Boenning & Scattergood, Inc.

Transcription

1 NEW ISSUE BOOK ENTRY ONLY Rating: Standard & Poor s: AA- Assured Guaranty Municipal Corp. Insured (See RATING herein.) In the opinion of Stradley Ronon Stevens & Young, LLP, Philadelphia, Pennsylvania, Special Counsel, assuming continuing compliance by the Commonwealth with certain covenants to comply with provisions of the Internal Revenue Code of 1986, as amended (the Code ) and any applicable regulations thereunder, the designated Interest Component portion of each Assigned Basic Lease Payment (the Lease Interest ) is not includable in gross income under Section 103(a) of the Code and is not an item of tax preference for purposes of the federal alternative minimum income tax but is included in current earnings for purposes of the federal alternative minimum tax imposed on certain corporations. See TAX MATTERS in this Official Statement. Other provisions of the Code may affect purchasers and holders of the Certificates. See TAX MATTERS - Federal Income Tax Treatment of Certificates herein for a brief description of these provisions. Special Counsel is also of the opinion that, under the laws of the Commonwealth of Pennsylvania, the Lease Interest shall be free from taxation for state and local purposes within the Commonwealth of Pennsylvania, but this exemption does not extend to gift, estate, succession or inheritance taxes or any other taxes not levied or assessed directly on the Certificates or the interest thereon. Under the laws of the Commonwealth of Pennsylvania, profits, gains or income derived from the sale, exchange or other disposition of the Certificates shall be subject to state and local taxation within the Commonwealth of Pennsylvania. For a more complete description, see TAX MATTERS. $17,025,000 CERTIFICATES OF PARTICIPATION, SERIES OF 2013 in Assigned Basic Lease Payments by the COMMONWEALTH OF PENNSYLVANIA (Acting Through its Department of General Services), as Lessee Pursuant to Certain Leases with Harristown Development Corporation, as Lessor Dated: Date of Delivery Due: As shown on the inside front cover Each of the Certificates of Participation, Series of 2013 (the Certificates ) represents a specified interest in the right to receive payments of the principal component (the Principal Component ) and interest component (the Interest Component ) of the Assigned Basic Lease Payments (as defined herein) to be made by the Commonwealth of Pennsylvania (the Commonwealth ), acting through its Department of General Services, as lessee (the Lessee ) pursuant to the Leases (as defined herein) of certain office space (the State Demised Premises ) with Harristown Development Corporation, a Pennsylvania nonprofit corporation, as lessor (the Lessor ). The Lessee is obligated under the Leases to make payments sufficient to pay the Principal Component and Interest Component evidenced by the Certificates when due but only from, and subject in all events to, annual appropriations being made by the Commonwealth to provide for its current lease obligations in the then-current operating budget of the Commonwealth. The Certificates are being executed and delivered pursuant to an Escrow Agreement dated as of July 1, 1991, as amended and supplemented, including by a Second Supplemental Escrow Agreement dated as of May 1, 2013 (collectively, the Escrow Agreement ) between the Lessor and Manufacturers and Traders Trust Company, Harrisburg, Pennsylvania, as successor escrow agent (the Escrow Agent ). The proceeds of the sale of the Certificates will be used to: (1) finance the current refunding of the 2001 Certificates (defined herein); and (2) pay the costs of executing and delivering the Certificates, all as described herein. The Certificates will be issued as fully registered Certificates and, when issued, will be registered in the name of and held by Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ). Purchase of the Certificates will be made in book-entry-only form (without delivery of physical certificates) in Principal Component denominations of $5,000 or any whole multiple thereof. So long as DTC or its nominee, Cede & Co., is the registered owner of the Certificates, payments of the Assigned Basic Lease Payments evidenced by the Certificates will be made directly to DTC or its nominee, Cede & Co., which will remit such payments to the Direct Participants in DTC, which will in turn remit such payments to the beneficial owners of the Certificates or to Indirect Participants in DTC for distribution to such beneficial owners. DTC and the Direct Participants and Indirect Participants, and not the Commonwealth or the Escrow Agent, shall be responsible for such distributions. See THE CERTIFICATES OF PARTICIPATION Book-Entry-Only System herein. The Interest Component of Assigned Basic Lease Payments evidenced by the Certificates is payable on each May 1 and November 1 of each year, commencing November 1, 2013, until maturity or earlier redemption of any Certificate prior to maturity, as described herein. The Certificates are subject to redemption prior to maturity as described herein. The scheduled payment of the Principal Component and Interest Component of the Certificates when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Certificates by Assured Guaranty Municipal Corp. The Leases are subject to termination in whole in any fiscal year if sufficient funds are not appropriated through the Commonwealth s annual General Fund budgeting process to enable the Lessee to make lease payments in respect of the State Demised Premises. Upon any such non-appropriation, the obligations of the Commonwealth under the Leases cease as of the beginning of that fiscal year, but such a non-appropriation is not an event of default under the Leases. Moreover, the Commonwealth is under no legal obligation to make any appropriation with respect to the Leases or any Lease Payments due thereunder. See SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES herein. The Certificates are not bonded debt of the Commonwealth or an obligation of the Lessor. The Commonwealth s obligation to make any lease payments, including Assigned Basic Lease Payments, does not constitute a general obligation, debt or liability of the Commonwealth within the meaning of any constitutional or statutory provision and neither the faith and credit nor the taxing power of the Commonwealth is pledged to make such payments. Payments of the principal and interest components of the Certificates will be made solely from amounts derived under the terms of the Leases, including the Assigned Basic Lease Payments, and amounts from time to time on deposit under the terms of the Escrow Agreement or otherwise available to the Escrow Agent for such purpose. The Lessor has no obligation to make any payments of any amounts due on the Certificates. The Certificates are offered when, as and if delivered and subject to the receipt of a certain legal opinion of Stradley Ronon Stevens & Young, LLP, Philadelphia, Pennsylvania, Special Counsel. Certain legal matters will be passed on for the Lessee by the Office of Chief Counsel of the Pennsylvania Department of General Services, for the Lessor by its counsel, McNees Wallace & Nurick LLC, Harrisburg, Pennsylvania, and for the Underwriter by its counsel, Cozen O Connor, Philadelphia, Pennsylvania. Public Financial Management, Inc. is acting as financial advisor to the Commonwealth in connection with the issuance of the Certificates. It is expected that the Certificates in definitive form will be available for delivery in New York, New York on or about May 6, Boenning & Scattergood, Inc. Dated: April 10, 2013

