George K. Baum & Company

Transcription

1 NEW ISSUE BANK QUALIFIED OFFERING CIRCULAR Unrated In the opinion of Bryan Cave LLP, Special Tax Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended, the interest component of the Rental Payments represented by the Series 2012 Certificates (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal and Missouri income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The Series 2012 Certificates are qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See TAX MATTERS herein. $550,000 MISSOURI SCHOOL BOARDS ASSOCIATION LEASE PARTICIPATION CERTIFICATES (CHILLICOTHE R-II SCHOOL DISTRICT, LIVINGSTON COUNTY, MISSOURI PROJECT) SERIES 2012 EVIDENCING PROPORTIONATE INTERESTS OF THE OWNERS THEREOF IN RENTAL PAYMENTS TO BE MADE BY CHILLICOTHE R-II SCHOOL DISTRICT, LIVINGSTON COUNTY, MISSOURI UNDER AN ANNUALLY RENEWABLE LEASE AGREEMENT Dated: October 1, 2012 Due: March 1, as shown on the inside Cover Page The Series 2012 Certificates are deliverable only as fully registered certificates, without coupons, and, when delivered, will be registered in the name of Cede & Co., as Registered Owner and nominee for The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository for the Series 2012 Certificates. Purchases of the Series 2012 Certificates will be made in book-entry form, in authorized denominations. Purchasers will not receive certificates representing their interests in Series 2012 Certificates purchased. Principal and Interest Components of the Rental Payments represented by the Series 2012 Certificates will be payable at maturity or upon earlier redemption at the principal corporate paying office of Commerce Bank, Kansas City, Missouri, as trustee and paying agent (the Trustee ). So long as DTC or its nominee, Cede & Co., is the owner, such payments will be made directly to such owner. DTC is expected, in turn, to remit such payments to the DTC Participants (herein defined) for subsequent disbursement to the Beneficial Owners. The Series 2012 Certificates will be delivered in the denomination of $5,000 or any integral multiple thereof. Principal Components and premium, if any, will be payable at the principal corporate paying office of the Trustee. Principal Components will be payable each March 1, as indicated on the inside cover page hereof, and semiannual Interest Components will be payable on March 1 and September 1, beginning March 1, Principal Components will be payable upon presentation and surrender of the Series 2012 Certificates by the Registered Owners thereof at the principal corporate paying office of the Trustee or at such other place designated by the Trustee. Interest Components will be payable by check or draft mailed (or by wire transfer in certain circumstances) by the Trustee to the person in whose name each Series 2012 Certificate is registered on the fifteenth day of the month preceding the month in which each interest payment date occurs. The Series 2012 Certificates evidence undivided ownership interests in the right to receive Rental Payments from the Chillicothe R- II School District, Livingston County, Missouri (the District ) under an annually renewable Lease Agreement dated June 1, 2006, as heretofore amended and further amended by a Second Amendment to Lease Agreement dated as of October 1, 2012 (collectively, the Lease ), between the Missouri School Boards Association, as lessor (the Association ) and the District. The Series 2012 Certificates are to be executed and delivered pursuant to a Second Supplement to Trust Indenture dated as of October 1, 2012 (the Second Indenture Supplement ) amending and supplementing that certain Trust Indenture dated as of June 1, 2006, as heretofore amended (collectively, the Indenture ), between the Trustee and the Association. The net proceeds from the Series 2012 Certificates, together with other available funds of the District, will be used to finance, or reimburse the District for, the costs to acquire, construct, improve, furnish and equip school facilities of the District and to pay the costs related to the delivery and sale of the Series 2012 Certificates. NEITHER THE SERIES 2012 CERTIFICATES NOR THE LEASE SHALL CONSTITUTE A LIABILITY OR OBLIGATION OF THE DISTRICT BEYOND THE INITIAL TERM OR THE RENEWAL TERM IN EFFECT AT ANY TIME. THE DISTRICT IS UNDER NO OBLIGATION TO RENEW THE LEASE AT THE END OF THE INITIAL TERM OR ANY RENEWAL TERM. NEITHER THE SERIES 2012 CERTIFICATES NOR THE LEASE WILL CONSTITUTE A GENERAL OBLIGATION OR INDEBTEDNESS OF THE DISTRICT WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. THE ASSOCIATION WILL HAVE NO FINANCIAL OBLIGATION UNDER THE LEASE OR THE INDENTURE. THE SERIES 2012 CERTIFICATES ARE ISSUED, RANK AND ARE SECURED ON A PARITY WITH OUTSTANDING SERIES 2006 CERTIFICATES AND SERIES 2007 CERTIFICATES IDENTIFIED AND DESCRIBED HEREIN. The Series 2012 Certificates shall be subject to optional, extraordinary optional and mandatory redemption and payment prior to maturity as more fully described herein. See The Series 2012 Certificates - Redemption Provisions herein. The Series 2012 Certificates will be offered when, as and if delivered and approved by the District, subject to prior sale, modification or withdrawal of the offer without sale, and subject to the approval of validity and certain other matters by Bryan Cave LLP, Kansas City, Missouri, Special Tax Counsel, and certain other conditions. It is expected that the Series 2012 Certificates will be available for delivery through the facilities of DTC in New York, New York on or about October 9, George K. Baum & Company The date of this Offering Circular is September 18, 2012.

