$4,605,000 BAY DE NOC COMMUNITY COLLEGE State of Michigan 2015 Refunding Bonds (General Obligation - Limited Tax)

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1 NEW ISSUE Book-Entry-Only Ratings ¹ : Moody s: A1 TAX STATUS: In the opinion of Thrun Law Firm, P.C., Bond Counsel, assuming continued compliance by the College with certain requirements of the Internal Revenue Code of 1986, as amended (the Code ), interest on the Bonds is excluded from gross income for federal income tax purposes, as described in the opinion, and the Bonds and interest thereon are exempt from all taxation in the State of Michigan, except inheritance and estate taxes and taxes on gains realized from the sale, payment or other disposition thereof. The College has designated the Bonds as QUALIFIED TAX-EXEMPT OBLIGATIONS within the meaning of the Code, and has covenanted to comply with those requirements of the Code necessary to continue the exclusion of interest on the Bonds from gross income for federal income tax purposes. $4,605,000 BAY DE NOC COMMUNITY COLLEGE State of Michigan 2015 Refunding Bonds (General Obligation - Limited Tax) PURPOSE AND SECURITY: The Bonds are being issued for the purpose of refunding a certain prior outstanding obligation (the Refunded Bonds ) of Bay de Noc Community College, State of Michigan (the College ). The Bonds are issued under the provisions of Act 331, Public Acts of Michigan, 1966, as amended ( Act 331 ). The College has pledged the limited tax full faith and credit of the College for the payment of principal and interest on the Bonds. The College has further pledged to levy sufficient ad valorem taxes within its authorized millage annually, as a first budget obligation, said levy must be subject to constitutional, statutory and charter tax rate limitations. The College not having the power to levy taxes for the payment of the Bonds in excess of its constitutional, statutory or charter tax rate limitation, the Bonds will be limited tax general obligations of the College, and, if tax collections are insufficient to pay the principal of or interest on the Bonds when due, the College pledges to use any and all other resources available for the payment of the Bonds. The College reserves the right to issue additional bonds of equal standing. BOOK-ENTRY-ONLY: The Bonds are issuable only as fully registered Bonds without coupons, and when issued, will be registered in the name of Cede & Co., as Bondholder and nominee for The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository for the Bonds. Purchases of beneficial interests in the Bonds will be made in book-entry only form, in the denominations of $5,000 or any integral multiple thereof. Purchasers will not receive certificates representing their beneficial interest in Bonds purchased. So long as Cede & Co. is the Bondholder, as nominee of DTC, references herein to the Bondholders or registered owners shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners of the Bonds. See BOOK-ENTRY ONLY SYSTEM herein. PAYMENT OF BONDS: Interest on the Bonds will be payable semiannually on May 1 and November 1 of each year commencing on May 1, The Bonds will be registered Bonds, of the denomination of $5,000 or multiples thereof not exceeding for each maturity the principal amount of such maturity. The principal and interest shall be payable at the corporate trust office of The Huntington National Bank, Grand Rapids, Michigan (the Paying Agent ) or such other Paying Agent as the College may hereafter designate by notice mailed to the registered owner not less than sixty (60) days prior to any interest payment date. So long as DTC or its nominee, Cede & Co., is the Bondholder, such payments will be made directly to such Bondholder. Disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants and Indirect Participants, as more fully described herein. Interest shall be paid when due by check or draft mailed to the registered owner as shown on the registration books as of the fifteenth day of the month preceding the payment date for each interest payment. Dated: December 9, 2015 Principal Due: May 1 of each year as shown below MATURITY SCHEDULE (Base CUSIP : ) Interest Interest Year Amount Rate Yield CUSIP Year Amount Rate Yield CUSIP 2017 $370, % 0.85% HL $430, % 2.10% HS , HM , HT , HN , HU , HP , HV , HQ , HW , HR8 OPTIONAL REDEMPTION: Bonds of this issue maturing in the years 2017 through 2026, inclusive, shall not be subject to redemption prior to maturity. Bonds or portions of Bonds in multiples of $5,000 of this issue maturing in the year 2027 shall be subject to redemption prior to maturity, at the option of the College, by lot within that maturity, on any date occurring on or after May 1, 2026, at par and accrued interest to the date fixed for redemption as described herein. See PRIOR REDEMPTION herein. BOND COUNSEL: The Bonds will be offered when, as and if issued by the College subject to the approving legal opinion of Thrun Law Firm, P.C., East Lansing, Michigan. This cover page contains information for a quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to making an informed investment decision. Official Statement Dated: November 12, 2015 Additional information relative to this Bond issue may be obtained from: Public Financial Management, Inc Research Park Drive Ann Arbor, Michigan ¹ For an explanation of ratings, see CREDIT RATING herein. As of the date of delivery Copyright 2015, American Bankers Association. CUSIP data herein is provided by Standard & Poor s CUSIP Service Bureau, a division of the McGraw-Hill Companies, Inc. The College shall not be responsible for the selection of CUSIP numbers, nor any representation made as to their correctness on the Bonds or as indicated above.

2 Bay de Noc Community College 2001 North Lincoln Road Escanaba, Michigan Fax BOARD OF TRUSTEES CHAIRMAN Thomas R. England Term Expires 12/31/2016 VICE CHAIRMAN Philip L. Strom Term Expires 12/31/2020 SECRETARY James L. Hermans Term Expires 12/31/2018 TREASURER Joy E. Hopkins Term Expires 12/31/2016 TRUSTEES Eric L. Lundin Term Expires 12/31/2020 William W. Lake Term Expires 12/31/2020 Thomas L. Butch Term Expires 12/31/2018 PRESIDENT Dr. Laura L. Coleman CHIEF FINANCIAL OFFICER Kevin W. Carlson PROFESSIONAL SERVICES PAYING AGENT... The Huntington National Bank BOND COUNSEL...Thrun Law Firm, P.C. FINANCIAL CONSULTANT... Public Financial Management, Inc. ii

3 TABLE OF CONTENTS Page INFORMATION FOR BIDDERS... 1 PURPOSE AND SECURITY... 1 PRIOR REDEMPTION... 1 NOTICE OF SALE... 1 BOOK-ENTRY ONLY SYSTEM... 2 TAX PROCEDURES... 4 TRANSFER OUTSIDE BOOK-ENTRY-ONLY SYSTEM... 4 MICHIGAN PROPERTY TAX REFORM... 5 LITIGATION... 5 LEVY AND COLLECTION OF TAXES FOR PAYMENT OF THE BONDS AND BONDHOLDER S REMEDIES... 5 TAX MATTERS... 6 State of Michigan... 6 Federal... 6 Original Issue Premium... 6 Future Developments... 6 QUALIFIED BY THE MICHIGAN DEPARTMENT OF TREASURY... 7 CONTINUING DISCLOSURE... 7 BOND COUNSEL S RESPONSIBILITY... 7 FINANCIAL CONSULTANT S OBLIGATION.. 8 CREDIT RATING... 8 PLAN OF REFUNDING... 9 ESTIMATED SOURCES AND USES... 9 GENERAL FINANCIAL INFORMATION AREA POPULATION PROPERTY VALUATIONS Historical Valuation Per Capita Valuation Industrial Facilities Tax (IFT) Renaissance Zone TAX BASE COMPOSITION MAJOR TAXPAYERS CONSTITUTIONAL MILLAGE ROLLBACK.. 12 TAX RATES - (Per $1,000 of Valuation) Bay de Noc Community College Other Major Taxing Units TAX LEVIES AND COLLECTIONS LABOR FORCE PENSION FUND OTHER POST-EMPLOYMENT BENEFITS STATE APPROPRIATIONS TUITION AND STUDENT FEES SOURCES OF REVENUES FOR OPERATIONS 16 DEBT STATEMENT DIRECT DEBT OVERLAPPING DEBT DEBT RATIOS DEBT HISTORY FUTURE FINANCING OTHER BORROWING LEGAL DEBT MARGIN GENERAL ECONOMIC INFORMATION LOCATION AND AREA POPULATION BY AGE INCOME EMPLOYMENT CHARACTERISTICS EMPLOYMENT BREAKDOWN UNEMPLOYMENT BANKING GENERAL COLLEGE INFORMATION DESCRIPTION PURPOSE MISSION BOARD OF TRUSTEES ADMINISTRATIVE STAFF COMMUNITY COLLEGE ENROLLMENT EXISTING COLLEGE FACILITIES OTHER MATTERS APPENDIX A - BUDGET... A-1 APPENDIX B - AUDIT... B-1 APPENDIX C - FORM OF CONTINUING DISCLOSURE AGREEMENT... C-1 APPENDIX D - DRAFT LEGAL OPINION... D-1 APPENDIX E - DRAFT OFFICIAL NOTICE OF SALE... E-1 iii

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5 DATED: December 9, 2015 FIRST INTEREST: May 1, 2016 REGISTRATION: PAYING AGENT: INFORMATION FOR BIDDERS $4,605,000 BAY DE NOC COMMUNITY COLLEGE State of Michigan 2015 Refunding Bonds (General Obligation - Limited Tax) Principal and Interest The Huntington National Bank, Grand Rapids, Michigan TAX DESIGNATION: QUALIFIED TAX-EXEMPT OBLIGATIONS PRINCIPAL DUE: May 1, annually as shown on the front cover PURPOSE AND SECURITY The Bonds of the College are being issued for the purpose of advance refunding a certain prior outstanding obligation of the College (the "Refunded Bonds"). The Bonds are issued under the provisions of Act 331 and Act 34, Public Acts of Michigan 2001, as amended ( Act 34 ). The College has pledged the limited tax full faith and credit of the College for the payment of principal and interest on the Bonds. The College has further pledged to levy sufficient ad valorem taxes within its authorized millage annually, as a first budget obligation, said levy must be subject to constitutional, statutory and charter tax rate limitations. The College not having the power to levy taxes for the payment of the Bonds in excess of its constitutional, statutory or charter tax rate limitation, the Bonds will be limited tax general obligations of the College, and, if tax collections are insufficient to pay the principal of or interest on the Bonds when due, the College pledges to use any and all other resources available for the payment of the Bonds. The College reserves the right to issue additional bonds of equal standing. PRIOR REDEMPTION Bonds of this issue maturing in the years 2017 through 2026, inclusive, shall not be subject to redemption prior to maturity. Bonds or portions of Bonds in multiples of $5,000 of this issue maturing in the year 2027 shall be subject to redemption prior to maturity, at the option of the College, by lot within that maturity, on any date occurring on or after May 1, 2026, at par and accrued interest to the date fixed for redemption. Notice of redemption of any Bond shall be given not less than thirty (30) days and not more than sixty (60) days prior to the date fixed for redemption by mail to the Registered Owner at the registered address shown on the registration books kept by the Paying Agent. Bonds shall be called for redemption in multiples of $5,000 and Bonds of denominations of more than $5,000 shall be treated as representing the number of Bonds obtained by dividing the denomination of the Bond by $5,000 and such Bonds may be redeemed in part. The notice of redemption for Bonds redeemed in part shall state that upon surrender of the Bond to be redeemed a new Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond surrendered shall be issued to the Registered Owner thereof. No further interest payment on the Bonds or portions of Bonds called for redemption shall accrue after the date fixed for redemption, whether presented for redemption, provided funds are on hand with the Paying Agent to redeem the same. If less than all of the Bonds of any maturity shall be called for redemption prior to maturity unless otherwise provided, the particular Bonds or portions of Bonds to be redeemed shall be selected by the Paying Agent, in such manner as the Paying Agent in its discretion may deem proper, in the principal amounts designated by the College. Upon presentation and surrender of such Bonds at the corporate trust office of the Paying Agent, such Bonds shall be paid and redeemed. NOTICE OF SALE See APPENDIX E - DRAFT OFFICIAL NOTICE OF SALE, for further information regarding this issue. 1

6 BOOK-ENTRY ONLY SYSTEM The information in this section has been furnished by The Depository Trust Company, New York, New York ("DTC"). No representation is made by The Huntington National Bank, Grand Rapids, Michigan (the Paying Agent ) as to the completeness or accuracy of such information or as to the absence of material adverse changes in such information subsequent to the date hereof. No attempt has been made by the College or the Paying Agent to determine whether DTC is or will be financially or otherwise capable of fulfilling its obligations. Neither the College nor the Paying Agent will have any responsibility or obligation to Direct Participants, Indirect Participants (both as defined below) or the persons for which they act as nominees with respect to the Bonds, or for any principal, premium, if any, or interest payment thereof. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully-registered 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. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. 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. 2

7 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 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 an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue 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 College 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, distributions, and dividend payments 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 College or 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, Agent, or College, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the College or 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. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to Tender/ Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to Tender/Re marketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Securities to Tender/Remarketing Agent's DTC account. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the College or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. The College may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the College believes to be reliable, but the College takes no responsibility for the accuracy thereof. 3

8 TAX PROCEDURES Article IX, Section 3, of the Michigan Constitution provides that the proportion of true cash value at which property shall be assessed shall not exceed 50% of true cash value. The Michigan Legislature by statute has provided that property shall be assessed at 50% of its true cash value, except as described below. The Michigan Legislature or the electorate may at some future time reduce the percentage below 50% of true cash value. On March 15, 1994, the electors of the State approved an amendment to the Michigan Constitution permitting the Legislature to authorize ad valorem taxes on a non-uniform basis. The legislation implementing this constitutional amendment added a new measure of property value known as "Taxable Value." Beginning in 1995, taxable property has two valuations -- State equalized valuation ("SEV") and Taxable Value. Property taxes are levied on Taxable Value. Generally, Taxable Value of property is the lesser of (a) the Taxable Value of the property in the immediately preceding year, adjusted for losses, and increased or reduced by the lesser of the inflation rate or 5%, plus additions, or (b) the property's current SEV. Under certain circumstances, therefore, the Taxable Value of property may be different from the same property's SEV. When property is sold or transferred, Taxable Value is adjusted to the SEV, which under existing law is 50% of the current true cash value. The Taxable Value of new construction is equal to current SEV. Taxable Value and SEV of existing property are also adjusted annually for additions and losses. Responsibility for assessing taxable property rests with the local assessing officer of each township and city. Any property owner may appeal the assessment to the local board of review, to the Michigan Tax Tribunal, and ultimately to the Michigan courts. The Michigan Constitution also mandates a system of equalization for assessments. Although the assessors for each local unit of government within a county are responsible for actually assessing at 50% of true cash value, adjusted for Taxable Value purposes, the final SEV and Taxable Value are arrived at through several steps. Assessments are established initially by the municipal assessor. Municipal assessments are then equalized to the 50% levels as determined by the county's department of equalization. Thereafter, the State equalizes the various counties in relation to each other. SEV is important, aside from its use in determining Taxable Value for the purpose of levying ad valorem property taxes, because of its role in the spreading of taxes between overlapping jurisdictions, the distribution of various State aid programs, State revenue sharing and in the calculation of debt limits. Property that is exempt from property taxes, e.g., churches, government property, public schools, is not included in the SEV and Taxable Value data in the Official Statement. Property granted tax abatements under Act 198, Public Acts of Michigan, 1974, amended, is recorded on a separate tax roll while subject to tax abatement. The valuation of tax-abated property is based upon SEV but is not included in either the SEV or Taxable Value data in the Official Statement except as noted. Under limited circumstances, other state laws permit the partial abatement of certain taxes for other types of property for periods of up to 12 years. TRANSFER OUTSIDE BOOK-ENTRY-ONLY SYSTEM In the event that the book-entry-only system is discontinued, the following provisions would apply to the Bonds. The Paying Agent shall keep the registration books for the Bonds (the Bond Register ) at its corporate trust office. Subject to the further conditions contained in the Resolutions, the Bonds may be transferred or exchanged for one or more Bonds in different authorized denominations upon surrender thereof at the corporate trust office of the Paying Agent by the registered owners or their duly authorized attorneys; upon surrender of any Bonds to be transferred or exchanged, the Paying Agent shall record the transfer or exchange in the Bond Register and shall authenticate replacement bonds in authorized denominations; during the fifteen (15) days immediately preceding the date of mailing (the Record Date ) of any notice of redemption or any time following the mailing of any notice of redemption, the Paying Agent shall not be required to effect or register any transfer or exchange of any Bond which has been selected for such redemption, except the Bonds properly surrendered for partial redemption may be exchanged for new Bonds in authorized denominations equal in the aggregate to the unredeemed portion; the College and Paying Agent shall be entitled to treat the registered owners of the Bonds, as their names appear in the Bond Register as of the appropriate dates, as the owners of such Bonds for all purposes under the Resolutions. No transfer or exchange made other than as described above and in the Resolutions shall be valid or effective for any purposes under the Resolutions. 4

9 MICHIGAN PROPERTY TAX REFORM On November 5, 2013, March 28, 2014, and April 1, 2014, Governor Snyder signed into law a package of bills amending and replacing legislation enacted in 2012 to phase-out most personal property taxes in Michigan. The bills were contingent on Michigan voters approving a ballot question authorizing a new municipal entity, the Local Community Stabilization Authority ("LCSA"), to levy a local component of the statewide use tax and distribute that revenue to local units of government to offset their revenue losses resulting from the personal property tax reform. On August 5, 2014, voters approved that ballot question. The bill package, together with the original 2012 legislation, created two new exemptions from the personal property tax. Under the "small taxpayer exemption," the commercial and industrial personal property of each owner with a combined true cash value in a local tax collecting unit of less than $80,000 is exempt from ad valorem taxes in that collecting unit beginning in For businesses that do not qualify for the "small taxpayer exemption," all "eligible manufacturing personal property" (personal property used more than 50% of the time in industrial processing or direct integrated support) purchased and placed into service before 2006 or during or after 2013 becomes exempt beginning in Taxation on "eligible manufacturing personal property" placed into service after 2006 but before 2013 will be phased-out over time; with the exemption taking effect after the property has been in service for the immediately preceding 10 years. The legislation extends certain personal property tax exemptions and tax abatements for technology parks, industrial facilities and enterprise zones that were to expire after 2012, until the voter-approved personal property tax exemptions take effect. Pursuant to voter approval in August 2014, the legislation also includes formulas to reimburse municipalities, including community colleges, for 100% of their calculated lost operating millage revenue. To provide the reimbursement, the legislation reduces the state share of the use tax and authorizes the LCSA to levy a local component of the use tax and distribute that revenue to qualifying local units. While the legislation provides reimbursement for prospective municipality operating losses, municipalities will only be reimbursed for ad valorem property taxes and any specific tax levied for the payment of obligations incurred before January 1, 2013 pledging the unlimited or limited tax power of the municipality. For the and fiscal years, the State of Michigan will appropriate sufficient funds to the LCSA to reimburse municipalities for such debt losses. Because the Bonds are associated with obligations incurred prior to January 1, 2013, the College expects to be reimbursed for tax revenue it could have otherwise generated, without the exemptions, to make payments on the Bonds. LITIGATION The College has not been served with any litigation, administrative action or proceeding, nor, to the knowledge of the College, is there threatened any litigation restraining or enjoining the issuance or delivery of the Bonds or in any manner questioning the proceedings and authority under which the Bonds are to be issued or affecting the validity of the Bonds. LEVY AND COLLECTION OF TAXES FOR PAYMENT OF THE BONDS AND BONDHOLDER S REMEDIES The College has pledged its full faith and credit for the prompt and timely payment of the principal of and interest on the Bonds. The full faith and credit pledge of the College is a limited tax general obligation, and the College is required to pay its debt service commitment on the Bonds as a first budget obligation from its general funds, including the collection of any ad valorem taxes which it is authorized to levy. However, the ability of the College to levy such taxes is subject to charter, statutory and constitutional limitations. Registered owners of the Bonds may attempt to obtain a money judgment against the College for the principal amount of the Bonds or interest not paid when due, and may periodically attempt to enforce the collection of the money judgment by requiring the tax assessing officers for the College to place the amount of such judgment on the next tax rolls of the College. The rights of the holders of the Bonds and the enforceability of the Bonds are subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors' rights previously or later enacted and their enforcement also may be subject to the exercise of judicial discretion in appropriate cases. 5

