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AGENDA BOOK OREGON FACILITIES AUTHORITY

Business Meeting

November 13, 2018

Tonkon Torp LLP 888 SW Fifth Avenue, Suite 1600, Portland, OR 97204

888 SW Fifth Avenue, Suite 1600 Portland, OR 97204

Ph: (503) 802-5710 Fax: (503) 972-7410 · http://oregonfacilities.org/

SUMMARY AGENDA OREGON FACILITIES AUTHORITY

Business Meeting November 13, 2018

12:00 PM – 1:00 PM – OFA Business (Suite 350) 1:00 PM – 3:00 PM – Bond Applications (Suite L-101)

200 SW Market Street, Suites 350 & L-101, Portland OR

Tab Item Action

RequiredLocation: 200 SW Market Street, Suite 350, Portland, OR 97201

1 Approval of Minutes of August 13 and October 5, 2018 Yes

Presentation by Mr. Mark Stevenson, CFO, Craft3 No

2 Presentation by Ms. Christine Reynolds, Lead Bond Counsel, on New Rules for Materials Event Disclosure

No

3 Executive Director's Reports No

4 Informational Items No

Brief Recess

Location: 200 SW Market Street, Suite L-101, Portland, OR 97201

5 Consideration of Preliminary Approval for the application by Cascadia Behavioral Healthcare, Inc. for an OFA SNAP Loan in an approximate amount of $9,900,000

Yes

6 Consideration of Preliminary Approval for the application by Howard Street Charter School for an OFA Traditional Bond in an approximate amount of $4,500,000

Yes

7 Consideration of Preliminary Approval for the application by Portland Community Reinvestment Initiatives, Inc. for an OFA Traditional Bond in an approximate amount of $6,000,000

Yes

Other Matters for the Authority No Public Comment No

The meeting is at: 200 SW Market St., Suites 350 & L-101, Portland, OR 97201

To attend by teleconference, Dial-In #: 888-529-0350

Participant Passcode: 503 802 2102

OFA helps nonprofit organizations access lower cost financing for capital projects by facilitating the issuance of tax exempt conduit revenue bonds.

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WORKING AGENDA OREGON FACILITIES AUTHORITY

Business Meeting November 13, 2018

200 SW Market St., Suites 350 & L-101, Portland, OR 12:00 PM – 1:00 PM – OFA Business

1:00 PM – 3:00 PM – Bond Applications

Tab Discussion and Action Time Location: 200 SW Market St., Suite 350, Portland, OR 97201 Call to Order and Present Notice of Meeting 12:00 1. Approval of Minutes of August 13 and October 5, 2018 12:00 – 12:10

Presentation by Mr. Mark Stevenson, CFO, Craft3 12:10 – 12:20

2. Presentation by Ms. Christine Reynolds, Lead Bond Counsel, on New Rules for Material Event Disclosure

12:20 – 12:45

3. Executive Director's Reports

Bonding Report General Report

12:45 – 12:50

4. Oregon Bond Calendar and Other Items – Informational Only 12:50 – 12:55

Meeting recess to change rooms

Location: 200 SW Market St., Suite L-101, Portland, OR 97201 5. Consideration of Preliminary Approval for the application by

Cascadia Behavioral Healthcare, Inc. for an OFA SNAP Loan in an approximate amount of $9,900,000

1:00 – 1:30

We will hear from: The Applicant: Ms. Janice Jacobs, CFO, and Mr. Jim Hlava, VP Housing &

Development The Sponsoring Bank: Mr. Kendall Hansen, Key Government Finance, Inc. SNAP Loan Counsel: Ms. Carol McCoog, Hawkins Delafield & Wood LLP OFA Financial Advisor: Mr. Duncan Brown, PFM Possible action: Approval of Resolution 2018-18, granting preliminary approval to Cascadia Behavioral Healthcare, Inc. for an OFA SNAP Loan in an approximate amount of $9,900,000.

6. Consideration of Preliminary Approval for the application by

Howard Street Charter School for an OFA Traditional Bond in an approximate amount of $4,500,000.

1:30 – 2:00

We will hear from: The Applicant: Ms. Christina Tracy, CEO, Erik Davis, Board Treasurer, and Pablo

Torrent, Board Member – Finance Committee The Applicant's FA: Mr. David Robertson, Lewis Young Robertson & Burningham, Inc. OFA Financial Advisor: Mr. Duncan Brown, PFM Bond Counsel: Mr. Michael Schrader, Orrick Herrington & Sutcliffe LLP OFA Executive Director: Ms. Gwendolyn Griffith Recommended action: Approval of Resolution 2018-19, granting preliminary approval to Howard Street Charter School for an OFA Traditional Bond in an approximate amount of $4,500,000. 7. Consideration of Preliminary Approval for the application by

Portland Community Reinvestment Initiatives, Inc. for an OFA Traditional Bond in an approximate amount of $6,000,000.

2:00 – 2:30

We will hear from: The Applicant: Ms. Maxine Fitzpatrick, Executive Director The Purchasing Bank: Ms. Michelle Lamb, Beneficial State Bank OFA Financial Advisor: Mr. Duncan Brown, PFM Bond Counsel: Mr. Michael Schrader, Orrick Herrington & Sutcliffe LLP OFA Executive Director: Ms. Gwendolyn Griffith Recommended action: Approval of Resolution 2018-20, granting preliminary approval to Portland Community Reinvestment Initiatives, Inc. for an OFA Traditional Bond in an approximate amount of $6,000,000.

None Public Comment: No Action Required 2:30 – 2:35 None Other Matters for the Authority: No Action Required

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Oregon Facilities Authority Page 1 of 5

Oregon Facilities Authority

Minutes of Meeting of August 13, 2018

A duly called meeting of the Oregon Facilities Authority ("OFA" or the "Authority") was held on August 13, 2018, commencing at approximately 12:00 p.m. at 888 SW Fifth Avenue, Suite 1600, Portland, Oregon. Authority Members participating in the meeting (in person, unless otherwise indicated) were: Chair Martha McLennan, Vice-Chair Eric Johansen, and Authority Members Beth deHamel, J. Kevin McAuliffe and Roy Kim. Participating in the meeting to assist the Authority were: Gwendolyn Griffith, Executive Director of the Authority; Duncan Brown of PFM, Financial Advisor; Carol McCoog and Jennifer Cordova of Hawkins Delafield & Wood LLP, SNAP Loan and Special Bond Counsel, Michael Schrader of Orrick, Herrington and Sutcliffe LLP, Lead Bond Counsel; Laura Lockwood-McCall and Lee Anaya of the Office of the State Treasurer ("OST"); and Assistant Attorney General Steven Marlowe, Oregon Department of Justice ("DOJ"). Chair Martha McLennan called the meeting to order and presented the notice of meeting. Approval of Minutes The Minutes of the meetings of June 11, July 19 and July 26, 2018, were unanimously approved. Executive Director Reports Ms. Griffith directed the Board's attention to the Bonding Report and General Report, both of which were included with the materials. She reported that the Arco Iris School transaction successfully closed. Mr. Schrader summarized the final road blocks in the transaction and the path to resolving them. Ms. Griffith suggested an out-of-town meeting in the fall in either Medford or Eugene. The Board agreed on Medford and Ms. Pham will communicate with the Board via email to confirm a date in early October. Ms. Jennifer Cordova presented on the purpose and requirements for TEFRA hearings. The Board took a brief recess and reconvened at approximately 1:00 p.m.


Consideration of Final Approval for the application by Northwest Housing Alternatives for an OFA SNAP Loan in an amount not to exceed of $4,400,000. Ms. McLennan declared an actual conflict of interest for this transaction, explaining that she is the Executive Director of the Applicant, Northwest Housing Alternatives, Inc., and she stated that she would neither be participating in the discussion nor voting on this matter. She asked the Vice-Chair, Mr. Johansen, to serve as Chair for this part of the meeting and he agreed to do so. Mr. Stephen McMurtrey, Housing Development Director, appeared on behalf of the Applicant to present the application. Ms. Kathy Swift of Heritage Bank, the sponsoring bank, appeared to assist with the presentation. Ms. Swift described the terms of the financing. The loan will have a ten-year fixed rate, estimated at 4.81%. The loan will have an 80.76% tax factor. Ms. McCoog reported that all issues had been resolved, and the transaction documents were in substantially final form. She recommended the transaction for final approval. The Executive Director's report is included in the materials. Ms. Griffith reported that the preparation for final approval has been as smooth as expected, and she recommended the transaction for final approval. After discussion, Ms. deHamel moved that the Authority adopt Resolution 2018-9, granting final approval to Northwest Housing Alternatives, Inc. for an OFA SNAP Loan in an amount not to exceed $4,400,000. Mr. McAuliffe seconded the motion. Ms. Martha McLennan abstained. Resolution 2018-9 was approved by the remaining four Board members. Mr. Johansen asked that Ms. McLennan resume her role as Chair, and she agreed to do so. Consideration of Conditional Final Approval for the application by Warner Pacific University for an OFA SNAP Loan in an amount not to exceed $5,083,359.44. Ms. Andrea Cook, President, Mr. Steve Stenberg, Advisor to the President, and Mr. Douglas Wade, Vice President of Finance, appeared on behalf of the Applicant to present the application. Mr. Rorie Leone, Vice President, Washington Trust Bank, the sponsoring bank, appeared to assist with the presentation. Mr. Stenberg explained the contract for operation for food service is still outstanding, but that they expect a draft tomorrow and hope to have approval by the end of the week. Mr. Leone summarized the financing terms. The Loan will have an initial five year fixed rate at 4.6%. Ms. Carol McCoog summarized the private use issues with the Sodexo contract. Ms. McCoog shared she expected it to be resolved this week. She reported that all other issues had been


resolved and the documentation was in substantially final form. She recommended the transaction for final approval. The Executive Director's report is included in the materials. Ms. Griffith congratulated the Applicant on its perseverance through its long journey, and she recommended the transaction for final approval. After discussion, Mr. McAuliffe moved that the Authority adopt Resolution 2018-10, granting conditional final approval to Warner Pacific University for an OFA SNAP Loan in an amount not to exceed $5,083,359.44. Mr. Roy Kim seconded the motion and Resolution 2018-10 was unanimously approved. Consideration of Final Approval for the application by Greenhill Humane Society and Society for the Prevention of Cruelty to Animals for an OFA SNAP Loan in an amount not to exceed $2,150,000. Mr. Cary Lieberman, Executive Director, appeared on behalf of the Applicant to present the application. Ms. Jamie Louie-Smith of Columbia Bank, the sponsoring bank, appeared to assist with the presentation. Ms. Louie-Smith announced that construction has commenced, with bank approval, and two draws have already occurred. She summarized the financing terms, reporting that the Loan would have a .7917 tax factor, and will be amortized over 25 years with reset dates at December 1, 2029 and again in 2039. The maturity date is 2044. SNAP Counsel's report is included in the materials. Ms. McCoog reported it has been a smooth transaction and recommended it for final approval. The Executive Director's report is included in the materials. Ms. Griffith reported that closing is expected for the end of the month and recommended the transaction for final approval. After discussion, Mr. Johansen moved that the Authority adopt Resolution 2018-11, granting final approval to Greenhill Humane Society and Society for the Prevention of Cruelty to Animals for an OFA SNAP Loan in an amount not to exceed $2,150,000. Mr. Kim seconded the motion and Resolution 2018-11 was unanimously approved. Consideration of approval for National University of Natural Medicine to use OFA SNAP Bond proceeds for additional projects. Mr. Gerald Bores, Vice President of Finance & Administration, and Mr. David Schleich, President, appeared on behalf of the Applicant to present the proposal. Mr. Gabe Wells of Columbia Bank, the sponsoring bank, appeared by telephone to assist with the presentation. Mr. Bores explained the timeline of events that led to the unused funds and the changing needs of the University. President Schleich updated the Board on the activities of the University.


SNAP Counsel's report is included in the materials. Ms. McCoog explained how the event triggers a tax reissuance and that the plan to return to the Board was recommended in an abundance of caution. Ms. Cordova explained the need for a new TEFRA hearing. Ms. McCoog recommended approval of the Borrower’s request. The Executive Director's report is included in the materials. Ms. Griffith explained that if approval is given, the Board would see NUNM only at this meeting. She recommended approval of the request by the Borrower. After discussion, Mr. Johansen moved that the Authority adopt Resolution 2018-12, granting approval to National University of Natural Medicine for using OFA Bond proceeds for additional projects. Mr. McAuliffe seconded the motion and Resolution 2018-12 was unanimously approved. Consideration of Preliminary Approval for the Application by LaClinica del Valle for an OFA SNAP Loan in an approximate amount of $4,125,000. Ms. Jill Borovansky, Chief Financial Officer, and Brenda Johnson, Chief Executive Officer, appeared on behalf of the Applicant to present the application. Mr. Darwin Parker and Mr. Jim Servoss of Banner Bank, the sponsoring bank, appeared to assist with the presentation. Ms. Johnson summarized the history of the Applicant, and the goals of the Project. Her presentation materials are available upon request. The organization served 30,000 people last year with 374 staff members and 37 dedicated medical providers. The Project will include the acquisition of a building for administrative employees, releasing space in three health centers to allow for expansion of services at each site. Mr. Parker described the terms of the financing. The loan will amortize over 25 years with a 10 year final maturity and a .69 tax factor. SNAP Counsel's report is included in the materials. Ms. McCoog reported a scoping call was held at which no unusual issues were identified. SNAP Counsel will conduct its usual diligence and hold a TEFRA hearing. Ms. McCoog recommended the transaction for preliminary approval. The Financial Advisor's report is included in the materials. Mr. Brown reported on his conversations with the Applicant, and discussed the Applicant's RFP process for selecting Banner out of six banks that expressed interest. Mr. Brown reported that the application was consistent with his discussions with the Applicant and summarized the key terms of the Loan. The Executive Director's report is included in the materials. Ms. Griffith expects a smooth transaction, and reported that if preliminary approval is given, the financing team would expect to return in October seeking final approval and closing. She recommended the transaction for preliminary approval.


After discussion, Mr. Johansen moved that the Authority adopt Resolution 2018-13, granting preliminary approval to La Clinica del Valle Family Health Care Center, Inc. for an OFA SNAP Loan in an approximate amount of $4,125,000. Mr. McAuliffe seconded the motion, and Resolution 2018-13 was unanimously approved. Ms. McLennan asked for any public comment. There was none. There being no further business to come before the meeting, the meeting was adjourned at approximately 2:50 pm.

___________________________________ Martha McLennan, Chair Gwendolyn Griffith, Executive Director

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Minutes of Meeting of October 5, 2018

A duly called meeting of the Oregon Facilities Authority ("OFA" or the "Authority") was held on October 5, 2018, commencing at approximately 1:30 p.m. at 816 Black Oak Drive, Medford, Oregon. Authority Members participating in the meeting (in person, unless otherwise indicated) were: Chair Martha McLennan, Vice-Chair Eric Johansen, and Authority Members J. Kevin McAuliffe (by telephone), Allyson Anderson, Sean Hubert and Roy Kim. Participating in the meeting to assist the Authority (in person, unless otherwise indicated) were: Gwendolyn Griffith, Executive Director of the Authority; Duncan Brown of PFM, Financial Advisor; Carol McCoog (by telephone) of Hawkins Delafield & Wood LLP, SNAP Loan and Special Bond Counsel, Michael Schrader, Gregory Blonde, and Douglas Goe (on the telephone) of Orrick, Herrington and Sutcliffe LLP, Lead Bond Counsel; Laura Lockwood-McCall and Lee Anaya (both by telephone) of the Office of the State Treasurer ("OST"); and Assistant Attorney General Steven Marlowe (by phone), Oregon Department of Justice ("DOJ"). Chair McLennan called the meeting to order and presented the notice of meeting. She expressed her appreciation to St. Mary's School of Medford for hosting the meeting in one of its science labs and providing a tour of the facility after the meeting. Consideration of Final Approval for the application by La Clinica del Valle Family Health Care Center, Inc. for an OFA SNAP Loan in an amount not to exceed of $4,125,000. Ms. Brenda Johnson, Chief Executive Officer, and Ms. Jill Borovansky, Chief Financial Officer, appeared on behalf of the Applicant. Mr. Darwin Parker, Vice President Public Finance (by telephone), and Mr. Bill Pritchett, Vice President / Senior Commercial Banking Relationship Manager, of Banner Bank, the sponsoring bank, appeared to assist with the presentation. Ms. Borovansky reviewed the Project and Mr. Pritchett described the terms of the financing. The initial interest rate is 3.87%. SNAP Counsel's report is included in the materials. Ms. McCoog reported the transaction had been quite straightforward, and the financing team had encountered no unusual issues. She reported that the transaction documents were in substantially final form and she recommended the transaction for final approval. The Executive Director's report is included in the materials. Ms. Griffith recommended the transaction for final approval. After discussion, Mr. Johansen moved that the Authority adopt Resolution 2018-14, granting final approval to La Clinica del Valle Family Health Care Center, Inc. for an OFA SNAP Loan in an amount not to exceed $4,125,000 and recommending that the Office


of the State Treasurer consider closing the transaction. Mr. Hubert seconded the motion. Resolution 2018-14 was unanimously approved. Consideration of Conditional Final Approval for the application by PeaceHealth for an OFA Traditional Bond in an amount not to exceed $230,000,000. Ms. Kim Hodgkinson, Executive Vice President & Chief Financial Officer, and Mr. Jeff Seirer, System Vice President, Financial Integrity & Controller, appeared by telephone on behalf of the Applicant to present the application. Ms. Hodgkinson's slide deck is available upon request. She reviewed the key highlights of PeaceHealth's current operations and introduced the leadership team. She reviewed the recent financial results relating to utilization, profitability and capitalization. She then reviewed the Project, which has two components: (1) the refinancing of approximately $146 million of letter-of-credit (LOC)-backed variable rate demand bonds (VRDBs) (OFA Series 2008A and Series 2008B) with new publicly offered LOC-backed VRDBs; and (2) the refinancing of $75 million of OFA bonds (Series 2011A) with a direct bank purchase bond. Phase 1 would close in October, and Phase 2 in December, 2018. Bond Counsel's Report is included in the materials. Mr. Blonde summarized the structure of the transaction and its current status. The financing team has been working for some time to prepare the transaction documents, and although these documents are not in substantially final form, they are fairly close. Bond counsel diligence has been underway for some time. Mr. Blonde recommended the transaction for conditional final approval. The Financial Advisor's report is included in the materials. Mr. Brown reviewed the structure of the transaction (as reported above) and also reviewed the status of the ratings of the bonds. He reported that the transaction appears to meet the requirements of the OFA administrative rules, and he recommended the transaction for conditional final approval. Ms. Griffith explained she has a conflict of interest because the law firm in which she is a partner provides legal representation to PeaceHealth in unrelated matters. As a result, she did not provide any recommendation relating to this transaction. After discussion, Mr. Johansen moved that the Authority adopt Resolution 2018-15, granting conditional final approval to PeaceHealth for an OFA Traditional Bond in an amount not to exceed $230,000,000, and recommending that the Office of the State Treasurer consider issuing the bonds when the conditions have been satisfied. Mr. Hubert seconded the motion and Resolution 2018-15 was unanimously approved. Consideration of Preliminary Approval for the application by Child Advocacy Center, dba Kids' FIRST, for an OFA SNAP Loan in the approximate amount of $1,815,000. Ms. Sarah Stewart, Executive Director, and Ms. Megan Jones, Finance Director, appeared on behalf of the Applicant to present the application. Ms. Jamie Louie-Smith, Vice President,


Commercial Banking Officer, of Columbia Bank, the sponsoring bank, appeared to assist with the presentation. Ms. Stewart explained the history and mission of the Applicant. Created in 1994, the organization provides a central location for a multidisciplinary team (MDT) approach to child abuse investigations, which eliminates the need for a child to be repeatedly interviewed about abuse by each individual agency. Kids' FIRST offers a warm, non-threatening environment where specially trained interviewers talk to children. The Project is financing for the purchase and remodeling of a stand-alone building to be owned and operated by the Applicant. Ms. Louie-Smith summarized the financing terms, reporting that the Loan would have a .7917 tax factor. The first six months will be interest-only and then the Loan will be amortized over 25 years with the first interest reset date at the 10-year mark. The initial interest rate is expected to be 3.95%. SNAP Counsel's report is included in the materials. Ms. McCoog reported that no unusual issues were identified on the scoping call for this transaction. The usual diligence process would be conducted, along with document preparation. Ms. McCoog recommended the transaction for preliminary approval. The Executive Director's report is included in the materials. Ms. Griffith reported that, if the transaction were approved today, the Applicant would be expected to return in December for Final Approval and to close the transaction before the year's end. Ms. Griffith expected this to be a straightforward transaction, and recommended it for preliminary approval. After discussion, Mr. Johansen moved that the Authority adopt Resolution 2018-16, granting preliminary approval to Friends of the Child Advocacy Center, dba Kids' FIRST, for an OFA SNAP Loan in an approximate amount of $1,815,000. Ms. Anderson seconded the motion and Resolution 2018-16 was unanimously approved. Consideration of Conditional Final Approval for the application by QSH Medford, LLC for an OFA Traditional Bond in an amount not to exceed $28,000,000. Mr. Stan Brading, President, appeared on behalf of the Applicant to present the application. Mr. Brading was assisted by the seller of the facility (which is also the prospective manager of the Project), Radiant Senior Living, represented by its President, Mr. James Guffee (by telephone) and Mr. David Young, Chief Financial Officer. Mr. Rick Lohr, Mr. Ogieva Guobadia (by telephone) and Ms. Romy McCarthy, of the underwriting firm, Piper Jaffray & Co., also appeared to assist with the presentation. Mr. Brading described the Project, which the purchase of a senior living/memory care facility located in Medford, Oregon. His presentation materials are available upon request. The facility, known as "The Farmington Square Medford Community," is a 74-bed memory care facility. It consists of four buildings and an operation designed to provide a continuum of care services across various stages of memory- and dementia-related conditions. The Community operates on a monthly rental basis, as opposed to the entrance fee model typical of many traditional


continuing care retirement communities (CCRCs). According to the Applicant, approximately 10 residents are participants in the State's Medicaid Waiver Program. Mr. Brading and Mr. Young described the operational history of the Project, and the overall economic environment for memory care facilities. Ms. McCarthy described the structure of the transaction, which will be a limited offering to qualified institutional buyers in three Series, two tax-exempt and one taxable. The tax exempt bonds will have a 35-year term with a fixed rate. Bond Counsel's report is included in the materials. Mr. Blonde explained how this transaction came to OFA, having originally been submitted to a different issuer that does not have the staff to process it. He reviewed the current state of the transaction documents and the proposed schedule, which necessitated the Applicant requesting conditional final approval. He explained the limited offering nature of the transaction, and that the bonds will be secured by a pledge of the Applicant's gross revenues. The Applicant will also grant to bondholders a mortgage, lien and security interest on the facility being acquired with the proceeds of the Bonds. Mr. Blonde recommended the transaction for conditional final approval. The Financial Advisor's report is included in the materials. Mr. Brown reviewed the limited offering nature of the transaction. He also explained that, while not required by the Oregon Administrative Rules for a limited public offering, the senior bonds are expected to have an investment grade rating from S&P Global Ratings, as this is typical in this particular industry. He recommended the transaction for conditional final approval. Ms. Griffith explained she has a conflict of interest because the law firm in which she is a partner provides legal representation to the seller of the Project in the sale transaction. As a result, she did not provide any recommendation relating to this transaction. Ms. Laura-Lockwood McCall described her recent conversations with the Applicant and OFA advisors. She recommended the transaction for conditional final approval. After discussion, Mr. Johansen moved that the Authority adopt Resolution 2018-17, granting conditional final approval to QSH Medford, LLC for using OFA Traditional Bond in an amount not to exceed of $28,000,000, and recommending that the Office of the State Treasurer consider issuing the bonds when the conditions have been satisfied. Ms. Anderson seconded the motion and Resolution 2018-17 was unanimously approved. Consideration of Approval of the OFA/Oregon State Treasury Memorandum of Understanding. Ms. Griffith explained the nature of the MOU between OFA and OST and the need for the agreement to be updated. There being no further discussion, Mr. Hubert moved that the Authority approve the MOU. Ms. Anderson seconded the motion and the motion was unanimously approved.