2 $17,025,000 CERTIFICATES OF PARTICIPATION, SERIES OF 2013 in Assigned Basic Lease Payments by the COMMONWEALTH OF PENNSYLVANIA (Acting Through its Department of General Services), as Lessee Pursuant to Certain Leases With Harristown Development Corporation, as Lessor CERTIFICATE MATURITY SCHEDULE Maturity Date Principal Component Interest Rate Yield Price CUSIP * November 1, 2013 $ 1,335, % 0.630% BR8 May 1, ,065, BS6 November 1, ,085, BT4 May 1, ,135, BU1 November 1, , BV9 May 1, ,225, BW7 * The above CUSIP (Committee on Uniform Securities Identification Procedures) numbers have been assigned by an organization not affiliated with the Lessor, the Commonwealth or the Underwriter, and such parties are not responsible for the selection or use of the CUSIP numbers. The CUSIP numbers are included solely for the convenience of certificate holders and no representation is made as to the correctness of such CUSIP numbers. CUSIP numbers assigned to securities may be changed during the term of such securities based on a number of factors including, but not limited to, the refundings or defeasance of such issue or the use of secondary market financial products. None of the Lessor, the Commonwealth or the Underwriter has agreed to, and there is no duty or obligation to, update this Official Statement to reflect any change or correction in the CUSIP numbers set forth above.

3 COMMONWEALTH OF PENNSYLVANIA COMMONWEALTH OFFICIALS GOVERNOR STATE TREASURER ATTORNEY GENERAL SECRETARY OF THE BUDGET SECRETARY, DEPARTMENT OF GENERAL SERVICES THE HONORABLE TOM CORBETT THE HONORABLE ROB MCCORD THE HONORABLE KATHLEEN KANE THE HONORABLE CHARLES ZOGBY THE HONORABLE SHERI PHILLIPS LESSOR HARRISTOWN DEVELOPMENT CORPORATION HARRISBURG, PENNSYLVANIA COUNSEL TO LESSOR MCNEES WALLACE & NURICK LLC HARRISBURG, PENNSYLVANIA ESCROW AGENT MANUFACTURERS AND TRADERS TRUST COMPANY HARRISBURG, PENNSYLVANIA FINANCIAL ADVISOR PUBLIC FINANCIAL MANAGEMENT, INC. HARRISBURG, PENNSYLVANIA SPECIAL COUNSEL STRADLEY RONON STEVENS & YOUNG, LLP PHILADELPHIA, PENNSYLVANIA UNDERWRITER BOENNING & SCATTERGOOD, INC. WEST CONSHOHOCKEN, PENNSYLVANIA COUNSEL TO UNDERWRITER COZEN O CONNOR PHILADELPHIA, PENNSYLVANIA

