OFFICIAL STATEMENT DATED JULY 11, 2013 $13,730,000 CLARK COUNTY JAIL HOLDING CORPORATION LEASE RENTAL REVENUE REFUNDING BONDS, SERIES 2013

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1 OFFICIAL STATEMENT DATED JULY 11, 2013 REFUNDING ISSUE Book-Entry Only RATING: Standard & Poor s: A See RATING herein In the opinion of Barnes & Thornburg LLP, Indianapolis, Indiana, under existing laws, interest on the Bonds (as hereinafter defined) is excludable from gross income for federal tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended and in effect on the date of issuance of the Bonds. Such exclusion is conditioned on continuing compliance with the Tax Covenants (hereinafter defined). In the opinion of Barnes & Thornburg LLP, Indianapolis, Indiana, under existing laws, interest on the Bonds is exempt from income taxation in the State of Indiana, except for the State financial institutions tax. See TAX MATTERS and Appendix D herein. $13,730,000 CLARK COUNTY JAIL HOLDING CORPORATION LEASE RENTAL REVENUE REFUNDING BONDS, SERIES 2013 Dated: Date of Delivery Due: As shown on Inside Cover The Clark County Jail Holding Corporation Lease Rental Revenue Refunding Bonds, Series 2013 (the Bonds ) will be dated the date of delivery with interest payable on January 15 and July 15 of each year, commencing January 15, The Bonds will be issued only as fully registered bonds, and when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ). Purchasers of beneficial interest in the Bonds (the Beneficial Owners ) will not receive physical delivery of certificates representing their interest in the Bonds. Principal of and semi-annual interest and premium, if any, on the Bonds will be disbursed on behalf of the Clark County Jail Holding Corporation (the Jail Holding Corporation ) by The Bank of New York Mellon Trust Company, N.A. (successor to J.P. Morgan Trust Company, N.A.), Indianapolis, Indiana, as Trustee, Registrar and Paying Agent (the Trustee ). The Bonds will be issued under a Trust Indenture dated as of December 1, 2003 (the Original Indenture ) as supplemented and amended by a First Supplemental Trust Indenture dated as of July 1, 2013 (the First Supplemental Indenture ) (the Original Indenture and the First Supplemental Indenture, collectively the Indenture ). The proceeds of the Bonds together with other funds of the Jail Holding Corporation will be used to (i) advance refund the Clark County Jail Holding Corporation Lease Rental Bonds, Series 2004 (the 2004 Bonds ) that were issued in the aggregate principal amount of $23,940,000 and are outstanding in the amount of $13,200,000 and (ii) pay the costs associated with the issuance of the Bonds. The Bonds are obligations of the Jail Holding Corporation payable solely from and secured exclusively by the trust estate established pursuant to the Indenture, which includes a security interest in (a) the funds established under the Indenture (except the Rebate Fund), (b) the rent ( Lease Payments, Lease Rental Payments, or Rent ) received by the Jail Holding Corporation under (i) the Lease, dated October 11, 1989, as amended by the First Amendment to Lease, dated as of August 1, 1993, and as further amended by the Amendment No. 2 to Lease, dated as of November 20, 2003, each of which is between the Jail Holding Corporation (as assignee of the Clark County Detention Building Corporation (the Building Corporation )), as lessor, and Clark County, Indiana (the County ), as lessee, concerning the lease of certain real property and improvements comprising the juvenile detention facility (collectively, the Improvements Lease ), and (ii) the Lease, dated as of October 11, 1989, as amended by the First Amendment to Lease, dated as of August 1, 1993, as further amended by the Amendment No. 2 to Lease, dated as of November 20, 2003, and as further amended by the Third Amendment to Lease, dated as of July 1, 2013, each of which is between the Jail Holding Corporation (as assignee of the Building Corporation), as lessor, and the County, as lessee, concerning the lease of certain real property and improvements comprising the jail facility (collectively, the Jail Lease ) (the Improvements Lease and the Jail Lease, collectively, the Leases ), and (c) the property subject to the Leases (collectively, the Leased Premises or Premises ). The rent paid by the County under the Leases is payable from the County s distributive share of Economic Development Income Tax (the EDIT Revenues ) and the County Adjusted Gross Income Tax (the CAGIT Revenues ), and to the extent the EDIT Revenues and CAGIT Revenues are insufficient for such purpose, from an ad valorem property tax to be levied on all taxable property in the County. (See SOURCES OF PAYMENT AND SECURITY FOR THE BONDS and THE JAIL HOLDING CORPORATION herein.) The Bonds are subject to optional redemption and may be subject to mandatory sinking fund redemption prior to their final maturity as more fully described herein. The Bonds are offered when, as and if issued by the Jail Holding Corporation and received by Edward D. Jones & Co., L.P. as representative of itself and City Securities Corporation (collectively, the Underwriter ), subject to prior sale, the withdrawal or modification of the offer without notice, and to the unqualified approval of legality by Barnes & Thornburg LLP, Indianapolis, Indiana. Additionally, certain legal matters will be passed upon for the Jail Holding Corporation by Young, Lind, Endres, & Kraft, New Albany, Indiana and certain legal matters will be passed upon for the County by Jacob Elder, Esq., Jeffersonville, Indiana. It is expected that the Bonds will be delivered through The Depository Trust Company in New York, New York on or about July 31, Dated: July 11, 2013 This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision.