The Authority deferred consideration of other business matters until the next meeting. Ms. McLennan asked for any public comment. There was none. There being no further business to come before the meeting, the meeting was adjourned at approximately 4:00 pm.

___________________________________ Martha McLennan, Chair Gwendolyn Griffith, Executive Director

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H A W K I N S A D V I S O R Y

RULE 15c2-12 AMENDMENTS – COMPLIANCE ALERT

Introducon

This Compliance Alert supplements the Hawkins Advisory en#tled “Rule 15c2-12 Amendments,” which was dated

August 22, 2018. That Advisory is appended to this Alert. The Advisory describes two new paragraphs (15 and 16) that are

required to be added to con#nuing disclosure agreements that are entered into pursuant to Rule 15c2-12 (“CDAs”) on and

a4er February 27, 2019 (the “compliance date,” which is 180 days a4er the publica#on of the Adop#ng Release in the

Federal Register1). Thus, CDAs that are entered into on or a4er February 27, 2019, must incorporate new paragraphs (15)

and (16). This Alert brings to your a9en#on some considera#ons to keep in mind as the compliance date approaches.

“Financial Obligaon”

The term “financial obliga#on” is key to paragraphs (15) and (16), and is defined in new paragraph (f)(11), as

follows:

The term financial obliga#on means a (i) debt obliga#on; (ii)

deriva#ve instrument entered into in connec#on with, or pledged as

security or a source of payment for, an exis#ng or planned debt

obliga#on; or (iii) guarantee of (i) or (ii). The term financial obliga#on

shall not include municipal securi#es as to which a final official

statement has been provided to the Municipal Securi#es Rulemaking

Board consistent with this rule.

The exclusion for “municipal securi#es as to which a final official statement” was provided to the MSRB only

excludes the municipal securi#es themselves, and does not exclude any associated financial obliga#on, such as a deriva#ve

instrument or a guarantee of either a deriva#ve instrument or a debt obliga#on. That is the case even if such associated

financial obliga#on was entered into in connec#on with or pledged as security for the municipal securi#es and was

described in the related official statement.

The phrase “provided to the Municipal Securi#es Rulemaking Board consistent with this rule,” would include

official statements that are provided to the MSRB voluntarily. Thus, for municipal securi#es for which the related official

statement was provided to the MSRB, either because required by Rule 15c2-12 or voluntarily, a no#ce would not be

required under paragraph (15) rela#ng to the issuance of such securi#es.

The SEC noted that “the defini#on of the term ‘financial obliga#on’ does not include ordinary financial and

opera#ng liabili#es incurred in the normal course of an issuer’s or obligated person’s business, only an issuer’s or obligated

person’s debt, debt-like, and debt-related obliga#ons.” This limita#on must be viewed in light of the SEC’s statement that

whether an obliga#on is “debt” for state law purposes is not determina#ve for the purposes of Rule 15c2-12, and that “a

narrow interpreta#on of ‘debt’ would be under-inclusive because issuers and obligated persons can, and o4en do, borrow

money through a variety of transac#ons, many of which would not qualify as ‘debt’ under relevant state laws.”

Pursuant to paragraph (15), the “incurrence” of a financial obliga#on triggers the disclosure obliga#on. With

respect to financial obliga#ons arising under contracts that are not municipal securi#es subject to a CDA, the Adop#ng

Release states that the financial obliga#on “generally should be considered to be incurred when it is enforceable against

an issuer or obligated person.” The Adop#ng Release notes that this is consistent with the instruc#ons for Item 2.03 of

Exchange Act Form 8-K, which provide that a registrant:

_________________________

1 83 Fed. Reg. 44,700 (Aug. 31, 2018).

OCTOBER 10, 2018 HAWKINS DELAFIELD & WOOD LLP

OCTOBER 10, 2018 HAWKINS ADVISORY

has no obliga#on to disclose informa#on . . . un#l the registrant

enters into an agreement enforceable against the registrant,

whether or not subject to condi#ons, under which the direct

financial obliga#on will arise or be created or issued.

For many transac#ons (other than municipal securi#es subject to a CDA), where a contractual commitment or sale

agreement has been entered into prior to closing or funding (e.g., certain bank loans), it may be prudent to treat the

incurrence of financial obliga#ons as occurring upon the sale or commitment date rather than the closing date.

Preparaon for Compliance Date

Paragraph (15) relates to the incurrence of financial obliga#ons or entering into certain agreements that occur

on or a4er the compliance date of February 27, 2019. Paragraph (16), however, includes defaults or other events with

respect to financial obliga#ons entered into on, a4er, or prior to February 27, 2019, including currently exis#ng financial

obliga#ons. Thus, an issuer or obligated person that expects to become a party to a CDA entered into a4er the

compliance date should begin well in advance of such compliance date to iden#fy the contracts under which it may have

financial obliga#ons and the payment, pledge, priority, financial covenant, default, and remedy provisions that are most

likely to trigger a filing under paragraph (16).

Many governmental issuers, and certain other obligated persons, may find that their audited financial

statements and audit process may provide a useful star#ng point for iden#fying exis#ng financial obliga#ons. As an

example, a governmental issuer whose financial statements comply with Governmental Accoun#ng Standards Board

(“GASB”) standards is required, for repor#ng periods beginning a4er June 15, 2018, to comply with GASB 88, en#tled

“Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements.”2 GASB 88 defines “debt,” for

purposes of disclosures in notes to financial statements, “as a liability that arises from a contractual obliga#on to pay

cash . . . in one or more payments to se9le an amount that is fixed at the date the contractual obliga#on is established . .

. debt does not include leases, except for contracts reported as a financed purchase of the underlying asset.”

However, even governmental issuers and obligated persons whose financial statements comply with GASB

requirements should be aware that both the scope of their par#cular financial obliga#ons that sa#sfy the Rule 15c2-12

“financial obliga#on” defini#on and the content of required disclosures thereunder may well vary from GASB

requirements. In addi#on, #ming of disclosure also will be different under applicable CDAs. One of the express purposes

of the amendments to Rule 15c2-12 is to require disclosure of a paragraph (15) or (16) event prior to the #me that

financial statements are published. As stated in the Adop#ng Release, “GASB Statement No. 88 is not a subs#tute for

[the] amendments.”

All of these obliga#ons will need to be reconciled with any confiden#ality or non-disclosure provisions that may

apply, and these should be carefully reviewed with your advisors. With respect to financial obliga#ons or agreements of

the type described in paragraph (15) that are incurred or agreed to a4er the compliance date of February 27, 2019, an

issuer or obligated person should consider an express acknowledgement by the contrac#ng party that disclosure may be

required under any CDA that includes paragraph (15).

There may be addi#onal guidance from the SEC staff as various issues are considered in implemen#ng

paragraphs (15) and (16). For example, the SEC retained the introductory language of Rule 15c2-12(b)(5)(i)(C), which

provides that no#ce of the listed events must be provided “[i]n a #mely manner not in excess of ten business days a4er

the occurrence of the event . . . with respect to the securies being offered in the Offering.” Accordingly, no#ce of the

incurrence of a financial obliga#on or execu#on of an agreement described in paragraph (15) ought to be required to be

filed with the MSRB only if it is material, directly or indirectly, to the holders of the securi#es that are the subject of the

applicable CDA.

In addi#on to establishing a comprehensive list of financial obliga#ons, an issuer should revise any wri9en

con#nuing disclosure controls and procedures, and update any associated training presenta#ons or materials, to reflect

paragraphs (15) and (16).

_________________________ 2

GASB 88 amends GASB 34, paragraph 119. Paragraph 119 currently requires “[i]nforma#on about long-term liabili#es [which] should include both long-term

debt (such as bonds, notes, loans, and leases payable) and other long-term liabili#es.”

2

H A W K I N S A D V I S O R Y

AUGUST 22, 2018 HAWKINS DELAFIELD & WOOD LLP

RULE 15c2-12 AMENDMENTS

Introducon

On August 20, 2018, the Securi�es and Exchange

Commission (“SEC” or “Commission”) adopted amendments to

Securi�es Exchange Act of 1934 Rule 15c2-12 (17 CFR §

240.15c2-12)1

(“Rule 15c2-12” or the “Rule”). The

amendments add two events that must be included in any

con�nuing disclosure agreement2 that is entered into a:er the

compliance date (approximately six months from now; see

“Compliance Date” below). The two addi�onal events are the

following:

Rule 15c2-12(b)(5)(i)(C)(15):

Incurrence of a financial obliga�on of the obligated

person, if material, or agreement to covenants,

events of default, remedies, priority rights, or other

similar terms of a financial obliga�on of the

obligated person, any of which affect security

holders, if material.

Rule 15c2-12(b)(5)(i)(C)(16):

Default, event of accelera�on, termina�on event,

modifica�on of terms, or other similar events under

the terms of a financial obliga�on of the obligated

person, any of which reflect financial difficul�es.

The disclosures that would be required by the

amendments are already being made. The amendments

address when such disclosures must be made. In general,

material financial informa�on of the type described in new

paragraphs (15) and (16) is included in official statements and/

or audited financial statements. The SEC, however, wanted to

have such disclosures made closer to the �me of the

incurrence or event, to provide greater transparency to the

market. The Adop�ng Release notes:

[I]nvestors and other market par�cipants may not

learn that the issuer or obligated person has

incurred a financial obliga�on if the issuer or

obligated person does not provide annual financial

informa�on or audited financial statements to

EMMA or does not subsequently issue debt in a

primary offering subject to Rule 15c2-12 that results

in the provision of a final official statement to

EMMA.

The impetus for the amendments was the increasing use

of direct purchases of municipal securi�es and direct loans as

alterna�ves to public offerings of municipal securi�es.

Although market par�cipants had encouraged over the years

voluntary disclosure of such financial obliga�ons, the SEC

concluded that “despite these ongoing efforts, few issuers or

obligated persons have made voluntary disclosures of financial

obliga�ons, including direct placements, to the MSRB

[Municipal Securi�es Rulemaking Board].”

Analysis of Provisions

The two new provisions reference “financial obliga�on of

the obligated person.”3 Note that, pursuant to exis�ng

paragraph (b)(5)(i), the party to the con�nuing disclosure

agreement may be either the issuer or the obligated person

(even if the issuer is not an obligated person).

The term “financial obliga�on” would be added by the

amendments as new paragraph (f)(11), as follows:

The term financial obliga�on means a (i) debt

obliga�on; (ii) deriva�ve instrument entered into in

connec�on with, or pledged as security or a source

of payment for, an exis�ng or planned debt

obliga�on; or (iii) guarantee of (i) or (ii). The term

financial obliga�on shall not include municipal

securi�es as to which a final official statement has

been provided to the Municipal Securi�es

Rulemaking Board consistent with this rule.

The amendments in proposed form had included “lease”

as a dis�nct financial obliga�on. The SEC did not include

“lease” in the defini�on as adopted on the ra�onale that item

(11)(i), “debt obliga�on,” would include those leases the SEC

considered to be financial obliga�ons:

1 SEC Rel. No. 34-83885 (Aug. 20, 2018) (the “Adop�ng Release”).

2 “Con�nuing disclosure agreement” references the “wriJen agreement or contract” required by and set forth in detail in Rule 15c2-12(b)(5)(i).

3 “Obligated person” is defined in Rule 15c2-12(f)(10) as follows:

The term obligated person means any person, including an issuer of municipal securi�es, who is either generally

or through an enterprise, fund, or account of such person commiJed by contract or other arrangement to sup-

port payment of all, or part of the obliga�ons on the municipal securi�es to be sold in the Offering (other than

providers of municipal bond insurance, leJers of credit, or other liquidity facili�es).

HAWKINS ADVISORY

The Commission agrees with commenters that, as

proposed, the term “lease” was too broad.

Accordingly, the Commission believes that it is

appropriate to limit the Rule’s coverage of leases to

those that operate as vehicles to borrow money.

The Commission believes that this is appropriate

because a lease entered into as a vehicle to borrow

money could represent compe�ng debt of the issuer

or obligated person.

* * *

With respect to leases that do not operate as

vehicles to borrow money . . . the Commission also

believes that such lease arrangements do not

warrant inclusion in the Commission’s defini�on of

“financial obliga�on” because they generally do not

represent compe�ng debt of the issuer or obligated

person.

In addi�on, the amendments in proposed form had

included as a “financial obliga�on” a “monetary obliga�on

resul�ng from a judicial, administra�ve, or arbitra�on

proceeding.” The SEC determined to not include such

monetary obliga�on on the reasoning that any such obliga�on

is typically covered by reserve funding or insurance, and

further that any ini�al judgment in such a proceeding may not

reflect the ul�mate disposi�on of the proceeding.

With respect to item (11)(i), “debt obliga�on,” the SEC

noted that whether an obliga�on was “debt” for state law

purposes was not determina�ve:

[I]n the context of Rule 15c2-12, the Commission is

not limi�ng the term “debt obliga�on” to debt as it

may be defined for state law purposes, but instead is

applying it more broadly to circumstances under

which an issuer or obligated person has borrowed

money. . . The Commission believes that, for the

purposes of Rule 15c2-12, a narrow interpreta�on of

“debt” would be under-inclusive because issuers and

obligated persons can, and o:en do, borrow money

through a variety of transac�ons, many of which

would not qualify as “debt” under relevant state

laws.

In connec�on with the phrase “reflect financial

difficul�es” in paragraph (16), the SEC reasoned that such

phrase does not need further clarifica�on because the same

phrasing is used in paragraphs 15c2-12(b)(5)(i)(C)(3) and (4), as

in effect since 1995.

For purposes of a material event no�ce of an event

described in paragraph (b)(5)(i)(C)(15), the SEC advised that

such no�ce:

[G]enerally should include a descrip�on of the

material terms of the financial obliga�on. Examples

of some material terms may be the date of

incurrence, principal amount, maturity and

amor�za�on, interest rate, if fixed, or method of

computa�on, if variable (and any default rates);

other terms may be appropriate as well, depending

on the circumstances.

Compliance Date

The compliance date is 180 days a:er publica�on of the

SEC Release in the Federal Register. The SEC notes that the

amendments would apply to “con�nuing disclosure

agreements that are entered into in connec�on with Offerings

occurring on or a:er the compliance date of the amendments.”

The use of the term “Offerings” could create some ambiguity

because, for purposes of Rule 15c2-12(b)(1), the SEC had �ed

such term to the use of a Preliminary Official Statement.4 In

the Adop�ng Release, the SEC provided the needed

clarifica�on: “For the purposes of these amendments, the

Commission believes that an Offering generally should be

considered to occur on the date the con�nuing disclosure

agreement is executed.” Such execu�on will generally occur

on the seJlement date. The SEC notes, however, that:

[I]f a preliminary official statement is distributed

before the compliance date, with an expecta�on

that the Offering will occur on or a:er the

compliance date, the preliminary official statement

should generally aJach a form of con�nuing

disclosure agreement that reflects the adopted

amendments.

The SEC also advised that “an event under the terms of a

financial obliga�on pursuant to (b)(5)(i)(C)(16) that occurs on

or a:er the compliance date must be disclosed regardless of

whether such obliga�on was incurred before or a:er the

compliance date.” Thus, for example, assuming a compliance

date of February 25, 2019, and a con�nuing disclosure

agreement executed a:er such date that incorporates new

paragraph (16), no�ce of an event as described in such

paragraph (e.g., default or termina�on event) must be posted

on EMMA, even if the associated financial obliga�on was

entered into prior to February 25, 2019.

2 AUGUST 22, 2018

4 SEC No-Ac�on LeJer (Mudge Rose leJer) dated April 4, 1990: “The term ‘offer’ tradi�onally has been defined broadly under the federal securi�es laws and, for pur-

poses of Rule 15c2-12, would encompass the distribu�on of a Preliminary Official Statement by the underwriter.”

About Hawkins Advisory

The Hawkins Advisory is intended to provide occasional general comments on new developments in Federal and State law and regula-

�ons that we believe might be of interest to our clients. Ar�cles in the Hawkins Advisory should not be considered opinions of Hawkins

Delafield & Wood LLP. The Hawkins Advisory is not intended to provide legal advice as a subs�tute for seeking professional counsel;

readers should not under any circumstance act upon the informa�on in this publica�on without seeking specific professional counsel.

Hawkins Delafield & Wood LLP will be pleased to provide addi�onal details regarding any ar�cle upon request.

HAWKINS ADVISORY AUGUST 22, 2018 3

New York

7 World Trade Center

250 Greenwich Street

New York, NY 10007

Tel: (212) 820-9300

Los Angeles

333 South Grand Avenue

Los Angeles, CA 90071

(213) 236-9050

Sacramento

1415 L Street

Sacramento, CA 95814

Tel: (916) 326-5200

Newark

One Gateway Center

Newark, NJ 07102

Tel: (973) 642-8584

Washington, D.C.

601 Thirteenth Street, N.W.

Washington, D.C. 20005

Tel: (202) 682-1480

Har4ord

20 Church Street

HarTord, CT 06103

Tel: (860) 275-6260

Portland

200 SW Market Street

Portland, OR 97201

Tel: (503) 402-1320

San Francisco

One Embarcadero Center

San Francisco, CA 94111

Tel: (415) 486-4200

Ann Arbor

2723 South State Street

Ann Arbor, MI 48104

Tel: (734) 794-4835

of 2 888 SW Fifth Avenue, Suite 1600

Portland, OR 97204 (503) 802-5710

http://oregonfacilities.org/

OREGON FACILITIES AUTHORITY Gwendolyn Griffith Executive Director

MEMORANDUM To: Martha McLennan, Chair

Eric Johansen, Vice-Chair Kevin McAuliffe, Authority Member Beth deHamel, Authority Member

Sean Hubert, Authority Member Allyson Anderson, Authority Member

Roy Kim, Authority Member From: Gwendolyn Griffith Date: November 1, 2018 Subject: Executive Director's Bonding Report as of October 31, 2018 REPORT ON PENDING APPLICATIONS Status Applicant/Type Amount Requested Pending: QSH Medford, LLC (T) $ 28,000,000 Kids' FIRST (S) $ 1,815,000 PeaceHealth (T) $ 75,000,000 Total: $ 184,815,000 STATUS OF BONDING AUTHORITY – 2017-2019 Biennium Summary of 2017-2019 Biennium Financing:

Total Authorized by Legislature $ 1,350,000,000 Total Utilized $ 74,409,144

Unused Balance $ 1,275,590,856

BIENNIUM ALLOCATION—ANNUAL SESSIONS: The Legislature allocated $1,350,000,000 for OFA bonding this biennium. PRIVATE ACTIVITY BOND ALLOCATION: No private activity bond allocation was made to OFA for this biennium. If OFA needs allocation, the Executive Director will apply to the PAB Committee (chaired by Laura Lockwood-McCall) and the committee may allocate PAB to OFA.