2 $550,000 MISSOURI SCHOOL BOARDS ASSOCIATION LEASE PARTICIPATION CERTIFICATES (CHILLICOTHE R-II SCHOOL DISTRICT, LIVINGSTON COUNTY, MISSOURI PROJECT) SERIES 2012 MATURITY SCHEDULE $50,000 Serial Certificates Maturity Principal Interest March 1 Amount Rate Yield 2013 $50, % 1.000% $500,000 Term Certificates Maturity March 1 Principal Amount Interest Rate Yield 2015 $100, % 1.500% , ,

3 OFFERING CIRCULAR $550,000 MISSOURI SCHOOL BOARDS ASSOCIATION LEASE PARTICIPATION CERTIFICATES (CHILLICOTHE R-II SCHOOL DISTRICT, LIVINGSTON COUNTY, MISSOURI PROJECT) SERIES 2012 Purpose of the Offering Circular INTRODUCTION The purpose of this Offering Circular is to furnish information in connection with the offering and sale of Missouri School Boards Association Lease Participation Certificates (Chillicothe R-II School District, Livingston County, Missouri) Series 2012, in the aggregate principal amount of $550,000 (the Series 2012 Certificates, together with any Additional Certificates, the Certificates ). The Series 2012 Certificates are being delivered pursuant to a Second Supplement to Trust Indenture dated as of October 1, 2012 (the Second Indenture Supplement ), amending and supplementing that certain Trust Indenture dated as of June 1, 2006, as amended (collectively, the Indenture ), between the Missouri School Boards Association (the Association ) and Commerce Bank, as trustee (the Trustee ), for the purpose of providing funds to finance, or reimburse the District for, the costs to acquire, construct, improve, furnish and equip school facilities of the District, including improvements to the high school and parking lots of District facilities (the Project Addition and together with the Original Project (as herein defined), the Project ) for Chillicothe R-II School District, Livingston County, Missouri, a school district and political subdivision of the State of Missouri (the District ) and to pay costs related to the delivery of the Series 2012 Certificates as described herein. The project site includes the District s middle school (the Project Site ). The Project Site, the Project and all additions, modifications, improvements, replacements and substitutions made thereon and thereto, and any additional facilities financed with Additional Certificates (as hereinafter described) are collectively referred to as the Facilities. The Series 2012 Certificates are issued on a parity with and enjoy an equal lien on the trust estate with those certain: (a) Lease Participation Certificates (Chillicothe R-II School District, Livingston County, Missouri Project), Series 2006, dated June 1, 2006 in the original principal amount of $1,740,000 (the Series 2006 Certificates ) issued for the purpose of acquiring and installing certain energy improvements to the District s school facilities (the Series 2006 Project ) and (b) Lease Participation Certificates (Chillicothe R-II School District, Livingston County, Missouri Project) Series 2007, dated April 1, 2007 in the original principal amount of $750,000 (the Series 2007 Certificates and together with the Series 2006 Certificates and the Series 2012 Certificates, the Certificates ) issued for the purpose of acquiring, constructing and installing energy improvements and roof repairs to the District s school facilities (the Series 2007 Project and together with the Series 2006 Project, the Original Project ). Plan of Financing THE SERIES 2012 CERTIFICATES Pursuant to the provisions of Section of the Revised Statutes of Missouri, as amended (the Act ), and the terms of a Site Lease dated as of June 1, 2006, as amended by a Second Amendment