2 $13,730,000 CLARK COUNTY JAIL HOLDING CORPORATION LEASE RENTAL REVENUE REFUNDING BONDS, SERIES 2013 The Bonds will mature on the dates and amounts as follows: Principal Date Maturity Coupon Yield CUSIP* 1/15/2016 $685, % 1.430% BS7 7/15/ , % 1.630% BT5 1/15/ , % 3.600% CA5 $1,355, % Term Bonds due July 15, 2014 Yield 0.600% CUSIP BQ1 $1,345, % Term Bonds due July 15, 2015 Yield 1.000% CUSIP BR9 $1,395, % Term Bonds due July 15, 2017 Yield 1.800% CUSIP BU2 $1,425, % Term Bonds due July 15, 2018 Yield 2.150% CUSIP BV0 $1,455, % Term Bonds due July 15, 2019 Yield 2.500% CUSIP BW8 $1,495, % Term Bonds due July 15, 2020 Yield 2.800% CUSIP BX6 $1,540, % Term Bonds due July 15, 2021 Yield 3.100% CUSIP BY4 $1,585, % Term Bonds due July 15, 2022 Yield 3.400% CUSIP BZ1 * CUSIP numbers shown have been provided by an organization not affiliated with the Jail Holding Corporation. The Jail Holding Corporation is not responsible for the selection of CUSIP numbers, nor does it make any representation as to such numbers.

3 IN CONNECTION WITH THIS OFFERING THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET, AND SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. No dealer, broker, salesman or other person has been authorized by the Jail Holding Corporation or the County to give any information or to make any representations, other than those contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the Jail Holding Corporation or the County. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities described herein by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained by the County, the Jail Holding Corporation, and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale of the securities described herein shall, under any circumstances, create any implication that there has been no change in the affairs of the Jail Holding Corporation or the County since the date of delivery of the securities described herein to the initial purchaser thereof. However, upon delivery of the securities, the Jail Holding Corporation and the County will provide a certificate stating that there have been no material changes in the information contained in the Final Official Statement since its delivery. THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE JAIL HOLDING CORPORATION AND THE COUNTY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE BONDS HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT; ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE UNDERWRITER HAS PROVIDED THE FOLLOWING SENTENCE FOR INCLUSION IN THIS OFFICIAL STATEMENT: THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH AND AS PART OF ITS RESPONSIBILITIES TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION AND REASONABLY BELIEVES SUCH INFORMATION TO BE ACCURATE AND COMPLETE, BUT THE UNDERWRITER DOES NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. Pursuant to continuing disclosure requirements of the Rule, the County will enter into a Continuing Disclosure Contract. For a description of the Continuing Disclosure Contract, see CONTINUING DISCLOSURE herein. (i)

4 TABLE OF CONTENTS INTRODUCTION... 1 THE JAIL HOLDING CORPORATION... 1 PURPOSE OF ISSUE... 1 THE REFUNDING PROGRAM... 2 MATHEMATICAL VERIFICATION... 2 SOURCES AND USES OF FUNDS... 3 SOURCE OF PAYMENT AND SECURITY FOR THE BONDS... 3 ADDITIONAL BONDS... 7 PROCEDURES FOR PROPERTY ASSESSMENT, TAX LEVY AND COLECTION... 7 RISKS TO THE OWNERS OF THE BONDS THE BONDS BOOK ENTRY LEGAL MATTERS AND ENFORCEABILITY OF REMEDIES LITIGATION CONTINUING DISCLOSURE TAX MATTERS AMORTIZABLE BOND PREMIUM RATING UNDERWRITING FINANCIAL ADVISOR STATEMENT OF THE JAIL HOLDING CORPORATION GENERAL INFORMATION ABOUT CLARK COUNTY...APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE... APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF THE LEASE... APPENDIX C FORM OF OPINION OF BOND COUNSEL...APPENDIX D SCHEDULE OF DEBT SERVICE AND LEASE RENTAL PAYMENTS... APPENDIX E (ii)

5 Clark County Jail Holding Corporation Brian Lenfert, President Jeremy Snelling, Vice President Dennis Hill, Secretary Brian Jones, Treasurer Chuck Moore, Member Clark County Board of County Commissioners Jack Coffman, President Rick Stephenson, Vice President John Perkins, Member Clark County Council Barbara C. Hollis, President Brian Lenfert, Vice President Steve Doherty, Member Kelly Khuri, Member Susan Popp, Member Kevin Vissing, Member Danny Yost, Member County Auditor R. Monty Snelling County Auditor Jacob C. Elder Jail Holding Corporation Counsel Young, Lind, Endres, & Kraft New Albany, Indiana Bond Counsel Barnes & Thornburg LLP Indianapolis, Indiana Financial Advisor London Witte Group, LLC Indianapolis, Indiana Underwriter Edward Jones St. Louis, Missouri Trustee, Registrar and Paying Agent The Bank of New York Mellon Trust Company, N.A. (Successor to J.P. Morgan Trust Company, N.A.) Indianapolis, Indiana (iii)