10 TAX MATTERS State of Michigan In the opinion of Thrun Law Firm, P.C., East Lansing, Michigan ( Bond Counsel ), based on its examination of the documents described in its opinion, under existing State statutes, regulations and court decisions, the Bonds and the interest thereon are exempt from all taxation in the State of Michigan, except inheritance and estate taxes and taxes on gains realized from the sale, payment or other disposition thereof. Federal In the opinion of Bond Counsel based upon its examination of the documents described in its opinion, under existing statutes, regulations, rulings and court decisions, the interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. It should be noted, however, that certain corporations must take into account interest on the Bonds in determining adjusted net current earnings for the purpose of computing the alternative minimum tax imposed on such corporations. The opinions set forth in the preceding sentences are subject to the condition that the College comply with all requirements of the Internal Revenue Code of 1986, as amended (the Code ), that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. Bond Counsel will express no opinion regarding other federal tax consequences arising with respect to the Bonds. There are additional federal tax consequences relative to the Bonds and the interest thereon. The following is a general description of some of these consequences but is not intended to be complete or exhaustive and investors should consult with their tax advisors with respect to these matters. Prospective purchasers of the Bonds should be aware that (i) interest on the Bonds is included in the effectively connected earnings and profits of certain foreign corporations for purposes of calculating the branch profits tax imposed by Section 884 of the Code, (ii) interest on the Bonds may be subject to a tax on excess net passive income of certain S Corporations imposed by Section 1375 of the Code, (iii) interest on the Bonds is included in the calculation of modified adjusted gross income for purposes of determining the taxability of social security or railroad retirement benefits, (iv) the receipt of interest on the Bonds by life insurance companies may affect the federal tax liability of such companies, (v) in the case of property and casualty insurance companies, the amount of certain loss deductions otherwise allowed is reduced by a specific percentage of, among other things, interest on the Bonds, (vi) holders of the Bonds may not deduct interest on indebtedness incurred or continued to purchase or carry the Bonds, and (vii) commercial banks, thrift institutions and other financial institutions may deduct their costs of carrying certain obligations such as the Bonds. Original Issue Premium For federal income tax purposes, the difference between the initial offering prices to the public (excluding bondhouses and brokers) at which certain Bonds, as set forth on the cover of this Official Statement, are sold and the amounts payable at maturity thereof (the Premium Bonds ), constitutes for the original purchasers of the Premium Bonds an amortizable bond premium. Such amortizable bond premium is not deductible from gross income but is taken into account by certain corporations in determining adjusted current earnings for the purpose of computing the alternative minimum tax, which may also affect liability for the branch profits tax imposed by Section 884 of the Code. The amount of amortizable bond premium allocable to each taxable year is generally determined on the basis of a taxpayer s yield to maturity determined by using the taxpayer s basis (for purposes of determining loss on sale or exchange) of such Premium Bonds and compounding at the close of each six-month accrual period. The amount of amortizable bond premium allocable to each taxable year is deducted from the taxpayer s adjusted basis of such Premium Bonds to determine taxable gain upon disposition (including sale, redemption or payment on maturity) of such Premium Bonds. Future Developments No assurance can be given that any future legislation or clarifications or amendments to the Code, if enacted into law, will not contain proposals which could cause the interest on the Bonds to be subject directly or indirectly to federal or state income taxation, adversely affect the market price or marketability of the Bonds, or otherwise prevent bondholders from realizing the full current benefit of the status of the interest thereon. 6

11 It is to be understood that the rights of the holders of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. INVESTORS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THEIR ACQUISITION, HOLDING OR DISPOSITION OF THE BONDS, INCLUDING THE TREATMENT OF ORIGINAL ISSUE PREMIUM. QUALIFIED BY THE MICHIGAN DEPARTMENT OF TREASURY The College has received a letter from the Department of Treasury of the State of Michigan stating that the College is in material compliance with the criteria of the Revised Municipal Finance Act, Act 34, Public Acts of Michigan, 2001, as amended, for a municipality to be granted qualified status. The College may therefore proceed to issue the Bonds without further approval from the Department of Treasury of the State of Michigan. CONTINUING DISCLOSURE Prior to delivery of the Bonds, the College will execute a Continuing Disclosure Agreement (the "Agreement") for the benefit of the holders of the Bonds and the Beneficial Owners (as defined in the Agreement) to send certain information annually and to provide notice of certain events to certain information repositories pursuant to the requirements of Rule 15c2-12(b)(5) (the "Rule") adopted by the Securities and Exchange Commission under the Securities Exchange Act of The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and the other terms of the Agreement, are set forth in APPENDIX C - "FORM OF CONTINUING DISCLOSURE AGREEMENT" to this Official Statement. A failure by the College to comply with the Agreement will not constitute an event of default under the Resolution and Beneficial Owners of the Bonds are limited to the remedies described in the Agreement. A failure by the College to comply with the Agreement must be reported by the College in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such failure may adversely affect the transferability and liquidity of the Bonds and their market price. Except as disclosed below, the College has not in the previous five years, failed to comply, in all material respects, with any previous continuing disclosure agreements executed by the College pursuant to the Rule. While the College filed its audited financial statements and annual disclosure information timely over the past five years in compliance, in all material respects, with the previous continuing disclosure agreements executed by the College, the College filed late material event notices of credit rating changes of its underlying rating, and ratings affecting the bond insurer for certain previous bond issues of the College. To the best of the College s knowledge, the College did not receive notification from bond insurer or the rating agencies of the rating changes for the bond insurer. The College is in the process of putting systems in place to identify and file material event notices in a timely manner in the future. BOND COUNSEL S RESPONSIBILITY The fees of Thrun Law Firm, P.C., East Lansing, Michigan ( Bond Counsel ) for services rendered in connection with its approving opinion are expected to be paid from Bond proceeds. Except to the extent necessary to issue its approving opinion as to the validity of the Bonds and tax matters relating to the Bonds and the interest thereon, and except as stated below, Bond Counsel has not been retained to examine or review, and has not examined or reviewed any financial documents, statements or materials that have been or may be furnished in connection with the authorization, issuance or marketing of the Bonds and accordingly will not express any opinion with respect to the accuracy or completeness of any such financial documents, statements or materials. Bond Counsel has reviewed the statements made in this Official Statement on the cover page and under the heading "Information for Bidders", insofar as such statements summarize the language and effect of the Resolutions, the Bonds, the Continuing Disclosure Agreement, the Constitution of the State of Michigan, the laws of the State of Michigan and federal income tax laws and, further, the statements under such headings are fair and accurate summaries 7

12 thereof in all material respects. Except as otherwise disclosed on pages herein, Bond Counsel has not been retained to review and has not reviewed any other portion of this Official Statement for accuracy or completeness, and has not made inquiry of any official or employee of the College or any other person and has made no independent verification of such other portions hereof, and further has not expressed and will not express an opinion as to any portions hereof. FINANCIAL CONSULTANT S OBLIGATION Public Financial Management, Inc., Ann Arbor, Michigan (the "Financial Advisor"), has been retained by the College to provide certain financial advisory services. The Financial Advisor assisted in the preparation of the Official Statement and in other matters relating to the planning, structuring and issuance of the Bonds. The information contained in the Official Statement was prepared in part by the Financial Advisor and is based on information supplied by various officials from records, statements and reports required by various local, county or state agencies of the State of Michigan. To the best of the Financial Advisor's knowledge, all of the information contained in the Official Statement, which it assisted in preparing, while it may be summarized is complete and accurate. However, the Financial Advisor has not and will not independently verify the completeness and accuracy of the information contained in the Official Statement. The Financial Advisor is a registered municipal advisor and is not engaged in the business of underwriting, marketing or trading of municipal securities or any other negotiable instrument. The Financial Advisor's duties, responsibilities and fees arise solely as financial advisor to the College. The Financial Advisor's fees are expected to be paid from Bond proceeds. Further information concerning the Bonds may be secured from Public Financial Management, Inc., 3989 Research Park Drive, Ann Arbor, Michigan Telephone: CREDIT RATING Moody's Investors Service, Inc., ( Moody s ) has assigned, as the of the date of delivery of the Bonds, its underlying municipal bond rating of A1, to the Bonds. An explanation of the significance of the rating may be obtained from the rating agency furnishing the same at the following addresses Moody s Investors Service, Inc., 7 World Trade Center, 250 Greenwich Street, New York, New York The aforementioned rating will reflect the sole view of the rating agency and there is no assurance that such rating will be continued for any period of time, or that it will not be revised upwards or downwards or be withdrawn; a revision, suspension, or withdrawal of the rating may have an effect on the market price of these securities and should be noted. A brief description of the Moody s rating definitions reads as follows: Moody s Investors Service, Inc. Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as gilt edge. Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Bonds which are rated Aa are judged to be of a high quality by all standards. Together with the Aaa group, they comprise what are generally known as high grade Bonds. They are rated lower than the best Bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of great amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in the Aaa securities. Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future. 8

13 Bonds which are rated Baa are considered as medium grade obligations; i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. General Note: Those Bonds in the Aa, A, and Baa groups which Moody s believes possess the strongest investment attributes are designated by the symbols Aa1', A1' and Baa1'. Under the expanded rating scale adopted by Moody s January 7, 1997 the numerical rating modifiers 2 and 3 have been added for long-term debt. The numerical modifier 2 indicates that the security is in the mid-range of its category, while the modifier 3 indicates that the issue is in the lower end of its generic category. A triple-a (Aaa) rating will have no numerical modifier; it remains Moody s highest bond rating. PLAN OF REFUNDING A portion of the proceeds of the Bonds will be used to refund that portion of the Issuer's outstanding 2006 College Facilities Bonds dated April 1, 2006, in the original amount of $6,800,000, which are callable on or after May 1, 2016, and are due and payable May 1, 2017 through May 1, 2027, inclusive (the Prior Bonds ) and to establish an escrow fund (the Escrow Fund ) composed of cash and non-callable direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America or other obligations the principal of and interest on which are fully secured by the foregoing. The Escrow Fund will be held by The Huntington National Bank, Grand Rapids, Michigan as escrow agent (the Escrow Agent ) and will be used to pay the principal of and interest on the Prior Bonds at call for redemption. The Escrow Fund will be held by the Escrow Agent pursuant to an escrow agreement (the Escrow Agreement ) which irrevocably directs the Escrow Agent to make the payment of the principal of and interest on the Prior Bonds at call for redemption. The Escrow Fund will be such that the cash and the principal and interest payments received on the investments, if any, will be sufficient, without reinvestment, except as may be provided in the Escrow Agreement, to pay the principal of and interest on the Prior Bonds as they are called for early redemption, as set forth in the table below: Principal of and Interest on the Prior Bonds to paid from the Escrow Fund Date Principal Interest Total 05/02/2016 $4,635, $96, $4,731, TOTAL $4,635, $96, $4,731, The accuracy of (i) the mathematical computations of the adequacy of cash and certain obligations to be held in the Escrow Fund and used, together with the earnings thereon, to pay the principal of and interest on the Prior Bonds and (ii) the computations of the yield on the Prior Bonds as originally issued and the yield of such obligations in the Escrow Fund, supporting the conclusion of Bond Counsel that the interest on the Bonds is excluded from gross income for federal income tax purposes as indicated under the caption TAX MATTERS below, will be verified by Robert Thomas CPA, LLC, Shawnee Mission, Kansas. Such verification of the accuracy of the computations shall be based upon information supplied by the College s Financial Advisor and on interpretations of Section 148 of the Internal Revenue Code of 1986, as amended, as provided by Bond Counsel. ESTIMATED SOURCES Sources of Funds Total Par Amount of Bonds $4,605, Production 198, Total Sources $4,803, ESTIMATED USES Uses of Funds Deposit to Escrow Account $4,727, Underwriter's Discount 15, Costs of Issuance 59, Total Uses $4,803,

14 BAY DE NOC COMMUNITY COLLEGE GENERAL FINANCIAL INFORMATION¹ AREA miles. The College s geographic boundaries are conterminous with those of Delta County and encompass 1,169 square POPULATION The U.S. Census populations reported for Delta County is as follows: PROPERTY VALUATIONS Year Population 2010 U.S. Census 37, U.S. Census 38, U.S. Census 37,780 In accordance with Act 539, Public Acts of Michigan, 1982, as amended, and Article IX, Section 3 of the Michigan Constitution, the ad valorem State Equalized Valuation (SEV) represents 50% of true cash value. SEV does not include any value of tax exempt property (e.g. churches, governmental property) or property granted tax abatements under Act 198, Public Acts of Michigan, 1974, as amended. As a result of Proposal A, ad valorem property taxes are assessed on the basis of taxable value, which is subject to assessment caps. SEV is used in the calculation of debt margin and true cash value. See TAX PROCEDURES herein for more information. Taxable property in the College is assessed by the local municipal assessor and is subject to review by the County Equalization Department. Historical Valuation Taxable State Equalized Year Valuation Valuation 2015 $1,206,534,426 $1,427,703, ,192,274,555 1,403,677, ,194,371,916 1,413,634, ,148,457,641 1,385,860, ,105,620,129 1,367,479, Taxable Valuation $1,206,534,426 Plus: 2015 IFT Taxable Value* 28,337,440 Total Value $1,234,871,866 * Millage is levied at half rate against the IFT Taxable Value. See "PROPERTY VALUATIONS - Industrial Facilities Tax (IFT)". Per Capita Valuation 2015 Per Capita Taxable Value $32, Per Capita State Equalized Valuation $38, Per Capita Estimated True Cash Valuation $77, ¹ Information included in this Official Statement under the headings General Financial Information, General Economic Information, and General College Information was obtained from the College, unless otherwise noted. 10

15 Industrial Facilities Tax (IFT) Act 198, Public Acts of Michigan, 1974, as amended ( Act 198 ), provides significant property tax incentives to industry to renovate and expand aging plants and to build new industrial facilities in Michigan. Under the provisions of Act 198, qualifying cities, villages and townships may establish districts in which industrial firms are offered certain property tax incentives to encourage restoration or replacement of obsolete industrial facilities and to attract new industrial facilities. Property tax owners situated in such districts pay an Industrial Facilities Tax ( IFT ) in lieu of ad valorem taxes on the facility and equipment for a period of up to 12 years. For rehabilitated plant and equipment, the IFT is determined by calculating the product of the state equalized valuation of the replacement facility in the year before the effective date of the abatement certificate multiplied by the total mills levied by all taxing units in the current year. New plants and equipment receiving their abatement certificate prior to January 1, 1994 are taxed at one-half the total mills levied by all taxing units, other than mills levied for local and school district operating purposes or under the State Education Tax Act, plus one-half of the number of mills levied for school operating purposes in For new facility abatements granted after 1993, new plants and equipment are taxed at one-half of the total mills levied as ad valorem property taxes by all taxing units except mills levied under the State Education Tax Act, plus the number of mills levied under the State Education Act. For new facility abatements granted after 1993, the State Treasurer may permit abatement of all, none or one-half of the mills levied under the State Education Tax Act. It must be emphasized, however, that ad valorem property taxes on land are not reduced in any way since land is specifically excluded under Act 198. After expiration of the abatement certificate, the then-current SEV of the facility is returned to the ad valorem tax roll. The total amount of 2015 IFT Taxable Value in the College district is $28,337,440. Renaissance Zone Act 376, Public Acts of Michigan, 1996 ( Act 376 ) authorized the creation of six urban, three rural and two ex-military facilities for designation as renaissance zones. The purpose of a renaissance zone is to foster economic development and stimulate industrial, commercial and residential improvements by, in part, providing certain tax credits or exemptions within the zone. One of the subzones lies within the College s boundaries. Property within this subzone has a 2015 Taxable Value of $1,043,885. TAX BASE COMPOSITION A breakdown of the College s 2015 Taxable Value by municipality, class and use are as follows: Total Taxable Percent of Municipality Value Total Baldwin Township $ 32,302, % Bark River Township 38,877, Bay de Noc Township 28,456, Brampton Township 26,370, Cornell Township 21,408, Ensign Township 28,937, Escanaba Township 109,839, Fairbanks Township 20,198, Ford River Township 62,955, Garden Township 62,029, Maple Ridge Township 26,847, Masonville Township 64,764, Nahma Township 33,964, Wells Township 238,927, City of Escanaba 305,061, City of Gladstone 105,591, TOTAL $1,206,534, % ¹ See SOURCES OF REVENUE FOR OPERATIONS for further details herein. 11

16 Taxable Percent of Class Value Total Real Property $1,006,230, % Personal Property 200,303, TOTAL $1,206,534, % Use Agricultural $25,495, % Commercial 142,945, Industrial 32,196, Residential 805,540, Developmental 52, Personal Commercial 18,875, Personal Industrial 115,808, Personal Residential 4, Personal Utility 65,614, TOTAL $1,206,534, % See "MICHIGAN PROPERTY TAX REFORM" herein for information regarding tax changes effective in the 2014 and 2016 tax years Source: Delta County MAJOR TAXPAYERS The ten largest taxpayers in the College and their 2015 Taxable Value totals and Industrial Facilities Tax Valuation totals are as follows: Taxable IFT Total Taxpayer Product/Service Value + Valuation = Valuation Escanaba (Mead) Paper Co * Paper & pulp mill $97,828,771 $25,064,892 $122,893,663 American Transmission Co Utility 33,490, ,490,262 EMP, Inc. Mfg. hydraulics 14,312, ,871 15,082,969 Heritage Garden Wind Farm LLC Wind turbines 14,725, ,725,639 Upper Peninsula Power Co Utility 7,572, ,572,197 Great Lakes Transmission Co Gas distribution 5,643, ,643,617 Dagenais Real Estate Co Real estate 5,404, ,404,474 UP Enterprises LLC Real estate 5,035, ,035,761 Wal Mart Stores Inc. Retail 4,853, ,853,589 DLP Marquette / General Hospital LLC Hospital 4,395, ,395,408 TOTAL $193,261,816 $25,835,763 $219,097,579 The Taxable Valuations of the major taxpayers represent 16.02% of the College s 2015 Taxable Valuation of $1,206,534,426. *Escanaba (Mead) Paper Company is contesting the multipliers used for assessing its real property taxes with the State Tax Tribunal. Source: Delta County CONSTITUTIONAL MILLAGE ROLLBACK Article IX, Section 31 of the Michigan Constitution (also referred to herein as the Headlee Rollback ) requires that if the total value of existing taxable property (State Equalized Valuation) in a local taxing unit, exclusive of new construction and improvements, increases faster than the U.S. Consumer Price Index from one year to the next, the maximum authorized tax rate for that local taxing unit must be reduced through a Millage Reduction Fraction unless new millage is authorized by a vote of the electorate of the local taxing unit. 12