4 to Site Lease dated as of October 1, 2012 (collectively, the Site Lease ), between the Association and the District, and the terms of a Lease Agreement dated as of June 1, 2006, as amended by that certain Second Amendment to Lease Agreement dated as of October 1, 2012 (collectively, the Lease ) between the Association and the District, (a) the District will lease the Project Site to the Association, (b) the Association will use a portion of the proceeds of the Series 2012 Certificates to acquire, construct, furnish and equip the Project, and (c) the Association will lease the Facilities to the District for a current term ending June 30, 2013 (the Initial Term ), with nine (9) successive one-year renewal options, provided that the final renewal term does not extend beyond June 30, 2022 (the Renewal Terms ), which Renewal Terms are subject to annual budget appropriations. The Series 2012 Certificates evidence undivided ownership interests in the right to receive Rental Payments payable by the District under the Lease. The Series 2012 Certificates will be payable solely from the rents, revenues and receipts received under the Lease for the use of the Facilities and not from any other fund or source of the Association or the Trustee, from certain proceeds of insurance policies or condemnation awards, from certain reserves and interest earnings on moneys in certain funds held by the Trustee, from money derived from the sale or lease of the Association s interest in the Facilities or portions thereof and not from any other fund or source of the Association or the Trustee. Pursuant to the Indenture, the Association will pledge and assign such rents, revenues and receipts and other moneys to the Trustee to permit the transfer of undivided ownership interest in the right to receive Rental Payment represented by the Series 2012 Certificates and the interest components with respect thereto. Limited Obligations; Sources of Payment The Series 2012 Certificates evidence undivided ownership in the right to receive (i) the Rental Payments paid by the District for the lease of the Facilities pursuant to the Lease, and (ii) to the extent received by the Trustee, interest earnings, proceeds of insurance and condemnation awards, moneys on deposit in the Reserve Fund, proceeds of any lease or sale of the Association s interest in the Facilities and not from any other funds or sources of the District or the Association. Under the Indenture, the Association will pledge and assign the Rental Payments under the Lease and its rights in the Lease and the Site Lease to the Trustee for the benefit of the Owners of the Series 2012 Certificates, as security for the payment of the Series 2012 Certificates and the interest components with respect thereto on a parity, however, with amounts payable under the Lease with respect to the remaining outstanding Series 2006 Certificates and Series 2007 Certificates, respectively. The Site Lease provides that the District shall lease the Project Site and any improvements thereon to the Association for a lease term ending June 30, The total cost of the Project Addition is estimated at approximately $600,000. The Project Addition includes acquisition, construction, and the furnishing and equipping of school facilities including improvements to the high school and parking lots of District facilities. The portion of the cost to be paid for from proceeds of the Series 2012 Certificates will be paid by the Trustee from the Project Fund, upon receipt of written requests for payment submitted by the District. The actual work of acquisition, construction, improvement, furnishing and equipping of the Project Addition is expected to be completed by October 1, Neither the Series 2012 Certificates nor the Lease shall constitute a debt or liability of the District or of the State of Missouri or of any political subdivision thereof and shall not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. The delivery of the Series 2012 Certificates shall not obligate the District to levy any form of taxation therefor or to make any appropriation for their payment in any fiscal year subsequent to a fiscal year in which the Lease is in effect. The Series 2012 Certificates are issued on a parity with and enjoy an equal lien on the trust estate with the Series 2006 Certificates and Series 2007 Certificates, respectively. The Indenture provides for the future delivery of additional certificates ( Additional Certificates and together with the Series