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7 OFFICIAL STATEMENT $13,730,000 CLARK COUNTY JAIL HOLDING CORPORATION LEASE RENTAL REVENUE REFUNDING BONDS, SERIES 2013 INTRODUCTION This Official Statement of the Clark County Jail Holding Corporation (the Jail Holding Corporation ), including the cover page and appendices, is provided for the purpose of setting forth information concerning the Jail Holding Corporation and Clark County, Indiana (the County ), the Jail Holding Corporation s Lease Rental Revenue Refunding Bonds, Series 2013, in the aggregate principal amount of $13,730,000 (the Bonds ), and the Trust Indenture, dated as of December 1, 2003 (the Original Indenture ), as supplemented and amended by a First Supplemental Trust Indenture dated as of July 1, 2013, (the First Supplemental Indenture ) (the Original Indenture and First Supplemental Indenture, collectively, the Indenture ). The Bonds shall be secured under the provisions of the Indenture and shall be issued in accordance with the Indenture and Indiana Code, Title 36, Article 1, Chapter 10, as amended, Indiana Code, Title 5, Article 1, Chapter 5, as amended, and other applicable laws (the Act ). The summaries of and references to all documents, statutes, and other instruments referred to in this Official Statement do not purport to be complete and are qualified in their entirety by reference to the full text of each document, statute, or instrument. Terms not defined in this Official Statement shall have the meaning set forth in the respective documents. Investors should read the entire Official Statement to obtain necessary information essential to the making of an informed investment decision. THE JAIL HOLDING CORPORATION The Jail Holding Corporation was organized as a nonprofit corporation under laws of the State of Indiana (the State ), for the purpose of providing funds to be applied to the cost of acquiring real estate and constructing facilities to be leased to the County. In order to provide the funds necessary to undertake projects, the Jail Holding Corporation may, from time to time, issue bonds secured by a lease agreement. None of the officers, directors or members of the Jail Holding Corporation has or will receive any compensation from the Jail Holding Corporation or the County, as a result of this transaction, and none have a pecuniary interest in the Bonds. PURPOSE OF ISSUE The proceeds of the Bonds together with other funds of the Jail Holding Corporation will be used to (i) advance refund the Clark County Jail Holding Corporation Lease Rental Bonds, Series 2004 (the 2004 Bonds ) that were issued in the aggregate principal amount of $23,940,000 and are outstanding in the aggregate principal amount of $13,200,000 and (ii) pay the costs associated with the issuance of the Bonds. 1

8 THE REFUNDING PROGRAM Pursuant to the terms of an Escrow Agreement, dated as of July 1, 2013 (the Escrow Agreement ), entered into by and among the Jail Holding Corporation, the Trustee, and The Bank of New York Mellon Trust Company, N.A., Indianapolis, Indiana as escrow agent (the Escrow Agent ), the advance refunding of the remaining 2004 Bonds will be accomplished by (a) creating an irrevocable escrow account (the Escrow Account ) to be held by the Escrow Agent and (b) depositing therein a sum of cash, without reinvestment, sufficient to pay (i) the principal of and interest on the 2004 Bonds due on January 15, 2014, and (ii) the redemption price, plus the accrued interest, on the 2004 Bonds maturing on or after July 15, 2014 through and including January 15, 2023, on January 15, 2014 (the Redemption Date ). The funds needed to establish the initial cash deposit to the Escrow Account will be provided from the proceeds of the sale of the Bonds and, if available, other available money of the Jail Holding Corporation. All moneys to be deposited with the Escrow Agent are pledged solely and irrevocably for the benefit of the holders of the 2004 Bonds. MATHEMATICAL VERIFICATION London Witte Group, LLC, Indianapolis, Indiana, a firm of independent public accountants, will deliver to the Jail Holding Corporation its attestation report indicating that it has examined, in accordance with standards established by the American Institute of Certified Accountants, the information and assertions provided by the Jail Holding Corporation, the Underwriter and others. Included in the scope of its examination will be a verification of the mathematical accuracy of: (1) the mathematical computations of the adequacy of the cash to pay the principal of and interest on the 2004 Bonds when due and the redemption price of the 2004 Bonds on the Redemption Date; and (2) the mathematical computations supporting the conclusion of Barnes & Thornburg LLP that the Bonds are not arbitrage bonds under the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 2

