) House Enrolled Act 1001 (HEA 1001) from the 2008 session of the General Assembly resulted in the
elimination of many property tax levies effective in tax year 2009. For school corporations, levies for the
General Fund and Pre-School Special Education were also eliminated with all budgeted expenditures for these
eliminated levies to be assumed by the State of Indiana. As a result of this legislation, levies and rates have
been reduced accordingly.
Source: Indiana Department of Local Government Finance; Mooresville Consolidated School Corporation Form 9
Collections are shown on an accrual basis and include present and prior year property tax levies, along with
penalties and interest on prior year delinquencies. Excluded are receipts from automobile excise taxes and
financial institution (intangibles) taxes.
Indiana statutes and practices make it difficult to evade property tax liabilities. Penalty and interest charges are
assessed and property may be seized and sold to satisfy loans. Taxes due each year are due in two installments,
May and November.
Financial Statements
The School Corporation is audited biennially by the Indiana State Board of Accounts. The School Corporation
maintains its system of accounts on a cash basis as prescribed by the Board of Accounts in the “Accounting and
Uniform Compliance Guidelines Manual for Indiana Public School Corporations” (2010 Revised Edition). Annual
Financial Reports (Form 9) are filed with the Indiana Department of Education. The most recent audit by the
State Board of Accounts was filed February 28, 2013 for the period July 1, 2010 to June 30, 2012. The current
audit period runs from July 1, 2012 through June 30. 2014.
The School Corporation maintains six state or tax supported funds: the General Fund, the Debt Service Fund, the
Pension Bonds Debt Service Fund, the Capital Projects Fund, the Transportation Operating Fund, and the
Transportation Bus Replacement Fund. A Rainy Day Fund and other funds are used for specific purposes, such
as federal grants and donations.
The General Fund is used for the operation and maintenance of the School Corporation and for any other lawful
expenses payable from the General Fund. The Debt Service Fund is used for the payment of all debt, including
lease rental obligations and other obligations to repay funds borrowed or advanced for the purchase or
construction of, or addition to, school buildings. The Pension Bond Repayment Fund is used for the payment of
A-5
all debt incurred to satisfy the School Corporation’s unfunded pension liabilities. The Capital Projects Fund is
used for land acquisition, site improvement, construction or purchase of school buildings and equipment, and
remodeling or repairing school buildings, all for school classroom purposes. The Transportation Operating and
Bus Replacement Funds are to be used exclusively for the payment of costs of transporting students and
purchasing school buses, respectively.
A copy of the School Corporation’s Audit Report for the period July 1, 2010 to June 30, 2012, is included as
Appendix B to this Official Statement. Potential purchasers should read such financial statements in their
entirety for more complete information concerning the School Corporation’s financial position. Such financial
statements have been audited by the State Board of Accounts, to the extent and for the periods indicated
thereon. The School Corporation has not requested the State Board of Accounts to perform any additional
examination, assessment or evaluation with respect to such financial statements since the date thereof, nor has
the School Corporation requested that the State Board of Accounts consent to the use of such financial
statements in this Official Statement. Although the inclusion of the financial information in this Official
Statement is not intended to demonstrate the fiscal condition of the School Corporation since the date of such
financial information, in connection with the issuance of the Bonds, the School Corporation represents that
there has been no material adverse change in the financial position or results of operations of the School
Corporation, nor has the School Corporation incurred any material liabilities, which would make such financial
information misleading.
A-6
Unaudited Compilation of Receipts and Expenditures
GENERAL FUND
Jan. 1 Balance
Receipts
Property Taxes
Fin. Inst., Excise Taxes
Local Option Prop. Tax Replacement
Other Local Sources
County & Intermediate
State Aid
Adjustments & Refunds
Interim Loans
2009
Actual
2010
Actual
2011
Actual
2012
Actual
2013
Actual
$ 3,437,839
$ 2,926,712
$ 2,041,970
$ 3,063,525
$ 3,204,405
352,847
1,192
22,437,942
170
97,946
331,640
15
23,338,958
1,844
53,081
346,061
14
24,047,436
86,731
52,470
222,785
3
25,361,177
-
147,430
11
26,177,794
1,321
-
22,890,097
23,401,225
-
23,725,538
24,610,280
-
24,532,712
23,458,686
52,470
25,583,965
23,659,323
1,783,762
26,326,556
24,073,161
2,000,000
$ 2,926,712
$ 2,041,970
$ 3,063,525
$ 3,204,405
$ 3,457,800
$ 2,080,206
$ 1,059,027
$
$
$
2,988,873
360,295
2,500
354,812
1,303,933
2,459,214
304,646
197,054
1,662,475
2,857,454
357,838
244,663
125
1,337,419
3,039,136
348,408
154,348
1,338,083
2,681,946
341,194
151,903
-
5,010,413
3,727,659
2,303,933
4,623,389
2,653,866
3,026,475
4,797,499
2,876,047
1,922,919
4,879,975
3,058,846
1,338,083
3,175,043
3,346,591
-
Total Receipts
Expenditures
Loan Repayments
Dec. 31 Balance
DEBT SERVICE FUND
Jan. 1 Balance
Receipts
Property Taxes
Other Local Sources
Interim Loans
Total Receipts
Expenditures
Loan Repayments
Dec. 31 Balance
PENSION DEBT SERVICE FUND
Jan. 1 Balance
Receipts
Property Taxes
Other Local Sources
Interim Loans
CAPITAL PROJECTS FUND
Jan. 1 Balance
Receipts
Property Taxes
Other Local Sources
Interim Loans
483,654
$
2,075
$
608
$
483,654
$
312,106
$
$
221,194
$
229,097
$
205,873
$
198,295
199,985
354,335
42,714
-
343,967
42,610
-
312,439
39,869
-
330,741
38,387
-
357,525
45,484
-
397,049
375,840
-
386,577
378,674
-
352,308
375,533
-
369,128
376,706
-
403,009
377,040
-
$
221,194
$
229,097
$
$
550,624
$
729,070
$ 1,192,761
$ 1,049,844
$ 1,283,295
2,919,435
351,925
345,223
9,679
32,610
1,739,199
2,833,443
350,975
227,843
70,802
1,500
1,911,936
2,785,908
353,513
282,891
106,006
17,307
544,031
2,431,923
278,797
123,486
59,839
8,699
-
2,790,206
355,399
161,644
208,737
224,681
-
5,398,071
3,480,426
1,739,199
5,396,499
3,020,872
1,911,936
4,089,657
3,688,543
544,031
2,902,744
2,669,293
-
3,740,667
3,332,916
-
729,070
$ 1,192,761
$ 1,049,844
$ 1,283,295
$ 1,691,046
Total Receipts
Expenditures
Loan Repayments
Dec. 31 Balance
608
$ 1,059,027
Total Receipts
Expenditures
Loan Repayments
Dec. 31 Balance
2,075
$
Source: School Corporation Biannual Financial Reports (Form 9)
A-7
205,873
$
198,295
$
224,264
Unaudited Compilation of Receipts and Expenditures
2009
Actual
TRANSPORTATION FUND
Jan. 1 Balance
Receipts
Property Taxes
Other Local Sources
Interim Loans
$
Total Receipts
Expenditures
Loan Repayments
Dec. 31 Balance
BUS REPLACEMENT FUND
Jan. 1 Balance
Receipts
Property Taxes
Other Local Sources
Interim Loans
PRE-SCHOOL SPECIAL EDUCATION
Jan. 1 Balance
Receipts
Property Taxes
State Aid
Interim Loans
$
692,989
$
2012
Actual
694,856
$
2013
Actual
877,279
$
924,701
1,647,501
199,042
191,790
64,027
12,763
946,585
1,419,045
213,927
141,632
70,579
22,447
1,037,701
1,655,220
210,273
175,852
60,159
13,107
-
1,871,812
214,586
95,059
72,791
17,378
-
1,835,771
233,544
174,464
75,123
51,281
-
3,061,708
1,739,523
1,146,585
2,905,331
1,865,763
1,037,701
2,114,611
1,932,188
-
2,271,626
1,974,204
250,000
2,370,183
2,056,317
225,000
$ 1,013,567
692,989
$
694,856
$
877,279
$
924,701
$
150,000
$
225,007
$
189,770
$
1,211
$
108,423
598,030
31,298
67,127
-
886,846
71,756
49,263
-
347,829
46,324
61,166
-
389,108
44,137
19,750
-
397,477
50,567
21,063
-
696,454
421,447
200,000
1,007,866
443,103
600,000
455,319
428,878
215,000
452,995
345,783
-
469,107
393,453
-
$
225,007
$
189,770
$
1,211
$
108,423
$
184,076
$
134,291
$
0
$
0
$
0
$
0
Total Receipts
Expenditures
Loan Repayments
Dec. 31 Balance
517,390
2011
Actual
$
Total Receipts
Expenditures
Loan Repayments
Dec. 31 Balance
2010
Actual
$
123,750
-
-
-
-
-
123,750
160,094
97,947
-
-
-
-
0
$
0
A-8
$
0
$
0
$
0
Cash Balances by Funds
Dec. 31
2009
2010
2011
2012
2013
Debt
General
Service
$ 2,926,712 $ 1,059,027
2,041,969
2,075
3,063,525
609
3,204,405
483,654
3,457,800
312,106
Pension
Debt
Capital
TransporBus
Service
Projects
tation
Replacement
Other
Total
$ 221,194 $ 729,070 $ 692,989 $ 225,007 $ 8,092,452 $ 13,946,451
229,097 1,192,761
694,856
189,770
9,074,784
13,425,312
205,873 1,049,844
877,279
1,211
6,889,925
12,088,266
198,296 1,283,295
924,701
108,423
8,717,299
14,920,073
224,264 1,691,046
1,013,567
184,076 11,205,299
18,088,158
Anticipated Receipts & Disbursements
Calendar Year 2014 Budget
Receipts
Property Tax
Bank & Excise
State Grants
Miscellaneous
Total
Disbursements
General
Fund
Debt
Service
Fund
Pension
Debt
Service
Capital
Projects
Fund
$
------26,653,913
70,000
$ 26,723,913
$ 3,381,236
419,711
---387,704
$ 4,188,651
$ 64,655
8,025
------$ 72,680
$ 2,213,412
274,751
------$ 2,488,163
$ 1,900,241
235,877
------$ 2,136,118
$ 395,000
49,032
------$ 444,032
$ 27,599,247
$ 4,653,183
$ 189,663
$ 3,476,621
$ 2,501,336
$ 492,563
A-9
Bus
Transportation Replacement
Fund
Fund
State of Indiana Payments
The following table shows the annual amounts appropriated to the School Corporation during the five previous
years and the amounts of such appropriations projected to be received during the current year.