Portland, OR 97204 (503) 802-5710


CLOSED TRANSACTIONS Nonprofit Organization Issued Amount Allocation Used Swallowtail School, Inc. (S) $ 2,457,738 $ 2,457,738 Forest Grove Community School (S) $ 1,063,000 $ 1,063,000 French American International School (S) $ 7,500,000 $ 5,354,902 St. Vincent de Paul (S) $ 8,500,000 $ 8,500,000 Rose CDC (S) $ 2,100,000 $ 2,100,000 Reed College (T) $ 65,650,000* $ 25,430,000* Cascade AIDS Project (S) $ 1,897,000 $ 1,897,000 Warner Pacific University (S) $ 5,083,359 $ 5,083,359 Northwest Housing Alternatives $ 4,400,000 $ 4,400,000 Greenhill Humane Society (S) $ 2,150,000 $ 2,150,000 Arco Iris Spanish Immersion (T) $ 12,100,000 $ 12,100,000 La Clinica del Valle (S) $ 4,125,000 $ 4,125,000 PeaceHealth (T) $145,975,000 $ 0 Total: $262,749,242 $ 74,409,144 *corrected.

$262,749,242

$39,024,242

$223,725,000

$74,409,144

Total Issued SNAP Bonds Traditional Bonds Allocation Used

OFA Bond Issuance Biennium 2017‐2019

Through October 31, 2018

034439/00001/9453059v1


Portland, OR 97204 (503) 802-5710 · Fax: (503) 972-7510 ·


OREGON FACILITIES AUTHORITY Gwendolyn Griffith Executive Director

MEMORANDUM To: Martha McLennan, Chair

Eric Johansen, Vice-Chair Kevin McAuliffe, Authority Member Beth deHamel, Authority Member

Sean Hubert, Authority Member Allyson Anderson, Authority Member Roy Kim, Authority Member From: Gwendolyn Griffith Date: November 7, 2018 Subject: Executive Director's General Report ______________________________________________________________________________ Transactions

Closed Transactions: La Clinica del Valle (S) PeaceHealth (Phase 1) (T) Pending Transactions: PeaceHealth (Phase 2)(T) Kids' FIRST (S)

QSH Medford, LLC (Quality Senior Housing Foundation, Inc.) (T)

New Applications: Howard Street Charter School (T) Cascadia Behavioral Healthcare (S) PCRI (T)

Marketing We have been working on follow up to the Informational Session in Medford in October, by providing information to bankers and nonprofits who attended. We have been asked by Umpqua Bank to do an Informational Session in Eugene, which we will schedule for later this year, and will hold Informational Sessions in Portland in January. All are welcome to attend; we will keep you posted on dates. We know of several transactions that may be making their way to OFA, including the YMCA of Salem, and a couple of SNAP transactions for nonprofits in the Portland Metro area.


Portland, OR 97204 (503) 802-5710 · Fax: (503) 972-7510 ·


Tentative Bond Schedule Month Prelim. Approval Final Approval Closing

November PCRI (T)

Howard Street Charter School (T) Cascadia Behavioral Healthcare (S)

December Salem YMCA (T) Kids' FIRST (S) Kids' FIRST (S)

PeaceHealth (T) QSH Medford, LLC (T)

January PCRI (T)

Howard Street Charter School (T)

Cascadia Behavioral Healthcare (S)

PCRI (T) Howard Street Charter

School (T) Cascadia Behavioral

Healthcare (S) February March St. Mary's School of Medford Salem YMCA (T) Salem YMCA (T) April May St. Mary's School of

Medford St. Mary's School of Medford

Financial Report Attached to this report are financial statements for July, August, and September 2018. June 30 is OFA's year-end, so the July report is the first of the new fiscal year and the new budget. The OFA financial information is provided by DAS (Oregon Department of Administrative Services). OFA reports on a cash method: revenue is booked when received, and expenses are booked when paid. The bookkeeping procedures are not tightly tied to OFA’s meeting schedule, so we are often a month behind in reporting revenue and expenses. The OFA cash balance as of September 30, 2018 was $881,180.49. As you can see from the Income and Expense Reports, as of August 30, 2018, OFA’s revenues were approximately $71,000 favorable to budget, and its expenses were approximately $30,000 favorable to budget. However, this is misleading as many of OFA’s expenses have not yet been reflected in DAS’ expenses. DAS has prepared draft year-end financial statements for inclusion in the Annual Report. When these are finalized, I will include them in the agenda book. Attachments:

OFA Income and Expense Report for July, August, and September 2018.

034439/00001/9452877v1

Income

Interest Income $13,500.00 $1,125.00 $1,654.16 $529.16 $1,125.00 $1,654.16 $529.16Application Fees $3,500.00 $291.67 $0.00 -$291.67 $291.67 $0.00 -$291.67

Closing: Reg. BondArco Iris Spanish Immersion $65,000.00 $5,416.67 $28,150.00 $22,733.33 $5,416.67 $28,150.00 $22,733.33

Closing: SNAP Bond $50,000.00 $4,166.67 $0.00 -$4,166.67 $4,166.67 $0.00 -$4,166.67Other

Total Income $132,000.00 $11,000.00 $29,804.16 $18,804.16 $11,000.00 $29,804.16 $18,804.16

Expenses

Executive Director $165,000.00 $13,750.00 $14,962.00 $1,212.00 $13,750.00 $14,962.00 $1,212.00Financial Advisor $30,000.00 $2,500.00 $1,200.00 -$1,300.00 $2,500.00 $1,200.00 -$1,300.00Bond Counsel Projects $25,000.00 $2,083.33 $0.00 -$2,083.33 $2,083.33 $0.00 -$2,083.33Department Justice $20,000.00 $1,666.67 $0.00 -$1,666.67 $1,666.67 $0.00 -$1,666.67Board Travel and Expenses $2,000.00 $166.67 $0.00 -$166.67 $166.67 $0.00 -$166.67Extranet $200.00 $16.67 $0.00 -$16.67 $16.67 $0.00 -$16.67Website $750.00 $62.50 $0.00 -$62.50 $62.50 $0.00 -$62.50Oregon State Treasurer $45,000.00 $3,750.00 $0.00 -$3,750.00 $3,750.00 $0.00 -$3,750.00Dept. of Admin. Services FBS Qtr 4 $4,100.00 $341.67 $9.19 -$332.48 $341.67 $9.19 -$332.48Association Dues and Pub NAHEFFA Dues $3,000.00 $250.00 $3,000.00 $2,750.00 $250.00 $3,000.00 $2,750.00Postage $500.00 $41.67 $54.14 $12.47 $41.67 $54.14 $12.47Printing/Copying $1,350.00 $112.50 $17.00 -$95.50 $112.50 $17.00 -$95.50Phone $300.00 $25.00 $61.97 $36.97 $25.00 $61.97 $36.97Banking $200.00 $16.67 $19.00 $2.33 $16.67 $19.00 $2.33Outreach/Legislative $10,000.00 $833.33 $0.00 -$833.33 $833.33 $0.00 -$833.33Post Issuance Compliance $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

OtherDesk sign and Meal for mtg. $1,200.00 $100.00 $267.99 $167.99 $100.00 $267.99 $167.99

Financial Services Support Proj. $15,000.00 $1,250.00 $0.00 -$1,250.00 $1,250.00 $0.00 -$1,250.00Low Income Senior Housing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Total Expenses $323,600.00 $26,966.67 $19,591.29 -$7,375.38 $26,966.67 $19,591.29 -$7,375.38

Net Cash -$191,600.00 -$15,966.67 $10,212.87 $26,179.54 -$15,966.67 $10,212.87 $26,179.54

7/1/2018 $867,348.32 Net from investments $1,654.16

7/30/2018 $840,326.10 Net from operations $8,558.71

[Not yet available]

July 2017 July 2018 YTD 2017 - 2018 YTD 2018 - 2019

Applications 3 0 3 0

Closings 0 1 0 1

Net Cash

OREGON FACILITIES AUTHORITY Income and Expense Report

July 2018

Item Detail

AnnualBudget Month

BudgetMonthActual Difference

Year to DateBudget

Year to DateActual Difference

Bank Balance

Prepared by: Gwendolyn Griffith OFA Executive Director 9/18/18 Information provided by DAS

Summary of Bond ActivityPrepared by Gwendolyn Griffith, OFA Executive Director

End of 2017 -2018 Fiscal Year Cash Balance per DAS:

Income

Interest Income $13,500.00 $1,125.00 $1,654.07 $529.07 $2,250.00 $3,308.23 $1,058.23Application Fees $3,500.00 $291.67 $0.00 -$291.67 $583.33 $0.00 -$583.33Closing: Reg. Bond $65,000.00 $5,416.67 $0.00 -$5,416.67 $10,833.33 $28,150.00 $17,316.67

Closing: SNAP Bond Warner Pacific University $50,000.00 $4,166.67 $17,350.08 $13,183.41 $8,333.33 $17,350.08 $9,016.75Other

Total Income $132,000.00 $11,000.00 $19,004.15 $8,004.15 $22,000.00 $48,808.31 $26,808.31

Expenses

Executive Director $165,000.00 $13,750.00 $0.00 -$13,750.00 $27,500.00 $14,962.00 -$12,538.00Financial Advisor $30,000.00 $2,500.00 $3,200.00 $700.00 $5,000.00 $4,400.00 -$600.00Bond Counsel Projects $25,000.00 $2,083.33 $0.00 -$2,083.33 $4,166.67 $0.00 -$4,166.67Department Justice $20,000.00 $1,666.67 $0.00 -$1,666.67 $3,333.33 $0.00 -$3,333.33Board Travel and Expenses $2,000.00 $166.67 $0.00 -$166.67 $333.33 $0.00 -$333.33Extranet $200.00 $16.67 $0.00 -$16.67 $33.33 $0.00 -$33.33Website $750.00 $62.50 $0.00 -$62.50 $125.00 $0.00 -$125.00Oregon State Treasurer $45,000.00 $3,750.00 $0.00 -$3,750.00 $7,500.00 $0.00 -$7,500.00Dept. of Admin. Services $4,100.00 $341.67 $0.00 -$341.67 $683.33 $9.19 -$674.14Association Dues and Pub $3,000.00 $250.00 $0.00 -$250.00 $500.00 $3,000.00 $2,500.00Postage $500.00 $41.67 $6.18 -$35.49 $83.33 $60.32 -$23.01Printing/Copying $1,350.00 $112.50 $0.00 -$112.50 $225.00 $17.00 -$208.00Phone $300.00 $25.00 $0.00 -$25.00 $50.00 $61.97 $11.97Banking $200.00 $16.67 $19.00 $2.33 $33.33 $38.00 $4.67Outreach/Legislative $10,000.00 $833.33 $0.00 -$833.33 $1,666.67 $0.00 -$1,666.67Post Issuance Compliance $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

OtherDesk sign and Meal for mtg. $1,200.00 $100.00 $0.00 -$100.00 $200.00 $267.99 $67.99

Financial Services Support Proj. $15,000.00 $1,250.00 $0.00 -$1,250.00 $2,500.00 $0.00 -$2,500.00Low Income Senior Housing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Total Expenses $323,600.00 $26,966.67 $3,225.18 -$23,741.49 $53,933.33 $22,816.47 -$31,116.86

Net Cash -$191,600.00 -$15,966.67 $15,778.97 $31,745.64 -$31,933.33 $25,991.84 $57,925.17


8/31/2018 $850,348.16 Net from operations $14,124.90

[Not yet available]

August 2017 August 2018 YTD 2017 - 2018 YTD 2018 - 2019


Closings 0 1 0 2

Net Cash

Bank Balance





August 2018

Item Detail

AnnualBudget Month


Year to DateBudget


Income

Interest Income $13,500.00 $1,125.00 $1,633.51 $508.51 $3,375.00 $4,941.74 $1,566.74

Application FeesLaClinica, Kids' First, PeaceHealth $3,500.00 $291.67 $1,500.00 $1,208.33 $875.00 $1,500.00 $625.00

Closing: Reg. Bond $65,000.00 $5,416.67 $0.00 -$5,416.67 $16,250.00 $28,150.00 $11,900.00

Closing: SNAP Bond

Greenhill Humane Society & Northwest Housing Alternatives $50,000.00 $4,166.67 $19,057.50 $14,890.83 $12,500.00 $36,407.58 $23,907.58

Other

Total Income $132,000.00 $11,000.00 $22,191.01 $11,191.01 $33,000.00 $70,999.32 $37,999.32

Expenses

Executive Director $165,000.00 $13,750.00 $15,602.00 $1,852.00 $41,250.00 $30,564.00 -$10,686.00Financial Advisor $30,000.00 $2,500.00 $2,000.00 -$500.00 $7,500.00 $6,400.00 -$1,100.00Bond Counsel Projects $25,000.00 $2,083.33 $0.00 -$2,083.33 $6,250.00 $0.00 -$6,250.00Department Justice May, June, July & August $20,000.00 $1,666.67 $4,586.40 $2,919.73 $5,000.00 $4,586.40 -$413.60Board Travel and Expenses $2,000.00 $166.67 $0.00 -$166.67 $500.00 $0.00 -$500.00Extranet $200.00 $16.67 $0.00 -$16.67 $50.00 $0.00 -$50.00Website $750.00 $62.50 $0.00 -$62.50 $187.50 $0.00 -$187.50Oregon State Treasurer $45,000.00 $3,750.00 $0.00 -$3,750.00 $11,250.00 $0.00 -$11,250.00Dept. of Admin. Services $4,100.00 $341.67 $4,060.00 $3,718.33 $1,025.00 $4,069.19 $3,044.19Association Dues and Pub $3,000.00 $250.00 $0.00 -$250.00 $750.00 $3,000.00 $2,250.00Postage $500.00 $41.67 $82.71 $41.04 $125.00 $143.03 $18.03Printing/Copying $1,350.00 $112.50 $15.40 -$97.10 $337.50 $32.40 -$305.10Phone $300.00 $25.00 $3.66 -$21.34 $75.00 $65.63 -$9.37Banking $200.00 $16.67 $5.43 -$11.24 $50.00 $43.43 -$6.57Outreach/Legislative $10,000.00 $833.33 $0.00 -$833.33 $2,500.00 $0.00 -$2,500.00Post Issuance Compliance $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Other SOS $1,200.00 $100.00 $57.74 -$42.26 $300.00 $325.73 $25.73Financial Services Support Proj. $15,000.00 $1,250.00 $0.00 -$1,250.00 $3,750.00 $0.00 -$3,750.00Low Income Senior Housing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Total Expenses $323,600.00 $26,966.67 $26,413.34 -$553.33 $80,900.00 $49,229.81 -$31,670.19

Net Cash -$191,600.00 -$15,966.67 -$4,222.33 $11,744.34 -$47,900.00 $21,769.51 $69,669.51


9/30/2018 $881,180.49 Net from operations ($5,855.84)

[Not yet available]

September 2017 September 2018 YTD 2017 - 2018 YTD 2018 - 2019


Closings 1 2 1 4

Net Cash


September 2018

Item Detail

AnnualBudget Month


Year to DateBudget


Bank Balance




October 2018

POSTPONED

BQ

TAX

AMTFull Faith & CreditObligations(S)

2018 Police Department BuildingCity Of Lincoln City10/24 Competitive

$12,000,000

ZERO

1. To Be Determined2. Hawkins, Delafield & Wood3. D.A. Davidson & Co.

PROPOSED

BQ

TAX

AMTConduit RevenueBonds

2018A-1 Farmington Square MedfordOregon FacilitiesAuthorityQSH Medford, LLC

10/25 Negotiated

$17,840,000

ZERO

1. Piper Jaffray, Inc.2. Orrick, Herrington & Sutcliffe3. Public Financial Management

BQ

TAX


2018A-2 Farmington Square MedfordOregon FacilitiesAuthorityQSH Medford, LLC

10/25 Negotiated

$2,520,000

ZERO

1. Piper Jaffray, Inc.2. Orrick, Herrington & Sutcliffe3. Public Financial Management

BQ

TAX

AMTGeneral Obligation(S) Bonds

102 Refunding of Series 90AOregon Department ofVeterans' Affairs

10/31 Negotiated

$4,435,000

ZERO

1. JP Morgan Securities2. Hawkins, Delafield & Wood3. Caine Mitter & Assoc.

BQ

TAX

AMTGeneral Obligation(S) Bonds

103 New MoneyOregon Department ofVeterans' Affairs

10/31 Negotiated

$40,000,000

ZERO

1. JP Morgan Securities2. Hawkins, Delafield & Wood3. Caine Mitter & Assoc.

SOLD

BQ

TAX

AMTFull Faith & CreditObligations(N)

2018B Public Safety Facilities FinancingAgreement

City Of Prineville10/03 PrivatelyPlaced

$4,000,000

ZERO

06/01/2033

TIC 3.15%

8.08 1. Zions First National Bank2. Hawkins, Delafield & Wood3. D.A. Davidson & Co.

Issuer

Oregon Bond Calendar

Sale Date Sale Type Bond TypeSeries/Par Amount

Maturity/1st Opt. Call

Alternative Minimum TaxBank Qualified

Federally TaxableZero Coupon

1. Underwriter/Purchaser2. Bond Counsel3. Financial Advisor

For Sale Dates from 10/1/2018 to 2/28/2019

Oregon State TreasuryDebt Management Division350 Winter Street NE, Suite 100Salem, OR 97301(503) [email protected]

AverageBond Life/Int. RateProject

1 Printed: 11/01/2018

October 2018

SOLD

BQ

TAX

AMTRevenue Bonds 2018 Refunding of Series 2003 BondBank Water Revenue Loan; Series2005 Business Oregon WaterRevenue Loans

City Of Woodburn10/03 PrivatelyPlaced

$8,630,000

ZERO

12/01/2024

Fixed 2.94%

3.07 1. JP Morgan Chase Bank2. Hawkins, Delafield & Wood3. None

BQ

TAX


2018 D-1 The Fields ApartmentsOregon Housing &Community ServicesDepartment

10/11 Negotiated

$27,943,000

ZERO

10/01/2036

Coupon 3.93%

17.00 1. KeyBanc2. Orrick, Herrington & Sutcliffe3. Caine Mitter & Assoc.

BQ

TAX


2018 E-1 Willow Creek Crossing ApartmentsOregon Housing &Community ServicesDepartment

10/11 Negotiated

$10,538,000

ZERO

10/01/2036

Coupon 3.93%

17.00 1. KeyBanc2. Orrick, Herrington & Sutcliffe3. Caine Mitter & Assoc.

BQ

TAX

AMTFull Faith & CreditObligations(S)

2018A Finance or refinance costs of localimprovement projects, sidewalkrepair projects and systemdevelopment charge projects

City Of Portland10/23 Competitive

$10,800,000

ZERO

06/01/2039

TIC 3.444%

12.67 1. D.A. Davidson & Co.2. Hawkins, Delafield & Wood3. None

November 2018

PROPOSED

BQ

TAX


2018 The Bonds are being issued tofinance all or a portion of theDistrict’s unfunded actuarial liability(the “UAL”) with the Oregon PublicEmployees Retirement System(“PERS”)

Portland CommunityCollege

11/06 Negotiated

$171,800,000

ZERO

1. Piper Jaffray, Inc.2. Hawkins, Delafield & Wood3. None

BQ

TAX


2018 F-1 Ya Po Ah TerraceOregon Housing &Community ServicesDepartment

11/12 Negotiated

$16,000,000

ZERO

1. RBC Capital Markets2. Orrick, Herrington & Sutcliffe3. Caine Mitter & Assoc.

Issuer










2 Printed: 11/01/2018

November 2018

PROPOSED

BQ

TAX


2018 Financing Construction of FireStations

Deschutes Cty RFPD 2(Bend)

11/14 Negotiated

$7,890,000

ZERO

1. D.A. Davidson & Co.2. Hawkins, Delafield & Wood3. SDAO Advisory Services LLC

BQ

TAX


2018 PERS side account depositClatsop Cty SD 4(Knappa)

11/28 Negotiated

$8,000,000

ZERO


BQ

TAX


2018 PERS side account depositColumbia Cty SD 1J(Scappoose)

11/28 Negotiated

$30,000,000

ZERO


BQ

TAX


2018 PERS side account depositLane Cty SD 69(Junction City)

11/28 Negotiated

$13,000,000

ZERO


BQ

TAX


2018 PERS side account depositMultnomah Cty SD 3(Parkrose)

11/28 Negotiated

$50,000,000

ZERO


BQ

TAX


2018 PERS side account depositMultnomah Cty SD 40(David Douglas)

11/28 Negotiated

$100,000,000

ZERO


BQ

TAX

AMTRevenue Bonds 2018 D New Money Fixed Rate BondsOregon Housing &Community ServicesDepartment

11/28 Negotiated

$75,055,000

ZERO

1. Bank of America Merrill Lynch2. Hawkins, Delafield & Wood3. Caine Mitter & Assoc.

Issuer










3 Printed: 11/01/2018

December 2018

PROPOSED

BQ

TAX

AMTGeneral Obligation(N) Bonds

2018 The Bonds are being issued tofinance capital costs for the County

Tillamook County12/06 Negotiated

$7,800,000

ZERO


BQ

TAX

AMTRevenue Bonds 2018 E New Money Variable Rate BondsOregon Housing &Community ServicesDepartment

12/18 Negotiated

$37,500,000

ZERO

1. Bank of America Merrill Lynch2. Hawkins, Delafield & Wood3. Caine Mitter & Assoc.

The State of Oregon Office of the Treasurer maintains debt information to assist in debt related matters. The data is based on information obtained from sources believed to be reliable; however, its accuracy cannot be guaranteed. The Officeof the State Treasurer does not independently verify the information received. The State of Oregon is not responsible for the accuracy, completeness or timeliness of the information obtained and the data presented and disclaims any liabilityfor or obligation to bond owners or others concerning the accuracy, completeness or timeliness of the data and information presented.

If you have questions about the Oregon Bond Calendar, please contact the Debt Management Division at 503-378-4930 or [email protected]. If you would like this material provided in an alternative format, please contact the Treasurer'sOffice Americans with Disabilities Act Coordinator at 503-378-4552.