9 SOURCES AND USES OF FUNDS The proceeds from the Bonds are expected to be applied as follows: Principal Amount of the Bonds $13,730, Original Issue Premium 36, Funds on Hand 26, Total Sources of Funds $13,792, Uses of Funds: Escrow Account $13,519, Cost of Issuance 115, Underwriter's Discount 154, Contingency 4, Total Uses of Funds $13,792, SOURCE OF PAYMENT AND SECURITY FOR THE BONDS The Bonds and any additional bonds hereafter issued under the Indenture on a parity therewith (the Additional Bonds ) (the Bonds and the Additional Bonds, collectively, the Bonds ), are obligations of the Jail Holding Corporation payable solely from and secured exclusively by a security interest in (a) the funds established under the Indenture (except the Rebate Fund), (b) the Lease Rental Payments received by the Jail Holding Corporation under the Leases, and (c) the Leased Premises. The Jail Holding Corporation does not have any taxing authority. The Jail Holding Corporation has no source of funds from which to pay debt service on the Bonds, except from Lease Rental Payments and amounts held under the pledged funds of the Indenture. If the County does not pay the Lease Rental Payments, the Jail Holding Corporation has no source of funds from which to pay debt service on the Bonds, except from amounts held in the pledged funds under the Indenture. Pursuant to the Leases the County is obligated to pay the rent on a semi-annual basis directly to the Trustee on January 1 and July 1 of each year in the amounts and on the dates shown on the schedule entitled SCHEDULE OF DEBT SERVICE REQUIREMENTS & LEASE PAYMENTS in APPENDIX E of this Official Statement. See SUMMARY OF CERTAIN PROVISIONS OF THE LEASES in Appendix C to this Official Statement. The Lease Rental Payments will be payable from revenues to be derived from the Clark County Economic Development Tax (the EDIT Revenues ) and the Clark County Adjusted Gross Income Tax (the CAGIT Revenues ) and, to the extent the EDIT Revenues and the CAGIT Revenues are insufficient, from an ad valorem property tax to be levied on all taxable property in the County. 3

10 As of the date of this Official Statement, the County is considering undertaking other types of financings for purposes authorized by and in accordance with the laws of the State. The obligations incurred by the County in connection with any and all such financings, if any, will be secured separately from the Bonds and will not constitute Bonds under the Indenture or for purposes of this Official Statement. Such other financings may be payable from ad valorem property taxes levied on all taxable property in the County. In addition, the County has reserved the right to incur additional obligations payable from EDIT Revenues and CAGIT Revenues, on a parity with the pledge thereof to the payment of the Lease Rental Payments, upon the satisfaction of certain conditions set forth in the Leases. See Parity Obligations EDIT Revenues and Parity Obligations CAGIT Revenues under this section. For a more detailed discussion of certain provisions of the Lease, see Appendix C, SUMMARY OF CERTAIN PROVISIONS OF THE LEASES herein. Economic Development Income Tax EDIT is authorized pursuant to Indiana Code (the EDIT Statute ) and may be imposed on the adjusted gross income of county taxpayers. County taxpayers are individuals who (i) reside in such county on January 1 of the calendar year in which the individual s taxable year commences or (ii) maintain a principal place of business or employment in such county on January 1 of the calendar year in which the individual s taxable year commences and who do not on that same date reside in another county in which EDIT is in effect. Subject to the limitations provided therein, the EDIT Statute provides for increases or decreases in the tax rate and for rescission of the tax by the body that imposed it. The EDIT Statute expressly states that the Indiana General Assembly may not repeal or amend the EDIT Statute in a manner that would adversely affect any outstanding bonds payable from EDIT revenues. EDIT may be imposed in increments of.1% up to.2% and at any multiple of.05% above.2% but not to exceed.5%. In counties in which COIT has been enacted, the combined rates of COIT and EDIT generally may not exceed 1%. In counties in which CAGIT has been enacted combined rates of CAGIT and EDIT may not exceed 1.25%. The Indiana Department of State Revenue (the Department of Revenue) is required to collect EDIT after adoption by the appropriate body in any county. Such collections are credited to a special account within the State general fund until distribution to the enacting county. In addition, any income earned on money credited to such special account is required to be added to each county s EDIT proceeds. Further, any funds remaining in any county s EDIT account at the end of a fiscal year may not be transferred to any other account in the State general fund. Before July 2 of each calendar year, the Department of Revenue, after reviewing the recommendation of the State Budget Agency, must estimate and certify to the county auditor of each adopting county the amount of EDIT that will be collected from that county during the twelve month period beginning July 1 of that calendar year. The amount certified is the county s certified distribution. The certified distribution may be adjusted upward or downward, upon recommendation of the State Budget Agency, if the Department of Revenue determines that there will be a greater or lesser amount of EDIT revenues available for distribution from a county s account. The certified distribution may be decreased only if the Department of Revenue determines that a part of such 4