17 TAX RATES - (Per $1,000 of Valuation) Each community college district, school district, county, township, special authority and city has a geographical definition which constitutes a tax district. Since community college districts, local school districts and the county overlap either a township or a city, and intermediate school districts overlap community college districts, local school districts and county boundaries, the result is many different tax rate districts. Bay de Noc Community College Voted Operating Voted Capital Debt TOTAL MILLAGE Residents of the Community College District voted a charter millage levy of 2.5 mills, for all purposes of the Community College, which has been reduced per constitutional requirements. The College s debt millage expires with the 2034 levy. See CONSTITUTIONAL MILLAGE ROLLBACK herein. Other Major Taxing Units State Education Fund¹ Escanaba Area Public Schools Gladstone Area Schools Delta County City of Escanaba City of Gladstone Delta-Schoolcraft I/S/D ¹ The State of Michigan levies 6.00 mills for school operating purposes on all principal residence and non-principal residence property located within the College District. Source: Delta County TAX LEVIES AND COLLECTIONS The College's fiscal year begins July 1 and ends June 30. College property taxes are due July 1 and December 1 of each fiscal year and are payable without interest on or before the following September 14 and February 14, respectively, and without penalty on or before the following February 14. All real property taxes remaining unpaid on March 1st of the year following the levy are turned over to the County Treasurer for collection. Delta County annually pays from its Tax Revolving Funds, delinquent taxes on real property to all taxing units in the County, including the College, shortly after the date delinquent taxes are returned to the County Treasurer for collection. The payments from this fund has resulted in collections of taxes approaching 100% for all taxing units. Delinquent personal property taxes are negligible. A history of tax levies and collections for the College is as follows: Levy Operating Collections to Collections Plus Funding Year Tax Levy March 1 of Following Year To June 30 of Following Year 2015 $2,784,199 (In process of collection) N/A ,751,292 $2,557, % $2,726, % ,790,565 2,613, ,784, ,632,536 2,474, ,629, ,551,329 2,323, ,542, The Tax Payment Fund is financed through the issuance of General Obligation Limited Tax Notes (GOLTNs) by the County. Although the College anticipates the continuance of this program by the County, the ability of the County to issue such GOLTNs is subject to market conditions at the time of offering. In addition, Act 206, Public Acts of Michigan, 1893, as amended, provides in part that: The primary obligation to pay to the county the amount of taxes Fand interest on the taxes shall rest with the local taxing units and the state for the state education tax under the state education tax act... If the delinquent taxes that are due and payable to the county are not received by the county for any reason, the county has full right of recourse against the taxing unit or to the state for the state education tax... to recover the amount of the delinquent taxes and interest... On the third Tuesday in July in each year, a tax sale is held by the County at which lands delinquent for taxes assessed in the third year preceding the sale, or in a prior year, are sold for the total of the unpaid taxes of those years. Pursuant to Act 123, Public Acts of Michigan, 1999, as amended, property owners with taxes that are two years delinquent will be foreclosed and the property will be sold at public auction. For example, property owners who fail to pay their 2015 delinquent property taxes will lose their property in March

18 LABOR FORCE A breakdown of the number of salaried employees of the College and their affiliations with organized groups are as follows: Contract Employees Number Bargaining Unit Expiration Administrators 49 Non-Affiliated N/A Full-time Instructors 47 Bay de Noc Faculty Assn. 08/14/2017 Part-time Instructors 101 Bay de Noc Part-time Faculty Assn. 06/30/2016 M-TEC Instructor 7 Non-Affiliated N/A Secretarial/Clerical 27 Non-Affiliated N/A Maintenance/Custodial 17 Non-Affiliated N/A Computer/Media Tech. 5 Non-Affiliated N/A Student Workers 134 Non-Affiliated N/A TOTALS 387 The College has not experienced a strike by any of its bargaining units within the past ten years. PENSION FUND For the period July 1 through June 30 the College pays an amount equal to a percentage of its employees wages to the Michigan Public School Employees Retirement System ( MPSERS ) which is administered by the State of Michigan. These contributions are required by law and are calculated by using the contribution rates and periods provided in the table below of the employees wages. On June 28, 2010, the Michigan Court of Claims issued an injunction in response to a challenge to the authority of the State to require employees who began working before July 1, 2010, to contribute 3% of reportable wages to the retiree health care trust at MPSERS. As a result, the State has adjusted the contribution rate due on employees wages paid between November 1, 2010 and September 30, 2011 to 20.66% for members who first worked prior to July 1, 2010 and 19.16% for Pension Plus members. In March 2011, the Court of Claims granted the plaintiffs' motions for summary disposition finding that the mandatory 3% contribution violated both the U.S. and Michigan Constitutions. The State appealed the ruling to the Michigan Court of Appeals. In August of 2012, the Court of Appeals affirmed the decision of the Court of Claims. The State of Michigan has filed an Application for Leave to Appeal with the Michigan Supreme Court. On September 4, 2012, the governor signed Public Act 300 of 2012 ("Act 300") to reform MPSERS. Act 300 changed employee contributions to their pensions and retiree health benefits, shifting the 3% pension contribution to retiree health benefits. Act 300 also increased the amount retirees contribute to their health insurance, and employees are required to choose to increase contributions to their pension plan, maintain current contribution rates and freeze existing benefits, or freeze existing pension benefits and move into a defined contribution plan. In addition, the legislation ended retiree health benefits for new hires. On November 29, 2012, the Ingham County Circuit Court, sitting as the Court of Claims, ruled that the substantive provisions of the Act 300 were constitutional except for one particular provision relating to an "election window" for healthcare benefits. The Legislature promptly adopted legislation which was signed into law by the Governor addressing the constitutional concerns of the election window raised by the Court of Claims. Two public school employee unions appealed the Court of Claims decision to the Michigan Court of Appeals, which affirmed the Court of Claims' ruling on January 14, The unions appealed the matter to the Michigan Supreme Court. On April 8, 2015, the Michigan Supreme Court upheld Act 300 by ruling that the required employee elections to participate and contribute to retiree healthcare and defined benefit pension plans are constitutional under both the Michigan and United States Constitutions. It is unknown at this time if plaintiffs will appeal this decision to the federal court. The Michigan Supreme Court has not yet ruled on the mandatory 3% retiree health contributions made by members from July 2010 to September 2012 before Act 300 took effect. 14

19 The College s estimated contribution to MPSERS for the 2015/16 fiscal year and the contributions for the previous four years are shown below. Contribution Period Contribution Rate Pension Plus Oct. 1, 2015-Sept. 30, % % Oct. 1, 2014-Sept. 30, Oct. 1, 2013-Sept. 30, Feb. 1, 2013-Sept. 30, Oct. 1, 2012-Jan. 31, Oct. 1, 2011-Sept. 30, Fiscal Year Ending Contributions to June 30 MPSERS 2016 Estimate $1,365, ,728, ,371, ,350, ,316,762 Source: Audited financial statements. Note: Effective for fiscal years beginning after June 15, 2014, GASB Statement 68 requires all reporting units in a multi-employer cost sharing pension plan to record a balance sheet liability for their proportionate share of the net pension liability of the plan. The College will be required to implement GASB 68 in their year ended June 30, 2015 financial statements. Audited results of the MPSERS plan for the year ended September 30, 2014 resulted in the College recognizing a net pension liability of $14,328,240 as of June 30, (Net pension liability 8% discount rate per ORS) OTHER POST-EMPLOYMENT BENEFITS Under the MPSERS Act, all retirees participating in the MPSERS pension plan have the option of continuing health, dental, and vision coverage through MPSERS. Retirees electing this coverage contribute an amount equivalent to the monthly cost for Part B Medicare and 10 percent of the monthly premium amount for health, dental, and vision coverage at the time of receiving the benefits. The MPSERS board of trustees annually sets the employer contribution rate to fund the benefits on a pay-as-you-go basis. Participating employers are required to contribute at that rate. The employer contribution rate was 8.5 percent of covered payroll for the period from July 1, 2012 through September 30, For the period from October 1, 2012 through June 30, 2013, the employer contribution rate ranged from 8.18 percent to 9.11 percent depending upon the employee s date of hire and plan election as noted above. Effective February 1, 2013, members can choose to contribute 3 percent of their covered payroll to the Retiree Healthcare Fund and keep this premium subsidy benefit, or they can elect not to pay the 3 percent contribution and instead choose the Personal Healthcare Fund, which can be used to pay healthcare expenses in retirement. Members electing the Personal Healthcare Fund will be automatically enrolled in a 2 percent employee contribution into their 457 account as of their transition date and create a 2 percent employer match into the employee s 401(k) account. The total contributions to the Optional Plan for the past four fiscal years and an estimated appropriation for the current fiscal year are as follows: Fiscal Year Ending Contributions to June 30 the Optional Plan 2016 Estimate $550, , , , ,123 Source: Audited Financial Statements STATE APPROPRIATIONS The Michigan Constitution requires that the Legislature provide by law for the financial support of community colleges. Each year the College submits to the State a request for an appropriation for the ensuing fiscal year of the College. The following sets forth the State appropriations to the College for each of the last four fiscal years and an estimated appropriation for the current fiscal year. 15

20 Fiscal Year Ending State June 30 Appropriations 2016 Estimate $5,966, ,914, ,807,075* ,329, ,040,200 Source: Audited Financial Statements *Includes Capital Appropriations from the State of Michigan. TUITION AND STUDENT FEES The Boards of individual community colleges have the authority to set tuition rates. The College s 2015/16 tuition rates are $ per contact hour for Delta County residents, $ per contact hour for Dickinson County residents, $ per contact hour for other Michigan residents and $ per contact hour for out-of-state students. The following sets forth the amounts collected from student tuition for each of the last four years and the estimated 2015/16 amount. Source: Audited Financial Statements Fiscal Year Ending Gross Tuition June 30 & Fees 2016 Estimate $7,390, ,098, ,335, ,091, ,032,911 SOURCES OF REVENUES FOR OPERATIONS The College has received during each of the last four fiscal years and an estimate for the current year the following unrestricted revenues for operational purposes: Fiscal Year Ending State Gross Tuition & Total June 30 Appropriation Student Fees Property Taxes Other Revenues 2016 Estimate $5,966,096 $7,390,367 $2,784,199 $4,523,566 $20,664, ,914,679 8,098,608 2,751,292 3,179,773 19,944, ,807,075* 9,335,022 2,790,565 2,734,616 20,667, ,329,461 9,091,547 2,632,536 3,887,388 20,940, ,040,200 9,032,911 2,551,329 1,338,640 17,963,080 *Includes Capital Appropriations from the State of Michigan. Source: Audited Financial Statements DEBT STATEMENT (As of November 12, 2015 and including the Bonds described herein) DIRECT DEBT Dated Interest Amount Date Purpose Type Spread Maturities Outstanding 04/01/2006 Building LTGO % 05/01/16-27 $4,950,000 05/14/2015 Facility Bonds LTGO /01/ ,600,000 TOTAL DIRECT DEBT $8,550,000 Less: Prior Bonds - LTGO ($4,635,000) Plus: 2015 Refunding Bonds - LTGO 4,605,000 ($30,000) NET DIRECT DEBT $8,520,000 16

21 OVERLAPPING DEBT Amount District Percent Municipality Outstanding Share % Escanaba City $ 2,680,000 $ 2,680, % Gladstone City 315, , Bark River Township 216, , Bark River Harris School District 1,035, , Escanaba School District 28,410,000 28,310, Gladstone School District 15,922,699 15,922, Mid Peninsula School District 1,880,491 1,508, Rapid River School District 9,390,000 9,390, Delta County 915, ,000 NET OVERLAPPING DEBT $59,809,016 NET DIRECT AND OVERLAPPING DEBT $68,329,016 Source: Municipal Advisory Council of Michigan. DEBT RATIOS Per Capita (37,069) Net Direct Debt $ Net Direct and Overlapping Debt $1, Ratio to 2015 Taxable Valuation ($1,206,534,426) Net Direct Debt 0.71% Net Direct and Overlapping Debt 5.66% Ratio to 2015 State Equalized Valuation ($1,427,703,612) Net Direct Debt 0.60% Net Direct and Overlapping Debt 4.79% Ratio to 2015 Estimated True Cash Valuation ($2,855,407,224) Net Direct Debt 0.30% Net Direct and Overlapping Debt 2.39% DEBT HISTORY The College has no record of default. FUTURE FINANCING The College expects to issue approximately $3.7 million of limited tax general obligation bonds within the next six to nine months to finance facility construction. OTHER BORROWING The College has no other borrowing outstanding, except as described herein. 17

22 LEGAL DEBT MARGIN 2015 State Equalized Valuation $1,427,703,612 Voted Debt Limit (15% of 2015 State Equalized Valuation)(1) $214,155,541 Debt Outstanding, including Bonds described herein (8,520,000)* Additional Voted Debt Which Could Be Legally Incurred $205,635,541* 2015 State Equalized Valuation $1,427,703,612 Non-Voted Debt Limit (2015 State Equalized Valuation)(2) $15,527,036 Debt Outstanding, including Bonds described herein (8,520,000)* Additional LIMITED Debt Which Could Be Legally Incurred $7,007,036* Under Act 331, the College is subject to the following debt limitations: (1) Loans and bonds, including Bonds approved by the qualified electors of the College district, may not be issued in an amount in excess of 15% of the SEV of the taxable property of the College district. (2) Within the foregoing limitation, the College may incur indebtedness that is not greater than 1-1/2% of the first $250,000,000 of SEV of the taxable property within the community college district of the College and 1% of the excess over $250,000,000 of SEV of the taxable property within the community college district of the College without a vote of the electors of the College. (3) Community colleges may enter into installment purchase contracts for real or personal property payable out of the funds of the college provided for that purpose. The College district has no outstanding installment purchase contracts. (4) Community colleges may issue revenue bonds to pay for educational facilities. Such revenue bonds would be payable out of the income and revenues from college facilities, or from fees and charges required to be paid by students enrolling in the college. The College district does not have any outstanding revenue bonds. (5) Community colleges may finance energy conservation improvements by installment contracts or the issuance of notes. The College district does not have any outstanding energy conservation improvement debt. * Preliminary, subject to change. 18

23 LOCATION AND AREA GENERAL ECONOMIC INFORMATION Delta County is 1,169 square miles and is situated in the south central portion of Michigan s Upper Peninsula. Bay de Noc Community College serves the entire county and is located in Escanaba, the county seat and its largest city. Escanaba is located at the entrance of Little Bay de Noc on Lake Michigan and is the area s main trading center. The College is located the following distances from these commercial and industrial areas: POPULATION BY AGE 60 miles south of Marquette 60 miles east of Iron Mountain 58 miles northeast of Menominee 111 miles northwest of Green Bay, Wisconsin 313 miles north of Chicago, Illinois 370 miles northeast of Minneapolis, Minnesota 430 miles northwest of Detroit The 2010 U.S. Census estimate of population by age for Delta County is as follows: Number Percent Total Population 37, % 0 through 19 years 8, through 64 years 21, years and over 7, Median Age 45.6 years INCOME The 2010 U.S. Census estimate of household income for Delta County is as follows: Number Percent HOUSEHOLDS BY INCOME 16, % Less than $10,000 1, $10,000 to $14,999 1, $15,000 to $24,999 2, $25,000 to $34,999 1, $35,000 to $49,999 2, $50,000 to $74,999 3, $75,000 to $99,999 1, $100,000 to $149,999 1, $150,000 to $199, $200,000 or more Source: Median Income $41,951 Mean Income $50,763 19

24 EMPLOYMENT CHARACTERISTICS* The following employers located within the College s boundaries and surrounding communities offer employment opportunities. Approx. No. Employer Product/Service Employed Within the College District (100 or more employees) Escanaba (Verso) Paper Co. Paper & pulp mill 1,772 Engineered Machined Products, Inc. Diesel engine components, oil systems, pumps & fans 900 St. Francis Hospital Medical & surgical hospital services 525 Chip In Island Resort & Casino Hotel, casino 438 Bay de Noc Community College Education 387 Escanaba Area School District Education 301 Community Action Agency Government 219 Wal-Mart Stores Inc. Department store 200 Wisconsin Central Transportation Corp. Ore dock loading from rail to vessel 200 Canadian National Railroad Railroad services 200 Gladstone Area School District Education 198 Christian Park Skilled nursing care facility 180 Menards Hardware Plus Retail hardware store 150 Elmer s County Market Inc. Retail grocery store with pharmacy & florists 150 City of Escanaba Executive offices 150 Andex Industries, Inc. Blister cards & printed skin board 140 USDA Forest Service Hiawatha National Forest 134 Besse Forest Products Group Logging; single ply veneer lumber 129 Cloverland Manufacturing Inc. Automotive & industrial engines & parts 125 Besse Forest Products Group Spliced hardwood veneers & plywood 120 Northern Michigan Veneers Spliced hardwood veneer faces 120 Delta Co. Community Mental Health Center Public mental health services 113 United Assn. Jorneymen Apprentice PLM Labor organizations 111 MFC First National Bank National commercial bank 107 Bishop Noa Home Senior Citizens Skilled nursing care facility 105 Upper Peninsula Commission Elderly & disabled persons social services 100 Skerbeck Carnival Maintenance services 100 ShopKo Stores Inc. Retail men s & women s clothing store & accessories 100 Lakestate Industries, Inc. Wooden survey states & pallet stock 100 UPCAP Services, Inc. Public health education 100 Super One Foods Retail grocery store 100 K-mart Discount department store 100 Pathways to Healthy Living Mental health/psychiatric counseling 100 * The approximate number of employees listed above are as reported in the sources indicated below. Because of reporting time lags and other factors inherent in collecting and reporting such information, the numbers may not reflect recent changes in employment levels, if any. Source: 2015 Michigan Manufacturers Directory, 2015 Crain s Book of Lists, Manta Company Intelligence website, the Michigan Economic Development Council ( MEDC ), and individual employers. EMPLOYMENT BREAKDOWN The 2010 U. S. Census reports the occupational breakdown of persons 16 years and over for Delta County as follows: Number Percent PERSONS BY OCCUPATION 16, % Professional Specialty Occupations 4, Service Occupations 3, Sales & Office Occupations 3, Natural Resources, Construction, and Maintenance Occupations 1, Transportation & Material Moving Occupations 2,

25 The breakdown by industry for persons 16 years and over in Delta County is as follows: Number Percent PERSONS BY INDUSTRY 16, % Agriculture, Forestry, Fishing, Hunting & Mining Construction 1, Manufacturing 2, Wholesale Trade Retail Trade 2, Transportation Information Finance, Insurance, & Real Estate Professional & Management Services Educational, Health & Social Services 3, Arts, Entertainment, Recreation and Food Services 1, Other Professional and Related Services Public Administration Source: UNEMPLOYMENT* The Michigan Department of Technology, Management & Budget Information, reports unemployment averages for Delta County as compared to the State of Michigan are as follows: *not seasonally adjusted County of State of Delta Michigan 2015 YTD (September) 5.2% 4.7% 2014 Annual Average Annual Average Annual Average Annual Average BANKING The following banks have branches located within the College boundaries. Deposits are as reported in the Accuity American Financial Directory, July - December Total State-Wide Bank Main Office Deposits Baybank Gladstone, MI $ 72,847,000 First Bank, Upper Michigan Gladstone, MI 121,298,000 Northern Michigan Bank & Trust Escanaba, MI 220,842,000 Upper Peninsula State Bank Escanaba, MI 139,032,000 Wells Fargo Bank, National Association Sioux Falls, SD N/A mbank Manistique, MI 609,173,000 21