Year
2009 (3)
2010
2011
2012
2013
2014 (Est.)
Basic
Grants (1)
$ 22,159,683
23,108,343
23,458,982
24,206,688
25,789,007
26,578,913
$
Other
Grants (2)
Total
542,038
1,211,021
1,168,136
1,954,092
1,102,734
75,000
$ 22,701,721
24,319,364
24,627,118
26,160,780
26,891,741
26,653,913
(1) The basic grant is for regular, handicapped and vocational instruction.
(2) Other grants include summer school, Primetime, Pre-School Special Education and other special state
programs.
(3) House Enrolled Act 1001 (HEA 1001) from the 2008 session of the General Assembly resulted in the
elimination of many property tax levies effective in tax year 2009. State levies for Forestry and the State Fair
Board were eliminated along with county levies for Welfare. Pension levies for cities were also eliminated. For
school corporations, levies for the General Fund and Pre-School Special Education were also eliminated with all
budgeted expenditures for these eliminated levies assumed by the State of Indiana. This change resulted in a
substantial increase in the Basic Grant beginning in 2009.
Source: School Corporation Biannual Financial Reports (Form 9) and Dep’t. of Local Government Finance
A - 10
Indebtedness
The bond and lease indebtedness of the School Corporation and the underlying and overlapping taxing units associated
with the School Corporation are summarized below as of February 1, 2014, assuming issuance of Bonds.
Percent of
Assessed
Valuation
Per Capita
Net Assessed Value
Direct Debt*
Direct & Underlying Debt*
Maximum Annual Debt Service*
2012 Estimated Population
2013 Total State Aid
$ 1,010,229,008
47,619,285
54,163,246
4,422,034
$ 41,467.41
1,954.65
2,223.27
---4.71%
5.36%
Times
State Aid
Coverage
6.08 times
24,362
26,891,741
$
The following tabulation itemizes the outstanding and expected principal amount of long term indebtedness of the School
Corporation and its overlapping and underlying taxing units.
Direct Debt
Original
Amount
Issued
General Obligation Bonds
2003 Pension Bonds
Common School Loans
2011 Loan A1540
2011 Loan A1480
2013 Loan A1621
2013 Loan A1694
Lease Obligations:
2014A QZABs (this issue)*
2014B QZABs (expected)*
2013B Bonds
2013 Bonds
2011B QZABs
2011 QZABs
2010 QSCBs
2009 QSCBs
2009 Bonds
2005 Bonds
1998 Bonds
12/8/03
2024
7/1/11
7/1/11
7/1/13
10/3/13
412,600
409,212
417,900
417,900
2017
2017
2018
2018
288,820
245,527
376,110
376,110
3/__/14
3/__/14
3/28/13
2/21/13
2/21/11
4/26/11
12/9/10
1/12/10
7/30/09
5/26/05
8/18/98
2,000,000
2,000,000
19,800,000
1,925,000
2,000,000
4,000,000
1,990,000
1,980,000
7,745,000
11,005,000
2,590,000
2034
2034
2030
2027
2021
2024
2019
2025
2017
2017
2019
2,000,000
2,000,000
19,800,000
1,925,000
2,000,000
4,000,000
1,990,000
1,562,000
2,155,000
3,620,000
2,590,000
Underlying and Overlapping Tax Supported Debt
Mooresville Library
Mooresville Town
Morgan Co. Jail
Morgan Co. Library
Total Overlapping Debt
Amount
Outstanding
4,500,000
Total Direct Debt*
$
Final
Maturity
$
$ 63,192,612
2,690,718
$ 47,619,285
Outstanding
Amount
Applicable
Per Cent
Amount
$ 4,575,000
54,890
4,485,000
1,055,000
100.00%
100.00%
34.55%
34.55%
$ 10,169,890
$ 4,575,000
54,890
1,549,568
364,503
$ 6,543,961
The schedule presented above is based on information furnished by the obligors or other sources and is deemed reliable.
The Underwriter makes no representations or warranty as to its accuracy or completeness.
Sources: Direct Debt from School Corporation; other from Indian Department of Local Government Finance
“Gateway”.
___________________________
A - 11
Combined Debt Service Requirements
The tabulation below sets forth the combined annual debt service and lease requirements for all loans, leases
and other long term obligations of the School Corporation.
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2003
Pension
Bonds
$ 95,718
374,358
376,629
378,031
373,364
377,715
380,375
376,682
372,235
381,583
Total
Pension
Debt
Fund
$ 95,718
374,358
376,629
378,031
373,364
377,715
380,375
376,682
372,235
381,583
1998
Bonds
$ 627,766
1,239,446
620,000
2005
Bonds
$ 1,146,000
1,144,000
1,148,000
578,000
2009
Bonds
$ 1,358,000
740,500
87,000
33,000
2009
QSCB
Bonds
$ 158,000
158,000
158,000
158,000
158,000
158,000
158,000
158,000
158,000
158,000
158,000
Common
School
Loans
$ 347,594
341,495
338,579
253,226
168,414
2010
QSCB
Bonds
$ 550,150
550,150
550,150
344,150
2011
QZAB
Bonds
$ 1,000
1,000
501,000
501,000
501,000
501,000
501,000
501,000
501,000
501,000
2011B
QZAB
Bonds
$ 211,497
211,400
211,400
211,400
211,400
280,000
280,000
2013
Bonds
$ 70,000
70,000
70,000
70,000
70,000
70,000
70,000
70,000
70,000
70,000
680,000
688,000
684,000
2013B
Bonds
$ 1,034,225
622,000
622,000
622,000
622,000
1,140,000
1,750,000
2,030,000
2,030,000
2,030,000
2,360,000
2,510,000
2,514,000
2,598,000
2,596,000
2,598,000
(This
Issue)
2014A
QZAB
Bonds*
(Expected)
2014B
Bonds*
$ 500,000
500,000
500,000
500,000
$ 500,000
500,000
500,000
500,000
Total
Debt
Fund*
$ 4,326,316
3,838,545
3,686,129
3,604,542
3,314,410
2,769,000
2,759,000
2,759,000
2,759,000
2,759,000
3,198,000
3,198,000
3,198,000
2,598,000
2,596,000
2,598,000
1,000,000
1,000,000
1,000,000
1,000,000
Total
Debt
Service*
$ 4,422,034
4,212,903
4,062,758
3,982,572
3,687,774
3,146,715
3,139,375
3,135,682
3,131,235
3,140,583
3,198,000
3,198,000
3,198,000
2,598,000
2,596,000
2,598,000
1,000,000
1,000,000
1,000,000
1,000,000
Future Financing
The School Corporation has had preliminary discussions regarding improvements that may be identified as a
result of an ongoing facilities audit. Any improvements are anticipated to not exceed $2,000,000 and may begin
as early as summer of 2015. The School Corporation also anticipates annually seeking three year Technology
Common School Loans from the State of Indiana to replace existing Technology Common School Loans as they
are retired. Other than the foregoing, the School Corporation presently has no additional borrowing plans in the
next 12 months.
Debt Payment History
The School Corporation has no record of default and has met its debt repayment obligations promptly.
Pension and Post Employment Obligations
All employees of the School Corporation are covered under the federal Social Security Act. The School
Corporation’s employer contribution for employees in the General Fund was $1,189,772.98 in calendar year
2013 and is budgeted to be $1,448,228.00 for 2014. All present and retired certificated employees of the School
Corporation are covered under the Indiana State Teachers’ Retirement Fund (the “Fund”). The active reporting
units state-wide in the Fund make contributions at a statutory rate of 3.0% of earned salary or compensation.
The School Corporation does contribute to the Fund for teachers. The Indiana General Assembly does not
presently fund the accrued liability for pension benefits payable from the Fund, but does appropriate moneys
annually in an amount equal to approximately 100% of the total benefits to be paid during the year of
appropriation benefits to be paid during the year of appropriation to all retired individuals covered by the Fund.
The School Corporation’s contribution to the TRF for the year ending June 30 was $547,131.28 in 2011,
___________________________
A - 12
$535,418.18 in 2012, and $566,727.92 in 2013, representing the entire obligation due from the School
Corporation.
All full-time non-certified employees of the School Corporation are covered under the Public Employees
Retirement Fund of Indiana (“PERF”). As of June 30, 2012, there were 333 active school corporation accounts
statewide making contributions. These non-certificated employees contribute to PERF at a rate of 3% of earned
salary or compensation. The School Corporation currently contributes at a rate of 11.2% of earned salary or
compensation, and this contribution is treated as a current expense. It will increase further in 2014. The total
contributions made to PERF by the School Corporation during the periods ending June 30, 2011 through 2013
were $86,429.90, $100,532.16, and $110,255.30, respectively.
PERF presently anticipates that the total unfunded accrued liability in PERF applicable to the School Corporation
will, using present rates, be fully funded in 40 years. As of June 30, 2012, there were approximately 1,138 total
PERF active accounts statewide making contributions. PERF reports that as of July 1, 2011, the total unfunded
accrued liability for the School Corporation was $2,564,996. This liability is presently being funded over periods
of years provided in separate agreements between PERF and the governing body of each governmental unit
participating in PERF.
The Fund and PERF are not presently subject to the funding and vesting requirements of the Federal Employee
Retirement Income Security Act of 1974.
The Fund is created and operates pursuant to statutes of the State. The Indiana General Assembly could
determine to amend the format and could impose or revise rates of contributions to be made by the School
Corporation and revise benefits or benefit levels.
The Fund and PERF issue publicly available financial reports and actuarial valuation reports that include financial
statements and required supplementary information. Those reports may be viewed at the Indiana Public
Retirement System’s website, as follows:
http://www.in.gov/inprs/index.htm
Such information is prepared by the entity maintaining such website and not by any of the parties to this
transaction, and no such information is incorporated herein by this reference.
The School Corporation has entered into agreements with teachers, and has policies relating to its
administrators and other staff, that provide employees who retire, after meeting certain eligibility requirements,
with the balances of 401(a) accounts and VEBA accounts. These accounts are for the benefit of the employees
and are funded through payroll withdrawals and School Corporation contributions annually. Employees are not
entitled to any post-retirement benefits from the School Corporation beyond their vested balances in the
various retirement accounts.
A - 13
APPENDIX B
AUDIT REPORT
B-1
TABLE OF CONTENTS
Description
Page
Schedule of Officials
2
Independent Auditor's Report
3-4
Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of the Financial Statement
Performed in Accordance With Government Auditing Standards
5-6
Financial Statement:
Statement of Receipts, Disbursements, Other Financing Source (Uses),
and Cash and Investment Balances - Regulatory Basis
8-9
Notes to Financial Statement..
