Agenda - Council - 07/12/2022 - Laserfiche WebLink

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Environmental Regulations The School Facilities are subject to various federal, State and local laws and regulations governing health and the environment. In general, these laws and regulations could result in liability to the owner of the School Facilities (and to any beneficiary of a mortgage on the School Facilities,particularly following any sale or foreclosure proceeding) for remediating adverse environmental conditions on or relating to the School Facilities, whether arising from preexisting conditions or conditions arising as a result of the activities conducted in connection with the ownership and operation of the School Facilities. Although the Charter School believes that it is in material compliance with applicable environmental laws for the School Facilities,costs incurred by the Company with respect to environmental remediation or liability could adversely affect its financial condition and its ability to own and operate the School Facilities. If excessive costs are incurred by the Company in connection with remediating environmental problems or from liability to third parties, such costs could make it impractical for the Loan Agreement to be continued pursuant to its current terms or such costs could make it more difficult to successfully relet the School Facilities. In connection with the acquisition of the Land, Professional Service Industries, Inc. (the "Environmental Consultant") prepared a Phase I Environmental Site Assessment dated April 4, 2022 (the "Upper School Site Assessment")with respect to the site of the Upper School Campus(the"Upper School Site"). In the Upper School Site Assessment,the Environmental Consultant did not identify any recognized environmental conditions("RECs"),controlled recognized environmental conditions("CRECs"),historical recognized environmental conditions("HRECs"),vapor encroachment conditions("VECS")or de minimis conditions, and did not recommend any further assessments for the Upper School Site. The Environmental Consultant also prepared a Phase I Environmental Site Assessment dated April 4, 2022 (the "Elementary School Site Assessment") with respect to the site of the Elementary School Campus (the "Elementary School Site"). In the Elementary School Site Assessment, the Environmental Consultant did not identify any RECs, CRECs, HRECs, VECS, or de minimis conditions, and did not recommend any further assessments for the Elementary School Site. The Company believes that it is in material compliance with applicable environmental laws for the School Facilities. Owners of real estate such as the Company may, in the future,be adversely affected by legislative, regulatory, administrative and enforcement actions involving environmental controls. Maintenance of the School Facilities The School Facilities, like other such facilities, will require ongoing capital repairs and improvements to maintain its value and, although the Charter School and the Company intend to maintain the School Facilities in good condition, and a Capital Repair and Replacement Fund is established pursuant to the Indenture with a Monthly Deposit requirement, no assurance can be given that the Charter School and the Company will have sufficient revenues in the future to be able to maintain a regular capital improvements program for the School Facilities in the future. No Appraisal of the School Facilities Neither the Company, the Charter School nor the Underwriter has engaged an appraiser in connection with the issuance of the Series 2022 Bonds and the construction of the Upper School Campus. In the event of a foreclosure of the Mortgage, the value of the School Facilities in such event cannot be determined and may be substantially less than the construction costs of the Upper School Campus and no assurance that the value received for the School Facilities will be sufficient to pay the principal of and interest due on the Series 2022 Bonds. 32