11 projected collections needs to be distributed during the current calendar year in order for a county to realize its full distribution for the current calendar year. The county auditor is to distribute EDIT revenues (i) based on the proportionate shares of the property taxes due and payable to the county and each city and town within the county (each, a unit ) to the total property taxes due and payable to the county and all units within the county or (ii) for the counties that adopt EDIT after June 1, 1992, upon passage of an ordinance by the appropriate body based on each units proportionate share of population within the county to the total population of the county. A unit which is collecting EDIT may enter into a lease for any property that could be financed with bonds payable from EDIT subject to the parity provisions outlined in an ordinance. Such lease, which may not exceed a term of 50 years, may provide for payments from EDIT. Any such lease must be approved by an ordinance of the fiscal body of the unit and must be subject to a public hearing and a finding that such lease will serve the best interest of said unit. County Adjusted Gross Income Tax CAGIT may be imposed by the county council under Indiana Code in any county in which the county option income tax is not in effect. An ordinance to impose CAGIT or decrease the CAGIT rate must be passed after January 1 but before April 1 of a year, and the tax or decreased rate is effective July 1 of the year the ordinance is passed. CAGIT may be imposed at the rate of.5%,.75%, or 1% on the adjusted gross income of resident county taxpayers. The CAGIT rate may be decreased in increments of one-tenth of one percent. EDIT may not be imposed or increased in a year when the CAGIT rate is decreased. The county auditor must send to the Department of Revenue by certified mail results of votes to impose CAGIT or rescind CAGIT or to increase or decrease the tax rate. CAGIT may not be rescinded and the CAGIT rate may not be decreased if the rescission or rate reduction could affect obligations to which CAGIT has been pledged. A county taxpayer is either a resident of the county or one who maintains a principal place of business or employment in the county and does not reside in another county in which CAGIT is in effect. CAGIT applies at a rate of.25% to nonresident county tax payers. Tax collections are made by the Department of Revenue. The Department of Revenue estimates by July 1 of a year the amount to be collected in the county between that July 1 and the following June 30. This amount is the certified distribution. The certified distribution received by a county is distributed to civil taxing units as property tax replacement credits and as certified shares and to school corporations as property tax replacement credits. If the tax rate is.5% equal amounts of the distribution are dedicated to property tax replacement credit and certified shares. The amounts dedicated to property tax replacement credits are distributed by the county among the civil taxing units and school corporations on the basis of proportional property tax collections (which include certified shares that have been used to reduce a unit s maximum levy, and, for a county, also includes an amount equal to the property taxes imposed by the county in 1999 for the county s welfare fund and welfare administration fund). A school corporation must allocate property tax replacement credits to its general fund, debt service fund, capital projects fund, transportation fund, and 5

12 special education preschool fund in proportion to the levy for each fund. Certified shares are distributed on the basis of the proportion among civil taxing units of attributed levies, which include not only property taxes of the unit but also any amount of federal revenue sharing funds and certified shares used to reduce the unit s maximum levy and tax levy of any special taxing district, authority, board, or other entity formed to discharge governmental services or functions on behalf of or ordinary attribute to the unit, and, for a county, also includes an amount equal to the property taxes imposed by the county in 1999 for the county s welfare fund and welfare administration fund. Distributions are made to a county or joint solid management district only if the majority of the members of each of the county fiscal bodies of counties within the district pass a resolution approving the distribution. Parity Obligations EDIT Revenues The County reserves the right to enter into leases or other obligations entitled to the pledge of EDIT Revenues on parity with the pledge thereof to the Leases in accordance with the requirement set forth below ( EDIT Parity Obligations ) for the purpose of raising money for future projects of the County. The authorization and issuance of EDIT Parity Obligations shall be subject to the following conditions precedent: 1. All rental payments due under the Leases and all payments on any EDIT Parity Obligations shall be current to date in accordance with the terms thereof, with no payment in arrears; 2. For EDIT Parity Obligations without a property tax backup, the County and the Jail Holding Corporation shall have received a certificate prepared by an independent, qualified accountant or feasibility consultant (the Certifier ) certifying the amount of the EDIT Revenues estimated to be received each succeeding year, shall be at least equal to one hundred twenty-five percent (125%) of the lease rental and debt service requirements with respect to the outstanding Lease Rental Payments and EDIT Parity Obligations and the proposed EDIT Parity Obligations, for each respective year during the term of the outstanding Lease Rental Payments and Parity Obligations. The County shall approve and confirm the figures and estimates set forth in the above-described certificate in any resolution or ordinance authorizing the EDIT Parity Obligations. This Certificate is not required if the lease rental or debt service payments on the proposed EDIT Parity Obligations are backed up by an ad valorem property tax levy. Payments of any EDIT Parity Obligations or junior obligations shall be payable semiannually on January 1 and July 1. Parity Obligations CAGIT Revenues The County reserve the right to enter into leases or other obligations entitled to the pledge of CAGIT Revenues on parity with the pledge thereof to the Leases in accordance with the requirement set forth below ( CAGIT Parity Obligations ) for the purpose of raising money for future projects of the County. The authorization and issuance of CAGIT Parity Obligations shall be subject to the following conditions precedent: 6

13 1. All rental payments due under the Leases and all payments on any CAGIT Parity Obligations shall be current to date in accordance with the terms thereof, with no payment in arrears; 2. For CAGIT Parity Obligations without a property tax backup, the County and the Jail Holding Corporation shall have received a certificate prepared by an independent, qualified accountant or feasibility consultant certifying the amount of the CAGIT Revenues estimated to be received each succeeding year, shall be at least equal to one hundred twenty-five percent (125%) of the lease rental and debt service requirements with respect to the outstanding Leases and CAGIT Parity Obligations and the proposed CAGIT Parity Obligations, for each respective year during the term of the outstanding Leases and Parity Obligations. The County shall approve and confirm the figures and estimates set forth in the above-described certificate in any resolution or ordinance authorizing the CAGIT Parity Obligations. This Certificate is not required if the lease rental or debt service payments on the proposed CAGIT Parity Obligations are backed up by an ad valorem property tax levy. Payments of any CAGIT Parity Obligations or junior obligations shall be payable semiannually on January 1 and July 1. ADDITIONAL BONDS The Jail Holding Corporation may issue Additional Bonds on parity from time to time to provide for the refunding of outstanding Bonds, to pay or reimburse the costs of improvements, and for certain other limited purposes. See APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF THE TRUST INDENTURE. PROCEDURES FOR PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION General Real and personal property in the State is assessed each year as of March 1. On or before August 1 each year, each county auditor must submit to each underlying political subdivision located within that county a statement containing: (1) information concerning the assessed valuation in the political subdivisions for the next calendar year; (2) an estimate of the taxes to be distributed to the political subdivision during the last six months of the current calendar year; (3) the current assessed valuation as shown on the abstract of charges; (4) the average growth in assessed valuation in the political subdivision over the preceding three budget years, adjusted according to procedures established by the Department of Local Government Finance (the DLGF ) to account for reassessment under certain provisions of the Indiana Code; and (5) any other information at the disposal of the county auditor that might affect the assessed value used in the budget adoption process. By statute, the budget, tax rate and levy of a local political subdivision (except for any school corporation which elects to have a budget year from July 1 of a year through June 30 of 7