Negotiated sales may occur any day of the week when the sale date is indicated as a Monday.Issues are Listed as 'Proposed' until sale results are reported.AID = Any Interest DateNeg = Negotiated SaleCom = Competitive SalePri = Private Placement SaleAMT = Subject to Alternative Minimum TaxBQ = Bank QualifiedTAX = Federally TaxableZERO = Zero Coupon or Deferred Interest Bonds

Full Faith & Credit Obligation(N) = Non Self-Supporting - bonds repaid by non-project revenues - not property-tax backedFull Faith & Credit Obligation(S) = Self-Supporting - bonds repaid by project revenues - not property-tax backedGeneral Obligation(N) = Non Self-Supporting - bonds repaid & secured by ad valorem property taxes levied outside the limits of Article XI 11bGeneral Obligation(S) = Self-Supporting - bonds 100% repaid by project revenues, and secured by ad valorem property-taxes.

The purpose categories are defined as follows:

1. Development: industrial development, economic development, non-government office buildings, urban renewal.2. Education: primary and secondary education, higher education, student loans.3. Electric power: public power utilities.4. Environmental Facilities: solid waste disposal, resource recovery, pollution control, recycling.5. Health Care: hospitals, nursing homes, life-care communities.6. Housing: single-family and multi-family housing.7. Public Facilities: government buildings, fire and police stations, jails and prisons, civic and convention centers, museums, libraries, stadiums and sports complexes, theaters, parks, zoos, beaches, other recreation.8. Transportation: airports, seaports and marine terminals, toll roads, highways and streets, bridges, tunnels, parking facilities, mass transit.9. Utilities: water and sewer, gas, flood control, sanitation, combined utilities, miscellaneous utilities.10. General Purpose: general purpose, veterans (other than housing), agriculture, unknown.

Bond Index Election Schedule

Issuer










4 Printed: 11/01/2018

http://www.oregon.gov/treasury/Divisions/DebtManagement/Documents/MDAC/Bond%20Index.pdf

http://www.oregon.gov/treasury/Divisions/DebtManagement/Documents/MDAC/Elections%20For%20Web%20Posting.pdf

Issuer










5. Health Care: hospitals, nursing homes, life-care communities.6. Housing: single-family and multi-family housing.7. Public Facilities: government buildings, fire and police stations, jails and prisons, civic and convention centers, museums, libraries, stadiums and sports complexes, theaters, parks, zoos, beaches, other recreation.8. Transportation: airports, seaports and marine terminals, toll roads, highways and streets, bridges, tunnels, parking facilities, mass transit.9. Utilities: water and sewer, gas, flood control, sanitation, combined utilities, miscellaneous utilities.10. General Purpose: general purpose, veterans (other than housing), agriculture, unknown.

5 Printed: 11/01/2018

As I write this, the House has completed passage of tax legislation which essentially would make permanent the individual tax cuts

from last year and enact additional benefits and incentives to families and others. It is a very expensive package and almost entirely unpaid for except for making permanent the restriction on state and local tax deductions, SALT. No matter which way the election goes it seems doubtful that anything like this tax package will be enacted by the Senate. The really good news for us is there is no hint of further negative bond- related provisions, and we would not expect them to be added next year even if the legislation precedes in some manner. Of course, we will remain vigilant. In our meetings on the Hill, especially among House Republicans, we found that one benefit of our intense, ex-hausting campaign last year against losing private activity bonds is that a whole bunch of folks understand what nonprofit tax exempt financing is and really don’t want to mess with it. That doesn’t mean that even if the House and possibly the Senate go Democratic next year that we will not ever face new restrictions but the political reality that works in our benefit is that issues like private activity bonds, the repeal of advance refunding and SALT have be-come partisan political issues to some extent and that offers us some protection. Indeed, if the House switches parties we would expect a campaign to bring back advance refunding and SALT. This will not be an easy task because of the significant revenues attached to each but there will be major efforts. Many state governments will prioritize SALT over advance refunding. Advance refunding loss has not yet seemed to pinch much nationwide and a variety of other techniques, taxable and tax-exempt, are being used. Perhaps over time the case

continued on page 3

WASHINGTON REPORTby Charles A. Samuels, Mintz LevinGeneral Counsel, NAHEFFA

FutureNAHEFFA

Conferences

Spring 2019Austin, TX

Omni Austin Hotel Downtown

Fall 2019 Portland, ME

In This Issue...

Washington Report | 1

NAHEFFA President’s Message | 2

Greetings from the Sponsor Committee | 4

1 | National Association of Health and Educational Facilities Finance Authorities www.naheffa.com

I would like to start by giving a big “shout out” to Nichole Doxey, Cor-

rine Johnson and Mark Heller for a terrific Fall Conference in Denver.

The combination of a vibrant city, great venues and excellent speakers made for a memora-ble week. For those of you who were there for my opening comments, you know that I love visiting Colorado, but this was the first time I had spent time in the city of Denver. I hope you took advan-tage of the great weather (record highs) and crisp air to extend your stay and enjoy the sights. Be-cause of Hurricane Florence plowing through the Carolinas, I was able to head back to Rocky Moun-tain National Park for a few more days. Luckily, returning home was uneventful and my part of the state was spared the torrential rains that has caused record flooding in North and South Carolina.

Paula Drummond (Florida) and Bob Bacon (Penn-sylvania) will be retiring later this year and were recognized in Denver for the contributions they have made to NAHEFFA over the past few decades. They will be missed, but I am sure that slowing down is not part of their retirement plans. Our congratulations to both of you and have fun in this next stage of your life.

NAHEFFA is a small organization, but we fight well

NAHEFFA President’s Messageby Harry Huntley, Executive Director

South Carolina Jobs-Economic Development Authority

Harry Huntley

Please visit the NAHEFFA websitefor presentations from the

2018 Fall CONFERENCE

above our weight class because of participation by our members. When I coached high school golf, I preached to my players to never expect to get more out of something than you put into it. The same thing holds true for NAHEFFA. Get involved, join a committee, and come to the conferences. The roundtable sessions at the conferences have become a great sharing and learning opportunity. There is a part for everyone and your help is always needed if we are going to continue serving our borrowers effectively for years to come.

Later this month I will be hosting the 7th Annual JEDA Bond Summit in Charleston. This is a great networking event for all of the professionals who work on my bond transactions. Unfortunately, it seems that emails and conference calls have taken the place of closing dinners and we have less per-sonal contact with everyone we work with. I am aware of other authorities who have similar events for borrowers, too. This is a great way to keep things more personal and build strong relationships.

I am excited about our Spring Conference in Aus-tin, Texas. This will be a good opportunity to re-cruit some new members in the fastest growing state in the country. My daughter recently moved to Austin and promised that we would have a great time.


https://www.naheffa.com/conference.materials.html

Chuck Samuels

will be built about the impact on public and nonprofit services of the unavailability of that mechanism. As you may find in your financings that the inability to do advanced refundings is significantly adversely affecting your borrowers, please let us know.

We will endeavor to put improvements on the table, including permanent liberalization of bank deductibility, perhaps as part of an infrastructure effort. But, frankly, a divided Con-

gress next year will be so diverted into investigations and other Kabuki dances relating to the presiden-tial election that it’s hard to think that bipartisan legislation of that nature will pass. We will keep up the advocacy and you each need in every state to make sure your congressional delega-tion understands the good work that’s being done. In the more meat and potatoes area of securities and banking regulation, we remain active. We have had good dialogue with MSRB about our use of financial advisors and will be briefing its staff on relationships with underwriters. If authorities are finding that MSRB guidance on financial advisors is unreasonably cramping relationships and processes beneficial to your borrowers, please let us know. Dodd- Frank revision legislation passed that reversed HQLA (high quality liquid assets) irrational restrictions on big banks investments in highly rated municipal bonds which should benefit some of our borrowers. Trying to enact the same reform on money market funds is proving to be more difficult because of divisions within the mutual fund industry, but we continue to be supportive of maintaining the largest possible universe of buyers. On August 20, the Securities and Exchange Commission added two events to the existing fourteen events under Rule 15c2-12, which requires certain notice filings with the Municipal Securities Rulemak-ing Board’s EMMA system within ten business days of occurrence. The new events require issuers and obligated persons in municipal securities offerings to contract to file notice of:

• Incurrence of a financial obligation of the issuer or obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the issuer or obligated person, any of which affect security holders, if material (“Event 15”); and

• Default, event of acceleration, termination event, modification of terms, or other similar events un-der the terms of the financial obligation of the issuer or obligated person, any of which reflect financial difficulties (“Event 16”).

Although it doesn’t affect our authorities directly it certainly affects our borrowers. We will need to mon-itor the implementation of this mandate. I’m not going to comment on anything else going on in Washington because you can see it on your screens as well as I can. The election is close at hand. I think that more or less the status quo will be maintained, but the conventional wisdom holds that the House will flip and even possibly the Senate.

We’ll see.

WASHINGTON REPORT, continued from coverby Charles A. Samuels, Mintz LevinGeneral Counsel, NAHEFFA


Officers:

Directors:

Nichole Doxey Charles SamuelsOperations Director, NAHEFFA Member, Mintz LevinP.O. Box 906 701 Pennsylvania Ave NW, #900Oakhurst, NJ 07755 Washington, DC 20004 (888) 414-5713 p&f (202) 434-7311 p | (202) 434-7400 [email protected] [email protected]

PresidentHarry HuntleySouth Carolina

Vice PresidentDennis ReillyWisconsin

SecretaryRebecca FloydKansas

TreasurerDon TempletonSouth Dakota

Past PresidentDonna MurrWashington

Barry FickMinnesota

Ronald WashingtonCalifornia

Carol JohnsonWashington

Corinne JohnsonColorado

NAHEFFA Board of Directors

NAHEFFA Contacts

The NAHEFFA Fall Conference in Denver, CO was held last month and was a great success. We would like to thank our 2018 Conference Sponsors for your continued support. NAHEFFA would like to re-mind you of our 2019 Conference schedule so that you can start planning ahead. More information will be provided soon.

• 2019 Spring Conference - Austin, TX • 2019 Fall Conference - Portland, ME

NAHEFFA encourages our sponsors to attend and participate in these conferences. Sponsor attendance at our events helps to build stronger relationships, reach key decision-makers in the industry and in-creases your organization’s exposure. NAHEFFA conferences are attended widely by NAHEFFA Mem-bers including authority board members and staff. These conferences also provide an opportunity to increase your awareness of issues and concerns in the industry.

NAHEFFA would also like to thank our sponsor chair, Shannon Govia. Shannon has chaired this com-mittee for some time now with such skill and grace and has fostered such great relationships with our sponsors. Shannon will be moving on from the sponsor committee next year and he will be missed.

Best regards,2018 Sponsorship Committee Members

Greetings from the naheffa sponsorship committee


mailto:ndoxey%40naheffa.com?subject=

mailto:CASamuels%40mintz.com?subject=

of 9Dip in September CUSIP requests signals municipal issuance slowdown | Bond Buyer

10/11/2018https://www.bondbuyer.com/news/dip-in-september-cusip-requests-signals-municipal-iss...

The end of summer seems to have jolted fixed-income investors awake to the fact that the Federal Reserve (Fed) is firmly on a path to raise short-term rates. The result: rates across the interest rate curve have risen, stocks have fallen and market volatility has turned sharply upward. Oh, for the days of summer.

Economic Highlights• U.S. equities had a great quarter, registering the best returns in

nearly five years, as the S&P 500 (S&P) rose more than 7% and hit new all-time highs in September, before plummeting after quarter-end. Stocks benefitted from tailwinds of robust economic fundamentals, strong corporate earnings and business optimism. But the outlook clouded in October, threatening valuations and raising uncertainty.

• The Federal Open Market Committee (FOMC) increased the overnight lending rate by 0.25% to a new target range of 2% to 2.25% at its September meeting, marking the third hike this year. Perhaps more significantly, the Fed ended the use of the word “accommodative.” This suggests additional hikes in coming months, but also adds uncertainty to rate forecasts.

• The U.S. economy added 134,000 new jobs in September, but this seemingly weak number was offset by sharp upward revisions in prior month estimates. Overall, the pace has averaged a healthy 200,000 jobs per month, enough to push the unemployment rate to 3.7%—a 48-year low.

• On the inflation front, many gauges of price increases are now at or near the Fed’s 2% target. Wage growth has ticked up, oil prices have spiked on supply constraints and tariffs threaten to push up the cost of imported goods—all factors that could portend higher inflation in the future.

• The final update to second-quarter gross domestic product (GDP) indicated the U.S. economy grew at an annual rate of 4.2%—the fastest pace since the third quarter of 2013. At the same time, growth in Europe and some key emerging market economies, such as China, are slowing, posing a risk to the “synchronized global growth” story of the past few years.

• The U.S., Canada and Mexico reached agreement on updates to NAFTA. While the deal revises some country-of-origin, intellectual property and environmental rules, the biggest result is the resolution of one significant source of market uncertainty. Meanwhile, however, trade with China showed signs of worsening.

Bond Markets• The U.S. Treasury yield curve is showing signs of steepening, while

short-term rates rose in lockstep with the Fed.

• As a result of higher yields, the majority of investment-grade (IG), fixed-income benchmarks generated negative returns for the month, with shorter-term maturities significantly outperforming their longer-term counterparts. For example, the three-year, five-year and 30-year constant maturity indices returned -0.30%, -0.70% and -3.34%, respectively.

• Among the few positively performing fixed-income sectors for the month were corporates and asset-backed securities (ABS) with maturities of less than three years. These sectors captured incremental income, while credit spreads were stable. Over the last several quarters, income has been a critical component of fixed-income total returns.

Municipal Bond Market• Municipal new issuance decreased in September by 18.1% to

$24.3 billion from $29.7 billion the same month last year. Year-to-date (YTD) municipal new issuance is down 14.8% to $249.8 billion in 2018 from $293.2 billion during the same period last year, according to Municipal Market Monitor (TM3) data.

• September brought mixed weekly bond flows throughout the month, ultimately ending with net outflows totaling a nominal $235 million, following August's net inflows of $2.33 billion, according to Investment Company Institute (ICI) data.

• The Municipal Market Data (MMD) Index experienced rising rates across the curve in September, with the largest increase on the front end. The one-year rate jumped 29 basis points (bps) to 1.89%, while the three-year rate increased 22 bps to 2.03%. The five-year rate rose 18 bps to 2.20%, while the 10-year rate climbed 16 bps to 2.44%. On the long end, the 30-year rate moved up 19 bps to 3.21%, according to TM3 data.

• The 10-year MMD Single-A General Obligation (GO) Index credit spreads and Double-A GO Index credit spreads remained unchanged at 47 and 17 bps, respectively, according to TM3 data.

• In September, Municipal/Treasury ratios increased on the front end of the yield curve. The two-year ratio climbed to 70% from 64.7% in August, and the five-year ratio increased to 74.8% from 73.7%. The intermediate-term ratio fell to 78.3% from 78.9%, while the 10-year ratio decreased to 84.6% from 85.6%. The 30-year ratio also dropped to 99.9% from 100.7%, according to TM3 data.

• The Municipal curve flattened in September, with the AAA MMD two- through 10-year slope ending at 61 bps, slightly narrower than August's 74 bps. The slope between the AAA MMD two- through 30-year narrowed to 122 bps from August’s 132 bps.

Municipal Bond | October 2018

Monthly Market Review

Current 1 Week Ago 1 Month Ago 1 Year Ago 1 Week Ago 1 Month Ago 1 Year Ago

9/28/2018 9/21/2018 8/31/2018 8/31/2017 9/21/2018 8/31/2018 8/31/2017

2-Year 1.97 1.93 1.65 1.00 2-Year 4 32 97 2-Year 1.97% 2.82% 2.02

3-Year 2.03 2.00 1.78 1.08 3-Year 3 25 95 3-Year 2.03% 2.88% 2.12

5-Year 2.20 2.17 2.00 1.35 5-Year 3 20 85 5-Year 2.20% 2.95% 2.22

7-Year 2.36 2.36 2.21 1.62 7-Year 0 15 74 7-Year 2.36% 3.02% 2.30

10-Year 2.58 2.59 2.43 2.00 10-Year -1 15 58 10-Year 2.58% 3.06% 2.40

30-Year 3.19 3.23 3.01 2.84 30-Year -4 18 35 30-Year 3.19% 3.21% 2.68

MMD AAA GO Curve MMD Rates Over Time

2018 Cumulative Issuance

Weekly Mutual Fund Inflows (Outflows) 30-Day Visible Municipal Supply

Date Time Statistic Date Time Statistic Date Time Statistic10/05/2018 08:30 AM 10/17/2018 08:30 AM 10/24/2018 2:00 PM10/09/2018 06:00 AM NFIB Small Business Optimism 10/17/2018 08:30 AM Housing Starts MoM 10/25/2018 08:30 AM10/10/2018 07:00 AM MBA Mortgage Applications 10/17/2018 08:30 AM Building Permits 10/25/2018 08:30 AM10/10/2018 08:30 AM PPI Final Demand MoM 10/17/2018 08:30 AM Building Permits MoM 10/26/2018 10:00 AM10/10/2018 10:00 AM Wholesale Trade Sales MoM 10/17/2018 2:00 PM FOMC Meeting Minutes 10/26/2018 10:00 AM10/11/2018 08:30 AM CPI MoM 10/18/2018 09:45 AM Bloomberg Economic Expectations 10/29/2018 08:30 AM10/11/2018 08:30 AM CPI Ex Food and Energy MoM 10/18/2018 09:45 AM Bloomberg Consumer Comfort 10/29/2018 08:30 AM10/12/2018 10:00 AM U. of Mich. 1 Yr Inflation 10/18/2018 10:00 AM Leading Index 10/30/2018 09:00 AM10/12/2018 10:00 AM U. of Mich. 5-10 Yr Inflation 10/19/2018 10:00 AM Existing Home Sales 10/30/2018 09:00 AM10/15/2018 08:30 AM Retail Sales Advance MoM 10/19/2018 10:00 AM Existing Home Sales MoM 10/30/2018 10:00 AM10/15/2018 08:30 AM Empire Manufacturing 10/22/2018 08:30 AM Chicago Fed Nat Activity Index 10/30/2018 10:00 AM10/15/2018 08:30 AM Retail Sales Ex Auto MoM 10/23/2018 10:00 AM Richmond Fed Manufact. Index 10/30/2018 10:00 AM10/16/2018 4:00 PM Total Net TIC Flows 10/24/2018 09:45 AM Markit US Composite PMI 10/31/2018 07:00 AM10/16/2018 4:00 PM Net Long-term TIC Flows 10/24/2018 10:00 AM New Home Sales 10/31/2018 08:15 AM10/17/2018 07:00 AM MBA Mortgage Applications 10/24/2018 10:00 AM New Home Sales MoM 10/31/2018 08:30 AM

Sources: Bloomberg, Thomson Reuters and ICI. Unless otherwise noted, all data is presented as of September 28, 2018.

© PFM Financial Advisors LLC

Economic Calendar

Labor Force Participation Rate Housing Starts

Personal Income

U.S. Fed Releases Beige BookAdvance Goods Trade Balance

Spot Rates Change in Spot Rate (basis points) Market Rates

Term MMD AAA GO U.S. Treasury Muni Swap Rate

The views expressed constitute the perspective of PFM’s financial advisory business at the time of distribution and are subject to change. The content is based on sources generally believed to be reliable and available to the public; however, PFM cannot guarantee its accuracy, completeness or suitability. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. PFM is the marketing name for a group of affiliated companies providing a range of services. All services are provided through separate agreements with each company. Financial advisory services are provided by PFM Financial Advisors LLC and Public Financial Management, Inc. Both are registered municipal advisors with the Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) under the Dodd-Frank Act of 2010. For more information regarding PFM’s services or entities, please visit www.pfm.com.