5 Certificates and the Series 2007 Certificates, the Certificates ) which, if delivered, would rank on a parity with the Series 2006 Certificates, the Series 2007 Certificates, the Series 2012 Certificates and any other certificates then outstanding under the Indenture. Under the terms of the Lease, if the District elects to renew the Lease at the end of the Initial Term or any Renewal Term, it is obligated to budget, appropriate and set aside a portion of its general revenues derived from property taxes and other sources, which appropriation shall be sufficient to make the Rental Payments coming due during the ensuing fiscal year. The District is obligated to make two Rental Payments to the Trustee during each fiscal year in which the Lease is in effect not less than three (3) business days prior to each certificate payment date, in amounts sufficient to enable the Trustee to pay the Principal Component, premium, if any, and Interest Component of the Rental Payments represented by the Series 2012 Certificates becoming due during such fiscal year (but only if the District elects to renew the Lease for each Renewal Term). THERE CAN BE NO ASSURANCE THAT THE DISTRICT WILL APPROPRIATE FUNDS FOR RENTAL PAYMENTS OR RENEW THE LEASE AFTER THE INITIAL LEASE TERM. NEITHER THE SERIES 2012 CERTIFICATES NOR THE LEASE CONSTITUTE A GENERAL OBLIGATION OR OTHER INDEBTEDNESS OF THE DISTRICT NOR A MANDATORY PAYMENT OBLIGATION IN ANY FISCAL YEAR SUBSEQUENT TO A FISCAL YEAR IN WHICH THE LEASE IS IN EFFECT. THE DISTRICT IS NOT LEGALLY REQUIRED TO BUDGET OR APPROPRIATE MONEYS FOR ANY SUBSEQUENT FISCAL YEAR BEYOND THE CURRENT FISCAL YEAR. Unilateral Right to Terminate Lease The District s obligations under the Lease may be terminated on an annual basis by the District without any penalty and there is no assurance that the District will renew the Lease beyond the Initial Term. Accordingly, the likelihood that the District will renew the Lease throughout the term of the Series 2012 Certificates is dependent upon certain factors which are beyond the control of the Owners, including (i) the continuing need of the District for facilities such as the Project, (ii) the demographic conditions within the District, including the number of persons residing in and the number of students served by the District, and (iii) the ability of the District to generate sufficient funds from property taxes and other sources to pay its obligations under the Lease and the other obligations of the District given budget constraints. Result of Termination of Lease; Inability to Liquidate In the event that the District does not budget and appropriate, specifically with respect to the Lease, moneys sufficient to pay all Rental Payments coming due for the Fiscal Year following the Initial Term or the then current Renewal Term, the Lease is terminated. Upon a termination of the Lease by reason of nonappropriation, the occurrence of certain events of condemnation, damage or destruction of all or a portion of the Project (if the District does not repair or replace the Project) or an Event of Default, the Trustee may terminate the Lease Term and give the District notice to vacate the Project Site. Thereafter, the Trustee may foreclose on and sell the Association s interest in the Project Site, subject to Permitted Encumbrances. Because of the nature of the Project, the Trustee holds only a leasehold interest in the Project Site as security, and a foreclosure of the Project Site may not be practicable. The Project Site may be specially zoned for school purposes and may be subject to other public use restrictions, and, as noted above, a sale of a leasehold interest in the Project Site may not be practicable. A potential purchaser of the Series 2012 Certificates should not assume that it will be possible to foreclose on and sell the Project Site upon termination of the Lease Term (i) for an amount equal to the aggregate stated principal amount of Certificates then outstanding plus accrued interest and/or (ii) within a time period which would prevent a default in the timely payment of amounts payable with respect to the Series 2012 Certificates. 3

6 Condemnation of the Facilities Section of the Revised Statutes of Missouri, as amended, grants Missouri school districts the power to condemn property for any purpose for which such districts are authorized to acquire property. There is no assurance that if the District were to condemn the Association s interest under the Site Lease that the condemnation award would be sufficient to pay the outstanding principal and interest components with respect to the Series 2012 Certificates. The District has agreed in the Site Lease that, in the event that the whole or any part of the Facilities is taken by eminent domain proceedings, the interest of the Association will be recognized. Under the Site Lease, the District and the Association have reached an agreement on the terms of the acquisition of the Facilities at the District s option, and to the use of the Facilities. The District has agreed that any acquisition of the Facilities or rights to their use by the District (whether pursuant to the exercise of eminent domain powers or otherwise) shall be pursuant to and in accordance with the Lease, including payment of Rental Payments and the applicable Option Purchase Price (as defined and set forth in the Lease). If the District allows the Lease to expire without exercising its option to purchase, whether by failure to exercise its option to extend the Lease for a Renewal Term, failure to exercise its option to purchase at the conclusion of the Maximum Lease Term or failure to cure an Event of Default (as such terms are defined in the Lease), the District s failure to exercise the option to purchase shall constitute an irrevocable determination by the District that the Facilities are not required by it for any public purpose for the term of the Site Lease. Reserve Fund A Reserve Fund was established pursuant to the Indenture in connection with the issuance of the Series 2006 Certificates in the amount of $174, and for the Series 2007 Certificates in the amount of $75, and will not be increased in connection with the Series 2012 Certificates (the Reserve Requirement ). The Reserve Requirement does not exceed the least of (1) ten percent (10%) of the stated principal amount of the Certificates, (2) the maximum annual principal and interest requirements on the Certificates (determined as of the issue date), or (3) one hundred and twenty-five percent (125%) of the average annual principal and interest requirements on the Certificates (determined as of the issue date). Amounts in the Reserve Fund are to be used to pay Principal and Interest Components of the Rental Payments represented by the Certificates to the extent of any deficiency in the Certificate Fund and for certain other purposes as described in Appendix B hereto under the caption THE INDENTURE - Reserve Fund. Redemption Provisions Optional Redemption. The Series 2012 Certificates, including portions of Series 2012 Certificates, maturing on March 1, 2022, and thereafter, shall be subject to redemption and payment prior to maturity, upon instructions from the District, on and after March 1, 2017, in whole or in part at any time, at the redemption price of 100% of the principal amount, plus accrued interest thereon to the redemption date. Extraordinary Optional Redemption. The Series 2012 Certificates shall be subject to redemption and payment prior to the stated maturity thereof upon instructions from the District, in whole and not in part or any date at a redemption price of one hundred percent (100%) of the principal amount of the Series 2012 Certificates being called for redemption, plus accrued interest to the redemption date, upon the occurrence of any of the following conditions or events: 4