14 the following year) must be established no later than November 1. The budget, tax levy and tax rate are subject to review, revision, reduction or increase by the DLGF. The DLGF must complete its actions on or before February 15 of the immediately succeeding calendar year. On or before March 15, each county auditor prepares and delivers to the Auditor of State and the county treasurer the final abstract of property taxes within that county. The county treasurer mails tax statements the following April (but mailing may be delayed due to reassessment or other factors). Unless the mailing of tax bills is delayed, property taxes are due and payable to the county treasurer in two installments on May 10 and November 10. If an installment of taxes is not completely paid on or before the due date, a penalty of 10% of the amount delinquent is added to the amount due; provided, that so long as the installment is completely paid within 30 days of the due date and the taxpayer is not liable for delinquent property taxes first due and payable in a previous year for the same parcel, the amount of the penalty is five percent of the amount of the delinquent taxes. On May 11 and November 11 of each year after one year of delinquency, an additional penalty equal to 10% of any taxes remaining unpaid is added. The penalties are imposed only on the principal amount of the delinquency. Real property becomes subject to tax sale procedures on June 30 if a delinquency of more than $25 then exists with respect to an installment due on or before May 10 of the prior year. With respect to delinquent personal property taxes, each county treasurer shall serve a demand upon each county resident who is delinquent in the payment of personal property taxes after November 10, but before August 1 of the succeeding year. Each county auditor distributes property taxes collected to the various political subdivisions on or before the June 30 or December 31 after the due date of the tax payment. Under State law, personal property is assessed at its actual historical cost less depreciation, whereas real property assessed after February 28, 2011, must be assessed in accordance with the 2011 Real Property Assessment Manual (the Manual ) and the Real Property Assessment Guidelines for 2011 (the Guidelines ), both published by the DLGF, pursuant to 50 Indiana Administrative Code 2.4 (the Rule ). The purpose of the Rule is to accurately determine true tax value as defined in the Manual and the Guidelines, not to mandate that any specific assessment method be followed. The Manual defines true tax value for all real property, other than agricultural land, as the market value in use of a property for its current use, as reflected by the utility received by the owner or a similar user from that property. In the case of agricultural land, true tax value shall be the value determined in accordance with the Guidelines and certain provisions of the Indiana Code. The Manual permits assessing officials in each county to choose any acceptable mass appraisal method to determine true tax value, taking into consideration the ease in administration and the uniformity of the assessments produced by that method. The Guidelines were adopted to provide assessing officials with an acceptable appraisal methodology, although the Manual makes it clear that assessing officials are free to select from any number of appraisal methods, provided that they are capable of producing accurate and uniform values throughout the jurisdiction and across all classes of real property. The Manual specifies the standards for accuracy and validation that the DLGF will use to determine the acceptability of any alternate appraisal method. The intent of the DLGF is that an assessment determined by an assessing official in accordance with the Rule and the Manual and Guidelines shall be presumed to be correct. Any 8