4 This Official Statement, including the Appendices hereto, does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Certificates by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. No dealer, broker, salesman or other person has been authorized by the Commonwealth, the Lessor or the Underwriter to give any information or to make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Commonwealth, the Lessor or the Underwriter. This Official Statement is not to be construed as a contract or agreement among the Commonwealth, the Lessor, Lessee, the Escrow Agent and the purchasers or owners of any offered Certificates. The information set forth in this Official Statement has been obtained from the Commonwealth and from other sources which are believed to be reliable; however, this information is not guaranteed as to accuracy or completeness by the Underwriter or, as to information from sources other than the Commonwealth, by the Commonwealth. The information and expressions of opinion in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale made under it shall, under any circumstance, create any implication that there has been no change in the affairs of the Commonwealth since the date of this Official Statement or the date such information was given, if earlier. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with and as part of their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The order and placement of materials in this Official Statement, including the Appendices hereto, are not to be deemed to be a determination of relevance, materiality or importance, and this Official Statement, including the Appendices, must be considered in its entirety. No quotations from or summaries or explanations of provision of law and documents herein purport to be complete and reference is made to such laws and documents for full and complete statements of their provisions. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME WITHOUT PRIOR NOTICE. Assured Guaranty Municipal Corp. ( AGM ) makes no representation regarding the Certificates or the advisability of investing in the Certificates. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading BOND INSURANCE and in APPENDIX E. This Official Statement contains statements relating to future results that are forward-looking statements as defined in the Private Securities Litigation Reform Act of When used in this Official Statement, the words estimate, forecast, intend, expect and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Certificates are not registered under the Securities Act of 1933, as amended, or listed on any stock or other securities exchange and neither the Securities and Exchange Commission nor any other federal, state, municipal or other governmental entity, other than the Commonwealth and the Lessor (subject to the limitations set forth herein), has passed upon the accuracy or adequacy hereof. In making an investment decision, investors must rely on their own examination of the Commonwealth and the terms of the offering, including the merits and risks involved. The Certificates have not been recommended by any federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy hereof. Any representation to the contrary is a criminal offense.

5 TABLE OF CONTENTS PAGE INTRODUCTION...1 THE HARRISTOWN PROJECT...3 Buildings Leased by the Commonwealth under the Leases...3 Ground Leases...3 History of the Harristown Project...4 Condominium Conversion...4 THE LESSOR...5 Organization of the Lessor...5 Powers and Duties...5 Members of Board of Directors and Executive Staff Board of Directors...5 Executive Staff...6 THE FINANCING PLAN...6 ESTIMATED SOURCES AND USES OF PROCEEDS...6 THE CERTIFICATES OF PARTICIPATION...6 General Provisions...6 Book-Entry-Only System...7 Procedures on Discontinuation of Book-Entry-Only System...10 Redemption Prior to Maturity...10 SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES...12 General...12 Assigned Basic Lease Payments...13 Non-Appropriation...13 Certain Requirements of Non-Appropriation...14 Additional Certificates...15 BOND INSURANCE...15 Bond Insurance Policy...15 Assured Guaranty Municipal Corp...15 INVESTMENT CONSIDERATIONS...17 Limited Obligations...17 Risk of Non-Appropriation...17 Leasing of State Demised Premises by Escrow Agent...17 Limitations on Enforceability of Remedies...18 Securities and Tax Implications of Lease Termination...18 No Secondary Market...18 Forward Looking Statements...18 TAX MATTERS...18 Federal Income Tax Treatment of the Certificates...18 Pennsylvania Tax Exemption...20 Regulations, Future Legislation...20 RATING...20 LEGAL MATTERS...21 UNDERWRITING...21 CONTINUING DISCLOSURE AGREEMENT...21 FINANCIAL ADVISOR...21 CERTAIN RELATIONSHIPS...22 MISCELLANEOUS...22 APPENDIX A The Commonwealth APPENDIX B Definitions and Summaries of Certain Legal Documents APPENDIX C Proposed Form of Opinion of Special Counsel APPENDIX D Form of Continuing Disclosure Agreement APPENDIX E Specimen Municipal Bond Insurance Policy