7 (1) if title to, or the use for a limited period of, all or substantially all of the Facilities is condemned by any authority having the power of eminent domain (other than the District or any entity controlled by or otherwise affiliated with the District); (2) if title to all or substantially all of the Facilities is found to be deficient or nonexistent to the extent that the efficient utilization of the Facilities by the District is impaired; (3) if all or substantially all of the Facilities is damaged or destroyed by fire or other casualty; or (4) if as a result of changes in the constitution of the State, or of legislative or administrative action by the State or any political subdivision thereof, or by the United States, or by reason of any action instituted in any court, the Site Lease, the Lease or this Indenture shall become void or unenforceable, or impossible of performance without unreasonable delay, or in any other way, by reason of such change of circumstances, unreasonable burdens or excessive liabilities are imposed on the District or the Association with respect to the Site Lease, the Lease or the Indenture. Mandatory Redemption. The Series 2012 Certificates maturing March 1, 2015 are subject to mandatory redemption in part and by lot, from sinking fund installments, at a redemption price equal to the principal amount of the Series 2012 Certificates to be redeemed plus accrued interest to the date fixed for redemption, without premium, on the respective dates and in the amounts set forth in the following table (subject to certain credits as provided in the Indenture): March 1, 2015 Term Certificate Redemption Date Principal March 1 Amount 2014 $50,000 (leaving $50,000 of such Series 2012 Certificates to be paid at stated maturity on March 1, 2015). The Series 2012 Certificates maturing March 1, 2017 are subject to mandatory redemption in part and by lot, from sinking fund installments, at a redemption price equal to the principal amount of the Series 2012 Certificates to be redeemed plus accrued interest to the date fixed for redemption, without premium, on the respective dates and in the amounts set forth in the following table (subject to certain credits as provided in the Indenture): March 1, 2017 Term Certificate Redemption Date Principal March 1 Amount 2016 $50,000 (leaving $50,000 of such Series 2012 Certificates to be paid at stated maturity on March 1, 2017). 5

8 The Series 2012 Certificates maturing March 1, 2022 are subject to mandatory redemption in part and by lot, from sinking fund installments, on March 1, 2018, and on each March 1 thereafter to and including March 1, 2021, at a redemption price equal to the principal amount of the Series 2012 Certificates to be redeemed plus accrued interest to the date fixed for redemption, without premium, on the respective dates and in the amounts set forth in the following table (subject to certain credits as provided in the Indenture): March 1, 2022 Term Certificate Redemption Date March 1 Principal Amount 2018 $60, , , ,000 (leaving $60,000 of such Series 2012 Certificates to be paid at stated maturity on March 1, 2022). Selection of Certificates to Be Redeemed. Certificates shall be redeemed only in principal amounts of five thousand dollars ($5,000) or any integral multiple thereof. When less than all of the Outstanding Certificates of any series are to be redeemed and paid prior to maturity, such Certificates shall be redeemed from the maturities selected by the District, and Certificates of less than a full maturity shall be selected by the Trustee in five thousand dollars ($5,000) units of face value in such equitable manner as the Trustee may determine. Notice and Effect of Call for Redemption. Official notice of any redemption of Certificates shall be given by the Trustee by mailing a copy of an official redemption notice at least thirty (30) days prior to the date fixed for redemption by first class mail to the Underwriter of the Certificates and the Owner of the Certificate or Certificates to be redeemed, unless waived by any Owner thereof, at the address shown on the Certificate Register as of the date of the notice, as more fully described in the Indenture. Upon notice having been given as provided in the Indenture, the Registered Owners of such Certificates or portion of the principal component with respect to the Certificates thus called for redemption shall no longer be entitled to receive any additional Interest Component of the Rental Payments after the specified redemption date, and such Certificates or portion of the Principal Component with respect to the Certificates thus called for redemption shall no longer be entitled to the protection, benefit or security of the Indenture and shall not be deemed to be Outstanding under the provisions of the Indenture. THE BOOK-ENTRY ONLY SYSTEM The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Series 2012 Certificates. The Series 2012 Certificates will be delivered as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee). One fully-registered Certificate will be delivered for each maturity of the Series 2012 Certificates, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also 6