15 evidence relevant to the true tax value of the real property as of the assessment date may be presented to rebut the presumption of correctness of the assessment. Such evidence may include an appraisal prepared in accordance with generally recognized appraisal standards; however, there is no requirement that an appraisal be presented either to support or to rebut an assessment. Instead, the validity of the assessment shall be evaluated on the basis of all relevant evidence presented. Whether an assessment is correct shall be determined on the basis of whether, in light of the relevant evidence, it reflects the real property s true tax value. There are certain credits, deductions and exemptions available for various classes of property. For instance, real property may be eligible for certain deductions for mortgages, solar energy heating or cooling systems, wind power devices, hydroelectric power devices and geothermal energy heating or cooling devices and if such property is owned by the aged. Residential real property may be eligible for certain deductions for rehabilitation. Real property, which is the principal residence of the owner thereof, is entitled to certain deductions and may be eligible for additional deductions, and if such owner is blind or disabled, such property may also be eligible for additional deductions. Buildings designed and constructed to systematically use coal combustion products throughout the building may be eligible for certain deductions. Tangible property consisting of coal conversion systems and resource recovery systems may be eligible for certain deductions. Tangible property or real property owned by disabled veterans and their surviving spouses may be eligible for certain deductions. Commercial and industrial real property, new manufacturing equipment and research and development equipment may be entitled to economic revitalization area deductions. Government-owned properties and properties owned, used and occupied for charitable, educational or religious purposes may be entitled to exemptions from tax. Assessed value or assessed valuation means an amount equal to the true tax value of property, which represents the gross assessed value of such property, less any deductions, credits and exemptions applicable to such property, and is the value used for taxing purposes in the determination of tax rates. Changes in assessed values of real property occur periodically as a result of general reassessments scheduled by the State General Assembly, as well as when changes occur in the property due to new construction or demolition of improvements. The current reassessment was effective as of the March 1, 2012 assessment date, and affects taxes payable beginning in Before July 1, 2013, and before July 1 of every fourth year thereafter, each county assessor will prepare and submit to the DLGF a reassessment plan for its county. The DLGF must complete its review and approval of the reassessment plan before March 1 of the year following the year in which the reassessment plan is submitted by the county. The reassessment plan must divide all parcels of real property in the county into four different groups of parcels. Each group of parcels must contain approximately 25% of the parcels within each class of real property in the county. All real property in each group of parcels shall be reassessed under the county's reassessment plan once during each four-year cycle. The reassessment of a group of parcels in a particular class of real property shall begin on July 1 of a year and must be completed on or before March 1 of the year after the year in which the reassessment of the group of parcels begins. For real property included in a group of parcels that is reassessed, the reassessment is the basis for taxes payable in the year following the year in which the reassessment is to be completed. The county may submit a reassessment plan that provides for reassessing more than 25% of all parcels of real property in the county in a particular year. A plan may provide that all parcels are to be 9

16 reassessed in one year. However, a plan must cover a four-year period. All real property in each group of parcels shall be reassessed under the county's reassessment plan once during each reassessment cycle. The reassessment of the first group of parcels under a county's reassessment plan shall begin on July 1, 2014, and shall be completed on or before March 1, In addition, the assessed value of real property will be annually adjusted to reflect changes in market value, based, in part, on comparable sales data, in order to account for changes in value that occur between reassessments. This process is generally known as Trending. When a change in assessed value occurs, a written notification is sent to the affected property owner. If the owner wishes to appeal this action, the owner must first request in writing a preliminary conference with the county or township official who sent the owner such written notification. That request must be filed with such official within 45 days after the written notification is given to the taxpayer. That preliminary conference is a prerequisite to a review of the assessment by the county property tax assessment board of appeals. While the appeal is pending: (1) any taxes on real property which become due on the property in question must be paid in an amount based on the immediately preceding year s assessment, or it may be paid based on the amount that is billed; and (2) any taxes on personal property which become due on the property in question must be paid in an amount based on the assessed value reported by the taxpayer on the taxpayer s personal property tax return, or it may be paid based on the amount billed. Prior to February 15 of each year for taxes to be collected during that year, the DLGF is required to review the proposed budgets, tax rates and tax levies of each political subdivision, including the County, and the proposed appropriations from those levies to pay principal of and interest on each political subdivision s funding, refunding, judgment funding or other outstanding obligations, to pay judgments rendered against the political subdivision and to pay the political subdivision's outstanding lease rental obligations (collectively bond and lease obligations ) to be due and payable in the next calendar year. If it determines that the proposed levies and appropriations are insufficient to pay the bond and lease obligations, the DLGF may at any time increase the tax rate and tax levy of a political subdivision to pay such bond and lease obligations. Circuit Breaker Tax Credit The electors of the State, at the general election held on November 2, 2010, approved an amendment to the State Constitution (the Amendment ), which provides taxpayers with a tax credit for all property taxes in an amount that exceeds a percentage of the gross assessed value of real and personal property eligible for the credit (the Circuit Breaker Tax Credit ). As a result of such approval, the Amendment has become a part of the State Constitution. In particular, under the Amendment, with respect to property taxes first due and payable in 2012 and thereafter, the State General Assembly will be required to limit a taxpayer s property tax liability as follows: (1) A taxpayer s property tax liability on tangible property, including curtilage, used 10

17 as a principal place of residence by an: (a) (b) (c) owner of property; individual who is buying the tangible property under a contract; or individual who has a beneficial interest in the owner of the tangible property (collectively, Tangible Property ); may not exceed 1% of the gross assessed value of the property that is the basis for the determination of property taxes. (2) A taxpayer s property tax liability on other residential property may not exceed 2% of the gross assessed value of the property that is the basis for the determination of property taxes. (3) A taxpayer s property tax liability on agricultural property may not exceed 2% of the gross assessed value of the property that is the basis for the determination of property taxes. (4) A taxpayer s property tax liability on other real property may not exceed 3% of the gross assessed value of the property that is the basis for the determination of property taxes. (5) A taxpayer s property tax liability on personal property (other than personal property that is Tangible Property or personal property that is other residential property) within a particular taxing district may not exceed 3% of the gross assessed value of the taxpayer s personal property that is the basis for the determination of property taxes within the taxing district. The Amendment provides that, with respect to property taxes first due and payable in 2012 and thereafter, property taxes imposed after being approved by the voters in a referendum will not be considered for purposes of calculating the limits to property tax liability under the provisions of the Amendment described in the preceding paragraphs. In addition, pursuant to statute, certain senior citizens with annual income below specified levels or their surviving spouses may be entitled to credits in addition to the Circuit Breaker Tax Credit with respect to their property tax liability attributable to their homesteads. The application of the Circuit Breaker Tax Credit will result in a reduction of property tax collections for each political subdivision in which the Circuit Breaker Tax Credit is applied. Except for referendum tax levies approved by voters for the benefit of school corporations, a political subdivision may not increase its property tax levy or borrow money to make up for any property tax revenue shortfall due to the application of the Circuit Breaker Tax Credit. Political subdivisions are required by law to fully fund the payments of their debt obligations in an amount sufficient to pay any debt service or lease rentals on outstanding obligations, regardless of any reduction in property tax collections due to the application of the 11