Conf. Board Present SituationConf. Board ExpectationsMBA Mortgage ApplicationsADP Employment ChangeEmployment Cost Index

Personal SpendingS&P CoreLogic CS US HPI NSA IndexS&P CoreLogic CS US HPI YoY NSAConf. Board Consumer Confidence

Wholesale Inventories MoMU. of Mich. 1 Yr InflationU. of Mich. 5-10 Yr Inflation

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Yie

ld

Maturity

1 Year Ago 1 Month Ago1 Week Ago Current

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Bill

ions

Date

Taxable 2018 AMT 2018

Tax-Exempt 2018 Total 2017

($1.25)

$0.00

$1.25

$2.50

Bill

ions

Date

0

5

10

15

20

25

30-Day Visible Supply

Bill

ions

45

50

55

60

65

70

1.2%

1.4%

1.6%

1.8%

2.0%

2.2%

2.4%

2.6%

Sp

rea

d to

MM

D (b

ps)

Yie

ld

Date

Rate and Spread Movement MMD 10 Year A GO 10-Year Spread

Date

0%

1%

2%

3%

4%

5%

6%

1 2 3 4 5 7 10 15 20 25 30

Yie

ld

Maturity Year

MMD Range (over past 10 years) Current MMD

Average MMD (over past 10 years)

RECENTLY PRICED CHARTER SCHOOL TRANSACTION

Priced (Week of) State Par Amount Charter School Final

MaturityRating M/S&P/F

Yield at Final Maturity*

10/29/18 NC $7,965,000** Invest Collegiate Imagine Inc. 2048 NR/NR/NR 5.680%**

10/29/18 IL $33,885,000 Perspectives Charter School 2048 NR/NR/NR 5.990%

10/22/18 NC $22,835,000 Southwest Charlotte STEM Academy LLC 2053 NR/NR/NR 7.265%

10/22/18 FL $17,875,000 Ivy Hawn Charter School of the Arts 2053 NR/NR/NR 5.750%

10/22/18 NY $10,520,000 American Dream Charter School 2052 NR/NR/NR 6.231%

10/15/18 NV $18,960,000 Coral Academy of Science 2055 NR/BBB-/NR 4.790%

10/15/18 CA $6,705,000 Core Butte Charter School 2048 NR/NR/NR 5.625%

10/15/18 TX $102,100,000 KIPP Texas Inc. 2048 NR/AAA(BBB+)/NR 4.110%Sources: Bloomberg and EMMA Recent transaction list may include financings completed by other banks or underwriters

*Yields represent most conservative outcome for investors ** Not to exceed par amount of $25.525 million and has an

adjustable rate which will reset on July 1, 2028

CHARTER SCHOOL FINANCE GROUP

FINANCIAL MARKET DASHBOARD

-

-

-

-

-

-

TAX-EXEMPT MARKET RATESUS Revenue Municipal Bloomberg Valuation “AA” "A" "BBB" Non-Rated*

Low High

1 Year 2.102% 2.237% 2.659% 3.150% 3.650%3 Year 2.301% 2.446% 2.893% 3.700% 4.200%5 Year 2.481% 2.648% 3.144% 3.800% 4.300%7 Year 2.706% 2.904% 3.420% 4.250% 4.700%10 Year 3.017% 3.258% 3.753% 4.850% 5.350%30 Year 3.777% 3.994% 4.385% 5.850% 6.350%

*Non-rated scale provided by BB&T Securities Underwriting Desk Sources: Bloomberg and BB&T Securities Underwriting Desk

2.85%

2.95%

3.05%

3.15%

3.25%

3.35%

3.45%

3.55%

30-Yr “AAA” MMD 30-Yr USTApr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18

Historical 30-Year “AAA” MMD and 30-Year UST

Sources: Municipal Market Data and Bloomberg

KEY FINANCIAL MARKET RATES

Current* 1-Month Ago

1-Year Average

5-Year Average

10-Year Average

30-Year UST 3.454% 3.335% 3.042% 2.977% 3.339%10-Year UST 3.212% 3.181% 2.815% 2.342% 2.504%Prime 5.250% 5.250% 4.751% 3.746% 3.510%SIFMA 1.610% 1.560% 1.322% 0.502% 0.378%30-Day LIBOR 2.318% 2.279% 1.865% 0.728% 0.510%

*Current Rate as of November 2, 2018 Source: Bloomberg 35-Day Rolling AverageApr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18($1,750)

($1,250)($750)($250)

$250$750

$1,250$1,750

Municipal Bond Fund Inflows & Outflows ($ mils)

Source: Investor Company Institute

This material is not to be considered an offer or solicitation regarding the sale of any security.Information contained herein has been obtained from outside sources deemed to be reliable and accurate, but we do not guarantee its accuracy or completeness.

BB&T Capital Markets is a division of BB&T Securities, LLC, member FINRA/SIPC. BB&T Securities, LLC, is a wholly owned nonbank subsidiary of BB&T Corporation. Securities or insurance products and annuities sold, offered or recommended are not a deposit, not FDIC insured, not guaranteed by a bank, not guaranteed by any federal government agency and may go down in value.

© 2018, Branch Banking and Trust Company. All rights reserved.

For more information We invite you to contact any member of our Charter School Finance Team, visit us at BBTCapitalMarkets.com/Education, or send us an email at [email protected].

November 7, 2018

RECENT TRANSACTION: $22,835,000Public Finance Authority Education Revenue Bonds (Southwest Charlotte STEM Academy Project)

Series 2018A&B

http://www.BBTCapitalMarkets.com/Education

mailto:CharterSchools%40BBandTCM.com?subject=

GWENDOLYN GRIFFITH EXECUTIVE DIRECTOR JESSICA MORGAN ASSOCIATE EXECUTIVE DIRECTOR NIKKI PHAM EXECUTIVE ASSISTANT

OREGON FACILITIES AUTHORITY

1600 PIONEER TOWER 888 SW FIFTH AVENUE

PORTLAND, OREGON 97204 PHONE: (503) 802-5710

EMAIL: [email protected]

MEMORANDUM

To: Martha McLennan, Chair Eric Johansen, Vice-Chair Kevin McAuliffe, Authority Member Beth deHamel, Authority Member Sean Hubert, Authority Member Allyson Anderson, Authority Member Roy Kim, Authority Member

From: Gwendolyn Griffith

Date: November 6, 2018

Subject: Application by Cascadia Behavioral Healthcare, Inc. Cascadia Behavioral Healthcare, Inc. (the "Applicant") timely made an application to the Authority for SNAP Loan financing in an approximate amount of $9,900,000. The Applicant appears to be the type of organization that qualifies for financing through OFA, and the Project also appears to be of the type that qualifies under OFA's statute and administrative rules. These assumptions would be confirmed in the diligence process, if preliminary approval is granted. Note: The law firm of Tonkon Torp LLP, in which I am a partner, is performing legal work for the Applicant in unrelated legal matters. I am not involved in that work. Under the state ethics rules, this creates a conflict of interest for me, which I have disclosed to OST. I will not be advising the Board by providing any recommendation on this transaction due to this conflict. I have, under instructions from OST, processed this application in the usual course and this memorandum described the Applicant’s request. This is the Applicant's first OFA financing. The Sponsoring Bank is Key Bank. The Applicant provides mental health services, addiction recovery support, primary care, wellness programs, permanent housing solutions and affordable housing to people of all ages. The Project is the purchase of the Plaza Health Center facility, located at 2415 SW 43rd St., Portland, OR, which is currently leased by the Applicant and in which it carries on some of its health care activities.

Memorandum November 6, 2018 Page 2

The Bank's term sheet, included in the application, provides details on the proposed financing terms. The amortization period will be 25 years. The initial interest rate (computed with a tax factor of .79) will be fixed for ten years, and reset at the ten-year mark. The projected interest rate is 4.64%. On October 16, 2018 we held a scoping call with the financing team. No unusual issues were identified. The Applicant and Bank hope to close the financing prior to the end of January, 2018. The Financial Advisor's Report is included in the materials. Mr. Brown has conducted his usual conference with the Applicant. SNAP Loan Counsel's Report is included in the materials. Ms. McCoog recommends the transaction for preliminary approval. If you have any questions, please let me know. GG/np

034439/00240/9451918v1

PFM Financial Advisors LLC, 650 NE Holladay Street, Ste. 1600, Portland, Oregon 97232

November 5, 2018

SNAP Report Cascadia Behavioral Healthcare, Inc.

This report has been prepared for the Oregon Facilities Authority’s preliminary consideration of the application submitted by Cascadia Behavioral Healthcare, Inc. (“CBH”) for a SNAP loan of up to $9,900,000.

Preliminary Conversation and Application I spoke with Janice Jacobs, CFO of CBH. CBH is a “safety net” behavioral healthcare provider for Multnomah, Clackamas, and Lane counties. CBH offers a variety of programs, including behavioral health counseling, addiction care, mental health services, and primary health care services. It operates over 750 housing units, including secure residential, supportive, and low-income housing. It was created in 2005 with the merger of several smaller organizations and currently has over 900 employees. CBH is one of the largest charitable not-for-profit organizations in the state, and is funded almost entirely through Medicare/Medicaid, either directly or via contracts with local jurisdictions.

CBH intends to use SNAP loan proceeds to finance and/or pay off interim financing related to the acquisition of two buildings. The first (“Plaza”) is an existing outpatient facility in southeast Portland, currently leased by CBH. The second (“Respite”) is located in outer east Portland and will be used to provide respite beds, with the potential to convert the second level to a clinic at a later date. In addition to SNAP loan proceeds, CBH intends to apply the proceeds of a $550,000 grant towards improvements at Respite.

CBH recently went through an RFP process for all banking services, a process which included indicative loan terms. KeyBank was selected as CBH’s primary bank. The proposed loan will have a ten year initial term and a 25 year amortization. The loan will have a fixed interest rate for the initial ten year term. This rate will be based on the bank’s cost of funds – rather than a published, third-party index – plus a credit spread and multiplied by the bank’s tax factor (currently 79%). The term sheet includes a mandatory tender provision at year 10, though it also provides for extensions with mutual agreement between the lender and borrower.

Based on our conversation, the applicant understands the mandatory tender provision and the risks associated with it, as well as the other provisions of the term sheet. CBH also has a

SNAP Report – Cascadia Behavioral Healthcare, Inc. Page 2

Western Financial Group, PMB 172-V, 333 South State Street, Lake Oswego, Oregon 97034

variety of non-SNAP bank loans on other properties, as well as experience with HUD loans, new market tax credits, and other forms of financing. The SNAP application is consistent with our earlier conversation.

If you have any question regarding this review, I will be at the November meeting.

For PFM Financial Advisors LLC

A. Duncan Brown

034439/00240/9436513v1

M E M O R A N D U M

TO: Members of the Oregon Facilities Authority Gwendolyn Griffith, Executive Director

FROM: Carol J. McCoog Jennifer B. Córdova Gulgun U. Mersereau

DATE: November 2, 2018

RE: Preliminary Approval for Cascadia Behavioral Healthcare SNAP Loan Cascadia Behavioral Healthcare, Inc. (the “Borrower”), an Oregon nonprofit corporation and a 501(c)(3) organization, is seeking preliminary approval for the issuance of an Oregon Facilities Authority SNAP Loan in an approximate principal amount of $9,900,000. Background The Borrower will use the SNAP Loan proceeds to finance or refinance the acquisition of the Plaza Health Center facility and the acquisition and improvement of the Rockwood Respite, a property owned by a limited liability company, the sole member of which is the Borrower. The Borrower will obtain financing through Key Government Finance, Inc. (the “Lender”) with a 25-year loan, amortized over 25 years, with an initial rate that will be fixed at closing for 10 years. The loan is subject to mandatory tender every 10 years and if mandatory tender is waived, the interest rate will be reset based on a formula set in the documents. Initial Scoping Call and Review of Application We have conducted an initial scoping call with the Borrower and reviewed its application. Based on the information provided, as of the time we are submitting this memorandum, we have identified the following issues that may affect either the size of the SNAP Loan or our ability to proceed with the SNAP Loan. Other issues may arise as we conduct further due diligence during the issuance process. • We will conduct due diligence on the Borrower’s 501(c)(3) status in order to determine that its 501(c)(3) status is current and that, from our perspective, there is nothing that materially, adversely affects its status. If we are not ultimately satisfied that the Borrower’s status is current and that there is nothing that would materially, adversely affect this status, we will not proceed with the issuance of the SNAP Loan.


034439/00240/9436513v1

• We will conduct due diligence on the uses of the facilities and property being refinanced and financed to determine whether there will be private business use or unrelated trade or business use that may exceed the IRS limitations. Recommendation Based on participation in the scoping call and our review of the application, we recommend the Borrower for preliminary approval of a SNAP loan. Next Steps Assuming the Board grants preliminary approval for the Cascadia Behavioral Health SNAP Loan, we will conduct our standard 501(c)(3) tax due diligence, and we anticipate that the Bank will schedule a kick-off call to review outstanding issues and establish a schedule for the financing.

Initial Resolution – Cascadia Behavioral Healthcare Page 1

034439/00240/9436520v2

State of Oregon Oregon Facilities Authority

Resolution No. 2018-18 Adopted: November 13, 2018

A resolution of the Oregon Facilities Authority recommending that the State Treasurer issue a small nonprofit accelerated program (SNAP) loan for the purposes described herein, authorizing the execution and delivery of a preliminary agreement by and between the Authority and the Participating Institution proposing the project described below, and authorizing and determining other matters with respect thereto.

WHEREAS, the Oregon Facilities Authority, a body politic and corporation duly created and existing under the laws of the State of Oregon (the “Authority”) is authorized and empowered by the provisions of ORS Chapter 289, as amended (the “Act”), to recommend to the State Treasurer the issuance of revenue bonds, as defined in ORS 289.005(1)(b), for the purpose of financing or refinancing the acquisition, construction and equipping of “projects” as defined in the Act, and the lending of the proceeds of such revenue bonds to participating institutions in connection therewith; and

WHEREAS, Cascadia Behavioral Healthcare, Inc., an Oregon nonprofit corporation and 501(c)(3) organization (the “Participating Institution”), has filed with the Authority a substantially complete application proceeds to finance or refinance the acquisition of the Plaza Health Center facility and the acquisition and improvement of the Rockwood Respite (all of the foregoing being herein collectively called the “Project”); which application has been reviewed by the Executive Director of the Authority, the Authority’s bond counsel for the Authority’s small nonprofit accelerated program (“SNAP”) loan and the Authority’s financial advisor; and

WHEREAS, in said application the Participating Institution has requested that the Authority consider recommending that the State Treasurer issue a SNAP loan under the Act (the “Loan”) in an approximate principal amount of $9,900,000, and to lend the proceeds of the Loan to the Participating Institution for the purposes described above and paying the related costs associated therewith and with the issuance of the Loan;

NOW, THEREFORE, be it resolved by the members of the Authority as follows:

Section 1. Eligibility. The Authority, based upon the advice of Hawkins Delafield & Wood LLP, bond counsel for the Authority’s SNAP loans (“Bond Counsel”), hereby finds and determines that the Project qualifies as a “project” within the meaning of the Act. The Authority further finds and determines that the financing and refinancing of the Project will promote the public purposes sought to be advanced by the Act.


034439/00240/9436520v2

Section 2. Recommendation to Issue SNAP Loan. The Authority hereby recommends that the State Treasurer declare his intent to issue the Loan in the approximate principal amount of $9,900,000, and to lend the proceeds of the Loan to the Participating Institution for the purposes described above; provided, however, that

(i) prior to the issuance of the Loan, the Authority and the State Treasurer shall have been advised by Bond Counsel that all legal requirements for the issuance of the Loan have been fully met and complied with;

(ii) in the event that the Loan is issued for the purpose of financing and refinancing the Project, the Loan shall be payable solely and only from the specific properties and revenues pledged thereto and shall not constitute a debt of the State of Oregon or a lending of the credit of the State of Oregon within the meaning of any constitutional or statutory limitation or a charge upon any properties or revenues of the State of Oregon or the Authority not specifically pledged thereto, and no holder of the Loan shall have the right to enforce the payment of any amounts owing under or with respect to the Loan out of any properties or revenues of the State of Oregon or the Authority not specifically pledged thereto; and

(iii) the Authority shall retain at all times complete and absolute discretion as to whether or not to proceed with the issuance of the Loan for the purpose of financing or refinancing the Project, and may refuse to proceed therewith for any reason deemed sufficient by the Authority notwithstanding that all legal requirements for the issuance of the Loan may have been met and fully complied with.

Section 3. Preliminary Agreement. The form of Preliminary Agreement attached hereto as Exhibit A is hereby approved. The Executive Director of the Authority is hereby authorized, empowered and directed, for and on behalf of the Authority, to execute and deliver such Preliminary Agreement in substantially the form approved but with such variations, changes, omissions and insertions as may be necessary or appropriate and not inconsistent with the provisions of applicable law.

Section 4. Appointment of Attorney-in-Fact. Bond Counsel is hereby appointed the Authority’s attorney-in-fact for the purpose of applying for any rulings from the Internal Revenue Service that may be required in connection with the Loan and for filing, signing and taking any other actions on behalf of the Authority in connection with any such ruling request.

Section 5. Post-Issuance Compliance. The Authority hereby resolves that the Participating Institution is not subject to the requirements of Section III of the Post-Issuance Disclosure Compliance Requirements of the State of Oregon Oregon Facilities Authority Post-Issuance Tax and Disclosure Compliance Policies and Procedures adopted by the Authority on December 5, 2012.

Section 6. Effectiveness; Conflicting Resolutions. This resolution shall be effective immediately upon its adoption. All resolutions of the Authority and parts thereof which are in conflict with the terms of this resolution shall be, and they hereby are, rescinded, but only to the extent of such conflict.


034439/00240/9436520v2

Certification of Resolution

The undersigned does hereby certify that I am the duly appointed, qualified and acting Executive Director of the Oregon Facilities Authority; that the foregoing is a true and complete copy of Resolution No. 2018-18 as adopted by said Authority at a meeting duly called and held in accordance with law on November 13, 2018; and that the following members of the Authority voted in favor of said Resolution: the following members of the Authority voted against said Resolution: and the following members of the Authority abstained from voting on said Resolution:

In witness whereof, the undersigned has hereunto set her hand as of this 13th day of November, 2018.

__________________________________ Gwendolyn Griffith, Executive Director

Exhibit A: Form of Preliminary Agreement – Cascadia Behavioral Healthcare Page 1

034439/00240/9436520v2

Exhibit A

Preliminary Agreement Oregon Facilities Authority SNAP Loan

Between

CASCADIA BEHAVIORAL HEALTHCARE, INC.

and


This Preliminary Agreement is entered into as of the 13th day of November, 2018 by and between the Oregon Facilities Authority, a public body corporate and politic duly created and existing under the laws of the State of Oregon (the “Authority”), and Cascadia Behavioral Healthcare, an Oregon nonprofit public corporation and 501(c)(3) organization (the “Participating Institution”).

Premises:

WHEREAS, the Authority is authorized and empowered by the provisions of ORS Chapter 289, as amended (the “Act”), to recommend to the State Treasurer the issuance of revenue bonds, as defined in ORS 289.005(1)(b) for the purpose of financing or refinancing the acquisition, construction and equipping of “projects” as defined in the Act, and the lending of the proceeds of such revenue bonds to participating institutions in connection therewith; and

WHEREAS, the Participating Institution has filed with the Authority a substantially complete application to finance or refinance the acquisition of the Plaza Health Center facility and the acquisition and improvement of the Rockwood Respite (all of the foregoing being herein collectively called the “Project”) through the Authority’s Small Nonprofit Accelerated Program (“SNAP”); and

WHEREAS, in its application the Participating Institution has requested that the Authority consider recommending that the State Treasurer issue a SNAP loan under the Act (the


034439/00240/9436520v2

“Loan”) in an approximate principal amount of $9,900,000 (the “Principal Amount”), and lend the proceeds of the Loan to the Participating Institution for the purposes described above and paying the related costs associated therewith and with the issuance of the Loan;

WHEREAS, the Authority has adopted a resolution pursuant to which it has recommended that the State Treasurer issue the Loan under the Act for the purposes described above; and

WHEREAS, the State Treasurer has indicated in writing his intent to issue the Loan under the Act for the purposes described above;

NOW, THEREFORE, for and in consideration of the premises and the mutual undertakings of the parties as set forth herein, the Authority and the Participating Institution hereby agree as follows:

Section 1. Undertakings on the Part of the Authority. Subject to the terms and conditions stated herein, the Authority agrees and represents as follows:

(a) Issuance of Loan. The Authority will, subject to the terms hereof and upon satisfaction by the Participating Institution of all conditions stated herein and all other conditions imposed on the Participating Institution by the Authority prior to issuance of the Loan and upon compliance with all requirements of applicable law, take such further actions as may be necessary or appropriate to recommend that the State Treasurer issue the Loan under the Act in the Principal Amount, and lend the proceeds of the Loan to the Participating Institution for the purposes described above, which Loan shall be payable solely and only out of the loan payments paid by the Participating Institution pursuant to a SNAP loan financing agreement to be entered into by the Participating Institution.

(b) Other Actions. Subject to the terms hereof and upon satisfaction by the

Participating Institution of all conditions stated herein and all other conditions imposed on the Participating Institution by the Authority or the State Treasurer prior to issuance of the Loan and upon compliance with all requirements of applicable law, the Authority will take such action within its lawful powers as may be necessary and advisable to recommend that the State Treasurer authorize, issue the Loan and lend the Loan proceeds to the Participating Institution for the purposes described above, all as authorized by law and as mutually satisfactory to the State Treasurer, the Participating Institution and the Authority.

The foregoing undertakings of the Authority are hereby qualified by and subject in all

respects to the following conditions and understandings:


034439/00240/9436520v2

(i) Compliance with Applicable Law. Prior to the issuance of the Loan, the Authority and the State Treasurer shall have been advised by Hawkins Delafield & Wood LLP (“Bond Counsel”) that all legal requirements for the issuance the Loan have been fully met and complied with.

(ii) Loan to be Limited Obligation. In the event that the Loan is issued for

the purpose of financing and refinancing the Project, the Loan shall be payable solely and only from the specific properties and revenues pledged thereto and shall not constitute a debt of the State of Oregon or a lending of the credit of the State of Oregon within the meaning of any constitutional or statutory limitation or a charge upon any properties or revenues of the State of Oregon or the Authority not specifically pledged thereto, and no holder of the Loan shall have the right to enforce the payment of any amounts owing under or with respect to the Loan out of any properties or revenues of the State of Oregon or the Authority not specifically pledged thereto. The Participating Institution understands that the SNAP loan financing agreement to be entered into in connection with the Loan will provide that amounts payable thereunder will be sufficient to pay the principal of and the interest on, and redemption premium, if any, of the Loan as and when the same become due and payable.

(iii) Discretion to Determine Whether to Proceed. The Authority and the

State Treasurer shall each retain at all times complete and absolute discretion as to whether or not to proceed with the issuance of the Loan for the purposes described above, and each may refuse to proceed therewith for any reason deemed by either to be sufficient notwithstanding that all legal requirements for the issuance of the Loan may have been met and fully complied with.

Section 2. Undertakings on the Part of the Participating Institution. The

Participating Institution agrees as follows:

(a) Completion of Project. If the Loan is issued as requested by the Participating Institution, it is the intent of the Participating Institution to diligently cause the Project to be completed at the earliest practicable time and to cause the Project to be operated in the manner and for the purposes previously disclosed to the Authority in the Participating Institution’s application. If the Loan proceeds are not sufficient to complete the financing of the Project, the Participating Institution agrees to cause the Project to be completed at the Participating Institution’s expense. The Authority makes no representation or warranty that the proceeds of the Loan will be sufficient to accomplish the Project as planned by the Participating Institution, and the Participating Institution hereby acknowledges and agrees that it assumes all risks associated with such potential insufficiency.


034439/00240/9436520v2

(b) Cooperation with the Authority and Treasurer. The Participating Institution will cooperate with the State Treasurer, the Authority, Bond Counsel and the Authority’s financial advisor in all matters relating to the issuance of the Loan.