26 DESCRIPTION GENERAL COLLEGE INFORMATION Bay de Noc Community College is a comprehensive community college which meets the post-secondary educational needs of its students. The College offers courses and programs in occupational fields which prepare students to immediately enter the work force, transfer curricula which prepare students to pursue baccalaureate degrees at four-year colleges and universities and courses, seminars and workshops which are designed to satisfy the unique educational needs of the College s service area. Established in 1962 by the citizens of Delta County, Bay de Noc Community College opened its doors to students in the fall of 1963 with an enrollment of 133 students. Since its beginnings in the old Escanaba Area High School building, the College s physical plant has grown to its current contingent of twelve buildings located on a 150-acre campus site, valued at more than $75,000,000, in the northeast corner of the City of Escanaba with a 2014/15 projected enrollment of 1,363 FTE. Bay de Noc Community College is accredited by the North Central Association of Colleges and Secondary Schools, an accreditation granted in recognition of academic excellence. Bay de Noc Community College operates on the semester system with fall semester classes beginning in late August or early September and ending in December. Winter semester begins in January and ends in late May. Students also have an opportunity to enroll in classes during the 15 week summer session. PURPOSE The purpose of the College is to provide quality learning opportunities that enable its students to succeed and its communities to thrive. MISSION The mission of the College is to be a leader in lifelong learning that empowers students and engages communities. BOARD OF TRUSTEES The Board of Trustees consists of seven members who are elected at large for six-year overlapping terms. The Board annually elects a Chairman, Vice Chairman, Treasurer and Secretary. The Board is responsible for the selection and appointment of the College President. The Board meets as a single body to set or amend policy, develop long range educational goals and act upon recommendations of the President. The Board is also responsible for adopting and periodically amending the operating budget and evaluating college programs in accordance with governing laws. The members of the Board of Trustees of Bay de Noc Community College are as follows: Commencement of Expiration of Current Term Current Term Thomas R. England, Chairman 01/01/10 12/31/16 Philip L. Strom, Vice Chairman 01/01/14 12/31/20 James L. Hermans, Secretary 01/01/12 12/31/18 Joy E. Hopkins, Treasurer* 01/01/14 12/31/16 Eric L. Lundin, Trustee* 07/02/15 12/31/20 William W. Lake, Trustee 01/01/14 12/31/20 Thomas L. Butch, Trustee 01/01/12 12/31/18 *Appointed to complete a vacated seat. ADMINISTRATIVE STAFF Dr. Laura L. Coleman, PRESIDENT Dr. Coleman has served as President of the College since July Prior to joining the College, Dr. Coleman was Executive Dean at Bertrand Crossing Campus, Lake Michigan College, Benton Harbor, MI. She also served as Interim Dean of Institute for Diversity and Leadership at Lake Michigan College, Benton Harbor, MI. She served as the Director at the Jefferson City Campus of State Fair Community College in Birmingham, Alabama. Dr. Coleman received her Doctorate of Philosophy (Ph.D.) degree from the University of Missouri-Columbia, her Master of Business Administration (MBA) degree from Lake Forest Graduate School of Management, Lake Forest, IL, and her Bachelor of Science (BS) degree from the University of Illinois. 22

27 Dr. Coleman serves on the Michigan College Access Network Board of Directors, the Michigan Early Middle College Association Board, the Michigan Center for Student Success Advisory Committee, the Michigan Colleges Online Advisory Board, and as Past President to the Continuous Quality Improvement Network (CQIN). She serves on the American Association of Community Colleges (AACC) Presidents Academy Executive Committee and was appointed by the Association of Community College Trustees (ACCT) to the Advisory Committee of Presidents. She served on the AACC Commission on Academic, Student, and Community Development from and the Commission on Research, Technology, and Emerging Trends from Locally, she serves on the Delta County Economic Development Board, the EDA Executive Committee, the CUPPAD Central U.P. Regional Prosperity Collaborative and Rural Wage Study Committee, and is a member of Rotary. She served on the OSF Community Advisory Board from and the Bay Area Economics Club from Kevin Carlson, CHIEF FINANCIAL OFFICER Mr. Carlson earned his Bachelor s degree in accounting from Michigan State University and his MBA from Marylhurst University. Prior to joing Bay de Noc Community College, Mr. Carlson had over 14 years of financial management experience and quickly advanced to the CFO role early in his career. He has worked in a variety of industries including insurance, healthcare, technology, government, non-profit and public accounting. He comes from 906 Technologies in Marquette, where he has served as their CFO since August Prior to that role, he held the role of Chief Financial Officer with Upper Peninsula Health Plan for 3 years. COMMUNITY COLLEGE ENROLLMENT The College s historical enrollment is as follows: College Year Enrollment College Year College Year 2015/16 1, /11 2, /15 2, /10 2, /14 2, /09 2, /13 2, /08 2, /12 2, /07 2,128 EXISTING COLLEGE FACILITIES Year Type of Assignable Gross Building Completed Construction Footage Footage Apartments - North Building (APART - 600) 1973 Concrete 8,190 9,100 Apartments - South Building (APART - 600) 1973 Concrete 10,800 12,000 Catherine Bonifas (CB- 200) 1970/1999 Concrete 23,970 26,600 Extension Center (Leased Building) 1972 Wood 4,541 5,046 Health & Applied Technology Center (HATC - 400) 1976/1999/2001/2012 Concrete 45,595 50,565 Learning Resource Center (LRC - 800) 1987 Concrete/Steel 36,720 49,052 Maintenance (MAINT ) 1970/2012 Metal/Steel 9,630 11,468 Math & Science (MS - 100) 1968/1999/2010/2011 Concrete 16,546 18,384 Advanced Technical Bldg. (MTEC ) 1999 Metal/Steel 37,953 42,170 Physcial Fitness & Family Center (YMCA - 300) 1970/1989/1999 Concrete/Steel 29,236 32,484 Welding (WELD ) 1974 Metal/Steel 12,960 14,400 West Campus (WC) 2007 Concrete/Steel 44,449 69,344 23

28 OTHER MATTERS All information contained in this Official Statement is subject, in all respects, to the complete body of information contained in the original source thereof and no guaranty, warranty or other representation is made concerning the accuracy or completeness of the information herein. In particular, no opinion or representation is rendered as to whether any projection will approximate actual results, and all opinions, estimates and assumptions, whether or not expressly identified as such, should not be considered statements of fact. The College certifies that to its best knowledge and belief, this Official Statement, insofar as it pertains to the College and its economic and financial condition, is true and correct as of the date of this Official Statement, and does not contain, nor omit, any material facts or information which would make the statements contained herein misleading. BAY DE NOC COMMUNITY COLLEGE /s/dr. Laura L. Coleman PRESIDENT 24

29 APPENDIX A - BUDGET BAY DE NOC COMMUNITY COLLEGE General Fund Budget Summaries For Fiscal Years Ending June 30, 2015 and June 30, / /16 Final Adopted Operating Revenue Budget* Budget Tuition $ 6,856,010 $ 5,724,131 Fees $1,861,415 $1,666,236 Scholarships, Discounts, & Waivers ($300,000) ($350,000) Net Tuition and Fees 8,417,425 7,040,367 Grants and Contracts 800,616 2,428,406 Sales and Services 455, ,000 Other Revenues 278, ,800 Total Operating Revenues $ 9,951,771 $ 10,255,573 Operating Expenses Salary and Wages $ 9,839,222 $ 9,275,698 Benefits 4,464,258 4,340,442 Total Salary and Employee Benefits 14,303,480 13,616,140 Depreciation 0 2,010,500 Grant Capital 0 1,531,592 Operating Expenses - Budget Managers 3,666,814 3,573,929 Total Operating Expenses 17,970,294 20,732,161 Net Operating Surplus(Deficit) (8,018,523) (10,476,588) Nonoperating State $ 5,419,500 $ 5,488,300 Property Tax Levy - 2,697,007 3,990,733 Other 0 358,000 Property Tax Dickinson County** 985, ,360 Net Nonoperating 9,101,507 10,787,393 Surplus(Deficit) before Capital & Debt Service Expenditures 1,082, ,805 Capital & Debt Service Expenditures Capital & Debt Service Millage Delta County $ 1,168,750 $0 Capital Outlay Delta County only (1,168,750) 0 Capital Outlay funded by Operations $ 366,000 0 Debt Service funded by Operations $ 516,984 $ 310,805 Increase(Decrease) in Net Assets $ 200,000 $0 *The College s Final 2014/15 Budget is expected to be adjusted due to the State of Michigan s determination on the College s GASB 68 potential pension liability amount. That Budget adjustment is expected to occur in February ** West Campus in Dickinson County. A-1

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31 Bay de Noc Community College BAY DE NOC COMMUNITY COLLEGE TABLE OF CONTENTS PAGE Management s Discussion and Analysis 1-12 Independent Auditors Report Financial Statements for the Years Ended June 30, 2014 and 2013 Statements of Net Position 15 Statements of Revenues, Expenses and Changes in Net Position 16 Statements of Cash Flows Discretely Presented Component Unit Foundation: Statements of Financial Position 19 APPENDIX B - AUDIT B-1 Years Ended June 30, 2014 and 2013 Financial Statements and Supplementary Information Statements of Activities 20 Notes to Financial Statements Supplementary Information for the Year Ended June 30, 2014 Combining Statement of Net Position 34 Combining Statement of Revenues, Expenses, Transfers and Changes in Net Position 35 West Campus Schedules of Revenues, Expenses, and Changes in Net Position 36

32 BAY DE NOC COMMUNITY COLLEGE MANAGEMENT S DISCUSSION AND ANALYSIS The discussion and analysis of Bay de Noc Community College s (the College ) financial statements provide an overview of the College s financial activities for the years ended June 30, 2014, June 30, 2013 and June 30, Management has prepared the financial statements and the related footnote disclosures along with the discussion and analysis. Responsibility for the accuracy and completeness of this information rests with the College s management. Using this Report MANAGEMENT S DISCUSSION AND ANALYSIS The College s financial statements have been prepared in accordance with Governmental Accounting Standards Board (GASB) Statement No. 35, Basic Financial Statements and Management s Discussion and Analysis for Public Colleges and Universities, as amended by GASB 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and the State of Michigan's Manual for Uniform Financial Reporting for Michigan Public Community Colleges, This annual financial report includes management s discussion and analysis, the report of the independent auditors, the basic financial statements, and notes to financial statements. Following the basic financial statements and footnotes are three supplementary schedules, the combining statement of net position, the combining statement of revenues, expenses, transfers and changes in net position, and the West Campus statements of revenues, expenses, and changes in net position. Although the GASB does not require this information be present for a fair and complete presentation, the statements do provide additional information regarding the various funds and activities of the College that are not disclosed in the basic financial statements. B-2 Component Unit The Financial Reporting Entity: Omnibus, GASB Statement No. 61, requires that separate legal entities associated with a primary government that meet certain criteria be included with the financial statements of the primary reporting unit. In compliance with this statement, the Bay de Noc Community College Foundation ( the Foundation ) is reported as a component unit of the College and its financial activity is discretely reported herein. Financial Highlights For the year ended June 30, 2014, the College recorded total operating revenues of $7.5 million and total operating expenses of $22.4 million. The difference produced an operating loss of $14.9 million. Net nonoperating and other revenues of $16.0 million offset this loss and resulted in an overall increase in net position of $1.1 million. With the $1.1 million of surplus generated in fiscal year 2014, the College s net position surpassed $25 million with a fiscal year-end balance of $25.35 million. The College experienced growth in student revenue as a result of moderate growth in tuition rates and a carefully redesigned student fee program. Strong and prudent fiscal expense management produced an actual decline in total operating expenses of $247,000 or 1.1%. 1

33 BAY DE NOC COMMUNITY COLLEGE MANAGEMENT S DISCUSSION AND ANALYSIS BAY DE NOC COMMUNITY COLLEGE MANAGEMENT S DISCUSSION AND ANALYSIS B-3 Statements of Net Position The statements of net position include all assets and liabilities of the College and are prepared under the accrual basis of accounting, whereby revenues and assets are recognized when services are provided and expenses and liabilities are recognized when obligations are incurred regardless of when cash is exchanged. The statements of net position present the financial position of the College at June 30, 2014, 2013 and Net position as of June 30 (in thousands) Current assets $ 6,608 $ 5,927 $ 5,424 Noncurrent assets 26,579 27,479 28,069 Total assets 33,187 33,406 33,493 Current liabilities 2,389 3,383 3,152 Noncurrent liabilities 5,449 5,781 7,114 Total liabilities 7,838 9,164 10,266 Net investment in capital assets 21,329 21,094 20,492 Unrestricted 4,020 3,148 2,735 Total net position $ 25,349 $ 24,242 $ 23,227 Changes from 2013 to 2014: Current assets consist of cash and cash equivalents, receivables, and prepaid expenses. Current assets totaled $6.6 million at June 30, 2014 as compared to $5.9 million at June 30, Significant changes include the following: Cash and cash equivalents increased by $722,000, which is primarily due to increases in state appropriations and property taxes. State appropriations receivable increased by $145,000, which is primarily attributable to an additional receivable from the State for the construction of the College s new nursing facility. Other receivables dropped by $173,000. The June 30, 2013 balance was unusually high as $151,000 of delinquent taxes for 2013 were not received until fiscal year 2014, while delinquent taxes for 2014 were received in Noncurrent assets consist of capital assets. Noncurrent assets totaled $26.6 million at June 30, 2014 and $27.5 million at June 30, Capital asset additions for fiscal year 2014 were $1.1 million compared to $1.4 million in fiscal year With some large investments in capital expected in the next two years this trend should change with positive growth in net capital assets. Current liabilities consist of accounts payable, accrued expenses, unearned revenue, and current portion of long-term debt obligations due within the next fiscal year. Current liabilities were $2.4 million at June 30, 2014 compared to $3.4 million at June 30, The substantial decrease in current liabilities can be directly attributed to the $835,000 decrease in the current portion of the long-term debt. This decrease resulted from the maturity and fully paying off the general obligation building and site bonds of 2001 and the general obligation refunding bonds of 2007 during fiscal Noncurrent liabilities consist of long-term debt, for which the principal is due in more than one year and accrued employee retirement benefits. Long-term debt decreased by $300,000 due to regular payments. Retirement benefits decreased by $32,000 due to retirement and payout to a couple of employees. Net position increased by $1,107,070. Changes from 2012 to 2013: Current assets consist of cash and cash equivalents, receivables, and prepaid expenses. Current assets totaled $5.9 million at June 30, 2013 as compared to $5.4 million at June 30, Significant changes include the following: Cash and cash equivalents increased by $218,000 due to increases in state appropriations, gift revenue, and other revenue with a reduction in operating expenses. State appropriations receivable increased by $137,000 due to a 2.4% increase in state appropriations from 2012 to Other receivables increased by $151,000 as delinquent taxes for 2013 were not received until fiscal year 2014, while delinquent property taxes for 2012 were received in Prepaid expenses increased by $169,000 due to management s accrual of prepaid software licensure fees in fiscal year These fees were expensed in Student receivables decreased $120,000 due to an increase in the allowance for bad debt and a 3% decrease in spring enrollment. Noncurrent assets consist of capital assets. Noncurrent assets totaled $27.5 million at June 30, 2013 and $28.1 million at June 30, Capital asset additions for fiscal year 2013 were $1.4 million compared to $1.0 million in fiscal year Investment in capital primarily included building and equipment for the Escanaba and Bay West nursing simulation labs, information technology equipment, and pavement, sidewalks and other infrastructure improvements. Current liabilities consist of accounts payable, accrued expenses, unearned revenue, and current portion of long-term debt obligations due within the next fiscal year. Current liabilities were $3.4 million at June 30, 2013 compared to $3.1 million at June 30, Most of this increase was in accrued salaries and wages offset by a decrease in the energy loan due to the State. Noncurrent liabilities consist of long-term debt, for which the principal is due in more than one year and deferred retirement benefits. Long-term debt decreased by $1.1 million due to regular payments. Retirement benefits decreased by $194,000 due to changes in assumptions used to calculate the liability. Net position increased by $1,015,

34 BAY DE NOC COMMUNITY COLLEGE MANAGEMENT S DISCUSSION AND ANALYSIS BAY DE NOC COMMUNITY COLLEGE MANAGEMENT S DISCUSSION AND ANALYSIS Statements of Revenues, Expenses and Changes in Net Position The statements of revenues, expenses and changes in net position present the revenues earned and expenses incurred during the year. The utilization of long-lived assets, referred to as capital assets, is reflected in the financial statements as depreciation, which amortizes the cost of the asset over the expected life. A summarized comparison of the College s revenues, expenses and changes in net position for the years ended June 30 is as follows: Statements of revenues, expenses and changes in net position (in thousands) Operating revenues decreased from 2012 to 2013 as a result of the following factors: Net tuition and fee revenue from both credit and noncredit courses decreased by $279,000 due to a 9% decrease in enrollment. Total grant funding decreased by $383,000 due to the reduction of grant funding in future years for multi-year grants. Federal grants consist primarily of awards in the form of Title III, TRIO, and Perkins. The Perkins Curriculum Development grant in the amount of $218,000 was completed in B Total operating revenues $ 7,503 $ 7,371 $ 8,025 Total operating expenses 22,410 22,657 24,501 Operating loss (14,907) (15,286) (16,476) Net nonoperating revenues 15,777 16,301 16,010 Other revenues Increase (decrease) in net position 1,107 1,015 (466) Net position beginning of year 24,242 23,227 23,693 Net position end of year $25,349 $24,242 $23,227 Operating revenues included the following for the years ended June 30: Operating revenues (in thousands) Net tuition and fees $6,127 $5,943 $6,222 Grants ,287 Auxiliary services Other operating revenues Total operating revenues $7,503 $7,371 $8,025 Operating revenues increased from 2013 to 2014 as a result of the following factors: Despite a decline in enrollment for 2014, net tuition and fee revenue increased by $184,000 due to a moderate increase in tuition rates and a well-designed realignment of the student fee charges. Total grant funding increased slightly from 2013 but remained well below 2012 funding levels due primarily to the Title III winding down and ending. 4 5

35 BAY DE NOC COMMUNITY COLLEGE MANAGEMENT S DISCUSSION AND ANALYSIS BAY DE NOC COMMUNITY COLLEGE MANAGEMENT S DISCUSSION AND ANALYSIS Nonoperating revenues are all revenue sources that are primarily non-exchange in nature. They consist primarily of state appropriations, property taxes, Pell grants, gifts, and interest income. Nonoperating revenues included the following for the years ended June 30: Support from the component unit increased by $829,000. A $650,000 gift was given to the College for the Bay West and Escanaba nursing simulation project, along with an additional $180,000 of contribution revenue for scholarships and other projects that were previously only recorded on the Foundation financial statements. B-5 Nonoperating revenues (expenses) (in thousands) State appropriations $5,570 $5,329 $5,040 Property tax levy 3,896 3,773 3,661 Property taxes from Dickinson County Pell grants 5,056 5,465 6,222 Support from component unit Private gifts, grants and contracts Interest income (Loss) gain on disposal of capital assets (2) 1 6 Interest on capital asset-related debt (256) (302) (340) Net nonoperating revenues $15,777 $16,301 $16,010 Changes in nonoperating revenues from 2013 to 2014 were a result of the following factors: State appropriations continue to increase with a 2014 increase of $241,000. Property tax revenue for 2014 increased by 3.1% or $148,000. The increase can be attributed to increases in the taxable value of Delta County property values which increased approximately 4 %. Pell grant revenue for 2014 decreased by $409,000 or 7.5% as enrollment declines led to decreases in contact hours. In 2013 the College received a $650,000 gift for the Bay West and Escanaba nursing simulation projects, which is reflected in support from component unit. The component unit support for scholarships and other projects has experienced strong growth increasing from $280,000 in 2013 (excludes the $650,000 gift) to $414,000 in This growth can be attributed directly to strong positive performance of the Foundation's endowed and beneficiary trust invested assets. Interest on capital asset-related debt was down $46,000 or 15% in 2014 from 2013, a result of the paying off of the general obligation building and site bonds of 2001 and the general obligation refunding bonds of Changes in nonoperating revenues from 2012 to 2013 were a result of the following factors: State appropriations increased by $289,000 due to a 2.4% increase in state appropriations and additional state payments of approximately $114,000, which was restricted towards the MPSERS liability payments. Property tax revenue increased $132,000 due to a 3.9% increase in taxable value of property. Pell grant revenue decreased by $757,000 due to a 9% decrease in contact hours from 2012 and fewer students receiving Pell in