9 facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Series 2012 Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2012 Certificates on DTC s records. The ownership interest of each actual purchaser of each Certificate ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2012 Certificates are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2012 Certificates, except in the event that use of the book-entry system for the Series 2012 Certificates is discontinued. To facilitate subsequent transfers, all Series 2012 Certificates deposited by Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co. The deposit of Series 2012 Certificates with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2012 Certificates; DTC s records reflect only the identity of the Direct Participants to whose accounts such Series 2012 Certificates are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Series 2012 Certificates within a series are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such series to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2012 Certificates unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Trustee as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Series 2012 Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal Component and Interest Component payments with respect to the Series 2012 Certificates will be made to Cede & Co., or such other nominee as may be requested by an authorized 7

10 representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the Paying Agent or the District, on each payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of Principal and Interest Component to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Trustee, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Series 2012 Certificates at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered. NEITHER THE DISTRICT, THE ASSOCIATION NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO SUCH PARTICIPANTS OR THE PERSONS FROM WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF NOTICE FOR THE PARTICIPANTS, THE INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS. The information in this section concerning DTC and DTC s book-entry system has been obtained from source that the District believes to be reliable, but the District takes no responsibility for the accuracy thereof. GENERAL AND ECONOMIC INFORMATION CONCERNING THE DISTRICT Location and Size The District encompasses approximately 325 square miles and is located entirely within the corporate limits of Livingston County, and encompasses the City of Chillicothe, Missouri (the City ). The City is located approximately 100 miles northeast of Kansas City and 250 miles northwest of the St. Louis metropolitan area. Based on the 2010 census, the population of the School District is 12,889. Government and Organization The District was initially organized in 1850, was reorganized in 1950, and currently exists as a seven-director school district organized and governed pursuant to Sections through of the Revised Statutes of Missouri, as amended. The District is governed by a seven-member Board of Education. The members of the Board are elected by the voters of the District for three-year staggered terms with two or three members being elected each year. All Board members are elected at-large and serve without compensation. The Board is responsible for all policy decisions. The President of the Board is elected by the Board from among its members for a term of one year and has no regular administrative duties. The Secretary and Treasurer are appointed by the Board and may or may not be members of the Board. 8

11 The Board of Education appoints the Superintendent of Schools who is the chief administrative officer of the District responsible for carrying out the policies set by the Board. Additional members of the administrative staff are appointed by the Board of Education upon recommendation by the Superintendent. The District has a total of 284 full-time equivalent employees, including 12 full-time equivalent administrative personnel, 155 full-time equivalent teachers and 117 full-time equivalent noncertified employees. The current members and officers of the Board of Education are: Name Office Original Term Began Current Term Expires David Meneeley President April, 2009 April, 2013 Paul Thomas Vice President April, 2009 April, 2015 Shawn Skoglund Treasurer April, 2011 April, 2014 Robin Westphal Member April, 2000 April, 2013 Michael Leamer Member April, 2008 April, 2014 Jason Bone Member April, 2011 April, 2014 Brent Turner Member April, 2012 April, 2015 The Board has appointed Laura Schuler to serve as Secretary. Dr. Roger Barnes joined the District in July, 2011 and serves as Superintendent. Educational Facilities The District operates seven schools described below. History of Enrollment Grades Served PK Name of School Garrison Elementary Dewey Elementary K-1 Field Elementary 2-3 Central Elementary 4-5 Chillicothe Middle School 6-8 Chillicothe High School 9-12 Grand River Tech 9-12/Adult The following table shows student enrollment in the District as of the last Wednesday in September, for each of the last five school years Elementary Schools Middle Schools High Schools Total 1,901 1,907 1,902 1,834 1,841 Other District Statistics The average daily attendance in the District for the academic year was 95.4%. The student/teacher ratio for such year was 20:1, and the cost of instruction in the District was $8,549 per 9

12 pupil. District statistics for the academic year have not been released by DESE as of the date of this Offering Circular. The Missouri Department of Elementary and Secondary Education ( DESE ) administers the Missouri School Improvement Program, whereby school districts are evaluated in all areas of operation, including curriculum, facilities, teaching staff and administrative staff. The evaluation culminates with the placing of each district in one of three categories: accredited, provisionally accredited or unaccredited. DESE has awarded the District an accredited status, the highest possible under the Program. The classification is not a bond or debt rating, but solely an evaluation made by DESE. (Remainder of this page intentionally left blank) 10