(c) Arrangements for the Lender. The Participating Institution

acknowledges and agrees that it shall have sole responsibility for arranging a lender of the Loan, and acknowledges that under the Act the State Treasurer has the ultimate authority to approve lender under the SNAP loan program. At the request of the Participating Institution, the State Treasurer has approved Key Government Finance, Inc., as the lender (the “Lender”).

(d) Execution and Delivery of SNAP Loan Financing Agreement. At the

time of issuance of the Loan, the Participating Institution will deliver an executed SNAP loan financing agreement with the State Treasurer (acting as issuer of the Loan on behalf of the State of Oregon and the Authority), under which terms the Participating Institution will agree to pay the loan payments sufficient in the aggregate to pay the principal of and interest on, and redemption premium, if any, of the Loan as and when the same shall become due and payable. The SNAP loan financing agreement shall contain a provision that the Participating Institution shall indemnify and hold the Authority and the State of Oregon harmless from all liabilities incurred in connection with the requested financing and the placement of the Loan.

(e) Further Actions. The Participating Institution will take such further

action and adopt such further proceedings as may be required to implement the terms and provisions of this Preliminary Agreement. The Participating Institution shall obtain all necessary governmental approvals and opinions of Bond Counsel in order to insure the legality and the exclusion of interest on the Loan from gross income for federal income tax purposes. In addition, the Participating Institution shall make no use of the Loan proceeds so as to cause the Loan to be classified as an “arbitrage bond” within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended.

(f) Reimbursement for Expenses. Regardless of whether or not the Loan is

actually issued, the Participating Institution will reimburse the Authority and the State Treasurer for all reasonable and necessary direct and indirect expenses incurred in connection with the consideration and processing of the application for Loan financing and the preparation of the Loan for issuance, which expenses shall be itemized on an invoice sent by the Authority to the Participating Institution and paid within 30 days of the date of such invoice. If the Loan is issued, the Participating Institution will pay to the Authority its usual and customary annual administrative fee according to Authority policy (as the same may be modified from time to time) and its issuance fee.

(g) Fees and Expenses of State, Bond Counsel and Financial Advisor. The

Participating Institution hereby agrees to pay the fees and expenses of the Authority, the


034439/00240/9436520v2

State Treasurer, Bond Counsel, and PFM Financial Advisors LLC, financial advisor to the Authority, as those fees are in effect on the date of closing. The fees currently in effect are shown in the attached Appendix A. The Participating Institution shall pay these fees and expenses at the time of the issuance the Loan; provided, however, that with respect to any hourly fees and any expenses which it is not practicable to itemize at the time of issuance the Loan, such hourly fees and expenses shall be paid within 30 days from the date of any invoice therefor; and provided further, that if the Participating Institution abandons or otherwise fails to complete the financing contemplated hereby within six months from the date of adoption of the Authority resolution referred to in the preamble hereto, the Participating Institution shall pay all fees and expenses incurred by Bond Counsel and the Authority’s financial advisor in connection with such financing, which fees and expenses shall be itemized on an invoice sent to the Participating Institution and paid within 30 days of the date of such invoice.

(h) Indemnity and Hold Harmless Agreement. The Participating Institution

hereby agrees to indemnify and hold the State of Oregon, the State Treasurer, the Authority and their respective officials, officers, members and employees (the “Indemnified Parties”) harmless against and from any and all claims, of whatever nature and howsoever arising, by or on behalf of any person, firm, corporation or other legal entity arising from the execution of this Preliminary Agreement or any other actions taken or omitted to be taken by any of the Indemnified Parties or the Participating Institution relating in any way to the Project or the placement or issuance of the Loan or any transaction related to the foregoing, including without limitation any claim or liability arising from or in connection with:

(i) financing and refinancing of the Project and any condition of the

Project or the construction thereof;

(ii) any breach or default on the part of the Participating Institution in the performance of any of its obligations under this Preliminary Agreement or any other agreement entered into in connection with the Loan and the financing and refinancing of the Project;

(iii) any act or negligence of the Participating Institution or of any of its

respective agents, contractors, servants, employees or licensees;

(iv) any act or negligence of any assignee or lessee of the Participating Institution, or of any agents, contractors, servants, employees or licensees of any assignee or lessee of the Participating Institution;

(v) any material misstatement or omission, or alleged material

misstatement or omission, made or omitted in any information used in connection with the placement or issuance of the Loan.


034439/00240/9436520v2

The Participating Institution shall indemnify and save the Indemnified Parties harmless from any such claim arising as aforesaid, or in connection with any action or proceeding brought thereon, and upon notice from the Indemnified Party, the Participating Institution shall, subject to ORS Chapter 180 (or any successor provision of law), defend it in any such action or proceeding at the Participating Institution’s expense, and shall pay all attorney’s fees and expenses of the Indemnified Parties incurred in connection therewith at trial, on appeal or otherwise related to the claim for which indemnification is provided hereunder. The foregoing indemnification and hold harmless agreement shall be and remain in full force and effect notwithstanding the failure or refusal, for any reason, of the Authority or the State Treasurer to proceed with the issuance of the Loan. Notwithstanding anything to the contrary contained herein, the Participating Institution shall have no liability to indemnify the Indemnified Parties against claims or damages resulting from the Indemnified Parties’ own willful misconduct.

(i) Policy Concerning Sale of Project. It is the policy of the Authority that

the proceeds of any sale of Loan -financed or refinanced assets shall be applied to prepay the outstanding Loan in such amounts and at such times as may be permitted by the Loan documents executed in connection with the issuance of the Loan, and as the Authority determines may be reasonable under the circumstances. Furthermore, in the event of the sale of Loan -financed or refinanced assets that serve as collateral for the Loan, adequate and acceptable substitute collateral shall be identified and provided prior to or simultaneous with such sale. The Authority may consider release of its security interests in lieu of such substitution of collateral, but only after all other security holders and the Lender agree to the release of their security interests in the assets to be sold. The Participating Institution hereby acknowledges the foregoing and agrees thereto.

Section 3. Miscellaneous. The State of Oregon, the State Treasurer, the Authority and

their respective officials, officers, members and employees, and bond counsel to the Authority and PFM Financial Advisors LLC, and each of them individually, shall be third party beneficiaries of this agreement with the right to enforce the provisions of this agreement directly and individually and without joining any other beneficiary hereof.

This agreement shall be governed by and construed in accordance with the laws of the State of Oregon without regard to principles of conflicts of law. Any claim, action, suit or proceeding (collectively, a “Claim”) between the Authority or any other agency or department of the State of Oregon and the Participating Institution that arises from or relates to this agreement shall be brought and conducted solely and exclusively within the Circuit Court of Marion County for the State of Oregon (unless Oregon law requires that the Claim be brought in another county; provided, however, if a Claim must be brought in a federal forum, then it shall be brought and conducted solely and exclusively within the United States District Court for the District of Oregon). In no event shall this Section be construed as a waiver by the State of Oregon of any form of defense or immunity, whether it is sovereign immunity, governmental immunity,


034439/00240/9436520v2

immunity based on the Eleventh Amendment to the Constitution of the United States or otherwise, from any Claim or from the jurisdiction of any court. PARTICIPATING INSTITUTION, BY EXECUTION OF THIS AGREEMENT, HEREBY CONSENTS TO THE IN PERSONAM JURISDICTION OF SAID COURTS.

This agreement shall be binding upon the parties hereto and their respective successors and assigns.

This agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the Authority and the Participating Institution have caused this Preliminary Agreement to be executed and delivered by their duly authorized officers or representatives as of the date first set forth above.


By: _________________________________________ Gwendolyn Griffith Its Executive Director

Cascadia Behavioral Healthcare, Inc. as Participating Institution

By: ___________________________________________

Name: _________________________________________

Title: _________________________________________

Appendix A to Preliminary Agreement – Cascadia Behavioral Healthcare Page 1

034439/00240/9436520v2

Appendix A

Oregon Facilities Authority SNAP Loan Program Fee Schedule

As of July 2018

OFA Fees:

Initial Application: $500

Processing Fee: 0.5% of the amount of the loan, up to $600,000, plus 0.3% of the amount of the loan in excess of $600,000 Note: For SNAP Loans closing after July 1, 2018 and before June 30, 2019, the

processing fee shall not exceed: • For loans $1,000,000 or less, 65% of the amount calculated above; • For loans greater than $1,000,000 but not more than $2,000,000, 70% of the

amount calculated above; and • For loans greater than $2,000,000 but not more than $3,000,000, 75% of the

amount calculated above. • For loans greater than $3,000,000 but not more than $5,000,000, 80% of the

amount calculated above.

Office of the State Treasurer Fees:

Closing Fee (based on principal amount):

$5 million or less: $6,000. More than $5 million and less than $10 million: $12,000 $10 million or more: $18,000.

OFA Bond Counsel:

Principal Amount of Loan Compensation Not to Exceed Up to $500,000 $11,500 $500,001 - $1,500,000 $11,500 + .30% for the amount over $500,000 $1,500,001 to $5,000,000 $15,000+ .40% for the amount over $1,500,000 Over $5,000,000 $30,750 + .20% for the amount over $5,000,000

Appendix A to Preliminary Agreement – Cascadia Behavioral Healthcare Page 2

034439/00240/9436520v2

Financial Advisor Fee: $900 Other Borrower Fees: The Borrower may incur bank fees and fees for its own counsel, which must issue a tax opinion on the §501(c)(3) status of the Borrower and related matters.

Additional fees may apply for certain transactions. Please consult the Executive Director.






MEMORANDUM




Subject: Application by Howard Street Charter School

Howard Street Charter School (the "Applicant") made a timely application for issuance of a Traditional OFA Bond in the approximate amount of $4,500,000. It paid the required fee. The Applicant is a charter school, and appears to be a qualifying borrower under OFA's program. The proposed uses of the bond proceeds appear to qualify as the type of project contemplated by OFA's statute and administrative rules as a qualifying project. These facts would be confirmed in the diligence process if this application is granted preliminary approval. This is the first financing through OFA for this Applicant. This bond is expected to be structured as a limited offering only to qualified institutional buyers. No ratings will be sought. Bond Counsel will discuss the specific limitations on offering at the meeting. Piper Jaffray & Co. is expected to be the underwriting firm. The Applicant has engaged, as its financial advisor, David Robertson of the Utah financial advisory firm, Lewis Young Robertson & Burningham, Inc. Mr. Robertson will be available at the meeting to answer any questions you may have about this financing. Since its inception in 1997, the Applicant has leased space from the sponsoring school district (Salem Keizer Public Schools). The Applicant has been informed that it must vacate those premises in mid-2019. The purpose of the bond issuance is to obtain funds to construct a new school on ground leased from a church, and to pay costs of financing. The project is 100% financed through this offering, which is typical in the charter school arena, according to this charter school financing team.


I have spoken with the Applicant and Mr. Davidson several times about this financing. In addition, we held an informal “pre-scoping” call among some of the members of the financing team, including Bond Counsel. The group discussed the proposed schedule, OFA's procedures for financing and, in particular, the limitations on offering to institutional buyers and also our thoughts on the Applicant engaging a financial advisor. Since that call, I have come to understand that the schedule for construction is fairly tight, and requires that an application be made now, before certain steps are taken with the sponsoring school district. The financing team anticipates taking a brief hiatus after the granting of preliminary approval to allow those steps to be taken. If all goes to plan, the Applicant anticipates returning to the Authority for final approval in January of 2019 and closing before the end of January. That schedule could change. Bond Counsel's report and the Financial Advisor's Report are included in the materials. Both recommend this transaction for preliminary approval. Recommendation: I recommend that the Authority adopt Resolution 2018-19, granting preliminary approval to Howard Street Charter School for a Traditional OFA Bond in an approximate amount of $4,500,000. If you have any questions, please let me know. GG//np

034439/00238/9451911v1

PFM Financial Advisors LLC, 650 NE Holladay Street, Suite 1600, Portland, OR 97232

November 2, 2018

Financial Advisor’s Report - Preliminary Howard Street Charter School

This report has been prepared for the Oregon Facilities Authority’s consideration of the application submitted by Howard Street Charter School (the “School”). The School has requested bond financing in an approximate amount of $4,500,000, plus a small taxable portion to cover issuance costs beyond the allowable 2%. The bonds would be structured as a non-rated, limited public offering.

The Borrower The School is a charter school located in Salem, established in 1997 and serving grades 6-8. Its current charter from the Salem-Keizer School District (the “District”) was renewed in 2017 for a five-year term (through June 30, 2022). It currently enrolls approximately 160 students and operates in a leased annex at South Salem High School.

The Project The School has identified a property currently owned by the First Christian Church in Salem and is negotiating a purchase and sale agreement for the building and a long-term ground lease for the land, including adjacent parking. The School, together with the District, is also in the process of obtaining necessary permits; the School is also working with a contractor to identify necessary upgrades to the facility as well as establish a guaranteed maximum price for those upgrades. The School intends to close the acquisition and ground lease and begin renovations by February 2019, in order to be operational by the start of the 2019-2020 school year. (The School’s current leased space will be used by South Salem High School beginning with the 2019-2020 school year.)

The Financing The School has retained Lewis Young Robertson & Burningham as its independent financial advisor in this transaction. It has not yet formally selected an underwriter but expects to select Piper Jaffray to serve in that role. The School does not expect to apply for a credit rating; the bonds would be offered to qualified institutional investors and/or accredited investors only in a limited public offering. The bonds are anticipated to have a 35-year term and a fixed rate for an initial period of time (e.g., 5 or 10 years). In addition to acquisition and construction of the

Preliminary Financial Advisor’s Report – Howard Street Charter School Page 2


facility, bond proceeds will also be used to fund a debt service reserve fund and capitalized interest.

We have reviewed the pro forma included with the School’s application and discussed with the School’s financial advisor. We believe that the assumptions are generally reasonable but note that the resulting debt service coverage projections are based on an expectation of increased funding from the District beginning in FY 2019-2020. The School’s funding formula is currently based on 85% weighted average daily membership (ADMw); the expectation is that this percentage would increase to 100% beginning in FY 2019-2020. The School and its finance team expect this change to take place, given that the School will be moving out of District facilities as a result. However, the District Board is not expected to take action until after the Authority’s November meeting. Based on conversations with the School’s financial advisor, the School understands that the proposed financing is only viable with this adjustment in District funding.

The School has requested preliminary approval at the November meeting, and hopes to obtain final approval by February 2019. We believe the application meets the requirements for preliminary approval. If you have any questions regarding this review, I will be present at the November meeting.


A. Duncan Brown

ORRICK, HERRINGTON & SUTCLIFFE LLP

1120 NW COUCH, SUITE 200

PORTLAND, OREGON 97209

tel 503-943-4800 fax 503-943-4801

WWW.ORRICK.COM

M E M O R A N D U M


FROM: Michael E. Schrader


RE: Preliminary Approval of Howard Street Charter School Application for Bond Financing through the Oregon Facilities Authority

Overview of Bonds.

Howard Street Charter School, an Oregon nonprofit corporation and a charter school operating pursuant to a charter with the Salem-Keizer School District (the “Borrower” and the “District,” respectively), is requesting preliminary approval from the Oregon Facilities Authority (the “Authority”) for the issuance of both tax-exempt and federally taxable revenue bonds, in an approximate aggregate principal amount of $4,500,000 (the “Bonds”). Bond proceeds are expected to be used for the purpose of (i) financing all or a portion of the costs of the acquisition, expansion, renovation, improvement and equipping of school facilities, (ii) funding a debt service reserve fund, (iii) paying capitalized interest, if necessary, and (iv) paying costs of issuing the Bonds (collectively, the “Project”).

The Bonds are expected to be issued in a single series of tax-exempt bonds and with a taxable tail to cover costs of issuance. The Bonds are expected to be sold through a negotiated limited public offering by Piper Jaffray, as underwriter (the “Underwriter”). The Bonds will not be rated and will only be marketed and sold to qualified institutional investors. The Borrower expects to finance 100% of the costs of the Project with proceeds of the Bonds.

The Bonds will be secured by a pledge of the Borrower’s gross revenues, and a mortgage, lien or security interest will be granted on the Borrower’s facilities being financed with the Bonds.

We participated on an initial scoping conference call with the Borrower, its counsel and its financial advisor, and expect to begin work in connection with the drafting of the Trust Indenture and Loan Agreement and other documents and agreements (the “Bond Documents”) after consideration of the Preliminary Agreement at the November 13th Authority meeting. We will be coordinating our general due diligence review with the Borrower, the Underwriter and their respective counsel and expect that this will be completed well in advance of consideration

-2-

of final approval of the Bonds at the Authority’s January 14th meeting. It is expected that the financing team will commence with regular conference calls shortly.

Discussion of Open Issues and Next Steps.

It is expected that the financing for this Project will have a similar security structure to those utilized in the financings for the Redmond Proficiency Academy (“RPA”) and the Arco Iris Spanish Immersion School (“Arco Iris”) projects, and will benefit from the work done in those financings, including particularly the charter contract amendments required to provide for the intercept of funds from the local school district to secure scheduled debt service payments on the Bonds. Additionally, given the recent precedent with RPA and Arco Iris on unrated, limited offerings to institutional investors financing Oregon charter schools, we do not expect any significant issues in working through initial offering conditions or subsequent transfer restrictions to ensure that the Bonds are offered, sold and held at all times by qualified institutional investors. We would note that the financing of the Project and the Project itself are proceeding on parallel tracks and on an accelerated timeline, meaning that negotiation of key contracts, including the construction contract, the long-term ground lease and the charter contact amendments with the District, will be occurring at the same time the offering memo and other bond documents are being drafted, which will require thoughtful management of the transaction and careful coordination of key deliverables.

In our role as bond counsel and disclosure counsel to the Authority, we expect to perform both a tax and general due diligence review of the Borrower, its charter and the Project. If our review reveals any material concerns with respect to the Borrower, its charter or the Bond-financed Project, including issues with respect to the Borrower’s tax-exempt status, we will inform the Authority.

Recommendation.

As bond counsel to the Authority, we recommend the Board grant preliminary approval of the Application submitted by the Borrower. The ultimate issuance of the Bonds will remain subject to several conditions precedent, including without limitation, completion of our due diligence review and completion of the Bond Documents and any other required legal documents. We would be happy to answer any questions members of the Authority may have with respect to the proposed financing.

4144-2893-2888

RESOLUTION – HOWARD STREET CHARTER SCHOOL 2019 FINANCING

STATE OF OREGON OREGON FACILITIES AUTHORITY

RESOLUTION NO. 2018-19

ADOPTED: NOVEMBER 13, 2018

A RESOLUTION OF THE OREGON FACILITIES AUTHORITY RECOMMENDING

THAT THE STATE TREASURER ISSUE REVENUE BONDS TO FINANCE THE PROJECT

DESCRIBED HEREIN; AUTHORIZING THE EXECUTION AND DELIVERY OF A

PRELIMINARY AGREEMENT BY AND BETWEEN THE AUTHORITY AND THE

PARTICIPATING INSTITUTION; AND AUTHORIZING AND DETERMINING OTHER

MATTERS WITH RESPECT THERETO.

WHEREAS, the Oregon Facilities Authority, a body politic and corporate duly created

and existing under the laws of the State of Oregon (the “Authority”) is authorized and empowered by the provisions of Oregon Revised Statutes Chapter 289, as amended (the “Act”), to recommend to the State Treasurer the issuance of revenue bonds for the purpose of financing or refinancing the acquisition, construction and equipping of “projects” as defined in the Act, and the loaning of the proceeds of such revenue bonds to “participating institutions” as defined in the Act in connection therewith; and

WHEREAS, Howard Street Charter School, an Oregon nonprofit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code (the “Participating Institution”), has filed with the Authority an application requesting the issuance of revenue bonds for the purpose of financing all or a portion of the costs of the acquisition, expansion, renovation and equipping of school facilities, including the making of seismic improvements to such facilities (collectively, the “Project”); and such application has been reviewed by the Executive Director of the Authority, the Authority’s bond counsel and the Authority’s financial advisor; and

WHEREAS, in said application the Participating Institution has requested that the Authority consider recommending that the State Treasurer issue one or more series of tax-exempt and federally taxable revenue bonds (the “Bonds”) under the Act in the approximate aggregate principal amount of $4,500,000, and to loan the proceeds of such Bonds to the Participating Institution for the purpose of financing the Project, and to pay the related costs associated therewith, including paying costs of issuance of the Bonds, funding a debt service reserve fund and paying capitalized interest; and

WHEREAS, the Participating Institution, the other parties to the transactions pertaining to the issuance and sale of the Bonds, and the Authority’s bond counsel are preparing drafts of the basic documents needed in connection therewith, and are ready to conduct required due

RESOLUTION – HOWARD STREET CHARTER SCHOOL 2019 FINANCING Page 2

diligence, to complete documentation required in connection with the financing of the Project and to proceed expeditiously with the issuance and sale of the Bonds.


SECTION 1. ELIGIBILITY. The Authority, based upon the advice of its bond counsel, hereby finds and determines that the Project qualifies as a “project” within the meaning of the Act. The Authority further finds and determines that the financing of the Project by means of revenue bonds issued by the State Treasurer pursuant to the Act will promote the public purposes sought to be advanced by the Act.