36 BAY DE NOC COMMUNITY COLLEGE MANAGEMENT S DISCUSSION AND ANALYSIS BAY DE NOC COMMUNITY COLLEGE MANAGEMENT S DISCUSSION AND ANALYSIS Operating expenses are all the costs necessary to perform and conduct the programs and primary purposes of the College. They include salaries and benefits, utilities, supplies, services and depreciation and are categorized by functional area. Operating expenses Instruction $ 8,700 $ 8,679 $ 9,636 Public service Instructional support 1,361 1,435 1,158 Student services 3,892 4,151 4,430 Institutional administration 4,340 4,474 5,106 Operations and maint. of plant 1,881 1,737 1,880 Depreciation 2,009 1,997 1,980 Total operating expenses $22,410 $22,657 $24,501 B-6 Changes in operating expenses from 2013 to 2014 were a result of the following factors: Student services decreased $259,000 or 6% in 2014 due to continued decline in enrollment, which led to a reduction in financial aid provided to students. Operations and maintenance of plant increased $144,000 or 8.3% in 2014 in spite of strong continued energy efficiencies gains and favorable natural gas prices. The increase can be directly attributable to the harsh winter conditions experienced in Institutional administration expenses decreased by $134,000, which is primarily due to a reduction in advertising expenses, less purchases of non-capitalizable equipment, and the loss of some administrative personnel. Changes in operating expenses from 2012 to 2013 were a result of the following factors: Operating expenses decreased 7.53% from $24.5 million to $22.7 million. Most of this decrease was due to decreases in expenses funded by grants, adjunct wages, and payroll/retirement compensation liabilities. Instruction decreased by 10% to $8.7 million. This decrease was due to reduced grant expenses based on the reduced grant funding and decreased adjunct faculty wages due to decreased enrollment. Instructional support increased by 23.9% to $1.4 million. This increase is due to a medical leave and partial-year employment in the Dean s positions in Institutional administration decreased by 12.3% to $4.5 million. This decrease was due to timing of payroll and changes in the assumptions used for retirement compensation accruals. Operations and maintenance of plant decreased by 7.7% to $1.7 million. This decrease was primarily due to a savings in electricity expenses. Statements of Cash Flows The statements of cash flows provide another way to assess the financial health of the College. The primary purpose of these statements is to provide relevant information about the cash receipts and cash payments of an institution during a year. The statements of cash flows also help users assess: Ability to generate future net cash flows Ability to meet its obligations as they come due Needs for external financing Statements of cash flows (in thousands) Net cash used in operating activities $(12,804) $(13,171) $(14,149) Net cash provided by non-capital financing activities 15,980 16,282 16,276 Net cash used in capital and related financing activities (2,462) (2,902) (2,418) Net cash provided by investing activities Increase (decrease) in cash and cash equivalents (281) Cash and cash equivalents, beginning of year 3,644 3,426 3,707 Cash and cash equivalents, end of year $ 4,366 $ 3,644 $ 3,

37 BAY DE NOC COMMUNITY COLLEGE MANAGEMENT S DISCUSSION AND ANALYSIS BAY DE NOC COMMUNITY COLLEGE MANAGEMENT S DISCUSSION AND ANALYSIS B-7 Major sources of funds from operations came from student tuition and fees, and grants and contracts. These sources were offset by expenditures for operations such as payments to employees and suppliers. In fiscal year 2014, in spite of cash flow from tuition and fees being down $153,000, the College expended less cash to support operating activities. Net cash provided by non-capital financing activities decreased by $301,000 from In 2013, net cash from non-capital financing activities included the $650,000 gift from the Foundation, which was partially offset by a $423,000 increase in state appropriations in Net cash used in capital and related financing activities decreased by $440,000 primarily due to less purchases of capital assets, which were $296,000 greater in 2013 due to the construction of the Bay West and Escanaba nursing simulation labs. Additionally, the College reduced its principal and interest paid on long-term debt by $97,000 as a result of paying off the 2001 and 2007 bonds during fiscal year Capital Assets and Debt As of June 30, 2014 the College had $26.6 million in capital assets, net of accumulated depreciation. Nursing lab fixtures and equipment became operational in 2014 and were transferred from construction in progress to furniture, fixtures and equipment. Additionally in 2014, CAD equipment that was nearly fully depreciated was written off and two vehicles were replaced with a new van. Balance July 1, 2013 Additions Retirements Transfers Balance June 30, 2014 Capital assets not being depreciated: Land $ 1,321,225 $ - $ - $ - $ 1,321,225 Construction in progress 614,587 8,570 - (614,587) 8,570 Subtotal, nondepreciable capital assets 1,935,812 8,570 - (614,587) 1,329,795 Capital assets being depreciated: Land improvements 1,291, , ,419,345 Infrastructure 184,858 51, ,697 Building and building improvements 38,926, , ,063,846 Furniture, fixtures and equipment 17,037, , , ,587 18,220,348 Library materials 779, ,613 Vehicles 300,663 23,315 37, ,327 Subtotal, depreciable capital assets 58,520,959 1,102, , ,587 60,006,176 Total capital assets 60,456,771 1,110, ,542-61,335,971 Less accumulated depreciation: Land improvements 908,488 98, ,007,451 Infrastructure 102,363 16, ,680 Building and building improvements 15,667,824 1,016, ,684,597 Furniture, fixtures and equipment 15,332, , ,283-15,978,118 Library materials 742,040 13, ,585 Vehicles 224,239 27,715 39, ,919 Total accumulated depreciation 32,977,885 2,008, ,318-34,757,350 Net depreciable capital assets 25,543,074 (906,611) 2, ,587 25,248,826 Capital assets, net $ 27,478,886 $ (898,041) $ 2,224 $ - $ 26,578,621 As of June 30, 2013 the College had $27.5 million in capital assets, net of accumulated depreciation. The College purchased $1.4 million in additional assets and disposed of capital assets totaling $33,125 in fiscal year Details of these assets are shown below. Balance July 1, 2012 Additions Retirements Balance June 30, 2013 Capital assets not being depreciated: Land $ 1,321,225 $ - $ - $ 1,321,225 Construction in progress 7, , ,587 Subtotal, nondepreciable capital assets 1,328, ,817-1,935,812 Capital assets being depreciated: Land improvements 1,291, ,291,842 Infrastructure 99,225 85, ,858 Building and building improvements 38,810, ,421-38,926,060 Furniture, fixtures and equipment 16,471, ,130 33,125 17,037,923 Library materials 779, ,613 Vehicles 300, ,663 Subtotal, depreciable capital assets 57,753, ,184 33,125 58,520,959 Total capital assets 59,082,895 1,407,001 33,125 60,456,771 Less accumulated depreciation: Land improvements 821,826 86, ,488 Infrastructure 90,243 12, ,363 Building and building improvements 14,635,887 1,031,937-15,667,824 Furniture, fixtures and equipment 14,544, ,685 33,125 15,332,931 Library materials 725,691 16, ,040 Vehicles 196,331 27, ,239 Total accumulated depreciation 31,014,349 1,996,661 33,125 32,977,885 Net depreciable capital assets 26,739,551 (1,196,477) - 25,543,074 Capital assets, net $ 28,068,546 $ (589,660) $ - $ 27,478,886 Detailed information about the College s long-term debt is presented in the notes to the financial statements. Economic Factors that will Affect the Future The State of Michigan s economy has continued to improve and steps taken by the state government are helping to stabilize finances. This has led to some improvement in state appropriations which is critical as with the improved economy community colleges such as Bay de Noc will experience declining enrollment. Property tax collections improve as property tax valuations increase but this is being offset by legislation that provides relief from property taxes to small businesses as well as improvements in veterans' benefits. These actions are commendable for small business owners and veterans but community colleges struggle to replace the lost revenue

38 BAY DE NOC COMMUNITY COLLEGE MANAGEMENT S DISCUSSION AND ANALYSIS All members of the Bay de Noc College community are committed to finding ways to meet the needs of our students, providing stable employment while ensuring the College remains financially strong. In the near term the College has managed to remain strong by offsetting declining enrollment by reducing adjunct faculty expenses through fewer class offerings and reducing other expenses where possible. As the College moves forward, consideration will need to be given to making more difficult expense reduction decisions if revenue sources remain flat or decline. Approximately 75.7 percent of College employees participate in the Michigan Public School Employees' Retirement System (MPSERS) with employer contributions mandated by the State. Contribution rates have risen significantly in recent years to fund retiree healthcare benefits and the unfunded pension liability. There are various MPSERS plans, but contributions for the plan with the majority of the College s employees has been set at 25.8 percent for fiscal year INDEPENDENT AUDITORS REPORT B-8 GASB Statement No. 68 "Accounting and Financial Reporting for Pensions" is effective for the College's fiscal year 2015 and establishes new requirements for colleges to report a net pension liability for the unfunded portion of its pension plan. Since the College participates in the MPSERS plan, it will report a liability for its proportionate share of the net pension liability of the entire system. The College received a letter dated February 28, 2014 from the State of Michigan communicating the College's proportionate share of the estimated net pension liability of $16,544,000 based on fiscal year 2012 plan data. We understand that this is a high-level estimation provided by the Office of Retirement Services. Further updates are expected as MPSERS continues their actuarial calculations with more recent plan data. Additionally, we expect these amounts to change annually based on actuarial calculations and updating of related assumptions. 12

39 B-9 To the Board of Trustees Bay de Noc Community College Escanaba, Michigan Report on the Financial Statements INDEPENDENT AUDITORS REPORT November 6, 2014 We have audited the accompanying financial statements of the business-type activities and the discretely presented component unit of Bay de Noc Community College (the College ) as of and for the years ended June 30, 2014 and 2013, and the related notes to the financial statements, which collectively comprise the College s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Independent Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We did not audit the financial statements of the Bay de Noc Community College Foundation (the Foundation ), the discretely presented component unit. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Foundation, is based solely on the report of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of the business-type activities and the discretely presented component unit of Bay de Noc Community College as of June 30, 2014 and 2013, and the respective results of their operations and cash flows, where applicable, for the years then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on pages 1 through 12 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audits were conducted for the purpose of forming opinions on the financial statements that collectively comprise the College's basic financial statements. The supplementary information identified in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in our audits of the financial statements and, accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued under separate cover our report dated November 6, 2014 on our consideration of Bay de Noc Community College s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Bay de Noc Community College s internal control over financial reporting and compliance

40 BAY DE NOC COMMUNITY COLLEGE STATEMENTS OF NET POSITION FINANCIAL STATEMENTS June Assets Current assets Cash and cash equivalents $ 4,365,627 $ 3,643,876 Student receivables, net 119, ,232 State appropriations receivable 1,197,970 1,053,098 Grants receivable 265, ,854 Due from component unit 189,742 97,242 Other receivables, net 100, ,965 Prepaid expenses and other current assets 369, ,926 Total current assets 6,608,240 5,927,193 Noncurrent assets Capital assets, net 26,578,621 27,478,886 Total assets 33,186,861 33,406,079 B-10 Liabilities Current liabilities Accounts payable 252, ,157 Accrued payroll and related liabilities 1,297,967 1,415,577 Unearned revenue 240, ,021 Interest payable 36,164 43,891 Other current liabilities 261, ,511 Current portion of long-term debt 300,000 1,135,000 Total current liabilities 2,388,461 3,383,157 Noncurrent liabilities Long-term debt, net of current portion 4,950,000 5,250,000 Accrued employee benefits payable 499, ,745 Total liabilities 7,837,614 9,163,902 Net position Net investment in capital assets 21,328,621 21,093,886 Unrestricted 4,020,626 3,148,291 Total net position $ 25,349,247 $ 24,242,177 The accompanying notes are an integral part of these financial statements. 15

41 BAY DE NOC COMMUNITY COLLEGE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION BAY DE NOC COMMUNITY COLLEGE STATEMENTS OF CASH FLOWS B-11 Year Ended June Operating revenues Tuition and fees $ 9,335,022 $ 9,091,547 Scholarship allowance (3,208,064) (3,148,740) Net tuition and fees 6,126,958 5,942,807 Federal grants and contracts 915, ,637 State and local grants and contracts 31,950 41,733 Sales and service of auxiliary activities, net of scholarship allowance of $48,393 ($124,803 for 2013) 247, ,720 Other operating revenues 181, ,209 Total operating revenues 7,503,248 7,371,106 Operating expenses Instruction 8,700,477 8,679,130 Public service 226, ,022 Instructional support 1,360,599 1,435,560 Student services 3,891,990 4,150,535 Institutional administration 4,340,376 4,474,100 Operations and maintenance of plant 1,881,505 1,736,955 Depreciation 2,008,783 1,996,661 Total operating expenses 22,410,406 22,656,963 Operating loss (14,907,158) (15,285,857) Nonoperating revenues (expenses) State appropriations 5,569,546 5,329,461 Property tax levy 3,896,246 3,773,349 Property taxes from Dickinson County 958, ,992 Pell grants 5,056,719 5,464,891 Support from component unit 414, ,164 Private gifts, grants and contracts 130, ,197 Interest income 7,637 9,221 (Loss) gain on disposal of capital assets (1,873) 600 Interest on capital asset-related debt (255,699) (302,740) Net nonoperating revenues 15,776,699 16,301,135 Other revenues State capital appropriations 237,529 - Increase in net position 1,107,070 1,015,278 Net position, beginning of year 24,242,177 23,226,899 Year Ended June Cash flows from operating activities Tuition and fees $ 6,091,189 $ 6,243,788 Grants and other contracts 933, ,819 Auxiliary enterprises and other revenue 247, ,720 Payments to employees (9,064,104) (9,620,317) Payments to suppliers (11,461,276) (10,913,040) Other operating receipts 449, ,275 Net cash used in operating activities (12,803,860) (13,170,755) Cash flows from noncapital financing activities State appropriations 5,615,584 5,192,765 Local property taxes and Dickinson County contract 4,855,220 4,707,341 Pell grants 5,056,719 5,464,891 Federal direct lending receipts 5,284,448 5,623,013 Federal direct lending disbursements (5,284,448) (5,623,013) Gifts and donations 452,648 1,168,646 Payments to the State - (252,004) Net cash provided by noncapital financing activities 15,980,171 16,281,639 Cash flows from capital and related financing activities Purchase of capital assets (1,110,742) (1,407,001) Principal paid on long-term debt (1,135,000) (1,185,000) Proceeds from sales of capital assets Interest paid on capital asset-related debt (263,426) (310,629) State capital appropriations 46,620 - Net cash used in capital and related financing activities (2,462,197) (2,902,030) Cash flows from investing activities Interest received on bank deposits 7,637 9,221 Net increase in cash and cash equivalents 721, ,075 Cash and cash equivalents, beginning of year 3,643,876 3,425,801 Cash and cash equivalents, end of year $ 4,365,627 $ 3,643,876 Net position, end of year $ 25,349,247 $ 24,242,177 The accompanying notes are an integral part of these financial statements. 16 The accompanying notes are an integral part of these financial statements. 17

42 BAY DE NOC COMMUNITY COLLEGE STATEMENTS OF CASH FLOWS (Concluded) BAY DE NOC COMMUNITY COLLEGE FOUNDATION - Component Unit STATEMENTS OF FINANCIAL POSITION B-12 Year Ended June Reconciliation of operating loss to net cash used in operating activities: Operating loss $ (14,907,158) $ (15,285,857) Adjustments to reconcile operating loss to net cash used in operating activities: Depreciation 2,008,783 1,996,661 Change in operating assets and liabilities which provided (used) cash: Student receivables (17,271) 120,111 Grants receivable (32,977) (24,153) Other receivables 298,850 (151,370) Prepaid expenses and other current assets 29,474 (169,001) Accounts payable (4,029) 6,683 Accrued payroll and related liabilities (117,610) 487,735 Unearned revenue ,472 Accrued employee benefits payable (31,592) (198,472) Other liabilities (31,111) 18,436 Net cash used in operating activities $ (12,803,860) $ (13,170,755) Assets June Cash and cash equivalents $ 668,475 $ 675,794 Accrued income receivable and other assets 23,788 25,352 Contributions receivable 145,000 - Investments 6,586,877 5,839,703 Beneficial interest in trust assets 1,970,156 1,858,556 Total assets $ 9,394,296 $ 8,399,405 Liabilities and Net Assets Liabilities Accrued expenses $ 9,500 $ 9,500 Due to Bay de Noc Community College 189,742 97,242 Due to William Bonifas Fine Arts Center 863, ,527 Total liabilities 1,062, ,269 Net assets Unrestricted deficit (229,327) (419,003) Temporarily restricted 1,990,546 1,758,752 Permanently restricted 6,570,175 6,124,387 Total net assets 8,331,394 7,464,136 Total liabilities and net assets $ 9,394,296 $ 8,399,405 The accompanying notes are an integral part of these financial statements. 18 The accompanying notes are an integral part of these financial statements. 19

43 BAY DE NOC COMMUNITY COLLEGE FOUNDATION - Component Unit STATEMENTS OF ACTIVITIES BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS B-13 Year Ended June Revenue Contributions $ 476,987 $ 581,173 Investment income 653, ,251 Gain on beneficial interest in trusts 200,889 - Total revenue 1,331,467 1,039,424 Expenses Scholarships 296, ,998 Administration expenses 9,536 9,500 Campus projects 158, ,917 Total expenses 464, ,415 Increase in net assets 867, ,009 Net assets, beginning of year 7,464,136 7,301,127 Net assets, end of year $ 8,331,394 $ 7,464, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity Bay de Noc Community College (the "College") is a Michigan community college located in Delta County in the Upper Peninsula of Michigan. The accompanying financial statements as of and for the years ended June 30, 2014 and 2013 include the accounts of all funds of the College and Bay de Noc Community College Foundation ( the Foundation ). The Foundation is considered a component unit of the College in accordance with Governmental Accounting Standards Board (GASB) Statement No. 61, The Financial Reporting Entity: Omnibus. The College reports financial information for the Foundation using a discrete rather than blended presentation because the individual trustees of the Foundation are independently appointed by the Foundation's Board of Trustees. The Foundation is considered a component unit because the Foundation provides support entirely, or almost entirely, to the College through financial support to students. The Foundation is a private nonprofit organization that reports under Financial Accounting Standards Board (FASB) standards. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. No modifications have been made to the Foundation's financial information in the College's financial reporting entity for these differences. A copy of the Foundation's separately issued financial statements may be obtained by contacting the Foundation Office at the College. Basis of Presentation The College's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America as prescribed by the GASB, including Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities and the State of Michigan Manual for Uniform Financial Reporting - Michigan Public Community Colleges, The College follows all applicable GASB pronouncements and the "business-type activities" reporting requirements of GASB Statement No. 35, which provides a comprehensive one-line look at the College's financial activities. Significant Accounting Policies Significant accounting policies followed by the College are described below to enhance the usefulness of the financial statements to the reader: Accrual Basis The financial statements of the College have been presented using the economic resources measurement focus on the accrual basis of accounting, whereby revenue is recognized when earned and expenses are recognized when the related liabilities are incurred and certain measurement and matching criteria are met. In accordance with GASB Statement No. 20, the College is required to follow all applicable GASB pronouncements. The accompanying notes are an integral part of these financial statements. 20 Use of Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. Significant estimates include but are not limited to the accounts receivable allowance for bad debts and the assumptions used to estimate accrued employee benefits payable. 21