13 DEBT STRUCTURE OF THE DISTRICT Overview The following table summarizes certain financial information concerning the District after issuance of the Series 2012 Certificates. This information should be reviewed in conjunction with the information contained in this section and the excerpts of financial statements of the District in Appendix A hereto Assessed Valuation 1 $132,127, Estimated Actual Valuation 2 $587,355,316 Outstanding General Obligation Bonds $6,795,000 Net Direct Debt 3 ( Direct Debt ) $6,271,962 Lease Debt 4 $2,350,000 Total Direct and Lease Debt $8,621,962 Estimated Population 12,889 Per Capita Direct Debt $ Ratio of Direct Debt to Assessed Valuation 4.74% Ratio of Direct Debt to Estimated Actual Valuation 1.07% Per Capita Direct Debt and Lease Debt $ Ratio of Direct and Lease Debt to Assessed Valuation 6.52% Ratio of Direct and Lease Debt to Estimated Actual Valuation 1.47% Overlapping and Underlying General Obligation and Lease Debt ( Indirect Debt ) $4,600,993 Total Direct, Lease and Indirect Debt $13,222,955 Per Capita Direct, Lease and Indirect Debt $1, Ratio of Direct, Lease and Indirect Debt to Assessed Valuation 10.01% Ratio of Direct, Lease and Indirect Debt to Estimated Valuation 2.25% 1 Includes 2011 real and personal property as provided by the Livingston County Clerk (does not include state assessed railroad and utility property based on figures provided by the Missouri State Tax Commission and by the railroad and utility companies for the 2011 tax year). 2 Estimated actual valuation is calculated by dividing different classes of property by the corresponding assessment ratio. 3 Outstanding general obligation bonds totaling $6,795,000 (including the Bonds) less a Debt Service Fund balance of $523,038 available to pay principal of bonds as of November 30, Lease Debt is comprised of the lease obligations described under the caption Debt Service Requirements Current Long-Term General Obligation Indebtedness The following table sets forth all of the outstanding general obligation indebtedness of the District as of the date hereof: Date of Amount Category of Indebtedness Indebtedness Outstanding General Obligation Refunding Bonds, Series 2012 March 1, 2012 $6,795,000 11

14 Overlapping or Underlying Indebtedness The following table sets forth overlapping and underlying general obligation and lease indebtedness of political subdivisions with boundaries overlapping the District or lying within the District as of the date indicated, and the percent attributable (on the basis of assessed valuation) to the District, based on information furnished by the jurisdictions responsible for the debt or lease obligations. The District has not independently verified the accuracy or completeness of such information. Furthermore, political subdivisions may have issued additional bonds or incurred lease obligations since the date indicated or may have ongoing programs requiring the issuance of substantial additional bonds or incurring of lease obligations, the amounts of which cannot be determined at this time. Jurisdiction General Obligation Indebtedness Obligations Outstanding Percent Attributable to the District Amount Attributable to the District Livingston County Library District $3,250, % $2,800,993 Sub-Total $3,250,000 $2,800,993 Leasehold Indebtedness Percent Attributable to the District Amount Attributable to the District Obligations Jurisdiction Outstanding City of Chillicothe $1,800, % $1,800,000 Sub-Total $1,800,000 $1,800,000 Total Overlapping & Underlying Debt $5,050,000 $4,600,993 Debt Service Requirements The following schedule shows the yearly principal and interest requirements under the Lease represented by the Series 2006 Certificates and the Series 2007 Certificates (the Prior Certificates ) and the Series 2012 Certificates being offered. The Certificates are payable solely from the District s Capital Projects Fund. The Certificates are not payable from moneys in the District s Debt Service Fund which are available solely to make payments on the District s general obligation bonds. Fiscal Year Ended Prior Certificates Series 2012 Certificates June 30 Principal Interest Principal Interest Total 2013 $130,000 $82, $50,000 $ 5, $268, ,000 77, ,000 12, , ,000 71, ,000 12, , ,000 65, ,000 11, , ,000 58, ,000 10, , ,000 51, ,000 9, , ,000 43, ,000 7, , ,000 35, ,000 5, , ,000 26, ,000 3, , ,000 9, ,000 1, ,