SECTION 2. RECOMMENDATION TO ISSUE BONDS. Contingent upon the concurrence of the Executive Director and the Director, Debt Management Division of the State Treasurer, the Authority hereby recommends that the State Treasurer express his intent to issue the Bonds under the Act in the approximate aggregate principal amount of $4,500,000, and to loan the proceeds of such Bonds to the Participating Institution for the purpose of financing the Project and to pay the related costs associated therewith, including paying costs of issuance of the Bonds, funding a debt service reserve fund, if necessary, and paying capitalized interest, provided, however, that:

(i) prior to the issuance of any Bonds for the purpose of financing the Project and paying the related costs associated therewith, the Authority and the State Treasurer shall have been advised by the Authority’s bond counsel that all legal requirements for the issuance and sale of such Bonds have been satisfied;

(ii) in the event that any Bonds are issued for the purpose of financing the Project and paying the related costs associated therewith, such Bonds shall be payable solely and only from the specific properties and revenues pledged thereto and shall not constitute a debt of the State of Oregon or a lending of the credit of the State of Oregon within the meaning of any constitutional or statutory limitation or a charge upon any properties or revenues of the State of Oregon or the Authority not specifically pledged thereto, and no holder of any such Bonds shall have the right to enforce the payment of any amounts owing under or with respect to such Bonds out of any properties or revenues of the State of Oregon or the Authority not specifically pledged thereto; and

(iii) the Authority shall retain at all times complete and absolute discretion whether to proceed with the issuance of any Bonds for the purpose of financing the Project and paying the related costs associated therewith, and may refuse to proceed therewith for any reason deemed sufficient by the Authority notwithstanding that all legal requirements for the issuance of such Bonds may have been satisfied.

SECTION 3. PRELIMINARY AGREEMENT; AUTHORIZATION. The form of Preliminary Agreement attached hereto as Exhibit A is hereby approved. The Executive Director of the Authority is hereby authorized, empowered and directed, for and on behalf of the Authority, to execute and deliver such Preliminary Agreement in substantially the form approved but with such variations, changes, omissions and insertions as may be necessary or appropriate and not inconsistent with the provisions of applicable law and to execute such other documents and

RESOLUTION – HOWARD STREET CHARTER SCHOOL 2019 FINANCING Page 3

instruments as shall be necessary or advisable for the purpose of furthering the actions described in Section 2 hereof.

SECTION 4. APPOINTMENT OF ATTORNEY-IN-FACT; DISCLOSURE COUNSEL. The Authority’s bond counsel, the law firm of Orrick, Herrington & Sutcliffe LLP, Portland, Oregon, is hereby appointed the Authority’s attorney-in-fact for the purpose of applying for any rulings from the Internal Revenue Service that may be required in connection with the bonds described herein and for filing, signing and taking any other actions on behalf of the Authority in connection with any such ruling request. Orrick, Herrington & Sutcliffe LLP is also appointed as disclosure counsel to the Authority for the purpose of assisting the Authority with respect to compliance with its disclosure obligations under applicable federal and state securities law.

SECTION 5. EFFECTIVENESS; CONFLICTING RESOLUTIONS. This Resolution shall be effective immediately upon its adoption. Any resolutions of the Authority and parts thereof which are in conflict with the terms of this Resolution shall be, and they hereby are, rescinded, but only to the extent of such conflict.

[Signature follows next page]

RESOLUTION – HOWARD STREET CHARTER SCHOOL 2019 FINANCING SIGNATURE PAGE

CERTIFICATION OF RESOLUTION

The undersigned does hereby certify that I am the duly appointed, qualified and acting

Executive Director of the Oregon Facilities Authority; that the foregoing is a true and complete copy of Resolution No. 2018-19 as adopted by said Authority at a meeting duly called and held in accordance with law on November 13, 2018; and that the following members of the Authority voted in favor of said Resolution:

the following members of the Authority voted against said Resolution:

and the following members of the Authority abstained from voting on said Resolution:

In witness whereof, the undersigned has hereunto set her hand as of this 13th day of

November 2018.

___________________________________ Gwendolyn Griffith, Executive Director

PRELIMINARY AGREEMENT – HOWARD STREET CHARTER SCHOOL 2018 Page A-1

EXHIBIT A

PRELIMINARY AGREEMENT

BETWEEN

HOWARD STREET CHARTER SCHOOL

AND


THIS PRELIMINARY AGREEMENT is entered into as of the 13th day of November 2018 by

and between the OREGON FACILITIES AUTHORITY, a public body corporate and politic duly created and existing under the laws of the State of Oregon (the “Authority”), and HOWARD

STREET CHARTER SCHOOL, an Oregon nonprofit corporation (the “Participating Institution”).

WHEREAS, the Authority is authorized and empowered by the provisions of Oregon Revised Statutes (“ORS”) Chapters 286A and 289, as amended (the “Act”), to recommend to the State Treasurer the issuance of revenue bonds for the purpose of financing or refinancing the acquisition, construction and equipping of “projects” as defined in the Act, and the loaning of the proceeds of such revenue bonds to “participating institutions” as defined in the Act in connection therewith; and

WHEREAS, the Participating Institution has filed with the Authority an application requesting the issuance of revenue bonds for the purpose of financing all or a portion of the costs of the acquisition, expansion, renovation and equipping of school facilities including the making of seismic improvements to such facilities (collectively, the “Project”); and such application has been reviewed by the Executive Director of the Authority, the Authority’s bond counsel and the Authority’s financial advisor; and

WHEREAS, in said application the Participating Institution has requested that the Authority consider recommending that the State Treasurer issue one or more series of tax-exempt and federally taxable revenue bonds (the “Bonds”) under the Act in an approximate aggregate principal amount of $4,500,000, and to loan the proceeds of such Bonds to the Participating Institution for the purpose of financing the Project and to pay the related costs associated therewith, including paying costs of issuance of the Bonds, funding a debt service reserve fund and paying capitalized interest; and

WHEREAS, the Authority has adopted a resolution pursuant to which it has recommended that the State Treasurer issue the Bonds under the Act for the purposes as described above; and


WHEREAS, the State Treasurer has indicated in writing his intent to issue the Bonds under the Act for the purposes described above;


SECTION 1. RECOMMENDATION OF THE AUTHORITY. By Resolution No. 2018-___ adopted on November 13, 2018 (the “Resolution”), the Authority has recommended that the State Treasurer issue the Bonds under the Act in an approximate aggregate principal amount of $4,500,000, and to loan the proceeds of such Bonds to the Participating Institution for the purposes described in the Resolution. Such recommendation remains subject to the terms hereof and upon satisfaction by the Participating Institution of all conditions stated herein and all other conditions imposed on the Participating Institution by the Authority prior to issuance of the Bonds and upon compliance with all requirements of applicable law, including without limitation, the following conditions and understandings:

(i) COMPLIANCE WITH APPLICABLE LAW. Prior to the issuance of any Bonds, the Authority and the State Treasurer shall have been advised by the Authority’s bond counsel that all legal requirements for the sale of such Bonds have been fully satisfied. If bond counsel advises the Authority that all legal requirements have not been complied with or that the financing and payment of associated costs contemplated by the Participating Institution deviates in any material respect from the financing proposed in the application of the Participating Institution, the Authority may require the Participating Institution to take further actions prior to the issuance of the Bonds, including resubmitting an updated application and seeking an additional approval of the Authority.

(ii) BONDS ARE LIMITED OBLIGATIONS. In the event that any Bonds are issued, such Bonds shall be payable solely and only from the specific properties and revenues pledged thereto and shall not constitute a debt of the State of Oregon or a lending of the credit of the State of Oregon within the meaning of any constitutional or statutory limitation or a charge upon any properties or revenues of the State of Oregon or the Authority not specifically pledged thereto, and no holder of any such Bond shall have the right to enforce the payment of any amounts owing under or with respect to such Bonds out of any properties or revenues of the State of Oregon or the Authority not specifically pledged thereto. The Participating Institution understands that any loan agreement, amendment, supplement or other agreement to be entered into in connection with the Bond financing will provide that amounts payable thereunder by the Participating Institution will be sufficient to pay the principal of and the interest on, and redemption premium, if any, of the Bonds as and when the same become due and payable.

(iii) DISCRETION TO DETERMINE WHETHER TO PROCEED. The Authority and the State Treasurer shall each retain at all times complete and absolute discretion as to whether or not to proceed with the issuance of the Bonds, and each may refuse to proceed therewith for any reason deemed by either to be sufficient notwithstanding that all legal requirements for the issuance of such Bonds may have been met and satisfied.


SECTION 2. UNDERTAKINGS ON THE PART OF THE PARTICIPATING INSTITUTION. The Participating Institution agrees as follows:

(A) COMPLETION OF FINANCING. If Bonds are issued as requested by the Participating Institution as described above, it is the intent of the Participating Institution to diligently cause the financing of the Project contemplated hereby to be completed and to cause the Project to be operated in the manner and for the purposes disclosed to the Authority in the Participating Institution’s application for financing. If the Bond proceeds are not sufficient to complete the Project, including the funding of any debt service reserve deemed to be necessary and desirable, and to pay costs of issuance of the Bonds, the Participating Institution agrees to cause the financing, the funding of any reserve and the payment of costs of issuance to be completed at the Participating Institution’s expense. The Authority makes no representation or warranty that the proceeds of the Bonds will be sufficient to accomplish the financing, the funding of any debt service reserve and the payment of costs of issuance of the Bonds as planned by the Participating Institution, and the Participating Institution hereby acknowledges and agrees that it assumes all risks associated with such potential insufficiency.

(B) COOPERATION WITH THE AUTHORITY AND TREASURER. The Participating Institution will cooperate with the State Treasurer, the Executive Director of the Authority, the Authority’s bond counsel and the Authority’s financial advisor in all matters relating to the issuance, sale and delivery of the Bonds and the financing of the Project from the proceeds thereof; provided, however, that nothing herein shall obligate the Participating Institution to cause the Bonds to be issued.

(C) ARRANGEMENTS FOR SALE OF THE BONDS. The Participating Institution acknowledges and agrees that it shall have sole responsibility for arranging for the sale of the Bonds, and acknowledges that under the Act the State Treasurer has the ultimate authority to approve and remove any underwriter for the Bonds.

(D) EXECUTION AND DELIVERY OF LOAN AGREEMENT: At the time of issuance of any Bonds, the Participating Institution will deliver an executed loan agreement or other financing agreement with the State Treasurer (acting as issuer of the Bonds on behalf of the State), under which terms the Participating Institution will agree to pay the loan payments sufficient in the aggregate principal of and interest on, and redemption premium, if any, of the Bonds as and when the same shall become due and payable. The loan agreement or other financing agreement shall contain a provision that the Participating Institution shall indemnify and hold the Authority and the State of Oregon harmless from all liabilities incurred in connection with the financing and the offering or sale of the Bonds.

(E) FURTHER ACTIONS. The Participating Institution will take such further action and adopt such further proceedings as may be required to implement the terms and provisions of this Preliminary Agreement. The Participating Institution shall obtain all necessary governmental approvals and opinions of bond counsel to ensure the legality of the Bonds and the exclusion of interest on the Bonds issued on a tax-exempt basis from gross income for federal income tax purposes. In addition, the Participating Institution


shall make no use of the proceeds of the Bonds issued on a tax-exempt basis so as to cause such Bonds to be classified as “arbitrage bonds” within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended.

(F) REIMBURSEMENT FOR EXPENSES. Regardless of whether the Bonds are issued, the Participating Institution will reimburse the Authority and the State Treasurer for all reasonable and necessary direct and indirect expenses incurred in connection with the consideration and processing of the application for bond financing and the preparation of the Bonds for issuance, which expenses shall be itemized on an invoice sent by the Authority to the Participating Institution and paid within 30 days of the date of such invoice. If any Bonds are issued, the Participating Institution will pay, or cause to be paid, to the Authority its usual and customary fees according to Authority policy (as the same may be modified from time to time), its issuance fee and any annual fee.

(G) FEES AND EXPENSES OF BOND COUNSEL AND FINANCIAL ADVISOR. The Participating Institution hereby agrees to pay the fees and expenses of Orrick, Herrington & Sutcliffe LLP, bond counsel and disclosure counsel (hereinafter “bond counsel”) to the Authority, and of PFM Financial Advisors, LLC, financial advisor to the Authority, for professional services rendered in connection with the issuance, sale and delivery of any Bonds. The Participating Institution acknowledges that the fees and expenses of bond counsel and the financial advisor shall be as set forth in the respective contracts of said firms entered into with the Authority and the State Treasurer, subject to such modifications as may have been agreed upon in writing by bond counsel or the financial advisor, as appropriate. The fees and expenses of bond counsel and the financial advisor shall be paid at the time of the issuance and delivery of any Bonds; provided, however, that with respect to any expenses which it is not practicable for bond counsel or the financial advisor to compile and itemize at such time, such expenses shall be paid within thirty (30) days from the date of any invoice therefor; and provided further, that if the Participating Institution abandons or otherwise fails to complete the financing contemplated hereby within six months from the date of adoption of the Authority resolution referred to in the preamble hereto, the Participating Institution shall pay all fees and expenses incurred by said bond counsel or said financial advisor in connection therewith, which fees and expenses shall be itemized on an invoice sent to the Participating Institution and paid within thirty (30) days of the date of such invoice.

(H) INDEMNITY AND HOLD HARMLESS AGREEMENT. The Participating Institution hereby agrees to indemnify and hold the State of Oregon, the State Treasurer, the Authority and their respective officials, officers, members and employees (the “Indemnified Parties”) harmless against and from any and all claims, of whatever nature and howsoever arising, by or on behalf of any person, firm, corporation or other legal entity arising from the execution of this Preliminary Agreement or any other actions taken or omitted to be taken by any of the Indemnified Parties or the Participating Institution relating in any way to the Project or the offering, issuance, sale or remarketing of the Bonds or any transaction related to the foregoing, including without limitation any claim or liability arising from or in connection with:

(i) any condition of the Project or the construction thereof;


(ii) any breach or default on the part of the Participating Institution in the performance of any of its obligations under this Preliminary Agreement or any other agreement entered into in connection with the Bonds or the Project;

(iii) any act or negligence of the Participating Institution or of any of its agents, contractors, servants, employees or licensees;


(v) any material misstatement or omission, or alleged material misstatement or omission, made or omitted in any disclosure materials used in connection with the offering or sale of the Bonds or any other information used in connection with the offering, placement, sale, remarketing or purchase of any Bond (other than a material misstatement or omission contained in information provided by an Indemnified Party specifically for inclusion in disclosure materials relating to the Bonds).

The Participating Institution shall indemnify and save the Indemnified Parties harmless from any such claim arising as aforesaid, or in connection with any action or proceeding brought thereon, and upon notice from the Indemnified Party, the Participating Institution shall, subject to ORS Chapter 180 (or any successor provision of law), defend it in any such action or proceeding at the Participating Institution’s expense, and shall pay all attorney’s fees and expenses of the Indemnified Parties incurred in connection therewith at trial, on appeal or otherwise related to the claim for which indemnification is provided hereunder, and against all other liabilities arising from the issuance of the Bonds on behalf of the Participating Institution and any fees and costs incurred by the Indemnified Parties in responding to any U.S. Department of the Treasury Internal Revenue Service (the “IRS”) audit, U.S. Securities and Exchange Commission (the “SEC”) inquiry or any Federal, State or regulatory action or proceeding with respect to the Bonds or the Project. The Authority and the State Treasurer may employ, at the Participating Institution’s expense, any legal counsel or experts required in responding to any IRS audit, SEC inquiry or any other Federal, State or regulatory action or proceeding with respect to the Bonds or the Project. The foregoing indemnification and hold harmless agreement shall be and remain in full force and effect notwithstanding the failure or refusal, for any reason, of the Authority or the State Treasurer to proceed with the issuance of the Bonds. Notwithstanding anything to the contrary contained herein, the Participating Institution shall have no liability to indemnify the Indemnified Parties against claims or damages resulting from the Indemnified Parties’ own willful misconduct.

SECTION 3. MISCELLANEOUS. The State of Oregon, the State Treasurer, the Authority and their respective officials, officers, members and employees, and Orrick, Herrington & Sutcliffe LLP and PFM Financial Advisors, LLC, and each of them individually, shall be third party beneficiaries of this agreement with respect to payment of their respective fees, with the right to enforce the provisions of this agreement directly and individually and without joining any other beneficiary hereof.


This agreement shall be governed by and construed in accordance with the laws of the State of Oregon.



PRELIMINARY AGREEMENT – HOWARD STREET CHARTER SCHOOL 2018 SIGNATURE PAGE


OREGON FACILITIES AUTHORITY By: _______________________________________

Gwendolyn Griffith, Executive Director

HOWARD STREET CHARTER SCHOOL, AS

PARTICIPATING INSTITUTION

By: Printed: Title:

4124-5406-7224.2






MEMORANDUM




Subject: Application by Portland Community Reinvestment Initiatives, Inc. (PCRI)

Portland Community Reinvestment Initiatives, Inc. (the "Applicant") made a timely application for issuance of a Traditional OFA Bond in the approximate amount of $6,000,000. It paid the required fee. The Applicant appears to be a qualifying borrower under OFA's program. The proposed uses of the bond proceeds appear to qualify as the type of project contemplated by OFA’s statute and administrative rules as a qualifying project. These facts would be confirmed in the diligence process if this application is granted preliminary approval. This is the first financing through OFA for this Applicant. This bond is expected to be structured as a bank placement with Beneficial State Bank. The Project is the refinancing of existing debt with another bank that allowed the Applicant to purchase a portfolio of single family homes in North and Northeast Portland, consisting of approximately 270 units. Beneficial State Bank is offering 20-30 year financing with the interest rate set for consecutive five-year periods. A swap is a possibility, and the Applicant is currently considering its options to manage interest rate risk. I have spoken with the Applicant and the purchasing bank several times about this financing. In addition, we held a scoping call on October 17, 2018, among some of the members of the financing team, including Bond Counsel. No unusual issues were identified during that call. If


preliminary approval is given, the Applicant anticipates returning to the Authority for final approval in January of 2019. Bond Counsel's report and the Financial Advisor's Report are included in the materials. Both recommend this transaction for preliminary approval. Recommendation: I recommend that the Authority adopt Resolution 2018-20, granting preliminary approval to Portland Community Reinvestment Initiatives, Inc. (PCRI) for a Traditional OFA Bond in an approximate amount of $6,000,000. If you have any questions, please let me know. GG//np

034439/00235/9451921v1


November 2, 2018

Financial Advisor’s Report - Preliminary Portland Community Reinvestment Initiatives, Inc.

This report has been prepared for the Oregon Facilities Authority’s consideration of the application submitted by Portland Community Reinvestment Initiatives, Inc. (“PCRI”). PCRI has requested bond financing in an amount not to exceed $6,000,000. The bulk of the bond proceeds will be used to refinance existing debt. Although the bonds are proposed to be issued through the Authority’s traditional bond program, the bonds would be structured as a direct placement with Beneficial State Bank, under the terms described in a term sheet included in the financing application.

PCRI is a community development organization, formed in 1992. Its core mission is to provide affordable rental housing. It owns and operates multiple portfolios of housing in North and Northeast Portland. Its original “PCRI 1” portfolio consists of approximately 270 units, the majority of which are single-family housing. The financing for this portfolio is currently provided by Columbia Bank. PCRI is seeking to refinance this existing debt on a tax-exempt basis in order to provide interest rate certainty and cost savings vs. taxable financing, which can then be passed on to tenants. A small portion of the proposed borrowing will be used to remodel and repair portions of the PCRI 1 portfolio. Vacancy rates for the portfolio are generally in the 3-4% range.

The Financing PCRI has received a term sheet from Beneficial State Bank for a 20-30 year financing, with the interest rate based on the five-year Treasury rate and reset every five years. Alternatively, the term sheet allows for an interest rate swap which would provide a fixed interest rate for 20 years, albeit with less prepayment flexibility. We understand that PCRI is still considering whether to pursue this alternative. The bonds will be secured by a first deed of trust and an assignment of rents on a portion of the PCRI 1 properties.

We note that PCRI is a first-time applicant to OFA. However, it currently manages a variety of bank loans and other debt obligations, including debt issued through the Oregon Housing and Community Services Department. Beneficial State Bank is also new to OFA. However, we understand that the bank has retained counsel familiar with the Authority and its bond programs.

Preliminary Financial Advisor’s Report – PCRI Page 2


(Beneficial State Bank has also previously provided credit to another PCRI entity, unrelated to the PCRI 1 portfolio.)

PCRI has requested preliminary approval at the November meeting, and hopes to obtain final approval in December or early 2019. We believe the application meets the requirements for preliminary approval. If you have any questions regarding this review, I will be present at the November meeting.


A. Duncan Brown

ORRICK, HERRINGTON & SUTCLIFFE LLP

1120 NW COUCH, SUITE 200

PORTLAND, OREGON 97209

tel 503-943-4800 fax 503-943-4801

WWW.ORRICK.COM

M E M O R A N D U M


FROM: Michael E. Schrader


RE: Preliminary Approval of PCRI Application for Bond Financing through the Oregon Facilities Authority

Overview of Bonds.

Portland Community Reinvestment Initiatives, Inc., an Oregon nonprofit corporation (“PCRI”), is requesting preliminary approval from the Oregon Facilities Authority (the “Authority”) for the issuance of tax-exempt revenue bonds, in one or more series, in an aggregate principal amount of $6,000,000 (the “Bonds”). Bond proceeds are expected to be used for the purpose of refinancing certain outstanding indebtedness of PCRI related to its portfolio of affordable housing units and financing certain costs associated with renovating and improving such units (collectively, the “Project”). It is also expected that a portion of the Bonds would be used to pay related costs associated with the issuance of the Bonds, including the funding of a debt service reserve fund, if deemed necessary and desirable, paying costs related to an interest rate swap and paying the costs of issuance of the Bonds.

The Bonds are expected to be privately placed with Beneficial State Bank (the “Bank”) and will not be rated. The Bonds are expected to be issued with a term of 15 to 20 years and will be fully amortizing. We understand that the Bank and PCRI are continuing to evaluate interest rate options, including an initial fixed rate period with a reset and a variable rate with an interest rate swap to establish a long term fixed rate. The Bonds will provide for monthly principal and interest payments to the Bank.