44 BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS B-14 Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, cash in banks, and all highly liquid investments with an initial maturity of three months or less. Accounts Receivable Accounts receivable resulting from Federal and State grants, State appropriations, and student tuition consist of revenues earned, but not received as of year-end. A bad debt allowance is established based on a specific assessment of all invoices that remain unpaid following normal student payment periods. In addition, a general valuation allowance is established for student accounts receivable and other receivables based on historical loss experience and knowledge of specifically uncollectible items. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to the bad debt allowance based on its assessment. Balances that are still outstanding after management has used reasonable collection efforts are written off. The bad debt allowance for student receivables was approximately $85,000 and $128,000 at June 30, 2014 and 2013, respectively. The bad debt allowance for other receivables was approximately $421,000 and $350,000 at June 30, 2014 and 2013, respectively. Capital Assets Capital assets are recorded at cost and include expenditures for new facilities and equipment and for significant improvements to existing facilities. Depreciation is computed using the straight-line method over the useful life of the asset. No depreciation is recorded on land. Expenditures for major renewals and betterments that extend the useful lives are capitalized while expenditures for routine repairs and maintenance are expensed as incurred. Management reviews capital assets annually for impairment. The following estimated useful lives are used to compute depreciation: Buildings/building improvements years Library materials 10 years Land improvements and infrastructure 15 years Furniture, fixtures and equipment 5-10 years Vehicles 5-7 years Unearned Revenue Revenue received prior to year-end, which is related to the next fiscal period, is recorded as unearned revenue. Unearned revenue relates primarily to summer-term tuition received prior to June 30 and grant and award monies received in excess of costs incurred as of year-end for College programs financed by government agencies and other organizations. Revenue Recognition The College generally follows the revenue recognition methods set forth in the Manual For Uniform Financial Reporting Michigan Public Community Colleges, In general, revenues are recognized when earned and expenditures are recognized when the service is provided. Property taxes are recorded as revenue in the year taxes are levied. Under this method, revenue for fiscal year 2014 includes property taxes that were levied on July 1, 2013 and December 1, 2013, which are generally collected before March 1, Uncollected real property taxes of the College are turned over to Delta County for subsequent collection. State appropriations are recorded as revenue in the period for which they are appropriated. Changes to State appropriations are recorded in the College's fiscal year in which the changes are approved by the State legislature. Operating revenues of the College consist of tuition and fees, grants and contracts, auxiliary enterprise revenues, and other revenues related to services provided for students. Tuition and fees and auxiliary enterprise revenues are reported net of scholarship allowances. Transactions related to capital financing activities, noncapital financing activities, investing activities, and State appropriations are components of nonoperating income. When both general purpose and restricted revenues are available for use, it is the College's policy to use restricted resources first. Gifts are recorded at estimated fair value when received. The College does not recognize as revenue sources held for others, such as Federal Direct Loans, where the College serves only as a conduit. Operating Expenses The College reports operating expenses by function on the face of the statements of revenues, expenses and changes in net position. The following table shows operating expenses by natural class for the years ended June 30: Salaries and wages $ 9,709,367 $ 9,780,950 Benefits 4,567,131 4,558,164 Capital under $5, , ,285 Pell and other scholarships 2,311,325 2,694,723 Professional services 914, ,853 Rent, utilities, and insurance 942, ,499 Supplies and materials 601, ,742 Travel and professional development 998, ,542 Bad debt expense 182, ,544 Depreciation 2,008,783 1,996,661 Total operating expenses $ 22,410,406 $ 22,656,963 Net Position Elements of net position are classified according to the external grantor restrictions or availability of assets for satisfaction of College obligations. Internal Services Activities Both revenue and expenses related to internal service activities have been eliminated. Reclassification Certain amounts as reported in the 2013 financial statements have been reclassified to conform with the 2014 presentation

45 BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS B CASH AND CASH EQUIVALENTS College Deposits and Investments State of Michigan ( State ) statutes authorize the College to invest in bonds and other direct and certain indirect obligations of the U.S. Treasury; certificates of deposit, savings accounts, deposit accounts, or depository receipts of a bank, savings and loan association, or credit union, which is a member of the Federal Deposit Insurance Corporation, or National Credit Union Administration, respectively; and in commercial paper of corporations located in this state rated prime by at least one of the standard rating services. Custodial Credit Risk Custodial credit risk is the risk that, in the event of a bank failure, the deposits may not be returned. The College does not have a policy for custodial credit risk. However, management believes that cash balances are maintained at high quality financial institutions. At June 30, 2014 and 2013, the carrying amount of cash deposits at banks for the College totaled $4,365,627 and $3,643,876, respectively, while the bank balances totaled $4,507,595 and $4,075,423, respectively. Of the bank balances, $500,000 was insured at both June 30, 2014 and 2013, and the remaining $4,007,595 and $3,575,423, respectively, was uninsured and uncollateralized. 3. CAPITAL ASSETS The following presents the changes in the various capital asset categories for the year ended June 30, 2014: Balance July 1, 2013 Additions Retirements Transfers 24 Balance June 30, 2014 Capital assets not being depreciated: Land $ 1,321,225 $ - $ - $ - $ 1,321,225 Construction in progress 614,587 8,570 - (614,587) 8,570 Subtotal, nondepreciable capital assets 1,935,812 8,570 - (614,587) 1,329,795 Capital assets being depreciated: Land improvements 1,291, , ,419,345 Infrastructure 184,858 51, ,697 Building and building improvements 38,926, , ,063,846 Furniture, fixtures and equipment 17,037, , , ,587 18,220,348 Library materials 779, ,613 Vehicles 300,663 23,315 37, ,327 Subtotal, depreciable capital assets 58,520,959 1,102, , ,587 60,006,176 Total capital assets 60,456,771 1,110, ,542-61,335,971 Less accumulated depreciation: Land improvements 908,488 98, ,007,451 Infrastructure 102,363 16, ,680 Building and building improvements 15,667,824 1,016, ,684,597 Furniture, fixtures and equipment 15,332, , ,283-15,978,118 Library materials 742,040 13, ,585 Vehicles 224,239 27,715 39, ,919 Total accumulated depreciation 32,977,885 2,008, ,318-34,757,350 Net depreciable capital assets 25,543,074 (906,611) 2, ,587 25,248,826 Capital assets, net $ 27,478,886 $ (898,041) $ 2,224 $ - $ 26,578,621 The following presents the changes in the various capital assets categories for the year ended June 30, 2013: Balance July 1, 2012 Additions Retirements 25 Balance June 30, 2013 Capital assets not being depreciated: Land $ 1,321,225 $ - $ - $ 1,321,225 Construction in progress 7, , ,587 Subtotal, nondepreciable capital assets 1,328, ,817-1,935,812 Capital assets being depreciated: Land improvements 1,291, ,291,842 Infrastructure 99,225 85, ,858 Building and building improvements 38,810, ,421-38,926,060 Furniture, fixtures and equipment 16,471, ,130 33,125 17,037,923 Library materials 779, ,613 Vehicles 300, ,663 Subtotal, depreciable capital assets 57,753, ,184 33,125 58,520,959 Total capital assets 59,082,895 1,407,001 33,125 60,456,771 Less accumulated depreciation: Land improvements 821,826 86, ,488 Infrastructure 90,243 12, ,363 Building and building improvements 14,635,887 1,031,937-15,667,824 Furniture, fixtures and equipment 14,544, ,685 33,125 15,332,931 Library materials 725,691 16, ,040 Vehicles 196,331 27, ,239 Total accumulated depreciation 31,014,349 1,996,661 33,125 32,977,885 Net depreciable capital assets 26,739,551 (1,196,477) - 25,543,074 Capital assets, net $ 28,068,546 $ (589,660) $ - $ 27,478,886

46 BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS B LONG-TERM LIABILITIES Changes in long-term liabilities for the year ended June 30, 2014 are as follows: Balance July 1, 2013 Additions Reductions Balance June 30, 2014 Current Portion Bonds payable General obligation building and site bonds of 2001 $ 175,000 $ - $ (175,000) $ - $ - General obligation facilities bonds of ,535,000 - (285,000) 5,250, ,000 General obligation refunding bonds of ,000 - (675,000) - - Total bonds payable 6,385,000 - (1,135,000) 5,250, ,000 Other long-term obligations Accrued employee benefits payable 530, (31,700) 499,153 - Total long-term obligations $ 6,915,745 $ 108 $ (1,166,700) $ 5,749,153 $ 300,000 Changes in long-term liabilities for the year ended June 30, 2013 are as follows: Balance July 1, 2012 Additions Reductions Balance June 30, 2013 Current Portion Bonds payable General obligation building and site bonds of 2001 $ 350,000 $ - $ (175,000) $ 175,000 $ 175,000 General obligation refunding bonds of 2003 Series II 300,000 - (300,000) - - General obligation facilities bonds of ,810,000 - (275,000) 5,535, ,000 General obligation refunding bonds of ,110,000 - (435,000) 675, ,000 Total bonds payable 7,570,000 - (1,185,000) 6,385,000 1,135,000 Other long-term obligations Accrued employee benefits payable 729,217 20,223 (218,695) 530,745 - Total long-term obligations $ 8,299,217 $ 20,223 $ (1,403,695) $ 6,915,745 $1,135,000 The proceeds of the 2001 Building and Site Bonds were used for construction and rehabilitation costs of the College's Health and Applied Technology Center. The bonds carried an average interest rate of approximately 4.5% and were paid off during fiscal year The proceeds of the 2006 Facilities Bonds were used for construction costs related to the erecting, furnishing, and equipping of the College's West Campus. The bonds carry an average interest rate of approximately 4.0% and mature in The proceeds of the 2007 Building and Site Refunding Bonds were used for costs related to the remodeling, refurnishing, and re-equipping the Student Center Building and to refund $1,250,000 of the 1997 Building and Site Bonds and $440,000 of the 1999 Facility and Site Bonds. No amounts remain in escrow. The bonds carried an interest rate of 4.0% and were paid off during fiscal year

47 BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS B-17 Future debt service requirements on bonds payable for years ending after June 30, 2014 are as follows: 5. LOCAL PROPERTY TAX LEVY Year Ending June 30 Principal Interest Total 2015 $ 300,000 $ 216,984 $ 516, , , , , , , , , , , , , ,100, ,958 2,690, ,495, ,818 1,624,818 $ 5,250,000 $ 1,679,696 $ 6,929,696 The College's annual property tax on real and personal property is levied by the tax collecting governmental units on July 1 and December 1 and is based on taxable valuation as of the preceding December 31. Taxable valuation is established by the tax collecting governmental unit and is subject to possible equalization by the State. Delta County ( the County ) maintains a delinquent tax revolving fund through which the College receives 100% of all delinquent real property taxes turned over to the County by the tax collecting governmental units. The College's annual tax levy is allocated between the various funds in accordance with the Board of Trustees' annual tax allocation plan. 6. RETIREMENT BENEFITS AND DEFERRED COMPENSATION Defined Benefit Plan The College contributes to the Michigan Public School Employees Retirement System (MPSERS), a collection of several retirement plans administered by the State of Michigan Department of Management and Budget, Office of Retirement Systems. MPSERS provides retirement, survivor and disability benefits to plan members and beneficiaries. Benefit provisions are established and may be amended by state statute. The Office of Retirement Systems issues a publicly available financial report that includes financial statements and required supplementary information for MPSERS. That report may be obtained by writing to Michigan Public School Employees Retirement System, 7150 Harris Drive, P.O. Box 30026, Lansing, Michigan, or by calling (517) Funding Policy Member contribution rates vary based on date of hire and certain voluntary elections. Member Investment Plan ( MIP ) members enrolled in MIP prior to January 1, 1990 contribute at a permanently fixed rate of 3.9% of gross wages. Members first hired January 1, 1990 through June 30, 2008 contribute at the following graduated permanently fixed contribution rates: 3 percent of the first $5,000; 3.6 percent of $5,001 through $15,000; 4.3 percent of all wages over $15,000. Members first hired July 1, 2008 through June 30, 2010 contribute at the following graduated permanently fixed contribution rates: 3.0 percent of the first $5,000; 3.6 percent of $5,001 through $15,000; 6.4 percent of all wages over $15,000. Basic Plan members make no contributions. Members first enrolled on or after July 1, 2010 are enrolled in the MIP Plus Plan. Member contributions are matched at a rate of 50 percent by the employer, up to a maximum of one percent. Basic 4% and MIP 7% members contribute 4 percent and 7 percent of pretax salary, respectively. Based on the option selected at enrollment, these individuals contribute at a fixed rate until termination of employment or until reaching 30 years of service. At that time, based on the option selected, employee contributions are no longer required or revert to the contribution requirements under the MIP plan in which the employee initially enrolled. The College is required to contribute the full actuarial funding contribution amount to fund pension benefits, plus an additional amount to fund retiree healthcare benefits on a cash disbursement basis. The rates for the years ended June 30, 2014 and 2013 as a percentage of payroll ranged from to percent and from to percent, respectively. In addition, the College is invoiced monthly an amount that approximates 4.56 percent of covered payroll for MPSERS UAAL Stabilization. This additional contribution is offset by monthly State aid payments equal to the amounts actually billed by the Office of Retirement Services. The contribution requirements of plan members and the College are established by Michigan State statute and may be amended only by action of the State Legislature. The College s contributions to MPSERS under all plans for the years ended June 30, 2014, 2013, and 2012 were $1,371,135, $1,350,445, and $1,316,762, respectively, equal to the required contributions for each year. GASB 68 "Accounting and Financial Reporting for Pensions" is effective for the College s fiscal year 2015 and establishes new requirements for colleges to report a net pension liability for the unfunded portion of its pension plan. Since the College participates in the MPSERS plan, it will report a liability for its proportionate share of the net pension liability of the entire system. The College received a letter dated February 28, 2014 from the State of Michigan communicating the College's proportionate share of the estimated net pension liability of $16,544,000 based on fiscal year 2012 plan data. We understand that this is a high-level estimation provided by the Office of Retirement Services. Further updates are expected as MPSERS continues their actuarial calculations with more recent plan data. Additionally, we expect these amounts to change annually based on actuarial calculations and updating of related assumptions

48 BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS B-18 Other Postemployment Benefits Retirees enrolled in MPSERS before September 4, 2012 have the option of participating in the Premium Subsidy plan, a defined benefit postemployment healthcare plan, which is funded by employers on a cash disbursement basis. The State of Michigan has contracted to provide the comprehensive group medical, hearing, dental and vision coverage for retirees and beneficiaries. All health care benefits are on a self-funded basis. A significant portion of the premium is paid by MPSERS with the balance deducted from the monthly pension. Plan participants contribute 3 percent of covered payroll to the Retiree Healthcare Fund. At retirement, these individuals receive a subsidy for healthcare premiums that cover up to 80 percent of cost. Plan members enrolled on or after September 4, 2012 participate in the Personal Healthcare Fund. This defined contribution other postemployment benefits plan includes a required 2 percent employee contribution into a personal tax-deferred account, which is matched by an additional 2 percent employer contribution. Employees are fully vested in these contributions which can be used, along with earnings thereon, to pay for postemployment healthcare expenses. Plan members working prior to September 4, 2012 were given the option to convert from the Premium Subsidy plan to the Personal Healthcare Fund option. Amounts paid into the Retiree Healthcare Fund between September 4, 2012 and February 1, 2013 were credited to each individual s Personal Healthcare Fund account. Any contributions made prior to September 4, 2012 are pending a Supreme Court resolution. The College s contributions to MPSERS for other postemployment benefits are not separately identified and are included in the contribution amounts disclosed above. Defined Contribution Plan Effective July 1, 1988, the College adopted a defined contribution retirement plan for qualified employees. Full-time faculty, administrators, and other exempt-status employees can elect to participate in the Bay de Noc Community College Optional Retirement Plan (the Optional Plan ), a defined contribution plan administered by the College. New employees can elect to participate in either the Optional Plan or MPSERS. Employees electing the Optional Plan who are members of MPSERS retain a limited membership in MPSERS. As of June 30, 2014 and 2013, the Optional Plan had 42 and 37 participants, respectively. The College is required to contribute 12 to percent of participating employees' salaries to the Optional Plan. Plan contributions are placed in a segregated employee account that the employee may allocate to the various funding vehicles permitted by the Plan. All contributions are fully vested when made. Total contributions for the years ended June 30, 2014, 2013 and 2012 were $492,407, $506,157, and $460,123, respectively. The plan provides for various benefit payment options. The amount of benefits paid is predicated on the balance in the employees' segregated account when benefit payments begin. The Board of Trustees reserves the right to amend or terminate the plan at any time subject to certain provisions. Longevity Benefit Payments Full-time Faculty In lieu of an early retirement program or payment for unused sick time, a faculty member who has not less than ten years of full-time services as a full-time faculty member of the College, who was hired before August 17, 2013, and is otherwise qualified to retire under MPSERS or the equivalent using the MPSERS formula if in the Optional Plan, qualifies for a retirement incentive payment upon termination of their employment with the College. This payment is equal to 25% of their last year's base salary. The faculty are not eligible for this if they are discharged "for cause," they are not teaching full-time when they terminate employment with the College, or if they have failed to give the prescribed notice for termination. Administrative Staff The College recognizes administrator loyalty to the College by providing a financial benefit upon the qualifying administrator's retirement. The administrator must have been hired before July 1, 2013 and must be employed by the College for a minimum of ten consecutive years and retire in accordance with the MPSERS guidelines. The employee will receive a percentage of their annual salary based on their number of full-time employment years and previous full fiscal year salary as listed below: 25 or more years of service - financial benefit is 25% of annual salary 20 to 24 years of service - financial benefit is 23 % of annual salary 15 to 19 years of service - financial benefit is 21 % of annual salary 10 to 14 years of service - financial benefit is 19% of annual salary The College records a liability for these benefits over the period earned by the employees based on the likelihood that a benefit will be paid out upon retirement or termination from the College. The College has elected to calculate the liability using the alternative measurement method permitted by governmental accounting standards for employers in plans with fewer than one hundred total plan members. The total liability for these benefits was approximately $492,000 and $523,000 at June 30, 2014 and 2013, respectively. The College recognized an expense associated with early retirement incentives of approximately $51,000 and $21,000 during the years ended June 30, 2014 and 2013, respectively. 7. COMPENSATED ABSENCES The College records amounts payable for compensated absences as a liability when benefits become vested and subject to payment upon employee termination. The following summarizes specific policies with regard to compensated absences

49 BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS BAY DE NOC COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS Vacation In general, employees may accumulate no more than 240 hours of vacation. Upon termination, employees are entitled to payment, at their current rate, of 100% of their accumulated vacation days up to the maximum of 240 hours. The College records this liability at 100% of the accumulated benefits since the accumulation is based upon past employee service and is fully vested. The total liability recorded for accrued vacation time is approximately $252,000 and $256,000 at June 30, 2014 and 2013, respectively. Sick Leave In general, employees may accumulate unused sick leave (no limitation for faculty and up to 130 days for administrative and support staff), however, sick leave is payable only when sick leave is actually used. Upon termination, accumulated sick leave is not vested, and accordingly, no liability is recorded for the accumulated sick leave. 10. RISK MANAGEMENT The College is exposed to various risks of loss related to property loss, errors and omissions, and employee injuries (workers' compensation), as well as medical benefits provided to employees. The College's principle resource used to manage and minimize potential losses is through the purchase of commercial insurance policies, including participation in the Michigan Community College Risk Management Authority (MCCRMA), a risk management fund that includes other community colleges in the State of Michigan. Coverage includes a deductible up to a specific amount, retention that is paid from member funds on deposits, stop loss fund that is funded with MCCRMA accumulated earnings, and reinsurance for claims balances in excess of deductible, retention, and stop loss. The member annual aggregate for retentions/deductibles is a combined annual aggregate of $45,000. The stop loss funds cover all claims from annual aggregate to the point of reinsurance. For the last three years, settled claims have not exceeded insurance coverage, nor has there been any reduction in insurance coverage. B VOLUNTARY TERMINATION BENEFITS Voluntary termination benefits are those provided to employees as a) an inducement to hasten the termination of services or b) as a result of a voluntary early termination plan. The College's obligation to provide benefits for voluntary terminations generally arises as a result of a bilateral agreement in which the College agrees to provide benefits, such as earlyretirement incentive benefits, in exchange for which the employee agrees to leave service earlier than he or she otherwise would. Voluntary termination agreements are used primarily by full-time administrative, professional/technical and faculty staff. Voluntary termination benefits include benefits such as enhanced early retirement options. Other termination benefits may include: 1. Early retirement incentives, such as cash payments or contribution to retirement to MPSERS or TIAA-CREF, or the College's 403(b) plan (see Note 6) 2. Health care coverage when none would otherwise be provided (COBRA) 3. Payments due to early release from employment contracts A terminated employee can continue to access health benefits. If the COBRA payment is provided by the College, then the College would have a termination liability. When a terminated employee pays 100% of the premium, the College would not have a termination liability. 9. CONTINGENCIES The College has received significant financial assistance from the State and Federal agencies in the form of grants and awards. The use of these funds generally requires compliance with grantor terms and conditions and is subject to audit by the grantor agency. Disallowed expenditures resulting from grantor audits could become a liability of the College, however, management believes that any future disallowances would not have a material effect on the College's financial statements