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7 OFFICIAL STATEMENT $17,025,000 CERTIFICATES OF PARTICIPATION, SERIES OF 2013 in Assigned Basic Lease Payments by the COMMONWEALTH OF PENNSYLVANIA (Acting Through its Department of General Services), as Lessee Pursuant to Certain Leases With Harristown Development Corporation, as Lessor INTRODUCTION This Official Statement provides certain information concerning the Certificates of Participation, Series of 2013 (the Certificates ) in Assigned Basic Lease Payments (hereinafter described) to be made by the Commonwealth of Pennsylvania (the Commonwealth ) in respect of certain office space (the State Demised Premises ) occupied by Commonwealth agencies and departments in certain office buildings in the City of Harrisburg, Dauphin County, Pennsylvania (the City ) known as State Office Building No. 1 and State Office Building No. 2 (the State Office Buildings ). The Certificates are being issued in the aggregate principal component of $17,025,000 pursuant to an Escrow Agreement (as defined herein). Each Certificate represents a specified interest in the right to receive payments of the principal component (the Principal Component ) and the interest component (the Interest Component ) of the Assigned Basic Lease Payments (the Assigned Basic Lease Payments ) comprising a portion of the lease payments (the Lease Payments ) to be made by the Commonwealth to Harristown Development Corporation ( HDC ), as Lessor (the Lessor ) pursuant to the Leases (as defined herein), and certain other lease rights as described herein. The Commonwealth has occupied nearly 1,000,000 square feet of office space in the State Office Buildings since 1978 pursuant to the Leases. The Commonwealth was authorized to enter into the Leases, including amendments thereto, and therefore to make the Assigned Basic Lease Payments, interests in which are evidenced by the Certificates, by the powers conferred on its Department of General Services (the Lessee ) pursuant to the laws of the Commonwealth (71 P.S. 632(d)). The purpose for issuing the Certificates is (1) to refund the outstanding Certificates of Participation, Series of 2001 that were issued in November 2001 (the 2001 Certificates ) pursuant to the Escrow Agreement and (2) to provide funds to pay the costs of executing and delivering the Certificates. The Certificates represent undivided rights in the Assigned Basic Lease Payments being assigned pursuant to a certain Assignment Agreement dated as of July 1, 1991, as amended and supplemented, including by a Second Amendment to Assignment Agreement dated as of May 1, 2013 (collectively, the Assignment Agreement ) between HDC and Manufacturers and Traders Trust Company, as successor escrow agent (the Escrow Agent ). The Escrow Agent is serving as escrow agent under and pursuant to an Escrow Agreement dated as of July 1, 1991, as amended and supplemented, including by a Second Supplemental Escrow Agreement dated as of May 1, 2013 (collectively, the Escrow Agreement ) between the Lessor and the Escrow Agent. The Lease Payments, including the Assigned Basic Lease Payments, but excluding the rights of the Lessor to collect operating expenses relating to SO1 and SO2, the right of Lessor to collect Retained Basic Lease Payments and rents from other portions of the Strawberry Square complex and the 333 Market Street Building, and the rights of Lessor to indemnification payments, assigned under the

8 Assignment Agreement (the Assigned Lease Payments ) represent a portion of the total Lease Payments payable pursuant to certain leases related to the State Demised Premises, dated October 14, 1975 between the Lessor and the Lessee, as amended and supplemented to date by amendments among the Lessor, the Lessee and the City, and as further amended and supplemented by amendments to be executed by and among the Lessor, the Lessee and the Redevelopment Authority of the City of Harrisburg ( HRA ) (collectively, the Leases ). The Commonwealth s obligation to make Lease Payments, including Assigned Basic Lease Payments, is without any right of set-off or counterclaim and exists regardless of whether the Commonwealth uses or occupies the State Demised Premises but is subject to appropriation as further described herein. The Escrow Agent s obligation to make payments in respect of the Certificates is limited solely to the Assigned Lease Payments, including the Assigned Basic Lease Payments received by it, to certain other moneys available for the purpose under the Escrow Agreement and from amounts, if any, realized on the leasing of the State Demised Premises upon an event of default or an event of non-appropriation. Neither the Escrow Agent nor the Lessor is otherwise liable for amounts payable in respect of the Certificates. The sources of payment of the Certificates offered hereby and the limitations thereon, including their dependence on annual appropriations, are described in this Official Statement. Certain information regarding the Commonwealth and its finances is presented in APPENDIX A. Concurrently with the issuance of the Certificates, Assured Guaranty Municipal Corp. ( AGM ) will issue its Municipal Bond Insurance Policy for the Certificates guaranteeing the scheduled payment of principal of and interest on the Certificates when due as set forth in the form thereof included as APPENDIX E hereto. If moneys are not so appropriated, the Leases will terminate as to the State Demised Premises with no further obligation on the part of the Commonwealth, and such non-appropriation will not constitute an event of default under the Leases. If Lease Payments are not made when due, by reason of non-appropriation or otherwise, then, subject to applicable cure provisions, the Escrow Agreement gives the Escrow Agent various rights, including the right to lease the State Demised Premises and apply amounts derived in connection therewith, together with any other available moneys, to the payment of the Certificates. THE COMMONWEALTH S OBLIGATION TO MAKE LEASE PAYMENTS, INCLUDING ASSIGNED BASIC LEASE PAYMENTS, DOES NOT CONSTITUTE A GENERAL OBLIGATION, DEBT OR LIABILITY OF THE COMMONWEALTH WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COMMONWEALTH IS PLEDGED TO MAKE SUCH PAYMENTS. PAYMENTS OF THE PRINCIPAL COMPONENT AND INTEREST COMPONENT OF WILL BE MADE SOLELY FROM THE ASSIGNED BASIC LEASE PAYMENTS AND AMOUNTS FROM TIME TO TIME ON DEPOSIT UNDER THE TERMS OF THE ESCROW AGREEMENT OR OTHERWISE AVAILABLE TO THE ESCROW AGENT FOR SUCH PURPOSE. THE LESSOR HAS NO OBLIGATION TO MAKE ANY PAYMENTS OF ANY AMOUNTS DUE ON THE CERTIFICATES. See SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES herein. Any Assigned Basic Lease Payments that become due are subject to annual appropriation by the General Assembly of the Commonwealth in its annual General Fund budgeting process, and the Commonwealth is not legally required to make annual appropriations of any Lease Payments. See SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES Non-Appropriation herein for a description of the annual budgeting and appropriation process of the Commonwealth. 2