The Bonds will be secured by a first lien deed of trust on a portion of the PCRI affordable housing portfolio (approximately 88 units) being refinanced. We will be evaluating to the extent, if any, that housing units within the refinanced PCRI portfolio have been or are required to be subject to restrictive affordability covenants recorded against property.

Discussion of Open Issues and Next Steps.

We participated on an initial scoping conference call with PCRI and the Bank to discuss the Bonds and the structure of the financing, and we expect that regular conference calls will

commence shortly. Drafting of the Trust Indenture and Loan Agreement for the Bonds and other documents and agreements (the “Bond Documents”) is expected to begin following preliminary approval of the Bonds. We will also commence our tax and general due diligence review of PCRI and the Project, although we do not anticipate any issues given our work with PCRI on a recent Oregon Housing conduit issue for its Beatrice Morrow project.

Recommendation.

As Bond Counsel to the Authority, we recommend the Board grant preliminary approval of the Application submitted by PCRI. The ultimate issuance of the Bonds will remain subject to several conditions precedent, including without limitation, completion of our due diligence review and completion of the Bond Documents and any other required legal documents. We would be happy to answer any questions Members of the Authority may have with respect to the proposed financing.

4164-5923-8168

RESOLUTION – PORTLAND COMMUNITY REINVESTMENT INITIATIVES 2019 FINANCING

STATE OF OREGON OREGON FACILITIES AUTHORITY

RESOLUTION NO. 2018-20

ADOPTED: November 13, 2018

A RESOLUTION OF THE OREGON FACILITIES AUTHORITY RECOMMENDING THAT

THE STATE TREASURER ISSUE REVENUE BONDS TO FINANCE AND REFINANCE

THE PROJECT DESCRIBED HEREIN; AUTHORIZING THE EXECUTION AND

DELIVERY OF A PRELIMINARY AGREEMENT BY AND BETWEEN THE AUTHORITY

AND THE PARTICIPATING INSTITUTION; AND AUTHORIZING AND DETERMINING

OTHER MATTERS WITH RESPECT THERETO.

WHEREAS, the Oregon Facilities Authority, a body politic and corporate duly created

and existing under the laws of the State of Oregon (the “Authority”) is authorized and empowered by the provisions of Oregon Revised Statutes Chapter 289, as amended (the “Act”), to recommend to the State Treasurer the issuance of revenue bonds for the purpose of financing or refinancing the acquisition, construction and equipping of “projects” as defined in the Act, and the loaning of the proceeds of such revenue bonds to “participating institutions” as defined in the Act in connection therewith; and

WHEREAS, Portland Community Reinvestment Initiatives, Inc., an Oregon nonprofit corporation (the “Participating Institution”), has filed with the Authority an application requesting the issuance of revenue bonds in one or more series for the purpose of refinancing certain outstanding indebtedness of the Participating Institution related to its portfolio of affordable housing units and financing certain costs associated with renovating and improving such units (collectively, the “Project”); and such application has been reviewed by the Executive Director of the Authority, the Authority’s bond counsel and the Authority’s financial advisor; and

WHEREAS, in said application the Participating Institution has requested that the Authority consider recommending that the State Treasurer issue tax-exempt and/or federally taxable revenue bonds, in one or more series (the “Bonds”), through a private placement under the Act in an aggregate principal amount not to exceed $6,000,000, and to loan the proceeds of such Bonds to the Participating Institution, and/or one or more affiliated limited liability companies or limited partnerships, for the purposes described above and to pay the related costs associated therewith, including the funding of a debt service reserve fund, if deemed necessary and desirable, paying the costs of an interest rate swap and paying costs of issuance of the Bonds; and

WHEREAS, the Bonds are expected to be purchased directly by Beneficial State Bank (the “Bank”), as the sole bondholder; and

RESOLUTION – PORTLAND COMMUNITY REINVESTMENT INITIATIVES 2019 FINANCING Page 2

WHEREAS, the Participating Institution, the other parties to the transactions pertaining to the issuance and sale of the Bonds, and the Authority’s bond counsel are preparing drafts of the basic documents needed in connection therewith, and are ready to conduct required due diligence, to complete documentation required in connection with the financing and to proceed expeditiously with the issuance and sale of the Bonds.


SECTION 1. ELIGIBILITY. The Authority, based upon the advice of its bond counsel, hereby finds and determines that the Project qualifies as a “project” within the meaning of the Act. The Authority further finds and determines that the financing and refinancing of the Project by means of revenue bonds issued by the State Treasurer pursuant to the Act will promote the public purposes sought to be advanced by the Act.

SECTION 2. RECOMMENDATION TO ISSUE BONDS. Contingent upon the concurrence of the Director, Debt Management Division of the State Treasurer, the Authority hereby recommends that the State Treasurer express his intent to issue the Bonds under the Act in an aggregate principal amount not to exceed $6,000,000, or in such lesser aggregate principal amount as may be determined to be necessary or appropriate, and to loan the proceeds of such Bonds to the Participating Institution, and/or one or more affiliated limited liability companies or limited partnerships, for the purpose of financing and refinancing the Project and to pay the related costs associated therewith, including paying costs of issuance of the Bonds, funding a debt service reserve fund, if necessary and desirable and paying costs of an interest rate swap, provided, however, that:

(i) prior to the issuance of any Bonds for the purpose of financing and refinancing the Project and paying the related costs associated therewith, the Authority and the State Treasurer shall have been advised by the Authority’s bond counsel that all legal requirements for the issuance and sale of such Bonds have been satisfied;

(ii) in the event that any Bonds are issued for the purpose of financing and refinancing the Project and paying the related costs associated therewith, such Bonds shall be payable solely and only from the specific properties and revenues pledged thereto and shall not constitute a debt of the State of Oregon or a lending of the credit of the State of Oregon within the meaning of any constitutional or statutory limitation or a charge upon any properties or revenues of the State of Oregon or the Authority not specifically pledged thereto, and no holder of any such Bonds shall have the right to enforce the payment of any amounts owing under or with respect to such Bonds out of any properties or revenues of the State of Oregon or the Authority not specifically pledged thereto; and

(iii) the Authority shall retain at all times complete and absolute discretion whether to proceed with the issuance of any Bonds for the purpose of financing and refinancing the Project and paying the related costs associated therewith, and may refuse to proceed therewith for any reason deemed sufficient by the Authority notwithstanding that all legal requirements for the issuance of such Bonds may have been satisfied.

RESOLUTION – PORTLAND COMMUNITY REINVESTMENT INITIATIVES 2019 FINANCING Page 3

SECTION 3. PRELIMINARY AGREEMENT; AUTHORIZATION. The form of Preliminary Agreement attached hereto as Exhibit A is hereby approved. The Executive Director of the Authority is hereby authorized, empowered and directed, for and on behalf of the Authority, to execute and deliver such Preliminary Agreement in substantially the form approved but with such variations, changes, omissions and insertions as may be necessary or appropriate and not inconsistent with the provisions of applicable law and to execute such other documents and instruments as shall be necessary or advisable for the purpose of furthering the actions described in Section 2 hereof.

SECTION 4. APPOINTMENT OF ATTORNEY-IN-FACT. The Authority’s bond counsel, the law firm of Orrick, Herrington & Sutcliffe LLP, Portland, Oregon, is hereby appointed the Authority’s attorney-in-fact for the purpose of applying for any rulings from the Internal Revenue Service that may be required in connection with the Bonds described herein and for filing, signing and taking any other actions on behalf of the Authority in connection with any such ruling request.

SECTION 5. EFFECTIVENESS; CONFLICTING RESOLUTIONS. This Resolution shall be effective immediately upon its adoption. Any resolutions of the Authority and parts thereof which are in conflict with the terms of this Resolution shall be, and they hereby are, rescinded, but only to the extent of such conflict.

RESOLUTION – PORTLAND COMMUNITY REINVESTMENT INITIATIVES 2019 FINANCING SIGNATURE PAGE

CERTIFICATION OF RESOLUTION

The undersigned does hereby certify that I am the duly appointed, qualified and acting

Executive Director of the Oregon Facilities Authority; that the foregoing is a true and complete copy of Resolution No. 2018-20 as adopted by said Authority at a meeting duly called and held in accordance with law on November 13, 2018; and that the following members of the Authority voted in favor of said Resolution:

the following members of the Authority voted against said Resolution:

and the following members of the Authority abstained from voting on said Resolution:

In witness whereof, the undersigned has hereunto set her hand as of this 13th day of

November 2018.

___________________________________ Gwendolyn Griffith, Executive Director

PRELIMINARY AGREEMENT – PORTLAND COMMUNITY REINVESTMENT INITIATIVES 2019 FINANCING Page A-1

EXHIBIT A

PRELIMINARY AGREEMENT

BETWEEN

PORTLAND COMMUNITY REINVESTMENT INITIATIVES, INC.

AND


THIS PRELIMINARY AGREEMENT is entered into as of the 13th day of November 2018 by

and between the OREGON FACILITIES AUTHORITY, a public body corporate and politic duly created and existing under the laws of the State of Oregon (the “Authority”), and PORTLAND

COMMUNITY REINVESTMENT INITIATIVES, INC., an Oregon nonprofit corporation (the “Participating Institution”).

WHEREAS, the Authority is authorized and empowered by the provisions of Oregon Revised Statutes (“ORS”) Chapter 289, as amended (the “Act”), to recommend to the State Treasurer the issuance of revenue bonds for the purpose of financing or refinancing the acquisition, construction and equipping of “projects” as defined in the Act, and the loaning of the proceeds of such revenue bonds to “participating institutions” as defined in the Act in connection therewith; and

WHEREAS, the Participating Institution has filed with the Authority an application requesting the issuance of revenue bonds for the purpose of refinancing certain outstanding indebtedness of the Participating Institution related to its portfolio of affordable housing units and financing certain costs associated with renovating and improving such units (collectively, the “Project”); and such application has been reviewed by the Executive Director of the Authority, the Authority’s bond counsel and the Authority’s financial advisor; and

WHEREAS, in said application the Participating Institution has requested that the Authority consider recommending that the State Treasurer issue tax-exempt and/or federally taxable revenue bonds, in one or more series (the “Bonds”), through a private placement, under the Act in an aggregate principal amount not to exceed $6,000,000, or in such lesser aggregate principal amount as may be determined to be necessary or appropriate, and to loan the proceeds of such Bonds to the Participating Institution, and/or one or more affiliated limited liability companies or limited partnerships, for the purposes described above and to pay the related costs associated therewith, including the funding of a debt service reserve fund, if deemed necessary and desirable, paying the costs of an interest rate swap and paying costs of issuance of the Bonds; and


WHEREAS, the Bonds are expected to be purchased directly by Beneficial State Bank (the “Bank”); and

WHEREAS, the Authority has adopted a resolution pursuant to which it has recommended that the State Treasurer issue the Bonds under the Act for the purposes as described above; and

WHEREAS, the State Treasurer has indicated in writing his intent to issue the Bonds under the Act for the purposes described above;


SECTION 1. RECOMMENDATION OF THE AUTHORITY. By Resolution No. 2018-___ adopted on November 13, 2018 (the “Resolution”), the Authority has recommended that the State Treasurer issue the Bonds under the Act in an aggregate principal amount not to exceed $6,000,000, and to loan the proceeds of such Bonds to the Participating Institution, and/or one or more affiliated limited liability companies or limited partnerships, for the purposes described in the Resolution. Such recommendation remains subject to the terms hereof and upon satisfaction by the Participating Institution of all conditions stated herein and all other conditions imposed on the Participating Institution by the Authority prior to issuance of the Bonds and upon compliance with all requirements of applicable law, including without limitation, the following conditions and understandings:

(i) COMPLIANCE WITH APPLICABLE LAW. Prior to the issuance of any Bonds, the Authority and the State Treasurer shall have been advised by the Authority’s bond counsel that all legal requirements for the sale of such Bonds have been fully satisfied. If bond counsel advises the Authority that all legal requirements have not been complied with or that the financing and refinancing and payment of associated costs contemplated by the Participating Institution deviates in any material respect from the financing and refinancing proposed in the application of the Participating Institution, the Authority may require the Participating Institution to take further actions prior to the issuance of the Bonds, including resubmitting an updated application and seeking an additional approval of the Authority.

(ii) BONDS ARE LIMITED OBLIGATIONS. In the event that any Bonds are issued, such Bonds shall be payable solely and only from the specific properties and revenues pledged thereto and shall not constitute a debt of the State of Oregon or a lending of the credit of the State of Oregon within the meaning of any constitutional or statutory limitation or a charge upon any properties or revenues of the State of Oregon or the Authority not specifically pledged thereto, and no holder of any such Bond shall have the right to enforce the payment of any amounts owing under or with respect to such Bonds out of any properties or revenues of the State of Oregon or the Authority not specifically pledged thereto. The Participating Institution understands that any loan agreement, amendment, supplement or other agreement to be entered into in connection with the Bond financing and refinancing will provide that amounts payable thereunder by


the Participating Institution will be sufficient to pay the principal of and the interest on, and redemption premium, if any, of the Bonds as and when the same become due and payable.

(iii) DISCRETION TO DETERMINE WHETHER TO PROCEED. The Authority and the State Treasurer shall each retain at all times complete and absolute discretion as to whether or not to proceed with the issuance of the Bonds, and each may refuse to proceed therewith for any reason deemed by either to be sufficient notwithstanding that all legal requirements for the issuance of such Bonds may have been met and satisfied.

SECTION 2. UNDERTAKINGS ON THE PART OF THE PARTICIPATING INSTITUTION. The Participating Institution agrees as follows:

(A) COMPLETION OF FINANCING. If Bonds are issued as requested by the Participating Institution as described above, it is the intent of the Participating Institution to diligently cause the financing and refinancing of the Project contemplated hereby to be completed and to cause the Project to continue to be operated in the manner and for the purposes previously disclosed to the Authority in the Participating Institution’s application for financing. If the Bond proceeds are not sufficient to complete the Project, including the funding of any debt service reserve deemed to be necessary and desirable, and to pay costs of an interest rate swap and issuance of the Bonds, the Participating Institution agrees to cause the financing, the funding of any reserve and the payment of costs of an interest rate swap and issuance of the Bonds to be completed at the Participating Institution’s expense. The Authority makes no representation or warranty that the proceeds of the Bonds will be sufficient to accomplish the financing, the funding of any reserve and payment of costs of an interest rate swap and issuance of the Bonds as planned by the Participating Institution, and the Participating Institution hereby acknowledges and agrees that it assumes all risks associated with such potential insufficiency.

(B) COOPERATION WITH THE AUTHORITY AND TREASURER. The Participating Institution will cooperate with the State Treasurer, the Executive Director of the Authority, the Authority’s bond counsel and the Authority’s financial advisor in all matters relating to the issuance, sale and delivery of the Bonds and the financing and refinancing of the Project from the proceeds thereof; provided, however, that nothing herein shall obligate the Participating Institution to cause the Bonds to be issued.

(C) ARRANGEMENT FOR SALE OF THE BONDS. The Participating Institution acknowledges and agrees that it shall have sole responsibility for arranging for the sale of the Bonds, and acknowledges that under the Act, the State Treasurer has the ultimate authority to approve and remove any underwriter for the Bonds.

(D) EXECUTION AND DELIVERY OF LOAN AGREEMENT: At the time of issuance of any Bonds, the Participating Institution will deliver an executed loan agreement or other financing agreement with the State Treasurer (acting as issuer of the Bonds on behalf of the State), under which terms the Participating Institution will agree to pay the loan payments sufficient in the aggregate principal of and interest on, and


redemption premium, if any, of the Bonds as and when the same shall become due and payable. The loan agreement or other financing agreement shall contain a provision that the Participating Institution shall indemnify and hold the Authority and the State of Oregon harmless from all liabilities incurred in connection with the financing and refinancing and the offering or sale of the Bonds.

(E) FURTHER ACTIONS. The Participating Institution will take such further action and adopt such further proceedings as may be required to implement the terms and provisions of this Preliminary Agreement. The Participating Institution shall obtain all necessary governmental approvals and opinions of bond counsel to ensure the legality of the Bonds and the exclusion of interest on the Bonds from gross income for federal income tax purposes of interest. In addition, the Participating Institution shall make no use of the Bond proceeds so as to cause the Bonds to be classified as “arbitrage bonds” within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended.

(F) REIMBURSEMENT FOR EXPENSES. Regardless of whether the Bonds are actually issued, the Participating Institution will reimburse the Authority and the State Treasurer for all reasonable and necessary direct and indirect expenses incurred in connection with the consideration and processing of the application for bond financing and the preparation of the Bonds for issuance, which expenses shall be itemized on an invoice sent by the Authority to the Participating Institution and paid within 30 days of the date of such invoice. If any Bonds are issued, the Participating Institution will pay, or cause to be paid, to the Authority its usual and customary fees according to Authority policy (as the same may be modified from time to time), its issuance fee and any annual fee.

(G) FEES AND EXPENSES OF BOND COUNSEL AND FINANCIAL ADVISOR. The Participating Institution hereby agrees to pay the fees and expenses of Orrick, Herrington & Sutcliffe LLP, bond counsel (hereinafter, “bond counsel”) to the Authority, and PFM Financial Advisors, LLC, financial advisor to the Authority, for professional services rendered in connection with the issuance, sale and delivery of any Bonds. The Participating Institution acknowledges that the fees and expenses of bond counsel and the financial advisor shall be as set forth in the respective contracts of said firms entered into with the Authority and the State Treasurer, subject to such modifications as may have been agreed upon in writing by bond counsel or the financial advisor, as appropriate. The fees and expenses of bond counsel and the financial advisor shall be paid at the time of the issuance and delivery of any Bonds; provided, however, that with respect to any expenses which it is not practicable for bond counsel or the financial advisor to compile and itemize at such time, such expenses shall be paid within thirty (30) days from the date of any invoice therefor; and provided further, that if the Participating Institution abandons or otherwise fails to complete the financing contemplated hereby within six months from the date of adoption of the Authority resolution referred to in the preamble hereto, the Participating Institution shall pay all fees and expenses incurred by said bond counsel or said financial advisor in connection therewith, which fees and expenses shall be itemized on an invoice sent to the Participating Institution and paid within thirty (30) days of the date of such invoice.


(H) INDEMNITY AND HOLD HARMLESS AGREEMENT. The Participating Institution hereby agrees to indemnify and hold the State of Oregon, the State Treasurer, the Authority and their respective officials, officers, members and employees (the “Indemnified Parties”) harmless against and from any and all claims, of whatever nature and howsoever arising, by or on behalf of any person, firm, corporation or other legal entity arising from the execution of this Preliminary Agreement or any other actions taken or omitted to be taken by any of the Indemnified Parties or the Participating Institution relating in any way to the Project or the offering, sale, remarketing or issuance of the Bonds or any transaction related to the foregoing, including without limitation any claim or liability arising from or in connection with:

(i) any condition of the Project or improvements thereof;

(ii) any breach or default on the part of the Participating Institution in the performance of any of its obligations under this Preliminary Agreement or any other agreement entered into in connection with the Bonds or the Project;

(iii) any act or negligence of the Participating Institution or of any of its agents, contractors, servants, employees or licensees;


(v) any material misstatement or omission, or alleged material misstatement or omission, made or omitted in any disclosure materials used in connection with the offering or sale of the Bonds or any other information used in connection with the offering, placement, sale, remarketing or purchase of any Bond (other than a material misstatement or omission contained in information provided by an Indemnified Party specifically for inclusion in disclosure materials relating to the Bonds).

The Participating Institution shall indemnify and save the Indemnified Parties harmless from any such claim arising as aforesaid, or in connection with any action or proceeding brought thereon, and upon notice from the Indemnified Party, the Participating Institution shall, subject to ORS Chapter 180 (or any successor provision of law), defend it in any such action or proceeding at the Participating Institution’s expense, and shall pay all attorney’s fees and expenses of the Indemnified Parties incurred in connection therewith at trial, on appeal or otherwise related to the claim for which indemnification is provided hereunder, and against all other liabilities arising from the issuance of the Bonds on behalf of the Participating Institution and any fees and costs incurred by the Indemnified Parties in responding to any U.S. Department of the Treasury Internal Revenue Service (the “IRS”) audit, U.S. Securities and Exchange Commission (the “SEC”) inquiry or any Federal, State or regulatory action or proceeding with respect to the Bonds or the Project. The Authority and the State Treasurer may employ, at the Participating Institution’s expense, any legal counsel or experts required in responding to any IRS audit, SEC inquiry or any other Federal, State or regulatory action or proceeding with respect to the Bonds or the Project. The foregoing indemnification and hold


harmless agreement shall be and remain in full force and effect notwithstanding the failure or refusal, for any reason, of the Authority or the State Treasurer to proceed with the issuance of the Bonds. Notwithstanding anything to the contrary contained herein, the Participating Institution shall have no liability to indemnify the Indemnified Parties against claims or damages resulting from the Indemnified Parties’ own willful misconduct.

SECTION 3. MISCELLANEOUS. The State of Oregon, the State Treasurer, the Authority and their respective officials, officers, members and employees, and Orrick, Herrington & Sutcliffe LLP and PFM Financial Advisors, LLC, and each of them individually, shall be third party beneficiaries of this agreement with respect to payment of their respective fees, with the right to enforce the provisions of this agreement directly and individually and without joining any other beneficiary hereof.

This agreement shall be governed by and construed in accordance with the laws of the State of Oregon.



PRELIMINARY AGREEMENT – PORTLAND COMMUNITY REINVESTMENT INITIATIVES 2019 FINANCING SIGNATURE PAGE


OREGON FACILITIES AUTHORITY By: _______________________________________

Its Executive Director

PORTLAND COMMUNITY REINVESTMENT

INITIATIVES, INC., AS PARTICIPATING INSTITUTION

By:

Maxine Fitzpatrick Executive Director

4141-0026-6008