50 SUPPLEMENTARY INFORMATION B-20 [THIS PAGE INTENTIONALLY LEFT BLANK]

51 BAY DE NOC COMMUNITY COLLEGE COMBINING STATEMENT OF NET POSITION JUNE 30, 2014 (with comparative totals for 2013) Combined Combined General Auxiliary Plant Agency Restricted Total Total Fund Fund Fund Fund Fund June 30, 2014 June 30, 2013 Assets Current assets Cash and cash equivalents $ 1,782,868 $ - $ - $ - $ 2,582,759 $ 4,365,627 $ 3,643,876 Student receivables, net 119, , ,232 State appropriations receivable 1,197, ,197,970 1,053,098 Grants receivable , , ,854 Due from component unit 6,841, ,823 (4,546,875) 125,273 (2,769,930) 189,742 97,242 Other receivables, net 100, , ,965 Prepaid expenses and other current assets 369, , ,926 Total current assets 10,411, ,823 (4,546,875) 125,273 78,660 6,608,240 5,927,193 Noncurrent assets Capital assets, net ,578, ,578,621 27,478,886 Total assets 10,411, ,823 22,031, ,273 78,660 33,186,861 33,406,079 Liabilities Current liabilities Accounts payable 246, , , ,157 Accrued payroll and related liabilities 1,297, ,297,967 1,415,577 Unearned revenue 168, , , ,021 Interest payable , ,164 43,891 Other current liabilities 129,977 6, , , ,511 Current portion of long-term debt , ,000 1,135,000 Total current liabilities 1,842,214 6, , ,273 78,660 2,388,461 3,383,157 Noncurrent liabilities Long-term debt, net of current portion - - 4,950, ,950,000 5,250,000 Accrued employee benefits payable 499, , ,745 Total liabilities 2,341,367 6,150 5,286, ,273 78,660 7,837,614 9,163,902 Net position Net investment in capital assets ,328, ,328,621 21,093,886 Unrestricted (deficit) 8,069, ,673 (4,583,039) - - 4,020,626 3,148,291 Total net position $ 8,069,992 $ 533,673 $ 16,745,582 $ - $ - $ 25,349,247 $ 24,242, BAY DE NOC COMMUNITY COLLEGE COMBINING STATEMENT OF REVENUES, EXPENSES, TRANSFERS, AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2014 (with comparative totals for 2013) Operating revenues Combined Combined General Auxiliary Plant Restricted Total Total Fund Fund Fund Fund Subtotal Eliminations June 30, 2014 June 30, 2013 Tuition and fees, net $ 9,335,022 $ - $ - $ - $ 9,335,022 $ (3,208,064) $ 6,126,958 $ 5,942,807 Federal grants and contracts , , , ,637 State and local grants and contracts ,950 31,950-31,950 41,733 Sales and service of auxiliary activities 106, , ,836 (48,393) 247, ,720 Other operating revenues 181, , , ,209 Total operating revenues 9,622, , ,094 10,759,705 (3,256,457) 7,503,248 7,371,106 Operating expenses Instruction 7,846, ,383 8,700,477-8,700,477 8,679,130 Public service 226, , , ,022 Instructional support 1,360, ,360,599-1,360,599 1,435,560 Student services 1,761, ,386,448 7,148,447 (3,256,457) 3,891,990 4,150,535 Institutional administration 4,340, ,340,376-4,340,376 4,474,100 Operations and maintenance of plant 1,809,188 72, ,881,505-1,881,505 1,736,955 Depreciation - - 2,008,783-2,008,783-2,008,783 1,996,661 Total operating expenses 17,345,182 72,317 2,009,533 6,239,831 25,666,863 (3,256,457) 22,410,406 22,656,963 Operating (loss) income (7,722,259) 117,371 (2,009,533) (5,292,737) (14,907,158) - (14,907,158) (15,285,857) Nonoperating revenues (expenses) State appropriations 5,569, ,569,546-5,569,546 5,329,461 Property tax levy 2,718,279-1,177,967-3,896,246-3,896,246 3,773,349 Property taxes from Dickinson County 958, , , ,992 Pell grants ,056,719 5,056,719-5,056,719 5,464,891 Support from component unit 350,380-64, , , ,164 Private gifts, grants and contracts 1, , , , ,197 Interest income 7, ,637-7,637 9,221 (Loss) gain on disposal of capital assets - - (1,873) - (1,873) - (1,873) 600 Interest on capital asset-related debt (80) - (255,619) - (255,699) - (255,699) (302,740) Net nonoperating revenues 9,605, ,546 5,186,217 15,776,699-15,776,699 16,301,135 Other revenues State capital appropriations , , ,529 - Increase (decrease) in net position before transfer 1,883, ,371 (787,458) (106,520) 1,107,070-1,107,070 1,015,278 Transfers (out) in (106,520) , Increase (decrease) in net position 1,777, ,371 (787,458) - 1,107,070-1,107,070 1,015,278 Net position, beginning of year 6,292, ,302 17,533,040-24,242,177-24,242,177 23,226,899 Net position, end of year $ 8,069,992 $ 533,673 $ 16,745,582 $ - $ 25,349,247 $ - $ 25,349,247 $ 24,242, B-21

52 BAY DE NOC COMMUNITY COLLEGE WEST CAMPUS SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Year Ended June Tuition and fees $ 2,555,100 $ 2,412,054 Scholarship allowance (8,640) (11,858) Net tuition and fees 2,546,460 2,400,196 Sales and services of auxiliary activities 3,409 2,743 Other operating revenue Total operating revenues 2,549,899 2,402,975 B-22 Salary and wages 1,290,629 1,475,570 Benefits 534, ,296 Advertising and professional services 79,602 86,495 Supplies and materials 76,801 78,317 Rent, utilities, and insurance 175, ,000 Travel, professional development, and other operating expenses 35,967 34,925 Capital under $5,000 & grant capital 14,565 28,958 General administration (5% of total expenses) 139, ,348 Depreciation 444, ,787 Total operating expenses 2,791,134 3,048,696 [THIS PAGE INTENTIONALLY LEFT BLANK] Operating loss (241,235) (645,721) Nonoperating revenues (expenses) Property taxes from Dickinson County 958, ,992 Interest on capital asset-related debt (226,484) (237,550) Net nonoperating revenues 732, ,442 Increase in net position $ 491,255 $ 50,721 36

53 APPENDIX C - FORM OF CONTINUING DISCLOSURE AGREEMENT FORM OF CONTINUING DISCLOSURE AGREEMENT $4,605,000 BAY DE NOC COMMUNITY COLLEGE STATE OF MICHIGAN 2015 REFUNDING BONDS (GENERAL OBLIGATION - LIMITED TAX) This Continuing Disclosure Agreement (the "Agreement") is executed and delivered by Bay de Noc Community College, State of Michigan (the "Issuer"), in connection with the issuance of $4,605, Refunding Bonds (General Obligation - Limited Tax) (the "Bonds"). The Bonds are being issued pursuant to resolutions adopted by the Board of Trustees of the Issuer on October 21, 2015 and November 12, 2015 (together, the "Resolution"). The Issuer covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Agreement. This Agreement is being executed and delivered by the Issuer for the benefit of the Bondholders and in order to assist the Participating Underwriters in complying with the Rule. The Issuer acknowledges that this Agreement does not address the scope of any application of Rule 10b-5 promulgated by the SEC pursuant to the 1934 Act to the Annual Reports or notices of the Listed Events provided or required to be provided by the Issuer pursuant to this Agreement. SECTION 2. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Agreement. "Bondholder" means the registered owner of a Bond or any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including any person holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bond for federal income tax purposes. "Dissemination Agent" means any agent designated as such in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation, and such agent's successors and assigns. "EMMA" shall mean the MSRB's Electronic Municipal Market Access which provides continuing disclosure services for the receipt and public availability of continuing disclosure documents and related information required by Rule 15c2-12 promulgated by the SEC. "Listed Events" shall mean any of the events listed in Section 5(a) of this Agreement. "MSRB" shall mean the Municipal Securities Rulemaking Board. "1934 Act" shall mean the Securities Exchange Act of 1934, as amended. C-1

54 "Official Statement" shall mean the final Official Statement for the Bonds dated November 12, "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with the offering of the Bonds. "Resolution" shall mean the resolutions duly adopted by the Issuer authorizing the issuance, sale and delivery of the Bonds. "Rule" shall mean Rule 15c2-12 promulgated by the SEC pursuant to the 1934 Act, as the same may be amended from time to time. "SEC" shall mean the Securities and Exchange Commission. "State" shall mean the State of Michigan. "State Repository" shall mean any public or private repository or entity designated by the State as a state repository for the purpose of the Rule and recognized as such by the SEC. Currently, the following is the State Repository: Municipal Advisory Council of Michigan Buhl Building 535 Griswold, Suite 1850 Detroit, Michigan Tel: (313) Fax: (313) mac@macmi.com SECTION 3. Provision of Annual Reports. (a) Each year, the Issuer shall provide, or shall cause the Dissemination Agent to provide, on or prior to the 180th day after the end of the fiscal year of the Issuer commencing with the fiscal year ending June 30, 2016, to EMMA and the State Repository an Annual Report for the preceding fiscal year which is consistent with the requirements of Section 4 of this Agreement. Currently, the Issuer's fiscal year ends on June 30. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by specific reference other information as provided in Section 4 of this Agreement; provided, however, that if the audited financial statements of the Issuer are not available by the deadline for filing the Annual Report, they shall be provided when and if available, and unaudited financial statements in a format similar to the financial statements contained in the Official Statement shall be included in the Annual Report. (b) The Annual Report shall be submitted to EMMA either through a web-based electronic submission interface or through electronic computer-to-computer data connections with EMMA in accordance with the submission process, document format and configuration requirements established by the MSRB. The Annual Report shall also include all related information required by MSRB to accurately identify: (i) the category of information being provided; (ii) the period covered by the Annual Report; (iii) the issues or specific securities to which the Annual Report is related (including CUSIP number, Issuer name, state, issue C-2

55 description/securities name, dated date, maturity date, and/or coupon rate); (iv) the name of any obligated person other than the Issuer; (v) the name and date of the document; and (vi) contact information for the Dissemination Agent or the Issuer's submitter. (c) If the Issuer is unable to provide to EMMA an Annual Report by the date required in subsection (a), the Issuer shall send a notice in a timely manner to the MSRB and to the State Repository in substantially the form attached as Appendix A. (d) If the Issuer's fiscal year changes, the Issuer shall send a notice of such change to the MSRB and to the State Repository in substantially the form attached as Appendix B. If such change will result in the Issuer's fiscal year ending on a date later than the ending date prior to such change, the Issuer shall provide notice of such change to the MSRB and to the State Repository on or prior to the deadline for filing the Annual Report in effect when the Issuer operated under its prior fiscal year. Such notice may be provided to the MSRB and to the State Repository along with the Annual Report, provided that it is filed at or prior to the deadline described above. SECTION 4. Content of Annual Reports. The Issuer's Annual Report shall contain or include by reference the following: (a) audited financial statements of the Issuer prepared pursuant to State laws, administrative rules and guidelines and pursuant to accounting and reporting policies conforming in all material respects to generally accepted accounting principles as applicable to governmental units as such principles are prescribed, in part, by the Financial Accounting Standards Board and modified by the Government Accounting Standards Board and in effect from time to time; and (b) additional annual financial information and operating data as set forth in the Official Statement under "CONTINUING DISCLOSURE". Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which previously have been provided to each of the Repositories or filed with the SEC. If the document included by specific reference is a final official statement, it must be available from the MSRB. The Issuer shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) The Issuer covenants to provide, or cause to be provided, notice in a timely manner not in excess of ten business days of the occurrence of any of the following events with respect to the Bonds in accordance with the Rule: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; C-3

56 (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; (7) modifications to rights of security holders, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the securities, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the obligated person; (13) the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. (b) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, the Issuer shall as soon as possible determine if such event would constitute material information for the Bondholders, provided, that any event other than those listed under Section 5(a)(1), (3), (4), (5), (9), (11) (only with respect to any change in any rating on the Bonds) or (12) above will always be deemed to be material. Events listed under Section 5(a)(6) and (8) above will always be deemed to be material except with respect to that portion of those events which must be determined to be material. (c) The Issuer shall promptly cause a notice of the occurrence of a Listed Event, determined to be material in accordance with the Rule, to be electronically filed with EMMA and with the State Repository together with a significant event notice cover sheet substantially in the form attached as Appendix C. In connection with providing a notice of the occurrence of a Listed Event described in Section 5(a)(9) above, the Issuer shall include in the notice explicit disclosure as to whether the Bonds have been escrowed to maturity or escrowed to call, as well as appropriate disclosure of the timing of maturity or call. (d) The Issuer acknowledges that the "rating changes" referred to above in Section 5(a)(11) of this Agreement may include, without limitation, any change in any rating on the Bonds or other indebtedness for which the Issuer is liable. (e) The Issuer acknowledges that it is not required to provide a notice of a Listed Event with respect to credit enhancement when the credit enhancement is added after the primary offering of the Bonds, the Issuer does not apply for or participate in obtaining such credit enhancement, and such credit enhancement is not described in the Official Statement. C-4

57 SECTION 6. Termination of Reporting Obligation. (a) The Issuer's obligations under this Agreement shall terminate upon the legal defeasance of the Resolution or the prior redemption or payment in full of all of the Bonds. (b) This Agreement, or any provision hereof, shall be null and void in the event that the Issuer (i) receives an opinion of nationally recognized bond counsel, addressed to the Issuer, to the effect that those portions of the Rule, which require such provisions of this Agreement, do not or no longer apply to the Bonds, whether because such portions of the Rule are invalid, have been repealed, amended or modified, or are otherwise deemed to be inapplicable to the Bonds, as shall be specified in such opinion, and (ii) delivers notice to such effect to the MSRB, and to the State Repository, if any. SECTION 7. Dissemination Agent. The Issuer, from time to time, may appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. SECTION 8. Amendment. Notwithstanding any other provision of this Agreement, this Agreement may be amended, and any provision of this Agreement may be waived to the effect that: (a) such amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, a change in law or a change in the identity, nature or status of the Issuer, or the types of business in which the Issuer is engaged; (b) this Agreement as so amended or taking into account such waiver, would have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, in the opinion of independent legal counsel; and (c) such amendment or waiver does not materially impair the interests of the Bondholders, in the opinion of independent legal counsel. If the amendment or waiver results in a change to the annual financial information required to be included in the Annual Report pursuant to Section 4 of this Agreement, the first Annual Report that contains the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of such change in the type of operating data or financial information being provided. If the amendment or waiver involves a change in the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared based on the new accounting principles and those prepared based on the former accounting principles. The comparison should include a qualitative discussion of such differences and the impact of the changes on the presentation of the financial information. To the extent reasonably feasible, the comparison should also be quantitative. A notice of the change in the accounting principles should be sent by the Issuer to the MSRB and to the State Repository. Further, if the annual financial information required to be provided in the Annual Report can no longer be generated because the operations to which it related have been C-5

58 materially changed or discontinued, a statement to that effect shall be included in the first Annual Report that does not include such information. SECTION 9. Additional Information. Nothing in this Agreement shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Agreement. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Agreement, the Issuer shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 10. Default. In the event of a failure of the Issuer to comply with any provision of this Agreement, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer to comply with its obligations under this Agreement. A default under this Agreement shall not be deemed an Event of Default under the Resolution or the Bonds, and the sole remedy under this Agreement in the event of any failure of the Issuer to comply with the Agreement shall be an action to compel performance. SECTION 11. Duties of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Agreement. SECTION 12. Beneficiaries. This Agreement shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriters, and the Bondholders and shall create no rights in any other person or entity. SECTION 13. Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the State, and any suits and actions arising out of this Agreement shall be instituted in a court of competent jurisdiction in the State. Notwithstanding the foregoing, to the extent this Agreement addresses matters of federal securities laws, including the Rule, this Agreement shall be construed and interpreted in accordance with such federal securities laws and official interpretations thereof. BAY DE NOC COMMUNITY COLLEGE STATE OF MICHIGAN Dated: December 9, 2015 By: Its: President C-6

59 APPENDIX A NOTICE TO THE MSRB AND TO THE STATE REPOSITORY OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Bay de Noc Community College, Michigan Name of Bond Issue: 2015 Refunding Bonds (General Obligation - Limited Tax) Date of Bonds: December 9, 2015 NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of its Continuing Disclosure Agreement with respect to the Bonds. The Issuer anticipates that the Annual Report will be filed by. BAY DE NOC COMMUNITY COLLEGE STATE OF MICHIGAN Dated: By: Its: President C-7

60 APPENDIX B NOTICE TO THE MSRB AND THE STATE REPOSITORY OF CHANGE IN ISSUER'S FISCAL YEAR Name of Issuer: Bay de Noc Community College, Michigan Name of Bond Issue: 2015 Refunding Bonds (General Obligation - Limited Tax) Date of Bonds: December 9, 2015 NOTICE IS HEREBY GIVEN that the Issuer's fiscal year has changed. Previously, the Issuer's fiscal year ended on. It now ends on. BAY DE NOC COMMUNITY COLLEGE STATE OF MICHIGAN Dated: By: Its: President C-8

61 APPENDIX C SIGNIFICANT EVENT NOTICE COVER SHEET This cover sheet and significant event notice should be provided in an electronic format to the Municipal Securities Rulemaking Board and the State Repository pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(C) and (D). Issuer's and/or other Obligated Person's Name: Issuer's Six-Digit CUSIP Number(s): or Nine-Digit CUSIP Number(s) to which this significant event notice relates: Number of pages of attached significant event notice: Description of Significant Events Notice (Check One): 1. Principal and interest payment delinquencies 2. Non-payment related defaults 3. Unscheduled draws on debt service reserves reflecting financial difficulties 4. Unscheduled draws on credit enhancements reflecting financial difficulties 5. Substitution of credit or liquidity providers, or their failure to perform 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security 7. Modifications to rights of security holders 8. Bond calls 9. Tender offers 10. Defeasances 11. Release, substitution, or sale of property securing repayment of the securities 12. Rating changes 13. Bankruptcy, insolvency, receivership or similar event of the obligated person 14. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms 15. Appointment of a successor or additional trustee or the change of name of a trustee 16. Other significant event notice (specify) I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly: Signature: Name: Employer: Address: City, State, Zip Code: Voice Telephone Number: ( ) Title: The MSRB Gateway is or through the EMMA portal at emma.msrb.org/submission/ Submission_Portal.aspx. Contact the MSRB at (703) with questions regarding this form or the dissemination of this notice. The cover sheet and notice may also be faxed to the MAC at (313) B-1 C-9