9 Any capitalized term used herein and not otherwise defined has the same meaning ascribed thereto in the Escrow Agreement or in the Leases. See the section captioned DEFINITIONS in APPENDIX B hereto for the definitions of certain of such terms. For further information concerning the Escrow Agreement, the Leases and the associated Assignment Agreement, see the summaries of each of such documents in APPENDIX B hereto. For further information concerning the plan of financing, see the section captioned THE FINANCING PLAN herein. For further information concerning the Lessor or the Harristown Project, see the sections captioned THE LESSOR and THE HARRISTOWN PROJECT herein. Additional information concerning the Commonwealth and the Lessee is set forth in Appendix A hereto. To understand the tenor of the Certificates, prospective investors must read the entire Official Statement. This introduction is qualified by reference thereto. THE HARRISTOWN PROJECT Buildings Leased by the Commonwealth under the Leases State Office Building No. 1. State Office Building No. 1 ( SO1 ), located in Strawberry Square in the City, adjacent to the Commonwealth s Capitol Complex, was completed in It is a sixteenstory, concrete and steel structure, with a pre-cast concrete and tile panel system now covered by an alucobond skin system. The Commonwealth has occupied SO1 since The Commonwealth is the sole tenant of SO1. The first floor of SO1 contains an office lobby entrance and a small office area. The second and third floors of the Strawberry Square building contain public/common areas of Strawberry Square including retail establishments and leased office space. The Department of Revenue of the Commonwealth occupies all of floors four through six, eight through ten and parts of the sub-basement and ground floors and floors three, seven, eleven and twelve. The Office of the Attorney General occupies the fourteenth through sixteenth floors and parts of the sub-basement and floor twelve. Other Commonwealth entities occupying space in SO1 include the Department of Insurance, the Lessee, the Office of the Auditor General and the Department of Treasury. Components of the building s mechanical systems are located on a part of the third floor, in the basement and on the roof of the Strawberry Square building. State Office Building No. 2. State Office Building No. 2 ( SO2 ), located at 333 Market Street (the 333 Market Building ) in the City, was completed in It is a twenty-two-story multiuse concrete and steel building with a pre-cast concrete panel facade. The Commonwealth has occupied SO2 since The 333 Market Building also includes approximately 15,000 square feet of retail and commercial space and common and public areas. The Commonwealth occupies approximately 96% of the 430,000 square feet of leased space in the 333 Market Building. The Department of Education occupies the majority of the building. Several other departments and agencies of the Commonwealth also occupy office space in SO2 from time to time based on office space needs; currently, those include the Lessee, the Patient Safety Authority, the Department of Public Welfare, the Independent Regulatory Review Commission, the Department of Labor and Industry, the Lieutenant Governor, and the Offices of General Counsel, Budget and Administration. In addition, the building s rooftop is used by certain companies and others for placement of microwave installations and radio and television transmitting installations. Ground Leases Ownership of the land underneath the Harristown Project (as defined herein) was transferred from the City to the HRA in 1998, and the HRA leases it to the HDC pursuant to certain ground leases. The ground lease for the land under Strawberry Square currently consists of three separate ground leases 3

10 one for the Verizon Premises (defined below), one for SO1 and one for the commercial, common, public and other spaces. The ground lease for land under SO1 ends on March 1, 2016; the final Assigned Basic Lease Payment is due from the Commonwealth on February 28, The lease for SO1 ends on the later to occur of (i) April 1, 2025, and (ii) the date all Outstanding Certificates have been paid in full, and includes a purchase option for the Commonwealth exercisable at any time after the later of April 1, 2016 or when all Outstanding Certificates have been paid in full. The Verizon Lease (defined below) and the corresponding ground lease end in 2016, without a purchase option. The term of the ground lease for the remainder of the land continues until at least 2033 and includes a $1.00 purchase option for the Lessor. There is a separate ground lease for the land under SO2 which ends on March 1, 2016; the final Assigned Basic Lease Payment is due from the Commonwealth on February 28, The lease for SO2 ends on the later to occur of (i) April 1, 2025, and (ii) the date all Outstanding Certificates have been paid in full, and includes a purchase option for the Commonwealth exercisable at any time after the later of April 1, 2016 or when all Outstanding Certificates have been paid in full. The Escrow Agent also has the right to extent the ground leases for additional five year terms if the Certificates have not been paid by reason of a default or a non-appropriation event on the part of the Commonwealth. History of the Harristown Project In 1975, HRA, the City and the HDC entered into a service agreement (as amended and supplemented, the Service Agreement ) which provided for the structure and cooperation among the parties thereto for the undertaking and development of the Harristown Urban Renewal Project (as defined in the Service Agreement) (the Harristown Project ), in the City s central business district and adjacent to the Commonwealth s Capitol Complex. The initial phase of the Harristown Project consisted of the development and construction of SO1 and an office tower (the Verizon Tower ) currently leased to Verizon Communications, Inc. ( Verizon ), pursuant to a certain lease (the Verizon Lease ). SO1 and the demised premises occupied by Verizon (the Verizon Premises ), together with certain other retail and office space, and the common areas, comprise a major building complex known as Strawberry Square, which is located immediately adjacent to the Commonwealth s Capitol Complex. The 333 Market Building is also part of the Harristown Project. Also included in the initial phase of the Harristown Project was the construction of two parking facilities containing a total of approximately 1,937 parking spaces and acquisition of a parking facility which provides approximately 1,000 parking spaces. HDC, acting on behalf of the City, financed the initial phase of the Harristown Project with grant monies and with the proceeds of the sale of its revenue bonds in 1975 and Condominium Conversion HRA, with the concurrence of HDC and the Commonwealth, is currently undertaking a conversion of Strawberry Square to a condominium form of ownership with separate ownership interests for SO1, the Verizon Premises and the other retail and office space. HRA, with the concurrence of HDC and the Commonwealth, also intends to undertake a conversion of 333 Market Street to a condominium form of ownership with separate ownership interests for SO2 and the other retail and commercial space. Such conversions are necessary in order to enable the Commonwealth to exercise its purchase options (when the Certificates are no longer Outstanding) for SO1 and SO2 as set forth in the Leases and for HRA and/or HDC to convey all legal and equitable right, title and interest to SO1 and SO2 to the Commonwealth pursuant to such purchase options. It is anticipated that certain modifications to the Leases and the ground leases for SO1 and SO2 will be required subsequent to the issuance of the Certificates in connection with such condominium conversion, but that such modifications will not: (A) change the Assigned Basic Lease Payments, the Payment Dates, the obligation of the Commonwealth to make the Assigned Basic Lease Payments or the 4

11 rights of the Escrow Agent to the Assigned Basic Lease Payments; (B) impair the assignment of the Assigned Basic Lease Payments to Escrow Agent; or (C) materially impair the rights and remedies of the Escrow Agent under the Escrow Agreement, the SO1 Lease, the SO2 Lease or the Assignment Agreement, including, but not limited to, the ability to relet the State Demised Premises following an Event of Non-Appropriation. See THE LEASE AGREEMENTS - STATE DEMISED PREMISES AS A CONDOMINIUM REGIME in APPENDIX B for a further description of the conditions to effectuating such modifications, including the certificates and opinion of counsel required in connection therewith. Holders of Certificates will have no prior notice of such amendments to the Leases and the ground leases, nor will they have right to consent to such amendments. THE LESSOR Organization of the Lessor The Lessor is a nonprofit corporation organized under the general nonprofit corporation law of the Commonwealth to assist in the implementation of the Harristown Project. The Lessor, directly or through affiliates, leases and manages the Strawberry Square complex and the 333 Market Building. In addition, the Lessor, directly or through affiliates, owns and manages an adjoining commercial complex of 10 restored buildings and public areas, while also leasing and managing a concourse known as Strawberry Arcade, which connects several office, retail and parking facilities with the Strawberry Square complex. Further, the Lessor owns and manages other properties in the central business district of the City which have been renovated or which are slated for redevelopment in the future. Powers and Duties The articles of incorporation of the Lessor provide that the purpose of the Lessor shall be to plan for and participate in the redevelopment of the central business district of the City and that upon dissolution of the Lessor any property, real, personal or mixed, remaining after paying or providing for all liabilities of the Lessor, shall be distributed to the City. Members of Board of Directors and Executive Staff Board of Directors Name Mr. William H. Alexander Ms. Mary Webber Weston Mr. Daniel J. Alderman Mr. David E. Black Mr. John O. Campbell Carol P. Cocheres, Esquire Mr. Raymond B. Harris, III Ms. Kristen Olewine Milke Christopher P. Markley, Esquire Mr. Isaac Mishkin Thomas B. Schmidt, III, Esquire Ms. Barbara Seiler Mr. Blair S. Trogner, Sr. Dean A. Weidner, Esquire Karen C. Yarrish, Esquire Office Chairperson Vice Chairman Member Member Member Member Member Member Member Member Member Member Member Member Member 5