10-14
Supplementary Information - Unaudited:
Combining Schedules of Receipts, Disbursements, Other Financing Source (Uses),
and Cash and Investment Balances - Regulatory Basis
Schedule of Leases and Debt
Schedule of Capital Assets
. 16-29
. 30
. 31
Audit Results and Comments:
Overdrawn Fund Balance
Internal Controls Over Reporting of Textbook Rental Fund Activity
.
.
Supplemental Audit of Federal Awards:
Independent Auditor's Report on Compliance With Requirements That
Could Have a Direct and Material Effect on Each Major Program and on
Internal Control Over Compliance in Accordance With OMB Circular A-133
Schedule of Expenditures of Federal Awards
Notes to Schedule of Expenditures of Federal Awards
Schedule of Findings and Questioned Costs
Auditee Prepared Schedule:
Corrective Action Plan
32
32
. 34-35
. 38-39
. 40
. 41-43
. 44-45
Exit Conference
.
46
Official Response
.
47
-1-
SCHEDULE OF OFFICIALS
Office
Treasurer
Official
Term
Becky S. Merriman
Larry Moore
Becky S. Merriman
Jim Diagostino
07-01-10 to
08-04-1 0 to
05-01-12 to
07-01-12 to
Superintendent
of Schools
Brad Lindsay
07-01-10 to 06-30-13
President of the
School Board
William E. Roberson
07-01-10 to 06-30-13
-2-
08-03-10
04-30-12
06-30-12
06-30-13
!{"""~STATE OF IND.IANA
~~$ . .:) AN EQUAL OPPORTUNITY EMPLOYER
.~~
STATE BOARD OF ACCOUNTS
302 WEST WASHINGTON STREET
ROOME418
INDIANAPOLIS, INDIANA 46204-2769
Telephone: (317) 232-2513
Fax: (317) 232-4711
Web Site: www.in.gov/sboa
INDEPENDENT AUDITOR'S REPORT
TO: THE OFFICIALS OF THE MOORESVILLE CONSOLIDATED
SCHOOL CORPORATION, MORGAN COUNTY, INDIANA
We have audited the accompanying financial statement of the Mooresville Consolidated School
Corporation (School Corporation), for the period of July 1,2010 to June 30,2012. This financial statement is
the responsibility ofthe School Corporation's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the School Corporation's internal control over reporting. Accordingly, we
express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As discussed in Note 1, the School Corporation prepares its financial statement on the prescribed
basis of accounting that demonstrates compliance with the reporting requirements established by the State
Board of Accounts as allowed by state statute (IC 5-11-1-6), which is a comprehensive basis of accounting
other than accounting principles generally accepted in the United States of America. The effects on the financial statement of the variances between these regulatory accounting practices and accounting principles
generally accepted in the United States of America, although not reasonably determinable, are presumed to
be material. The basis of accounting noted above is a different basis than that used in the prior period.
In our opinion, because of the matter discussed in the preceding paragraph, the financial statement
referred to above does not present fairly, in conformity with accounting principles generally accepted in the
United States of America, the financial position and results of operations of the School Corporation for the
period of July 1, 2010 to June 30, 2012.
In our opinion, the financial statement referred to above presents fairly, in all material respects, the
financial position and results of operations of the School Corporation for the period of July 1, 2010 to June 30,
2012, on the basis of accounting described in Note 1.
INDEPENDENT AUDITOR'S REPORT
(Continued)
In accordance with Government Auditing Standards, we have also issued a report dated February 12,
2013, on our consideration of the School Corporation's internal control over financial reporting and our tests of
its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters.
The purpose of that report is to describe the scope of our testing of internal control over financial reporting
and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards and should be considered in assessing the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the School Corporation's financial
statement. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of
additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of
States, Local Governments, and Non-Profit Organizations, and is not a required part of the financial statement. Such information is the responsibility of management and was derived from and relates directly to the
underlying accounting and other reports used to prepare the financial statement. The information has been
subjected to the auditing procedures applied in the audit of the financial statement and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting and
other records used to prepare the financial statement or to the financial statement itself, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In our
opinion, the Schedule of Expenditures of Federal Awards is fairly stated, in all material respects, in relation to
the financial statement taken as a whole.
Our audit was conducted for the purpose of forming an opinion on the School Corporation's financial
statement. The Combining Schedules of Receipts, Disbursements, Other Financing Source (Uses), and
Cash and Investment Balances - Regulatory Basis, Schedule of Leases and Debt, and Schedule of Capital
Assets, as listed in the Table of Contents, are presented for additional analysis and are not required parts of
the financial statement. They have not been subjected to the auditing procedures applied by us in the audit of
the financial statement and, accordingly, we express no opinion on them.
The School Corporation's response to the Audit Results and Comments identified in our audit is
described in the accompanying section of the report entitled Official Response. We did not audit the School
Corporation's response and, accordingly, we express no opinion on it.
February 12, 2013
ROOME418
Telephone: (317) 232-2513
Fax: (317) 232-4711
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENT
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
We have audited the financial statement of the Mooresville Consolidated School Corporation (School
Corporation), for the period of July 1, 2010 to June 30, 2012, and have issued our report thereon dated
February 12, 2013. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
Management of the School Corporation is responsible for establishing and maintaining effective
internal control over financial reporting. In planning and performing our audit, we considered the School
Corporation's internal control over financial reporting as a basis for designing our auditing procedures for the
purpose of expressing our opinion on the financial statement, but not for the purpose of expressing an opinion
on the effectiveness of the School Corporation's internal control over financial reporting. Accordingly, we do
not express an opinion on the effectiveness of the School Corporation's internal control over financial reporting.
Our consideration of the internal control over financial reporting was for the limited purpose described
in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial
reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as
described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies
in internal control over financial reporting that we consider to be material weaknesses.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and
correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies
in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statement will not be prevented or detected and corrected on a timely basis. We consider the deficiency
described in the accompanying Schedule of Findings and Questioned Costs as item 2012-1 to be a material
weakness.
-5-
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENT
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
(Continued)
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School Corporation's financial statement is free of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and material
effect on the determination of financial statement amounts. However, providing an opinion on compliance
with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
The School Corporation's response to the findings identified in our audit is described in the accompanying Official Response and Corrective Action Plan. We did not audit the School Corporation's response
and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of the School Corporation's management,
School Board, others within the entity, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. In accordance with
Indiana Code 5-11-5-1, this report is a part of the public records of the State Board of Accounts and of the
office examined.
February 12, 2013
-6-
FINANCIAL STATEMENT
The financial statement and accompanying notes were approved by management of the School
Corporation. The financial statement and notes are presented as intended by the School Corporation.
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-9-
NOTES TO FINANCIAL STATEMENT
Note 1.
Summary of Significant
A.
Accounting
Policies
Reporting Entity
School Corporation, as used herein, shall include, but is not limited to, school townships,
school towns, school cities, consolidated school corporations, joint schools, metropolitan
school districts, township school districts, county schools, united schools, school districts,
cooperatives, educational service centers, community schools, community school corporations,
and charter schools.
The School Corporation was established under the laws of the State of Indiana. The School
Corporation operates under a Board of School Trustees form of government and provides educational services.
The accompanying financial statement presents the financial information for the School
Corporation.
B. Basis of Accounting
The financial statement is reported on a regulatory basis of accounting prescribed by the State
Board of Accounts in accordance with state statute (IC 5-11-1-6), which is a comprehensive
basis of accounting other than accounting principles generally accepted in the United States of
America. Receipts are recorded when received and disbursements are recorded when paid.
The regulatory basis of accounting differs from accounting principles generally accepted in the
United States of America in that receipts are recognized when received in cash, rather than
when earned, and disbursements are recognized when paid, rather than when a liability is incurred.
C.
Cash and Investments
Investments are stated at cost. Any changes in fair value of the investments are reported as
receipts in the year of the sale of the investment.
D. Receipts
Receipts are presented in the aggregate on the face of the financial statement. The aggregate
receipts include the following sources:
Local sources which include taxes, revenue from local governmental units other than
school corporations, transfer tuition, transportation fees, investment income, food services,
school corporation activities, revenue from community services activities, and other
revenue from local sources.
Intermediate sources which include distributions from the County for fees collected for or
on behalf of the School Corporation including educational license plate fees, congressional
interest, riverboat distributions, and other similar fees.
State sources include distributions from the State of Indiana and are to be used by the
School Corporation for various purposes. Included in state sources are unrestricted
grants, restricted grants, revenue in lieu of taxes, and revenue for or on behalf of the
School Corporation.
-10-
(Continued)
Federal sources include distributions from the federal government and are to be used by
the School Corporation for various purposes. Included in federal sources are unrestricted
grants, restricted grants, revenue in lieu of taxes, and revenue for or on behalf of the
School Corporation.
Temporary loans which include money received from a loan obtained to pay current
expenses prior to the receipt of revenue from taxes levied for that purpose. These loans,
sometimes designated tax anticipation warrants, must be repaid from the next semiannual
distribution of local property taxes levied for such fund.
Interfund loans which include money temporarily transferred from one fund to a depleted
fund for use in paying current operating expenses. Such advancement shall not be made
for a period extending beyond the budget year.
Other receipts which include amounts received from various sources which include return
of petty cash, return of cash change, insurance claims for losses, sale of securities, and
other receipts not listed in another category above.
E. Disbursements
Disbursements are presented in the aggregate on the face of the financial statement. The aggregate disbursements include the following uses:
Instruction which includes outflows for regular programs, special programs, adult and
continuing education programs, summer school programs, enrichment programs, remediation, and payments to other governmental units.
Support services which include outflows for support services related to students, instruction, general administration, and school administration. It also includes outflows for central
services, operation and maintenance of plant services, and student transportation.
Noninstructional services which include outflows for food service operations and community service operations.
Facilities acquisition and construction which includes outflows for the acquisition, development, construction, and improvement of new and existing facilities.
Debt services which include fixed obligations resulting from financial transactions previously entered into by the School Corporation. It includes all expenditures for the reduction
of the principal and interest of the School Corporation's general obligation indebtedness.
Nonprogrammed charges which include outflows for donations to foundations, securities
purchased, indirect costs, scholarships, funds held temporarily for an authorized recipient,
and self-insurance payments.
Interfund loans which include money temporarily transferred from one fund to a depleted
fund for use in paying current operating expenses. Such advancement shall not be made
for a period extending beyond the budget year.
(Continued)
F. Other Financing Sources and Uses
Other financing sources and uses are presented in the aggregate on the face of the financial
statement. The aggregate other financing sources and uses include the following:
Sale of capital assets which includes money received when land, buildings, or equipment
owned by the School Corporation is sold.
Transfers in which includes money received by one fund as a result of transferring money
from another fund. The transfers are used for cash flow purposes as provided by various
statutory provisions.
Transfers out which includes money paid by one fund to another fund. The transfers are
used for cash flow purposes as provided by various statutory provisions.
G. Fund Accounting
Separate funds are established, maintained, and reported by the School Corporation. Each
fund is used to account for money received from and used for specific sources and uses as
determined by various regulations. Restrictions on some funds are set by statute while other
funds are internally restricted by the School Corporation. The money accounted for in a
specific fund may only be available for use for certain, legally restricted purposes. Additionally,
some funds are used to account for assets held by the School Corporation in a trustee capacity
as an agent of individuals, private organizations, other funds, or other governmental units and
therefore the funds cannot be used for any expenditures of the unit itself.
Note 2.
Budgets
The operating budget is initially prepared and approved at the local level. The fiscal officer of the
School Corporation submits a proposed operating budget to the governing board for the following
calendar year. The budget is advertised as required by law. Prior to adopting the budget, the
governing board conducts public hearings and obtains taxpayer comments. Prior to November 1,
the governing board approves the budget for the next year. The budget for funds for which
property taxes are levied or highway use taxes are received is subject to final approval by the
Indiana Department of Local Government Finance.
Note 3.
Property Taxes
Property taxes levied are collected by the County Treasurer and are scheduled to be distributed to
the School Corporation in June and December; however, situations can arise which would delay
the distributions.
State statute (IC 6-1.1-17-16) requires the Indiana Department of Local
Government Finance to establish property tax rates and levies by February 15. These rates were
based upon the preceding year's March 1 (lien date) assessed valuations adjusted for various tax
credits. Taxable property is assessed at 100 percent of the true tax value (determined in
accordance with rules and regulations adopted by the Indiana Department of Local Government
Finance). Taxes may be paid in two equal installments which normally become delinquent if not
paid by May 10 and November 10, respectively.
-12-
(Continued)
Note 4.
Deposits and Investments
Deposits, made in accordance with state statute (IC 5-13), with financial institutions in the State of
Indiana at year end should be entirely insured by the Federal Depository Insurance Corporation or
by the Indiana Public Deposit Insurance Fund. This includes any deposit accounts issued or
offered by a qualifying financial institution.
State statutes authorize the School Corporation to invest in securities including, but not limited to,
federal government securities, repurchase agreements, and certain money market mutual funds.
Certain other statutory restrictions apply to all investments made by local governmental units.
Note 5.
Risk Management
The School Corporation may be exposed to various risks of loss related to torts; theft of, damage
to, and destruction of assets; errors and omissions; job related illnesses or injuries to employees;
medical benefits to employees, retirees, and dependents; and natural disasters.
These risks can be mitigated through the purchase of insurance, establishment of a self-insurance
fund, and/or participation in a risk pool. The purchase of insurance transfers the risk to an independent third party. The establishment of a self-insurance fund allows the School Corporation to
set aside money for claim settlements. The self-insurance fund would be included in the financial
statement. The purpose of participation in a risk pool is to provide a medium for the funding and
administration of the risks.
Note 6.
Pension Plans
A. Public Employees' Retirement Fund
Plan Description
The Indiana Public Employees' Retirement Fund (PERF) is a defined benefit pension plan.
PERF is an agent multiple-employer public employee retirement system, which provides retirement benefits to plan members and beneficiaries. All full-time employees are eligible to
participate in this defined benefit plan. State statutes (IC 5-10.2 and 5-10.3) govern, through
the Indiana Public Retirement System (INPRS) Board, most requirements of the system, and
give the School Corporation authority to contribute to the plan. The PERF retirement benefit
consists of the pension provided by employer contributions plus an annuity provided by the
member's annuity savings account. The annuity savings account consists of members'
contributions, set by state statute at 3 percent of compensation, plus the interest credited to the
member's account. The employer may elect to make the contributions on behalf of the
member.
INPRS administers the plan and issues a publicly available financial report that includes
financial statements and required supplementary information for the plan as a whole and for its
participants. That report may be obtained by contacting:
Indiana Public Retirement System
1 North Capital Street, Suite 001
Ph. (888) 526-1687
-13-
(Continued)
Funding Policy and Annual Pension Cost
The contribution requirements of the plan members for PERF are established by the Board of
Trustees of INPRS.
B.
Teacher's Retirement Fund
Plan Description
The Indiana Teacher's Retirement Fund (TRF) is a defined benefit pension plan. TRF is a
cost-sharing multiple-employer public employee retirement system, which provides retirement
benefits to plan members and beneficiaries. All employees engaged in teaching or in the
supervision of teaching in the public schools of the State of Indiana are eligible to participate in
TRF. State statute (IC 5-10.2) governs, through the Indiana Public Retirement System
(INPRS) Board, most requirements of the system, and gives the School Corporation authority
to contribute to the plan. The TRF retirement benefit consists of the pension provided by
employer contributions plus an annuity provided by the member's annuity savings account.
The annuity savings account consists of members' contributions, set by state statute at 3
percent of compensation, plus the interest credited to the member's account. The School
Corporation may elect to make the contributions on behalf of the member.
INPRS issues a publicly available financial report that includes financial statements and
required supplementary information for the TRF plan as a whole and for its participants. That
report may be obtained by contacting:
Indiana Public Retirement System
1 North Capital Street, Suite 001
Ph. (888) 286-3544
Funding Policy and Annual Pension Cost
The School Corporation contributes the employer's share to TRF for certified employees
employed under a federally funded program and all the certified employees hired after July 1,
1995. The School Corporation currently receives partial funding, through the school funding
formula, from the State of Indiana for this contribution. The employer's share of contributions
for certified personnel who are not employed under a federally funded program and were hired
before July 1, 1995, is considered to be an obligation of, and is paid by, the State of Indiana.
-14-
SUPPLEMENTARY INFORMATION - UNAUDITED
For additional financial information, the School Corporation's Financial Reports can be found on the
Indiana Department of Education website: http://mustanq.doe.state.in.usITRENDSlfin.cfm.This
website is
maintained by the Indiana Department of Education. More current financial information is available from the
School Corporation Treasurer's office.
Differences may be noted between the financial information presented in the financial statement contained in this report and the financial information presented in the Financial Reports of the School Corporation
which are referenced above. These differences, if any, are due to adjustments made to the financial information during the course of the audit. This is a common occurrence in any financial statement audit. The
financial information presented in this report is audited information, and the accuracy of such information can
be determined by reading the opinion given in the Independent Auditor's Report.
The supplementary information presented was approved by management of the School Corporation.
It is presented as intended by the School Corporation.
-15-
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AUDIT RESULTS AND COMMENTS
OVERDRAWN FUND BALANCE
As noted in Audit Report No. 838571, the fund balance of the Retiree Medical Fund, which is a part of
the Payroll Clearing Fund in the financial statement, was overdrawn $30,666.55 on June 30, 2012.
The fund balance of any fund may not be reduced below zero. Routinely overdrawn funds could be
an indicator of serious financial problems which should be investigated by the governmental unit. (Accounting
and Uniform Compliance Guidelines Manual for Indiana Public School Corporations, Chapter 9)
INTERNAL CONTROLS OVER REPORTING OF TEXTBOOK RENTAL FUND ACTIVITY
The controls over the reporting of the financial activity of the Textbook Rental Fund in the School
Corporation's Financial Reports submitted to the Indiana Department of Education were insufficient. The
activity ofthe Textbook Rental Funds was handled in the extra-curricular accounts at the School Corporation.
There was not any procedure in place for the School Corporation to obtain this information from the ExtraCurricular accounts to report in their Financial Reports submitted to the Indiana Department of Education. As
a result, the Textbook Rental Fund activity was not reflected in the financial statement. Therefore, the information had to be abstracted from the Extra-Curricular records and an adjustment approved and made to the
financial statements.
Governmental units should have internal controls in effect which provide reasonable assurance
regarding the reliability of financial information and records, effectiveness and efficiency of operations, proper
execution of management's objectives, and compliance with laws and regulations. Among other things,
segregation of duties, safeguarding controls over cash and all other assets and all forms of information processing are necessary for proper internal control. (Accounting and Uniform Compliance Guidelines Manual
for Indiana Public School Corporations, Chapter 9)
-32-
SUPPLEMENTAL AUDIT OF
FEDERAL AWARDS
-33-
1ft
.!>",~
STATE OF INDIANA
~~~ - .;.~) AN EQUAL OPPORTUNITY
STATE BOAlID OF ACCOUNTS
ROOME418
EMPLOYER
'.tl-/
Telephone: (317) 232-2513
Fax: (317) 232-4711
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT
COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON
INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Compliance
We have audited the Mooresville Consolidated School Corporation's (School Corporation) compliance
with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB)
Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major
federal programs for the period of July 1, 2010 to June 30,2012. The School Corporation's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings
and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the School Corporation's management. Our
responsibility is to express an opinion on the School Corporation's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in
the United States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of
States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require
that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the
types of compliance requirements referred to above that could have a direct and material effect on a major
federal program occurred. An audit includes examining, on a test basis, evidence about the School
Corporation's compliance with those requirements and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our
audit does not provide a legal determination of the School Corporation's compliance with those requirements.
In our opinion, the School Corporation complied, in all material respects, with the requirements
referred to above that could have a direct and material effect on each of its major federal programs for the
period of July 1, 2010 to June 3D, 2012. However the results of our auditing procedures disclosed instances
of noncompliance with those requirements which are required to be reported in accordance with OMB Circular
A-133 and which are described in the accompanying Schedule of Findings and Questioned Costs as item
2012-2.
Internal Control Over Compliance
Management of the School Corporation is responsible for establishing and maintaining effective
internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to
federal programs. In planning and performing our audit, we considered the School Corporation's internal
control over compliance with requirements that could have a direct and material effect on a major federal
program to determine our auditing procedures for the purpose of expressing our opinion on compliance and to
-34-
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT
COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON
INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
(Continued)
test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the
purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we
do not express an opinion on the effectiveness of the School Corporation's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control does
not allow management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely
basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies,
in internal control over compliance, such that there is a reasonable possibility that material noncompliance
with a type of compliance requirement of a federal program will not be prevented, or detected and corrected,
on a timely basis.
Our consideration of the internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
However, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies as described in the accompanying Schedule of Findings and Questioned Costs as item
2012-2. A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that
is less severe than a material weakness in internal control over compliance, yet important enough to merit
attention by those charged with governance.
The School Corporation's response to the finding identified in our audit is described in the accompanying Official Response and Corrective Action Plan. We did not audit the School Corporation's response
and, accordingly, we express no opinion on the response.
This report is intended solely for the information and use of the School Corporation's management,
School Board, others within the entity, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. In accordance with
Indiana Code 5-11-5-1, this report is a part of the public records of the State Board of Accounts and of the
office examined.