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63 APPENDIX D - DRAFT LEGAL OPINION U.S. Mail Address: P.O. BOX 2575 EAST LANSING, MI PHONE: (517) FAX: (517) FAX: (517) ALL OTHER SHIPPING: 2900 WEST ROAD, SUITE 400 EAST LANSING, MI MICHAEL B. FARRELL ROY H. HENLEY KIRK C. HERALD DAVID M. REVORE KATHERINE WOLF BROADDUS GORDON W. VAN WIEREN, JR. ROBERT G. HUBER MARGARET M. HACKETT JENNIFER K. JOHNSTON TIMOTHY T. GARDNER, JR. BEVERLY J. BONNING MICHAEL D. GRESENS MATTHEW F. HISER RYAN J. NICHOLSON MARTHA J. MARCERO CHRISTOPHER J. IAMARINO KARI S. COSTANZA BRANDON C. WALKER LISA L. SWEM RAYMOND M. DAVIS ROBERT A. DIETZEL FREDRIC G. HEIDEMANN KEVIN S. HARTY (OF COUNSEL) JEFFREY J. SOLES MICHELE R. EADDY ERIC D. DELAPORTE DANIEL R. MARTIN ROBERT J. ROBINSON (OF COUNSEL) Bay de Noc Community College State of Michigan DRAFT LEGAL OPINION We have acted as legal counsel in connection with the issuance by Bay de Noc Community College, State of Michigan (the "Issuer"), of bonds in the aggregate principal amount of $4,605,000 designated 2015 Refunding Bonds (General Obligation - Limited Tax) (the "Bonds"). The Bonds are in fully registered form and issued without coupons. The Bonds are dated December 9, 2015, are not subject to redemption prior to maturity, are of $5,000 denomination or any integral multiple thereof, mature serially on May 1 of each year, and bear interest payable on May 1, 2016, and semiannually thereafter on November 1 and May 1 of each year in the amounts and rates as follows: Year Amount Rate Year Amount Rate 2017 $370, % 2023 $430, % , , , , , , , , , We have examined the documents which we deem authentic and pertinent to the validity of the Bonds, including the certified record evidencing the authorization of the Bonds by the board of trustees of the Issuer, a copy of the approval of the Department of Treasury of the State of Michigan to issue the Bonds, and a specimen of the Bond certificates. Based upon the foregoing, we are of the opinion that under existing law: (1) the Bonds have been lawfully authorized and issued and are enforceable obligations of the Issuer in accordance with their terms; (2) the Bonds are the limited tax general obligation of the Issuer for which its full faith, credit and resources have been irrevocably pledged; (3) the Issuer has the power, has pledged and is obligated to levy taxes within its authorized millage rate on all taxable property now situated within the corporate boundaries of the Issuer in an amount sufficient to pay the principal of and interest on the Bonds, taking into account other available funds, but the Issuer does not have the power to levy taxes for the payment of the Bonds in excess of its constitutional, statutory and charter tax rate limitations; D-1 East Lansing Novi West Michigan

64 Bay de Noc Community College State of Michigan December 9, 2015 Page 2 (4) if tax collections are insufficient to pay the principal of and interest on the Bonds when due, the Issuer has pledged and is obligated to use any and all other resources available for payment of the Bonds; (5) the Issuer has designated the Bonds as "qualified tax-exempt obligations" within the meaning of the Internal Revenue Code of 1986, as amended; (6) the Bonds and the interest thereon are exempt from all taxation in the State of Michigan, except inheritance and estate taxes and taxes on gains realized from the sale, payment or other disposition thereof; and (7) the interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that certain corporations must take into account interest on the Bonds in determining adjusted net current earnings for the purpose of computing the alternative minimum tax imposed on such corporations. The opinions set forth in the preceding sentence are subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. The rights of the owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement of such rights may also be subject to the exercise of judicial discretion in appropriate cases. THRUN LAW FIRM, P.C. TLF/CJI D-2

65 APPENDIX E - DRAFT OFFICIAL NOTICE OF SALE OPTIONAL DTC BOOK-ENTRY-ONLY OFFICIAL NOTICE OF SALE $4,810,000 BAY DE NOC COMMUNITY COLLEGE STATE OF MICHIGAN 2015 REFUNDING BONDS (GENERAL OBLIGATION - LIMITED TAX) BIDS for the purchase of the above 2015 Refunding Bonds (the "Bond" or "Bonds") will be received by Bay de Noc Community College, Michigan (the "Issuer"), at the Issuer's administrative offices located at 2001 North Lincoln Road, Escanaba, Michigan , on Thursday, the 12th day of November, 2015, until 10:30 o'clock in the a.m., prevailing Eastern Time, at which time and place said bids will be publicly opened and read. BIDS also will be received on the same date and the same hour by an agent of the undersigned at the offices of the Municipal Advisory Council of Michigan, Buhl Building, 535 Griswold, Suite 1850, Detroit, Michigan 48226, where the bids will simultaneously be opened and read. Bidders may choose either location to present bids but not both locations. Award of the bids will be considered by the Board of Trustees of the Issuer at 11:30 o'clock in the a.m., prevailing Eastern Time, on that date. FAXED BIDS: Bidders may submit signed bids via facsimile transmission to the Issuer at (906) or the Municipal Advisory Council at (313) , provided that the faxed bids are received prior to the time and date fixed for receipt of bids. Bidders submitting faxed bids bear the full risk of failed or untimely transmission of their bids. Bidders are encouraged to confirm the timely receipt of their full and complete bids by telephoning the Issuer at (906) or the Municipal Advisory Council at (313) Bidders submitting bids by fax must satisfy the requirements of the good faith deposit obligations described herein. ELECTRONIC BIDS may be presented via PARITY on the date and at the time shown above provided that such bidders must also comply with the good faith deposit requirements described herein. To the extent any instructions or directions set forth in PARITY conflict with this Notice, the terms of this Notice shall control. For further information about PARITY, potential bidders may contact Public Financial Management, Inc., at (734) or PARITY at (212) PURPOSE AND SECURITY: The Bonds are being issued for the purpose of refunding a certain prior outstanding obligation of the Issuer (the "Refunded Bonds"). The Bonds are issued under the provisions of Act 331, Public Acts of Michigan, 1966, as amended, and Act 34, Public Acts of Michigan, 2001, as amended. The Issuer has pledged the limited tax full faith and credit of the Issuer for the payment of principal and interest on the Bonds. The Issuer has further pledged to levy sufficient ad valorem taxes within its authorized millage annually, as a first budget obligation, said levy must be subject to constitutional, statutory and charter tax rate limitations. The Issuer not having the power to levy taxes for the payment of the Bonds in excess of its constitutional, statutory or charter tax rate limitation, the Bonds will be limited tax general obligations of the Issuer, and, if tax collections are insufficient to pay the principal of or interest on the Bonds when due, the Issuer pledges to use any and all other resources available E-1

66 for the payment of the Bonds. The Issuer reserves the right to issue additional bonds of equal standing. OPTIONAL DTC BOOK-ENTRY-ONLY: Unless otherwise requested by the Purchaser, the Bonds will be initially offered as registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company, New York, New York ("DTC") under DTC's Book-Entry-Only system of registration. If DTC Book-Entry-Only is used, Purchasers of interests in the Bonds (the "Beneficial Owners") will not receive physical delivery of bond certificates, and ownership by the Beneficial Owners of the Bonds will be evidenced by book-entry-only. As long as Cede & Co. is the registered owner of the Bonds as nominee of DTC, payments of principal and interest payments will be made directly to such registered owner which will in turn remit such payments to the DTC participants for subsequent disbursement to the Beneficial Owners. BOND DETAILS: Said Bonds will be fully registered Bonds, of the denomination of $5,000 each or multiples thereof up to the amount of a single maturity, dated the date of delivery, numbered in order of issue from 1 upwards and will bear interest from their dated date payable on May 1, 2016, and semiannually thereafter. The Bonds will mature on May 1 as follows: Year Amount 2017 $385, , , , , ,000 Year Amount 2023 $450, , , , ,000 TERM BOND OPTION: Bidders shall have the option of designating bonds maturing in any year as serial bonds or term bonds, or both. The bidder must designate whether each of the principal amounts shown above represent a serial maturity or a mandatory redemption requirement for a term bond maturity. There may be more than one term bond maturity. In any event, the above principal amount schedule shall be represented by either serial bond maturities or mandatory redemption requirements, or a combination of both. Any such designation must be made within twenty-four (24) hours of the Bond sale. MATURITY ADJUSTMENT: The aggregate principal amount of this issue is believed to be the amount necessary to provide, in part, adequate funds to retire the Refunded Bonds and transactional costs. The Issuer reserves the right to increase or decrease the aggregate principal amount of the Bonds by not more than $250,000 after receipt of the bids and prior to final award. Such adjustment, if necessary, will be made in increments of $5,000, will not exceed $35,000 per maturity and may be made in any maturity. ADJUSTMENT TO PURCHASE PRICE: The purchase price of the Bonds will be adjusted proportionately to the adjustment in principal amount of the Bonds and in such manner as to maintain as comparable an underwriter spread as possible to the winning bid. E-2

67 PAYING AGENT: Principal and interest shall be payable at a bank or trust company qualified to act as a paying agent in Michigan (the "Paying Agent"), or such other Paying Agent as the Issuer may hereafter designate by notice mailed to the registered owner not less than sixty (60) days prior to any change in Paying Agent. In the event the Bonds cease to be held in book entry form only, the Paying Agent will serve as bond registrar and transfer agent, interest shall be paid by check mailed to the owner as shown by the registration books of the Issuer as of the close of business on the 15th day of the month preceding any interest payment date and the Bonds will be transferable only upon the registration books of the Issuer kept by the Paying Agent. See "Optional DTC Book-Entry-Only" above. PRIOR REDEMPTION: A. Mandatory Redemption Term Bonds. Principal designated by the original Purchaser of the Bonds as a term maturity shall be subject to mandatory redemption, in part, by lot, at par and accrued interest on the redemption dates corresponding to the maturities hereinbefore scheduled. When term Bonds are purchased by the Issuer and delivered to the Paying Agent for cancellation or are redeemed in a manner other than by mandatory redemption, the principal amount of the term Bonds affected shall be reduced by the principal amount of the Bonds so redeemed or purchased in the order determined by the Issuer. B. Optional Redemption. Bonds of this issue maturing in the years 2017 through 2026, inclusive, shall not be subject to redemption prior to maturity. Bonds or portions of Bonds in multiples of $5,000 of this issue maturing in the year 2027 shall be subject to redemption prior to maturity, at the option of the Issuer, by lot within that maturity, on any date occurring on or after May 1, 2026, at par and accrued interest to the date fixed for redemption. Notice of redemption of any Bond shall be given not less than thirty (30) days and not more than sixty (60) days prior to the date fixed for redemption by mail to the Registered Owner at the registered address shown on the registration books kept by the Paying Agent. Bonds shall be called for redemption in multiples of $5,000 and Bonds of denominations of more than $5,000 shall be treated as representing the number of Bonds obtained by dividing the denomination of the Bond by $5,000 and such Bonds may be redeemed in part. The notice of redemption for Bonds redeemed in part shall state that upon surrender of the Bond to be redeemed a new Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond surrendered shall be issued to the Registered Owner thereof. No further interest payment on the Bonds or portions of Bonds called for redemption shall accrue after the date fixed for redemption, whether presented for redemption, provided funds are on hand with the Paying Agent to redeem the same. If less than all of the Bonds of any maturity shall be called for redemption prior to maturity unless otherwise provided, the particular Bonds or portions of Bonds to be redeemed shall be selected by the Paying Agent, in such manner as the Paying Agent in its discretion may deem proper, in the principal amounts designated by the Issuer. Upon presentation and surrender E-3

68 of such Bonds at the corporate trust office of the Paying Agent, such Bonds shall be paid and redeemed. INTEREST RATE AND BIDDING DETAILS: The Bonds shall bear interest at a rate or rates not exceeding four percent (4%) per annum, to be fixed by the bids therefor, expressed in multiples of 1/8 or 1/20 of 1%, or both. The interest on any one Bond shall be at one rate only. All Bonds maturing in any one year must carry the same interest rate. The difference between the highest and lowest interest rates bid shall not exceed three percent (3%) per annum. No proposal for the purchase of less than all of the Bonds or at a price less than 99% or greater than 104% of the par value, or at a price which will cause the true interest cost on the Bonds to exceed four percent (4%) per annum, will be considered. THE INTEREST RATE BORNE BY BONDS MATURING IN ANY YEAR SHALL NOT BE LESS THAN THE INTEREST RATE BORNE BY BONDS MATURING IN THE PRECEDING YEAR. GOOD FAITH: A certified or cashier's check in the amount of two percent (2%) of the par value of the Bonds may be submitted contemporaneously with the bid or, in the alternative, a deposit in the amount of two percent (2%) of the par amount of the Bonds shall be made by the winning bidder by federal wire transfer as directed by Public Financial Management, Inc., to be received by the Issuer not later than noon, prevailing Eastern Time, on the next business day following the award as a guarantee of good faith on the part of the bidder to be forfeited as liquidated damages if such bid be accepted and the bidder fails to take up and pay for the Bonds. Any award made to the low bidder is conditional upon receipt of the good faith deposit. The good faith deposit will be applied to the purchase price of the Bonds. In the event the Purchaser fails to honor its accepted bid, the good faith deposit will be retained by the Issuer. No interest shall be allowed on the good faith deposit. Payment for the balance of the purchase price of the Bonds shall be made at the closing. Good faith checks of unsuccessful bidders will be returned via U.S. Mail. AWARD OF BONDS: The Bonds will be awarded to the bidder whose bid produces the lowest true interest cost which is the rate that will discount all future cash payments so that the sum of the present value of all cash flows will equal the Bond proceeds computed from December 9, LEGAL OPINION: Bids shall be conditioned upon the unqualified approving opinion of Thrun Law Firm, P.C., East Lansing, Michigan, bond counsel, the original of which will be furnished without expense to the Purchaser of the Bonds at the delivery thereof. The fees of Thrun Law Firm, P.C. for services rendered in connection with such approving opinion are expected to be paid from Bond proceeds. Except to the extent necessary to issue its approving opinion as to the validity of the above Bonds, Thrun Law Firm, P.C. has not been requested to examine or review, and has not examined or reviewed, any financial documents, statements or other materials that have been or may be furnished in connection with the authorization, marketing or issuance of the Bonds and, therefore, has not expressed and will not express an opinion with respect to the accuracy or completeness of any such financial documents, statements or materials. TAX MATTERS: In the opinion of bond counsel, assuming continued compliance by the Issuer with certain requirements of the Internal Revenue Code of 1986, as amended (the "Code"), interest on the Bonds is excluded from gross income for federal income tax purposes, E-4

69 as described in the opinion, and the Bonds and interest thereon are exempt from all taxation in the State of Michigan, except inheritance and estate taxes and taxes on gains realized from the sale, payment or other disposition thereof. The Issuer has designated the Bonds as "QUALIFIED TAX-EXEMPT OBLIGATIONS" within the meaning of the Code, and has covenanted to comply with those requirements of the Code necessary to continue the exclusion of interest on the Bonds from gross income for federal income tax purposes. OFFICIAL STATEMENT: Upon the sale of the Bonds, the Issuer will publish an Official Statement in substantially the same form as the Preliminary Official Statement, subject to minor additions, deletions and revisions as required to complete the Preliminary Official Statement. Promptly after the sales date, but in no event later than seven (7) business days after such date, the Issuer will provide the successful bidder with a reasonable number of final Official Statements. Such final Official Statements may be obtained without cost to the successful bidder in a reasonable amount from the financial consultant as set forth herein. The successful bidder agrees to supply to the Issuer all necessary pricing information and any underwriter identification necessary to complete the Official Statement within 24 hours after the award of Bonds. Additional copies of the final Official Statement may be obtained up to three months following the sale of the Bonds by a request and payment of costs to the financial consultant. The Issuer agrees to provide to the successful bidder at closing a certificate executed by appropriate officers of the Issuer acting in their official capacities, to the effect that as of the date of delivery the information contained in the Official Statement, and any supplement to the Official Statement, relating to the Issuer and the Bonds are true and correct in all material respects, and that the Official Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. CONTINUING DISCLOSURE: As more particularly described in the Official Statement, the Issuer will agree in the bond resolution or sales resolution to provide or cause to be provided, in accordance with the requirements of Rule 15c2-12 (the "Rule") promulgated by the Securities and Exchange Commission, (i) on or prior to the 180th day after the end of the fiscal year of the Issuer, commencing with the fiscal year ended June 30, 2016, certain annual financial information and operating data, including audited financial statements for the preceding fiscal year, generally consistent with the information contained or cross-referenced in the Official Statement relating to the Bonds, (ii) timely notice of the occurrence of certain significant events with respect to the Bonds and (iii) timely notice of a failure by the Issuer to provide the required annual financial information on or before the date specified in (i) above. CERTIFICATE REGARDING "ISSUE PRICE": The successful bidder will be required to furnish, prior to the delivery of the Bonds, a certificate in a form acceptable to bond counsel as to the "issue price" of the Bonds within the meaning of Section 1273 of the Internal Revenue Code of 1986, as amended. In addition, if the successful bidder will obtain a municipal bond insurance policy or other credit enhancement for the Bonds in connection with their original issuance, the successful bidder will be required, as a condition of delivery of the Bonds, to certify whether the premium therefor will be less than the present value of the interest expected to be saved as a result of such insurance or other credit enhancement. The form of an acceptable certificate will be provided by bond counsel. E-5

70 DELIVERY OF BONDS: The Issuer will furnish Bonds ready for execution at its expense. Bonds will be delivered without expense to the Purchaser at a place to be mutually agreed upon with the Purchaser. The usual closing documents, including a certificate that no litigation is pending affecting the issuance of the Bonds, will be delivered at the time of the delivery of the Bonds. If the Bonds are not tendered for delivery by twelve o'clock, noon, prevailing Eastern Time, on the 45th day following the date of sale, or the first business day thereafter if the 45th day is not a business day, the successful bidder may on that day, or any time thereafter until delivery of the Bonds, withdraw the proposal by serving notice of cancellation in writing, on the undersigned, in which event the Issuer shall promptly return the good faith deposit. Accrued interest to the date of delivery of the Bonds shall be paid by the Purchaser at the time of delivery. Payment for the Bonds shall be made in federal reserve funds. Unless the Purchaser furnishes the Paying Agent with a list giving the denominations and names in which it wishes to have the certificates issued at least five (5) business days prior to delivery of the Bonds, the Bonds will be delivered in the form of a single certificate for each maturity registered in the name of the Purchaser. CUSIP NUMBERS: CUSIP numbers will be imprinted on the Bonds at the expense of the Issuer. An improperly imprinted number or failure to print CUSIP numbers shall not constitute basis for the Purchaser to refuse to accept delivery of the Bonds. The Purchaser shall be responsible for requesting assignment of numbers and for the payment of any charges for the assignment of numbers. If the Purchaser requires CUSIP numbers on the Bonds, the Purchaser shall request assignment of CUSIP numbers for the Bonds and provide the numbers to Public Financial Management, Inc. and Thrun Law Firm, P.C., within forty-eight (48) hours of the bond sale. BIDDER CERTIFICATION - NOT "IRAN-LINKED BUSINESS": By submitting a bid, the bidder shall be deemed to have certified that it is not an "Iran-Linked Business" as defined in Act 517, Public Acts of Michigan, 2012; MCL , et seq. FURTHER INFORMATION may be obtained from Public Financial Management, Inc., 3989 Research Park Drive, Ann Arbor, Michigan Telephone: (734) THE RIGHT IS RESERVED TO REJECT ANY OR ALL BIDS. ENVELOPES containing the bids should be plainly marked "Proposal for Bay de Noc Community College 2015 Refunding Bonds." James L. Hermans Secretary, Board of Trustees E-6

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72 Additional information relative to this Bond issue may be obtained from: Public Financial Management, Inc Research Park Drive Ann Arbor, Michigan Facsimile: