Agenda - Council - 08/13/2013 - Laserfiche WebLink

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Minnesota Department of Education. Future renewals of the Charter Agreement for the School will be subject to review by Authorizer. Financial Statements, No Certified Financial Forecast The Audited Financial Statements of the School attached hereto as Appendix B reflect the last three years of operation of the School for which audited financial statements are available. Also included in Appendix B are the unaudited financial statements of the School for the period from July 1, 2012 through , 2013. No certified forecasted financial statements have been prepared by the School to account for the debt service on the Series 2013 Bonds or the revenues of the School following the issuance of the Series 2013 Bonds, but the School has prepared the Five -Year Proforma Budget and Balance Sheet Projections included in Appendix E to provide the School's projections of these amounts. For information regarding the Company's and the School's expectations after the issuance of the Series 2013 Bonds and the, see Appendix A: "THE COMPANY, THE SCHOOL AND THE PROJECT" and Appendix C: "FIVE-YEAR FINANCIAL SUMMARY AND FIVE-YEAR BUDGET PROJECTIONS." Income and Property Tax Exemption Under present federal and Minnesota law, regulations and rulings, the income and revenue of nonprofit, 501(c)(3) qualified tax-exempt organizations are exempt from federal and state income tax, except for any unrelated business income as defined in the Code, and their revenues arc exempt from the State sales tax except for certain services. The Company is a Minnesota nonprofit corporation and on the Company received a determination letter from the Internal Revenue Service that the Company was a 501(c)(3) qualified exempt organization. The School is also a nonprofit, 501(c)(3) qualified exempt organization. Under present Minnesota law and rulings, public (charter) schools are exempt from property taxes levied by political subdivisions of the State so long as such property is used for public school purposes (although such property is subject to special assessments for local improvements to the property). The Company has established with the local governmental authorities that the Project is exempt from the payment areal estate taxes. However, such laws, regulations and rulings are subject to change, and no assurance can be given that any future change in exempt status would not have a material adverse effect on the Company. Factors That Could Affect the Future Financial Condition of the Company and the School The future financial condition of the Company and the School could be affected adversely by, among other things, legislation, regulatory actions, increased competition from other schools, changes in demand for public and private education, the ability of the School to provide the educational services and classes demanded by parents or to attract students generally, changes in the level of confidence of the public school system, tuition costs, demographic changes and litigation. Some of such changes might include the following: Continued Utilization of the Facilities of the Comuanv. A significant portion of the School's revenue is derived based on the number of students enrolled in the education facilities of the School. The School faces competition from other educational facilities and could face additional competition in the future as a result of the organization of, the construction of new, or the 34