February 12, 2013
-35-
-36-
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
The Schedule of Expenditures of Federal Awards and accompanying notes presented were approved
by management of the School Corporation. The schedule and notes are presented as intended by the School
Corporation.
-37-
For The Years Ended June 30, 2011 and 2012
Federal
CFDA
Number
Federal Grantor Agency/Pass-Through Entity
Cluster Tille/Program Tille/Project Tille
U.S. DEPARTMENT OF AGRICULTURE
Pass-Through Indiana Department of Education
Child Nutrition Cluster
School Breakfast Program
School Year 2010-2011
Pass-Through
Entity (or Other)
Identifying
Number
Total
Federal Awards
Expended
06-30-11
Total
Federal Awards
Expended
06-30-12
$
$
10.553
Agreement 55-5960
Agreement 55-5960
Total for program
119,498
135,967
119,498
National School Lunch Program
135,967
10.555
Agreement 55-5960
Agreement 55-5960
Total for program
Total for federal grantor agency
U.S. DEPARTMENT OF EDUCATION
Title I, Part A Cluster
Title I Grants to Local Educational Agencies
FY 2010
FY 2011
FY2012
655,547
736,787
655,547
736,787
775,045
872,754
84.010
Project No.1 0-5930
Project No. 11-5930
Project No. 12-5930
Total for program
ARRA - Title I Grants to Local Educational Agencies, Recovery Act
64,022
257,961
174,799
339,424
321,983
514,223
54,982
101,038
376,965
615,261
84.389
FY 09-10
Project No.1 0-5930
Total for cluster
Pass-Through Metropolitan School District of Wayne Township
Special Education Cluster
Special Education - Grants to States
FY2009
FY 2010
FY 2011
FY2012
84.027
Project
Project
Project
Project
No.
No.
No.
No.
14209-063-PN01
14210-063-PN01
14211-063-PN01
14212-063-PN01
Total for program
14,572
162,251
479,285
656,108
Special Education - Preschool Grants
FY2010
FY 2011
FY 2012
30,253
344,937
569,339
944,529
84.173
Project No. 4571 0-063-PN01
Project No. 45711-063-PN01
Project No. 45712-063-PN01
Total for program
ARRA - Special Education - Grants to States, Recovery Act
FY 09-10
84.391
ARRA - Special Education - Preschool Grants, Recovery Act
84.392
FY09-10
8,198
15,873
21,290
24,071
Project No. 33310-063-SN01
72,122
199,142
Project No. 44410-063-SN01
5,525
20,631
755,045
1,188,373
Total for cluster
The accompanying notes are an integral part of the Schedule of Expenditures of Federal Awards.
-38-
3,923
17,367
For The Years Ended June 30, 2011 and 2012
(Continued)
Federal
CFDA
Number
Federal Grantor Agency/Pass-Through Entity
Cluster Title/Program Title/Project Title
U.S. DEPARTMENT
Pass-Through
Entity (or Other)
Identifying
Number
Total
Federal Awards
Expended
06-30-11
Total
Federal Awards
Expended
06-30-12
18,154
36,835
35,145
18,154
71,980
313
404
5,127
717
5,127
OF EDUCATION (continued)
Education of Homeless Children and youth Cluster
Education for Homeless Children and Youth
84.196
FY 2009
FY 2011
Total for cluster
Safe and Drug Free Schools and Communities - State Grants
84.186
Project No. 5930-08
Project No. 5930-09
Total for program
Pass-Through
Plainfield Community School Corporation
English Language Acquisition State Grants
84.365
FY 2011
Improving Teacher Quality State Grants
Fiscal Year 2009
Fiscal Year 2010
Fiscal Year 2011
Fiscal Year 2012
4,939
84.367
Project
Project
Project
Project
No.
No.
No.
No.
09-5930
10-5930
11-5930
12-5930
Total for program
42,616
103,172
FY 2012
705,478
Pass-Through
1,537
101,635
84.410
Education Jobs Fund
CORPORATION
7,112
35,504
1,193,497
2,694,330
3,510
7,151
4,849
10,661
4,849
FOR NATIONAL AND COMMUNITY SERVICE
Indiana Department of Education
Learn and Serve America School and Community Based Programs
94.004
FY2010
FY 2011
Schoo1Year2010-2011
$
Total federal awards expended
The accompanying notes are an integral part of the Schedule of Expenditures of Federal Awards.
-39-
1,979,203
=$==3::::,5:::71:::,9:::3:3
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Note 1.
Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity
of the Mooresville Consolidated School Corporation (School Corporation) and is presented in
accordance with the cash and investment basis of accounting used in the preparation of the financial statement. Accordingly, the amount of federal awards expended is based on when the disbursement related to the award occurs except when the federal award is received on a
reimbursement basis. In these instances the federal awards are considered expended when the
reimbursement is received.
Circular A-133 requires an annual audit of nonfederal entities expending a total amount of federal
awards equal to or in excess of $500,000 in any fiscal year unless by constitution or statute a less
frequent audit is required. In accordance with Indiana Code (IC 5-11-1 et seq.), audits of school
corporations shall be conducted biennially. Such audits shall include both years within the biennial
period.
Note 2.
NoncashAssistance
The School Corporation expended the following amount of noncash assistance for the years
ending June 30, 2011 and 2012. This noncash assistance is also included in the federal expenditures presented in the schedule.
Federal
CFDA
Number
Program Title
National School Lunch Program
10.555
-40-
2011
$
2012
87,702 =$==1=0=4:::::,0=14=
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Section 1- Summary of Auditor's Results
Financial Statement:
Type of auditor's report issued:
Adverse as to GAAP; Unqualified
as to Regulatory Basis
Internal control over financial reporting:
Material weaknesses identified?
Significant deficiencies identified?
yes
none reported
Noncompliance material to financial statement noted?
no
Federal Awards:
Internal control over major programs:
Material weaknesses identified?
Significant deficiencies identified?
no
yes
Type of auditor's report issued on compliance for
major programs:
Any audit findings disclosed that are required to be reported
in accordance with section 510(a) of Circular A-133?
Unqualified
yes
Identification of Major Programs:
CFDA
Number
84.410
Name of Federal Program or Cluster
Title 1, Part A Cluster
Education Jobs Fund
Dollar threshold used to distinguish between Type A and Type B programs: $300,000
Auditee qualified as low-risk auditee?
no
Section 1/- Financial Statement Findings
FINDING 2012-1-INTERNAL
CONTROLS OVER REPORTING OF TEXTBOOK RENTAL FUND ACTIVITY
Management of the School Corporation has not established an effective internal control system over
the reporting of the financial activity of the textbook rental fund. The Financial Reports submitted to the
Indiana Department of Education did not include the activity of the textbook rental funds. The textbook rental
fund is handled in the extra-curricular accounts of the School Corporation. No procedures are in place for the
School Corporation to obtain this information from the extra-curricular accounts to report on their Financial
Reports submitted to the Indiana Department of Education.
As a result, the textbook rental fund activity was not reflected in the financial statements. An audit
adjustment was approved by management and made to the financial statement.
-41-
(Continued)
Lack of internal controls could cause material misstatements to go undetected, which could result in
the financial statement to be materially misstated.
Governmental units should have internal controls in effect which provide reasonable assurance
regarding the reliability of financial information and records, effectiveness and efficiency of operations, proper
execution of management's objectives, and compliance with laws and regulations. Among other things,
segregation of duties, safeguarding controls over cash and all other assets and all forms of information processing are necessary for proper internal control. (Accounting and Uniform Compliance Guidelines Manual
for Indiana Public School Corporations, Chapter 9)
Section 11/- Federal Award Findings and Questioned
FINDING 2012-2 - ALLOWABLE
Costs
COSTS/COST PRINCIPLES
Federal Agency: U. S. Department of Education
Federal Program: Title I Grants to Local Educational Agencies, ARRA Title I Grants to
Local Educational Agencies, Recovery Act
CFDA Number: 84.010 and 84.389
Federal Award Number and Year (or Other Identifying Number): Project No. 10-5930; Project No.
11-5930; Project No. 12-5930; and
Project No.1 0-5930 (ARRA)
Pass-Through Entity: Indiana Department of Education
Contact Person: Mitch Fortune
Phone: 317-831-9212
Management of the School Corporation has not established an effective internal control system over
compliance for allowable costs/cost principles. The failure to establish an effective internal control system
places the School Corporation at risk of material noncompliance.
The School Corporation was required to maintain time and effort reports on all full and part time
employees paid from the Title 1, Part A Cluster grants. No time and effort reports were presented for the
audit period.
OMS circular A 87, Attachment S, item 8h, states in part:
"(3) Where employees are expected to work solely on a single Federal award or cost objective,
charges for their salaries and wages will be supported by periodic certifications that the
employees worked solely on that program for the period covered by the certification. These
certifications will be prepared at least semi-annually and will be signed by the employee or
supervisory official having first-hand knowledge of the work performed by the employee.
(4) Where employees work on multiple activities or cost objectives, a distribution of their
salaries or wages will be supported by personnel activity reports or equivalent documentation
which meet the standards in subsection (5) unless a statistical sampling system (see
subsection (6)) or other substitute system has been approved by the cognizant Federal
agency."
-42-
(Continued)
OMB Circular A-133, Subpart C, section .300 (b) states:
"The auditee shall: Maintain internal control over Federal programs that provides reasonable
assurance that the auditee is managing Federal awards in compliance with laws, regulations,
and the provisions of contracts or grant agreements that could have a material effect on each
of its Federal programs."
Noncompliance of the grant agreement or the compliance requirements that have a direct and
material effect to the program could result in the loss of federal funds to the School Corporation.
We recommended that the School Corporation's management establish controls to ensure all grant
requirements are complied with.
-43-
MOORE~VILLE CONSQLiOATEo SCHOOL COR.rORATlON
·EDUCAT10N
CENIER
.
. .. _"."
11 W: CARl.lSLE STREET, MOORESVILLE, ffiDiANA. 46158
TELEPHONE: (317) ~.~1-09 $0
FAX:
(ji7}831-9202
.www.rhOOi'esvllleschQOls,Orit
BRAD LlNl)sAY, SUPERINTENDENT
.'tllvUjYAGQS11NO,1\SSISTANT·SOPEruNTENDENT
SCOTT- KERN~ tRIEF~t."EARNiNGOFFICER
February 12, 2013
According to State Board of A~tountsfindings,Mooresville Consolidated Schoo! CorporatIon wtit
Implement the following-procedure for the BI-annuallForm· 9) report endlngJune. gO·2013:
Mooresville Consolidation.SchoolCOrporatkm'sffnancial r~port wUlifitlude hiformatlM from the
schools accounting for Textbook Rental funds. This 'Information wi.ll be acquired from the schools fiscal
year Financial Rep-olttn·g,This procedure and a·n'!'aite·rnatlvepr()ced~.rewtil be evaluated and a decision
made tocornplv with the·findings.
• Alternate procedurewould ,beta have the textbobk' rental funds be deposited and expended·a~the
Corporation ievel.
Superintendent.
AssI~_"t S"por"""ndent,
Dr. William Roberson
:aro.~ ~
-
.~ ". . . - : . . .'
-- ~
Mooresville SchoolBoard President
Date: February 12. 2013
OUR' KJD$'- OUR.Pu7:URE
-44-
EDUCATfON CENTER
11 W. CARUSLE STREET. MOORESVIllE, INDIANA 46158
TELEPHONE: (317) 831-0950
FAX: (317) 831-9202
www,IDPPrcsyil\escboQ!s.ol1l
. BRAD LINDSAY, SUPERINTENDENT
JIM DJAGOSTlNO, ASSISTANT SUPERINTENDENT
SCOTT KERN, CHIEF LEARNING OFFICER
Section Iff FederalAward Findingsand Questioned Costs
Finding 2012-2 INTERNALCONTROLSOVERALLOWABLECOSTS/COST
PRINCIPLES
Federal Agency: U.S.Department of Education
Federal Program: Title I Cluster/Education Jobs Funds
CDFANumber and Year: 84.010, 84.389/84.10
Federal Award Number and Year: 1D-4545/years 2009-2012
Contact Person: Mitch Fortune, Principal ([email protected])
Date: January29, 2013
Correction Action Plan
On Tuesday, January29, 2013, we met to discussthe Title I grant requirements and documentation for
Mooresville Schools. At the conclusion of our conversation, the following documented Items were
determined In need of corrective actIon for our district.
1.
Completed time and effort semi-annual certifications for all full-time emplovees paid from the
grant.
2. Time and Effort Logs/PersonalActivity Reports (PAR)for employees who spilt time between Title I
and other activities
The required documentation for the above mentioned items will be corrected immediately and
documentation wJJJ be available for future reference.
Respectfully,
MHch Fortune
Becky Merrim.n
nJlOO ~ b.;L,
D~
r<>-v
OUR KIDS- OUR FUTURE
-45-
EXIT CONFERENCE
The contents of this report were discussed on February 12, 2013, with Jim Diagostino, Treasurer;
Becky S. Merriman, Deputy Treasurer; Brad Lindsay, Superintendent of Schools; and William E. Roberson,
President of the School Board. The Official Response has been made a part of this report and may be found
on page 47.
-46-
MOORESVILLE CONSOLIDATED SCHOOL CORPORATiON
EDUCATION CeN1'ER
11 W. CIIRLlSL~,StREET. MtiORESVILL£' iNDIANA 461$8
-
T-ELEPtlONE: (317.) 831-0950
'FAX; '(311),83H)2Q2
\Vww.mQQresvmeschOQls,or~
JiM,DIAGijSTINO, AS'SIST ANf:Supl;JUNTENDENT
scor-Tj~:ERN.CHlEF·_LE~Q. QFFICER
BRAD LINDSAY, $UPERINTENDENT
Febryart1_2, 2013-
According to Stat~ Soard of Accounts-findings, Moores~lIleCc,-nsolldated'School Corporation hi;ld'an
overdrawn Payroll Clearing Fund'in theffinahtiill-statement of $30,,66E):;SS-C;ln
Jlm~ aOj ~Ol_2;,This
sltuatlonls under revieWwith Valle, the company handllog;-out Retlr,eeM~dlC.alFund. -Upon completion
of this audit, 'a plan "Will be'lmplemented to reg(lverrilQhie$ dLI~frbl'ri:'tetli'es'andany negative' balance'
will be broughtto the'Moi:Jr~s\('iile Sollool Board for corrective action.
Superintendent
Assistaht SlJperlntendenti T
Moore.sville School Board President
O~te:
Februarv 12;_20i3, s •
OUR KIDS...,.,OUR FUTURE
-47-
APPENDIX C
GENERAL INFORMATION ABOUT THE COMMUNITY
Location
The Mooresville Consolidated School Corporation (the “School Corporation”), is located in central Indiana
approximately 15 miles southeast of Indianapolis, Indiana. The close proximity to Indianapolis allows for easy
commuter access.
Population
General populations for the units of local government which comprise the School Corporation are:
School Corporation
Morgan County
Percentage of County
1980
16,076
51,999
30.9%
1990
16,995
55,920
30.4%
2000
22,483
66,689
33.7%
2010
24,200
68,894
35.1%
2012
24,387
69,356
35.2%
Source: U.S. Census Bureau
Total Tax Rates
Total tax rates, which include the school rates, are:
Brown Township
Harrison Township
Madison Township
Town of Mooresville
2014
$ 1.5527
1.1255
1.2713
1.8233
Employment Statistics and Patterns
The School Corporation’s location in central Indiana provides residents with varied employment opportunities in
the Indianapolis area, as well as Mooresville. Large employers in the area of the School Corporation include: St.
Francis Hospital, Nice-Pak Products, TOA (USA) LLC and General Shale.
C-1
Total Covered Employment for 2nd Quarter 2013 was 14,795. Employment patterns for Morgan County were:
Quarterly
Wages
Number
Employees
% of Total
Employment
24,479,452
12,787,611
16,382,087
5,552,685
12,659,243
9,023,302
6,020,638
4,793,065
3,175,480
5,197,414
3,948,883
4,094,741
2,520,718
3,468,742
847,271
1,017,788
354,161
559,886
628,248
2,291
2,216
1,973
1,641
1,486
934
898
596
490
410
397
394
340
196
151
130
119
72
61
15.5%
15.0%
13.3%
11.1%
10.0%
6.3%
6.1%
4.0%
3.3%
2.8%
2.7%
2.7%
2.3%
1.3%
1.0%
0.9%
0.8%
0.5%
0.4%
$ 117,511,415
14,795
100.0%
Employment Category
Manufacturing
Retail Trade
Health Care and Social Services
Accommodation and Food Services
Educational Services
Construction
Public Administration
Admin. & Support & Waste Mgt. & Rem. Services
Other Services (Except Public Administration)
Wholesale Trade
Professional, Scientific, and Technical Services
Finance and Insurance
Transportation & Warehousing
Utilities
Information
Real Estate and Rental and Leasing
Arts, Entertainment, and Recreation
Agriculture, Forestry, Fishing and Hunting
Mining
$
Source: Stats Indiana – Indiana Department of Workforce Development data
With regard to the level of employment as reported by the Indiana Employment Security Division, the data
revealed the following for Morgan County in comparison to the State of Indiana and the United States:
Morgan County
Labor Force
Unemployed
Rate of Unemployment
2009
36,768
3,402
9.3%
Annual Averages
2010
2011
2012
35,349
35,449
35,306
3,502
3,172
2,863
9.9%
8.9%
8.1%
State of Indiana
United States
10.4%
9.3%
10.1%
9.6%
Source: Stats Indiana – U.S. Bureau of Labor Statistics
C-2
9.0%
8.9%
8.4%
8.1%
Dec. 2013
35,302
2,056
5.8%
6.3%
6.5%
Transportation
The area of the School Corporation is served by diversified transportation facilities. Access is by Interstate
Highway 70 and U.S. Highways 37 and 67. Numerous state and U.S. Highways converge in Indianapolis. Air
service is provided by Indianapolis International Airport located approximately 10 miles north.
Financial Institutions
The following is a summary of the commercial banks and savings institutions serving the school district and their
total local deposits as of June 30, 2013:
Financial Institution
Citizens Bank (Mooresville, IN)
BMO Harris Bank, N.A. (branches of Chicago, IL)
First Merchants Bank, N.A. (branch of Muncie, IN)
Regions Bank (branch of Birmingham, AL)
JP Morgan Chase Bank, N.A. (branch of Columbus, OH)
Home Bank, S.B. (branch of Martinsville, IN)
Deposits
$ 160,077,000
77,416,000
30,782,000
28,944,000
27,724,000
26,989,000
Source: Federal Deposit Insurance Corporation
Higher Education
Within a 30 mile radius of the School Corporation are a variety of institutions which provide opportunities for
technical education and fully accredited college degree programs: Indiana University, DePauw University,
Marian College, University of Indianapolis, Franklin College, Butler College and Indiana University-Purdue
University of Indianapolis.
Utilities
The following public utilities provide service within the School Corporation:
Telephone
Electric
Natural Gas
Water & Sewer
-
AT&T
South Central Indiana REMC
Indianapolis Power & Light
Vectren
Town of Mooresville
C-3
Education Attainment
The educational background of area residents living in the School Corporation, Morgan County and the State of
Indiana, are set forth in the following table.
Educational Level Attained
Less than 9th grade
9th to 12th grade, no diploma
High school graduate (excludes equivalency)
Some college, no degree
Associate’s degree
Bachelor’s degree
Graduate or professional degree
Percent high school graduate or higher
Percent Bachelor’s degree or higher
School
Corporation
2.9%
8.0%
40.7%
23.1%
8.8%
11.8%
4.7%
89.1%
16.5%
Morgan County,
Indiana
3.1%
9.7%
40.4%
22.8%
8.4%
10.4%
5.2%
87.3%
15.6%
Indiana
4.2%
8.8%
35.4%
20.9%
7.7%
14.7%
8.2%
87.0%
23.0%
Source: U.S. Census Bureau, 2008-2012 American Community Survey
Income
The following table sets forth the distribution of household income in 2012 inflation-adjusted dollars for the
School Corporation, Morgan County and the State of Indiana.
Income Level
Less than $10,000
$10,000 to $14,999
$15,000 to $24,999
$25,000 to $34,999
$35,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $149,999
$150,000 to $199,999
$200,000 or more
Median Income (dollars)
Mean Income (dollars)
School Corporation
3.9%
3.3%
9.5%
9.7%
13.5%
23.8%
13.9%
17.5%
3.1%
1.9%
Morgan County, Indiana
4.7%
4.4%
10.4%
9.8%
15.6%
20.5%
13.9%
15.5%
2.9%
2.2%
$ 61,105
72,125
$ 56,303
67,991
C-4
Indiana
7.2%
5.6%
11.5%
11.8%
15.4%
19.6%
12.5%
10.9%
3.0%
2.5%
$ 48,374
62,715
Per Capita Income
Per Capita Income statistics are provided by Stats Indiana, a service of the Kelley School of Business at Indiana
University. No statistics are available specifically for the School Corporation.
Morgan County
Indiana
2008
$ 36,825
34,966
2009
$ 36,324
33,679
2010
$ 36,674
34,386
2011
$ 38,424
36,342
2012
$ 40,139
38,119
Source: Stats Indiana
Housing Values
The following table sets forth the distribution of home values for owner-occupied units for the School
Corporation, Morgan County and the State of Indiana.