12 Executive Staff President and Chief Executive Officer Vice President Senior Vice President & General Counsel Vice President, Treasurer & Chief Financial Officer Vice President Assistant Secretary Assistant Secretary Russell C. Ford Bradley R. Jones Neal S. West Mr. Andrew S. McCleaf Ms. Carol G. Rossi Nadine A. Kim Ms. Patricia McPoyle THE FINANCING PLAN The Certificates are being issued (1) to refund the outstanding 2001 Certificates pursuant to the Escrow Agreement and (2) to provide funds to pay the costs of executing and delivering the Certificates. The refunding will be accomplished by depositing proceeds of the Certificates with the Escrow Agent to be applied to the redemption of the 2001 Certificates on the date of issuance of the Certificates. Sources ESTIMATED SOURCES AND USES OF PROCEEDS Par Amount of Certificates $ 17,025, Original Issue Premium 645, Transfer from 2001 Debt Service Reserve Fund 6,594, TOTAL SOURCES $ 24, Uses Redemption of 2001 Certificates $ 23,747, Costs of Issuance (1) 518, TOTAL USES $ 24, (1) Includes underwriter s discount, legal fees, insurance premium, escrow agent fees, rating agency fees, financial advisor fees, printing expenses and all other expenses incurred in connection with issuing the Certificates. General Provisions THE CERTIFICATES OF PARTICIPATION Each Certificate evidences a proportionate interest in the right to receive the Principal Component and a specified interest in the right to receive the Interest Component of the Assigned Basic Lease Payments payable by the Commonwealth under the Leases. The Interest Component of each Assigned Basic Lease Payment evidenced by the Certificates is computed at the rates set forth on the inside cover page hereof and is payable on each May 1 and November 1 (each a Payment Date ), beginning on November 1, 2013, until maturity or earlier redemption. The Principal Portion of each Certificate will bear interest from the Payment Date next preceding its date of authentication, except that Certificates authenticated prior to the close of business on October 15, 2013, will bear interest from their dated date and Certificates authenticated on a Payment Date will bear interest from such Payment Date. If interest 6

13 on a Certificate shall be in default, it shall bear interest from the date on which interest was last paid hereon. The Principal Component of each Assigned Basic Lease Payment evidenced by the Certificates is payable in accordance with the maturity schedule shown on the inside front cover hereof or earlier on any redemption date applicable thereto. The Certificates are subject to redemption prior to maturity as described below. Each Certificate initially delivered will be dated the date of delivery thereof. The Certificates will be issued as fully registered certificates and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). Purchases of beneficial ownership interests in the Certificates will be made in book-entry form (without certificates) in the denominations of $5,000 or any integral multiple thereof. If such system is discontinued, the provisions described under Procedures on Discontinuation of Book-Entry-Only System below will be applicable. All amounts payable by the Escrow Agent with respect to the Certificates shall be paid only from (i) Assigned Basic Lease Payments received by the Escrow Agent from the Commonwealth, (ii) money and Investment Securities (as defined in the Escrow Agreement) from time to time held by the Escrow Agent in the funds and accounts created under the Escrow Agreement, including the Revenue Fund and the Lease Payment Fund, but excluding the Rebate Fund, (iii) insurance proceeds and condemnation awards held by the Escrow Agent, (iv) amounts derived from the exercise by the Escrow Agent of any rights or remedies under the Leases, including, but not limited to, amounts received by the Escrow Agent, if any, upon the leasing of all, or any part of, the State Demised Premises after an event of default or nonappropriation by the Commonwealth, and (v) investment income, receipts and proceeds of the foregoing (except moneys and investments in the Rebate Fund) unless and until transferred to the Lessee in accordance with the Escrow Agreement, all of the foregoing only to the extent that the Escrow Agent shall have actually received or be holding the moneys from such sources for the purpose of making such payments. So long as the Certificates shall be in book-entry form, the Principal Component and the Interest Component shall be payable by the Escrow Agent by wire transfer of funds to Cede & Co., as nominee for DTC and as registered owner of the Certificates, for redistribution by DTC to the Direct Participants (as hereinafter defined) and in turn to the beneficial owners of Certificates and to Indirect Participants for redistribution to such beneficial owners as described below under Book-Entry-Only System. The Escrow Agreement and the Leases and all provisions thereof are incorporated by reference in the text of the Certificates and the Certificates provide that each registered owner, Beneficial Owner, Direct Participant or Indirect Participant (as such terms are hereinafter defined), by acceptance of a Certificate (including receipt of a book-entry credit evidencing an interest therein), assents to all of such provisions as an explicit and material portion of the consideration running to the Escrow Agent, the Lessor and the Lessee, to induce them to cause the issuance of the Certificates. Copies of the Escrow Agreement, including the full text of the form of Certificates, and the Leases are on file at the corporate trust office of the Escrow Agent located in Harrisburg, Pennsylvania. Book-Entry-Only System The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Certificates (also be referred to below as the Securities ). The Securities will be issued as fullyregistered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. At least one fully-registered Security certificate will be issued for each maturity of the Securities, each in the aggregate principal amount of such series and maturity, and will be deposited with DTC. 7

14 SO LONG AS CEDE & CO. OR SUCH OTHER NAMED NOMINEE IS THE REGISTERED OWNER OF THE SECURITIES, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE HOLDERS, OWNERS OR REGISTERED OWNERS OF THE SECURITIES SHALL MEAN CEDE & CO. OR SUCH OTHER NOMINEE AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE SECURITIES. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized 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. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC s records. The ownership interest of each actual purchaser of each Security ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 8

15 Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Securities within a maturity are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Escrow Agent 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds and distributions on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the Lessor or the Escrow Agent as bond registrar and paying agent on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with 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 Escrow Agent, the Commonwealth or the Lessor, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and distributions to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Commonwealth, the Lessor or the Escrow Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. The Commonwealth, the Lessor, the Underwriter and the Escrow Agent cannot and do not give any assurances that DTC, the Direct Participants or the Indirect Participants will distribute to the Beneficial Owners of the Securities (i) payments of principal, tender price or redemption price of or interest on the Securities, (ii) certificates representing an ownership interest on the Securities, (iii) certificates representing an ownership interest or other confirmation of Beneficial Ownership interests in Securities, or (iv) redemption or other notices sent to DTC or Cede & Co., its nominee, as the Registered Owner of the Securities, or that they will do so on a timely basis or that DTC, Direct Participants or Indirect Participants will serve and act in the manner described in this Official Statement. The current Rules applicable to DTC are on file with the SEC, and the current Procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. The information contained in this section regarding DTC and the Book-Entry-Only System is based on material obtained from DTC. No representation is made by the Escrow Agent, the Lessor, the Commonwealth or the Underwriter as to the completeness or accuracy of such information. No attempt has been made by the Escrow Agent, the Lessor, the Commonwealth or the Underwriter to determine whether DTC is or will be financially or otherwise capable of fulfilling its obligations. 9

16 Procedures on Discontinuation of Book-Entry-Only System DTC may determine to discontinue providing its services as securities depository with respect to the Certificates at any time by giving reasonable notice to the Lessor and the Escrow Agent and discharging its responsibilities with respect thereto under applicable law or the Lessor may determine to discontinue the system of book-entry transfers through DTC (or a successor securities depository) if it decides that continuation is not in the best interests of the Beneficial Owners or the Lessor. Under such circumstances, physical certificates will be delivered, as provided in the Escrow Agreement, to the Beneficial Owners, who, upon registration thereof in the Beneficial Owners names, shall become the Registered Owners thereof. In the event that the Book-Entry-Only System is discontinued and the Beneficial Owners become Registered Owners of the Certificates, the following provisions, applicable to such Registered Owners, would apply: (i) Certificates may be exchanged for a like aggregate Principal Component of Certificates in other authorized denominations, each bearing the same rate of interest (if applicable) and having the same maturity as the Certificates being exchanged, upon surrender thereof at the designated corporate trust office of the Escrow Agent; (ii) the transfer of any Certificates may be registered on the Register maintained by the Escrow Agent for such purpose only upon the surrender thereof to the Escrow Agent with a duly executed instrument of transfer in form satisfactory to the Escrow Agent; (iii) for every exchange or registration of transfer of Certificates, the Escrow Agent may make a charge sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or registration of transfer, but no other charge may be made to the Registered Owner for any exchange or registration of transfer of the Certificates; and (iv) the Escrow Agent will not be required (a) to issue, transfer or exchange any Certificates beginning at the opening of business on the fifth (5th) day (whether or not a business day) next preceding the date of selection of Certificates to be redeemed and ending at the close of business on the day on which the applicable notice of redemption is given, or (b) to transfer or exchange any Certificate so selected for redemption in whole or in part. On any such transfer or exchange, new Certificates, bearing interest payable from appropriate dates as provided in the Escrow Agreement, shall be authenticated and delivered by the Escrow Agent. Also in the event that the Book-Entry-Only System is discontinued, the Principal Component or any applicable redemption price of Certificates will be payable upon surrender of the Certificates at the designated corporate trust office of the Escrow Agent, and the Interest Component will be payable on each Payment Date by check mailed to the Registered Owners as of the close of business on the Record Date, or, upon a written request submitted to the Escrow Agent at least three (3) Business Days before the Regular Record Date for such payment by Registered Owners of $1,000,000 or more in aggregate Principal Component of Certificates as of the close of business on such Regular Record Date, by wire transfer. Redemption Prior to Maturity Extraordinary Redemption. The Certificates are subject to extraordinary redemption at any time prior to maturity in whole or, from time to time, in part after the occurrence of any of the following events, at a redemption price equal to 100% of the Principal Component of the Certificates plus interest accrued to the date fixed for redemption: (a) the State Demised Premises shall have been materially damaged or destroyed and pursuant to the Leases, within ninety (90) days after the payment of the proceeds of insurance, either (i) the Lessee has determined that the repair or rebuilding of the State Demised Premises is not economically feasible or (ii) the Escrow Agent and AGM have determined that the repair or rebuilding will adversely affect the payment of the Principal Component of or Interest Component on the Certificates; or 10