15 Fiscal Year Ended Prior Certificates Series 2012 Certificates June 30 Principal Interest Principal Interest Total ,000 6, , Total $1,800,000 $527, $550,000 $80, $2,957, History of General Obligation Indebtedness The following table sets forth debt information pertaining to the District as of the end of each of the last five fiscal years available: Debt Service As of June 30 Assessed Valuation Total Outstanding Debt Fund Available for Principal Payments Net Outstanding Debt Net Debt as % of Assessed Value 2011 $132,127,680 $7,275,000 $173,201 $7,101, % ,996,003 7,650, ,023 7,438, % ,238,598 8,000, ,990 7,761, % ,544,873 8,300, ,790 8,079, % ,853,615 8,575, ,495 8,330, % The District has never defaulted on the payment of any of its debt obligations. (Remainder of this page intentionally left blank) 13

16 Sources of Revenue The District finances its operations through the local property tax levy, state sales tax, state aid, federal grant programs and miscellaneous sources. Debt service on general obligation bonds is paid from amounts in the District s Debt Service Fund. The primary source of money in the Debt Service Fund is local property taxes derived from a debt service levy. However, the Debt Service Fund may also contain money derived from transfers from the Incidental Fund. For the fiscal year, the District s sources of its revenues were as follows: Source Amount % Local Revenue Property Taxes $5,215, % Proposition C Sales Tax 1 1,577, % Other 1,845, % County Revenue: Railroad & Utility Property Taxes 2 321, % Fines, Forfeiture & Other 120, % State Revenue 7,537, % Federal Revenue 3,723, % Other Revenue 678, % Total Revenue $21,020, % 1 2 Under the provisions of an initiative petition adopted by the voters of Missouri on November 2, 1982 ( Proposition C ), revenues generated by a 1% state sales tax are credited to a special trust fund for school districts and are deemed to be local revenue. For school taxation purposes, all state assessed railroad and utility property within a county is taxed uniformly at a rate determined by averaging the tax rates of all school districts in the county. No determination is made of the assessed value of such property that is physically located within the bounds of each school district. Such tax collections for each county are distributed to the school districts within that county according to a formula based in part on total student enrollments in each district and in part on the taxes levied by each district. (Remainder of this page intentionally left blank) 14

17 Fund Balances Summary The following Summary Statement of Cash Receipts, Disbursements and Changes in Fund Balances was prepared from reports filed by the District with the Department of Elementary and Secondary Education. The statement set forth below should be read in conjunction with the other financial statements and notes appertaining hereto set forth in Appendix A to this Offering Circular and the financial statements on file at the District s office General (Incidental Fund) Balance Beginning of Year $3,197,122 $3,199,835 $2,439,518 $1,658,795 $1,151,026 Cash Receipts 13,550,391 12,341,089 11,927,293 13,547,147 13,498,642 Cash Disbursements (8,788,431) (8,089,250) (7,432,747) (7,570,876) (7,000,588) Transfers In (Out) (4,759,246) (5,012,157) (5,275,269) (6,484,040) (5,204,258) Balance End of Year $3,199,835 $2,439,518 $1,658,795 $1,151,026 $2,444,822 Special Revenue (Teachers ) Fund Balance Beginning of Year $0 $0 $0 $0 $0 Cash Receipts 6,893,733 7,002,113 7,129,368 6,470,413 6,482,385 Cash Disbursements (11,194,846) (11,437,799) (11,535,232) (11,695,617) (11,065,462) Transfer In (Out) 4,301,113 4,435,686 4,405,864 5,225,204 4,583,078 Balance End of Year $0 $0 $0 $0 $0 Debt Service Fund Balance Beginning of Year $269,772 $244,495 $220,790 $238,990 $211,023 Cash Receipts 578, , , , ,965 Cash Disbursements (603,988) (618,988) (632,988) (673,988) (687,788) Balance End of Year $244,495 $220,790 $238,990 $211,023 $173,201 Capital Projects Fund Balance Beginning of Year $353,329 $248,046 $248,046 $473,659 $430,000 Cash Receipts 436, , ,884 2,139, ,605 Cash Disbursements (999,418) (920,527) (1,185,676) (3,441,562) (971,166) Transfers In (Out) 458, , ,405 1,258, ,180 Balance End of Year $248,046 $248,046 $473,659 $430,000 $469,619 Total Funds Balance Beginning of Year $3,820,223 $3,692,377 $2,908,354 $2,371,444 $1,792,049 Cash Receipts 21,458,837 20,282,541 20,249,732 22,802,647 21,020,597 Cash Disbursements (21,586,683) (21,066,564) (20,786,642) (23,382,043) (19,725,004) Balance End of Year $3,692,377 $2,908,354 $2,371,444 $1,792,049 $3,087,642 Ending Operating Fund Balances as Percentage of Disbursements 16.01% 12.49% 8.75% 5.97% 13.53% 15

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