Value of Owner-occupied
Housing Units
Less than $50,000
$50,000 to $99,999
$100,000 to $149,999
$150,000 to $199,999
$200,000 to $299,999
$300,000 to $499,999
$500,000 or more
School Corporation
Morgan County, Indiana
5.5%
16.2%
30.3%
21.8%
18.8%
6.2%
1.2%
7.2%
19.4%
27.1%
20.5%
16.7%
7.2%
1.9%
Indiana
10.1%
27.0%
25.1%
16.9%
12.7%
6.0%
2.3%
Building Permits
The following table sets forth the residential building permits and values for the Town of Mooresville.
Year
2009
2010
2011
2012
2013 (through Dec.)
Number of
Permits
15
18
20
28
20
Source: U.S. Census Bureau, Building Permit Estimates
C-5
Value of
Permits
$ 2,500,686
2,781,000
3,388,028
4,970,514
3,543,000
Average Value
$ 166,712
154,500
169,401
177,518
177,150
Building Permits
The following table sets forth the residential building permits and values for Morgan County.
Year
2009
2010
2011
2012
2013 (through Dec.)
Number of
Permits
76
86
86
114
104
Value of
Permits
$ 13,643,405
14,355,123
12,704,605
18,714,254
17,989,959
Source: U.S. Census Bureau, Building Permit Estimates
C-6
Average
Value
$ 179,518
166,920
147,728
164,160
172,980
APPENDIX D
CONTINUING DISCLOSURE UNDERTAKING
This CONTINUING DISCLOSURE UNDERTAKING (the “Agreement”) is made as of February ___, 2014, by
Mooresville Consolidated School Corporation, a school corporation organized and existing under the laws of the
State of Indiana (the “Obligor”) for the purpose of permitting City Securities Corporation (the “Underwriters”) to
purchase the Mooresville Consolidated School Building Corporation’s (the “Building Corporation”) $2,000,000 of
Taxable Ad Valorem Property Tax First Mortgage Bonds, Series 2014A, dated on March ___, 2014 (the “Bonds”),
issued pursuant to a Trust Indenture dated as of March 1, 2013, as supplemented by a First Supplemental Trust
Indenture dated as of February 1, 2014 (as supplemented, the “Indenture”) between the Building Corporation
and The Bank of New York Mellon Trust Company, N.A., as trustee, in compliance with the Securities and
Exchange Commission (“SEC”) Rule 15c2-12 (the “SEC Rule”) as published in the Federal Register on
November 17, 1994.
WHEREAS, the Building Corporation has issued its Bonds pursuant to the Indenture; and
WHEREAS, pursuant to a Lease Agreement dated February 12, 2013, as amended by an Amendment to
Lease dated as of November 12, 2013 (as amended, the “Lease”) between the Building Corporation, as lessor,
and the Obligor, as lessee, the Obligor is required to pay lease rentals due, which rentals will be used to pay the
principal and interest due on the Bonds;
WHEREAS, the Obligor is an Obligated Person (as defined in the SEC Rule) because the lease rental
payments due under the Lease are the only source of funds (other than bond proceeds held under the
Indenture) pledged to pay the principal and interest due on the Bonds; and
WHEREAS, the Underwriters, by their agreement to purchase the Bonds, accept and assent to this
Agreement and the exchange of such purchase and acceptance for the promises of Obligor contained herein,
and hereby assigns all their rights hereunder, as promisee, to the holders of the Bonds;
NOW, THEREFORE, in consideration of the payment for and acceptance of any Bonds by the
Underwriters, and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Obligor hereby promises to the Underwriters:
Section 1.
Definitions. The words and terms defined in this Agreement shall have the meanings
herein specified unless the context or use clearly indicates another or different meaning or intent. Those words
and terms not expressly defined herein and used herein with initial capitalization where rules of grammar do not
otherwise require capitalization, shall have the meanings assigned to them in the SEC Rule.
(1) “Bondholder” or “holder” or any similar term, when used with reference to a Bond or Bonds, means
any person who shall be the registered owner of any outstanding Bond, or the holders of beneficial
interests in the Bonds.
(2) “EMMA” is Electronic Municipal Market Access System established by the Municipal Securities
Rulemaking Board.
(3) “Final Official Statement” means the Official Statement, dated as of February ___, 2014, relating to
the Bonds, including any document included by specific reference to such document filed with the
MSRB.
D-1
(4) “MSRB” means the Municipal Securities Rulemaking Board.
Section 2.
Term. The term of this Agreement is from the date hereof to the earlier of (i) the date
of the last payment of principal of and interest on the Bonds, or (ii) the date the Bonds are defeased under the
Indenture.
Section 3.
Obligated Persons. The Obligor hereby represents and warrants as of the date hereof
that it is the only Obligated Person with respect to the Bonds. If the Obligor is no longer committed by contract
or other arrangement to support payment of the Bonds, such person shall no longer be considered an Obligated
Person within the meaning of the SEC Rule and the continuing obligation under this Agreement to provide
annual financial information and notices of events shall terminate with respect to such person.
Section 4.
Provision of Financial Information.
a. The Obligor hereby undertakes to provide, with respect to the Bonds, the following annual financial
information, in each case (i) in an electronic format as prescribed by the MSRB and (ii) accompanied
by identifying information as prescribed by the MSRB:
(1) To the MSRB, when and if available, the audited financial statements of the Obligor for each
fiscal year as prepared and examined by the State Board of Accounts for each twelve-month
period ending June 30, together with the opinion of such accountants and all notes thereto,
within sixty (60) days of receipt from the State Board of Accounts; and
(2) To the MSRB, within 180 days of each December 31, unaudited annual financial information for
the Obligor for such calendar year including (i) unaudited financial statements of the Obligor,
and (ii) operating data (excluding any demographic information or forecast) of the general type
included under the following headings in Appendix A to the Final Official Statement (collectively,
the “Annual Information”) however, that the updated information may be provided in such
format as the Obligor deems appropriate:
APPENDIX A
- Enrollments
- Net Assessed Valuation
- Largest Taxpayers
- Taxes Levied and Collected
- School Tax Rates
- School Corporation Receipts and Disbursements
- Cash Balances by Fund
- State of Indiana Payments
(b) If any Annual Information or audited financial statements relating to the Obligor referred to in
paragraph (a) of this Section 4 no longer can be provided because the operations to which they
related have been materially changed or discontinued, a statement to that effect, provided by the
Obligor to the MSRB, along with any other Annual Information or audited financial statements
required to be provided under this Agreement, shall satisfy the undertaking to provide such Annual
Information or audited financial statements. To the extent available, the Obligor shall cause to be
filed along with the other Annual Information or audited financial statements operating data similar
to that which can no longer be provided.
D-2
(c) The disclosure may be accompanied by a certificate of an authorized representative of the Obligor in
the form of Exhibit A attached hereto.
(d) The Obligor agrees to make a good faith effort to obtain Annual Information. However, failure to
provide audited financial statements or portions of Annual Information because it is unavailable
through circumstances beyond the control of the Obligor shall not be deemed to be a breach of this
Agreement. The Obligor further agrees to supplement the Annual Information filing when such data
is available.
(e) Annual Information or audited financial statements required to be provided pursuant to this Section
4 may be provided by a specific reference to such Annual Information or audited financial
statements already prepared and previously provided to the MSRB. Any information included by
reference shall also be (i) available to the public on the MSRB’s Internet Web Site, or (ii) filed with
the Securities and Exchange Commission.
(f) All continuing disclosure filings under the Agreement shall be made in accordance with the terms
and requirements of the MSRB at the time of such filing. Currently, the SEC has approved the
submission of continuing disclosure filings with EMMA, and the MSRB has requested that such filings
be made by transmitting such filings electronically to EMMA at www.emma.msrb.org.
Section 5.
Accounting Principles. The financial information will be prepared on a cash basis as
prescribed by the State Board of Accounts, as in effect from time to time, as described in the auditors’ report
and notes accompanying the audited financial statements of the Obligor or those mandated by state law from
time to time. The audited financial statements of the Obligor, as described in Section 3(a)(1) hereof, will be
prepared in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller
General of the United States.
Section 6.
Reportable Events. The Obligor undertakes to disclose the following events within 10
business days of the occurrence of any of the following events, if material (which determination of materiality
shall be made by the Obligor in accordance with the standards established by federal securities laws), to the
MSRB, in each case (i) in an electronic format as prescribed by the MSRB and (ii) accompanied by identifying
information as prescribed in MSRB:
(1)
(2)
(3)
(4)
(5)
non-payment related defaults;
modifications to rights of Bondholders;
bond calls;
release, substitution or sale of property securing repayment of the Bonds;
the consummation of a merger, consolidation, or acquisition, or certain asset sales, involving the
obligated person, or entry into or termination of a definitive agreement relating to the foregoing;
and
(6) appointment of a successor or additional trustee or the change of name of a trustee.
The Obligor undertakes to disclose the following events, within 10 business days of the occurrence of
any of the following events, regardless of materiality, to the MSRB, in each case (i) in an electronic format as
prescribed by the MSRB and (ii) accompanied by identifying information as prescribed in MSRB:
(1) principal and interest payment delinquencies;
(2) unscheduled draws on debt service reserves reflecting financial difficulties;
(3) unscheduled draws on credit enhancements reflecting financial difficulties;
D-3
(4)
(5)
(6)
(7)
substitution of credit or liquidity providers, or their failure to perform;
defeasances;
rating changes;
adverse tax opinions or events affecting the status of the Bonds, the issuance by the IRS of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other
material events, notices or determinations with respect to the tax status of the Bonds;
(8) tender offers; and
(9) bankruptcy, insolvency, receivership or similar event of the obligated person.
The disclosure may be accompanied by a certificate of an authorized representative of the Obligor in the
form of Exhibit B attached hereto.
Section 7.
Use of Agent. The Obligor may, at its sole discretion, utilize an agent (the
“Dissemination Agent”) in connection with the dissemination of any information required to be provided by the
Obligor pursuant to the SEC Rule and the terms of this Agreement. If a Dissemination Agent is selected for these
purposes, the Obligor shall provide prior written notice thereof (as well as notice of replacement or dismissal of
such agent) to EMMA, and the MSRB.
Further, the Obligor may, at its sole discretion, retain counsel or others with expertise in securities
matters for the purpose of assisting the Obligor in making judgments with respect to the scope of its obligations
hereunder and compliance therewith, all in order to further the purposes of this Agreement.
Section 8.
Failure to Disclose. If, for any reason, the Obligor fails to provide the audited financial
statements or Annual Information as required by this Agreement, the Obligor shall provide notice of such failure
in a timely manner to EMMA or to the MSRB, in the form of the notice attached as Exhibit C.
Section 9.
Remedies.
(a) The purpose of this Agreement is to enable the Underwriters to purchase the Bonds by providing for
an undertaking by the Obligor in satisfaction of the SEC Rule. This Agreement is solely for the
benefit of (i) the Underwriters and (ii) the Bondholders and creates no new contractual or other
rights for, nor can it be relied upon by, the SEC, underwriters, brokers, dealers, municipal securities
dealers, potential customers, other Obligated Persons or any other third party. The sole remedy
against the Obligor for any failure to carry out any provision of this Agreement shall be for specific
performance of the Obligor’s disclosure obligations hereunder and not for money damages of any
kind or in any amount or for any other remedy. The Obligor’s failure to honor its covenants
hereunder shall not constitute a breach or default of the Bonds, the Indenture, the Lease or any
other agreement to which the Obligor is a party and shall not give rise to any other rights or
remedies.
(b) Subject to paragraph (e) of this Section 9, in the event the Obligor fails to provide any information
required of it by the terms of this Agreement, any holder of Bonds may pursue the remedy set forth
in the preceding paragraph in any court of competent jurisdiction in the State of Indiana. An
affidavit to the effect that such person is a holder of Bonds supported by reasonable documentation
of such claim shall be sufficient to evidence standing to pursue this remedy.
(c) Subject to paragraph (e) of this Section 9, any challenge to the adequacy of the information
provided by the Obligor by the terms of this Agreement may be pursued only by holders of not less
than 25% in principal amount of Bonds then outstanding in any court of competent jurisdiction in
the State of Indiana. An affidavit to the effect that such persons are holders of Bonds supported by
D-4
reasonable documentation of such claim shall be sufficient to evidence standing to pursue the
remedy set forth in the preceding paragraph.
(d) If specific performance is granted by any such court, the party seeking such remedy shall be entitled
to payment of costs by the Obligor and to reimbursement by the Obligor of reasonable fees and
expenses of attorneys incurred in the pursuit of such claim. If specific performance is not granted by
any such court, the Obligor shall be entitled to payment of costs by the party seeking such remedy
and to reimbursement by such party of reasonable fees and expenses of attorneys incurred in the
pursuit of such claim.
(e) Prior to pursuing any remedy for any breach of any obligation under this Agreement, a holder of
Bonds shall give notice to the Obligor and the Building Corporation, by registered or certified mail,
of such breach and its intent to pursue such remedy. Thirty (30) days after the receipt of such
notice, upon earlier response from the Obligor to this notice indicating continued noncompliance,
such remedy may be pursued under this Agreement if and to the extent the Obligor has failed to
cure such breach.
Section 10.
Modification of Agreement. The Obligor may, from time to time, amend or modify this
Agreement without the consent of or notice to the holders of the Bonds if either (a)(i) such amendment or
modification is made in connection with a change in circumstances that arises from a change in legal
requirements, change in law or change in the identity, nature or status of the Obligor, or type of business
conducted, (ii) this Agreement, as so amended or modified, would have complied with the requirements of the
SEC Rule on the date hereof, after taking into account any amendments or interpretations of the SEC Rule, as
well as any change in circumstances, and (iii) such amendment or modification does not materially impair the
interests of the holders of the Bonds, as determined either by (A) nationally recognized bond counsel or (B) an
approving vote of the holders of the Bonds pursuant to the terms of Article 11 of the Indenture at the time of
such amendment or modification; or (b) such amendment or modification (including an amendment or
modification which rescinds this Agreement) is permitted by the SEC Rule, as then in effect.
Section 11.
Previous Undertakings. The Obligor hereby represents that it has not, in the previous
five years, failed to comply in all material respects, with any previous Undertakings except as described in the
Final Official Statement.
Section 12.
Interpretation Under Indiana Law. It is the intention of the parties hereto that this
Agreement and the rights and obligations of the parties hereunder shall be governed by and construed and
enforced in accordance with, the laws of the State of Indiana.
Section 13.
Severability Clause. In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 14.
Successors and Assigns. All covenants and agreements in this Agreement made by the
Obligor shall bind its successors, whether so expressed or not.
D-5
IN WITNESS WHEREOF, the Obligor has caused this Agreement to be executed as of the day and year
first hereinabove written.
President, Board of School Trustees
Secretary, Board of School Trustees
D-6
APPENDIX E
FORM OF OPINION OF BOND COUNSEL
March ___, 2014
Indianapolis, Indiana
Re:
Mooresville Consolidated School Building Corporation
Taxable Ad Valorem Property Tax First Mortgage Bonds,
Series 2014A (Qualified Zone Academy Bonds – Tax Credit Bonds)
Total Issue: $2,000,000
Original Date: March ___, 2014
Ladies and Gentlemen:
We have acted as bond counsel in connection with the issuance by Mooresville Consolidated School
Building Corporation (the “Issuer”) of $2,000,000 of Taxable Ad Valorem Property Tax First Mortgage Bonds,
Series 2014A (Qualified Zone Academy Bonds – Tax Credit Bonds) with an Original Date of March ___, 2014 (the
“Bonds”), pursuant to Indiana Code 20-47-3 (the “Act”) and a Trust Indenture between the Issuer and The Bank
of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), dated as of March 1, 2013, as
supplemented by a First Supplemental Trust Indenture, dated as of February 1, 2014 (as supplemented, the
“Indenture”). We have examined the law and the certified transcript of proceedings of the Issuer had relative to
the authorization, issuance and sale of the Bonds and such other papers as we deem necessary to render this
opinion. We have relied upon the certified transcript of proceedings and certificates of public officials, including
the Issuer’s tax covenants and representations (“Tax Representations”), and we have not undertaken to verify
any facts by independent investigation.
We have also relied upon a commitment for title insurance as to title of the real estate described in the
Indenture.
We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the
Official Statement or any other offering material relating to the Bonds, and we express no opinion relating
thereto.
Based on our examination, we are of the opinion, as of the date hereof, as follows:
1. The Lease Agreement between the Issuer, as lessor, and the Mooresville Consolidated School
Corporation (the “School Corporation”), as lessee, executed February 12, 2013, as amended by an
Amendment to Lease, dated November 12, 2013 (as amended, the “Lease”), and extending for a
term ending December 31, 2035 has been duly entered into in accordance with the provisions of the
Act, and is a valid and binding lease. All taxable property in the School Corporation is subject to ad
valorem taxation without limitation as to the rate or amount to pay the lease rental; however, the
School Corporation’s collection of the levy may be limited by operation of I.C. 6-1.1-20.6, which
provides taxpayers with tax credits for property taxes attributable to different classes of property in
an amount that exceeds certain percentages of the gross assessed value of that property. The
School Corporation is required by law to fully fund the payment of its lease rentals in an amount
E-1
March __, 2014
Page 2
sufficient to pay the lease rentals, regardless of any reduction in property tax collections due to the
application of such tax credits. Pursuant to the Lease, the School Corporation is required by law
annually to levy and appropriate an amount sufficient to pay the increased lease rentals which
commence with the later of completion of the renovation and improvements to a portion of a
school building or June 30, 2015.
2. The Issuer has duly authorized, sold, executed and delivered the Bonds and has duly authorized and
executed the Indenture securing the same, and the Indenture has been duly recorded. The Bonds
are the valid and binding obligations of the Issuer secured on a parity basis with the Issuer’s Ad
Valorem Property Tax First Mortgage Bonds, Series 2013B by a mortgage on the property described
in the Indenture. Any foreclosure of the mortgage would, if the School Corporation is not in default
in the payment of rentals as provided in the Leases, be subject to the rights of the School
Corporation under the Leases.
3. Under federal statutes, decisions, regulations and rulings existing on this date, the Bonds are
“Qualified Zone Academy Bonds” as such term is defined in Section 54E(a) of the Internal Revenue
Code of 1986, as amended (the “Code”). An owner of a Bond as of the applicable credit allowance
date (as defined in Section 54A of the Code) is entitled, subject to the limitations of Section 54A of
the Code, to a federal income tax credit (the “Tax Credit”) for such taxable year. The amount of the
Tax Credit will be treated as interest for federal tax purposes and will be included in the gross
income of the recipient thereof. The Code contains requirements that must be satisfied subsequent
to the issuance of the Bonds in order for the Bonds to be or continue to be qualified zone academy
bonds. Failure to comply with certain of those requirements may result in termination of such Tax
Credit, possibly retroactive to the date of issuance of the Bonds. The Issuer has agreed to comply
with those requirements. The opinions set forth in this paragraph are subject to the condition that
the Issuer comply with such requirements. We express no opinion regarding other tax
consequences related to the ownership of the Bonds or the receipt of the Tax Credit or the accrual
or receipt of deemed interest with respect to the Bonds.
It is to be understood that the rights of the owners of the Bonds and the enforceability of the Bonds and
the Indenture, as well as the rights of the Issuer and the Trustee and the enforceability of the Lease may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’
rights heretofore or hereafter enacted and that their enforcement may be subject to the exercise of judicial
discretion in accordance with general principles of law and equity; and (ii) the valid exercise of the constitutional
powers of the State and the United States of America. We express no opinion with regard to particular
remedies available to registered owners of the Bonds.
In rendering the opinions in numbered Paragraph 3, we have relied upon and assumed (i) the material
accuracy of the representations, certifications of fact and statements of reasonable expectations made by the
Issuer and the School Corporation in connection with the issuance of the Bonds, and (ii) compliance by the
Issuer and School Corporation subsequent to the date hereof with their Tax Representations. Failure to comply
with the Tax Representations could cause the Bonds to lose their status as Qualified Zone Academy Bonds
retroactive to their date of issue.
To ensure compliance with U.S. Treasury Department Regulations, we are required to advise you that,
unless otherwise expressly indicated, any federal tax advice contained in this opinion, including any
attachments, is not intended or written by us to be used, and cannot be used, by anyone for the purpose of
E-2
March __, 2014
Page 3
avoiding federal tax penalties that may be imposed by the federal government or for promoting, marketing or
recommending to another party any tax-related matters addressed herein.
We express no opinion with respect to the laws of any jurisdiction other than the federal laws of the
United States of America and the State of Indiana. The opinions expressed above are based upon such laws as
are in effect on the date hereof and we expressly disclaim any undertaking to advise you of any subsequent
changes therein.
The opinion expressed above expresses the professional judgment of the attorneys participating in the
transaction as to the legal issues addressed herein. By rendering such opinion, the undersigned does not
become an insurer or guarantor of that expression of professional judgment or of the transaction opined upon.
Nor does the rendering of this opinion guarantee the outcome of any legal dispute that may arise out of the
transaction.
Very truly yours,
E-3

PRELIMINARY OFFICIAL STATEMENT DATED MARCH 18, 2014

Transcription

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