18 Circuit Breaker Tax Credit. If the amount deposited in a fund from which Debt Service Obligations (as defined herein) of the political subdivision are paid is reduced as a result of the application of the Circuit Breaker Tax Credit below the amount needed to meet the Debt Service Obligations of a political subdivision as such Obligations become due, the political subdivision may transfer funds from one or more of the other funds of the political subdivision. Debt Service Obligations of a political subdivision means (1) the principal and interest payable during a calendar year on bonds and (2) lease rental payments payable during a calendar year on leases of such political subdivision, which are payable from ad valorem property taxes. This application of property tax revenues may impact the ability of political subdivisions to provide existing levels of service and, in extreme cases, the ability to make debt service or lease rental payments. Upon the failure of a political subdivision to pay any of the political subdivision s Debt Service Obligations during a calendar year when due, the Treasurer of State, upon being notified of the failure by a claimant, shall pay the unpaid Debt Service Obligations that are due from money in possession of the State that would otherwise be available for distribution to the political subdivision under any other law, deducting such payment from the amount distributed. Future Changes in Law The Jail Holding Corporation and the County cannot predict the timing, likelihood or impact on property tax collections of any future judicial actions, amendments to the State Constitution, including legislation, regulations or rulings taken, enacted, promulgated or issued to implement the regulations, the statutes or the Amendment described above or of future property tax reform in general. In addition, there can be no assurance as to future events or legislation that may impact such regulations or statutes or the Amendment or the collection of property taxes by the County. Estimated Circuit Breaker Tax Credit for the County Legislative Services Agency ( LSA ) prepared a report which estimates the impact of the Circuit Breaker Tax Credit for all taxing units in the State of Indiana. Pursuant to LSA data as of December 31, 2012, there was $919,145 of Circuit Breaker Credits allocable to the County in 2012 and $502,247 allocable to the County in Information for Collection Year 2013 was unavailable as of the date of this Official Statement. The LSA Circuit Breaker Tax Credit analysis described above does not reflect the potential effect of any further changes in the property tax system or methods of funding local government that may be enacted by the Indiana General Assembly. The effects of these changes could affect LSA s estimate of the Circuit Breaker Tax Credit and the impact could be material. Other future events, such as the loss of a major taxpayer, reductions in assessed value, increases in property tax rates of overlapping taxing units, or a reduction in the amount of property tax replacement credit paid by the State could increase effective property tax rates and the amount of the lost revenue due to the Circuit Breaker Tax Credit, and the resulting increase could be material. 12

19 RISKS TO THE OWNERS OF THE BONDS The Bonds are not a debt, liability or loan of the credit of the State, the County or any other political subdivision of the State, or a pledge of the faith, credit or taxing power of the State, the County or any other political subdivision of the State. The Bonds are payable solely from and secured exclusively by certain property pledged thereto under the Indenture, including the Lease Rental Payments to be made by the County pursuant to the Leases. The Jail Holding Corporation has no taxing power. See, SOURCE OF PAYMENT AND SECURITY FOR THE BONDS and APPENDIX C Summary of Certain Provisions of the Leases. The Jail Holding Corporation and the County will covenant to comply with all action required under the Leases to assure the continuing excludability of the interest on the Bonds from gross income for federal income tax purposes. Failure of the Jail Holding Corporation or the County to comply with such covenants could cause interest on the Bonds to become included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. See TAX MATTERS. Risks Associated with EDIT and CAGIT Revenues 1. EDIT Revenues and CAGIT Revenues could be reduced as a result of adverse economic conditions nationally or locally, such as a general economic downturn, strikes or plant closings in the County, a reduction in the number of taxpayers in the County or a reduction in the aggregate adjusted gross income of County taxpayers. 2. EDIT Revenues and CAGIT Revenues received by the County could be reduced because of a reduction in the amount of EDIT Revenues and CAGIT Revenues collected and distributed throughout the County, a distribution certified by the State for an amount that is less than EDIT Revenues and CAGIT Revenues annually collected. 3. The County may not modify the rate at which EDIT and CAGIT are levied unless the County Council takes the necessary action. The County Council is prohibited by statute from taking any action that would result in a civil taxing unit having a smaller distributive share than the share to which it was entitled when it pledged the EDIT Revenues and CAGIT Revenues. 4. The Indiana General Assembly or an administrative agency with jurisdiction in the matter could modify or enact new laws or regulations or a court of competent jurisdiction could interpret the laws or regulations governing all matters associated with the EDIT Revenues or CAGIT Revenues in a manner that would negatively affect the owners of the Bonds. 5. Should the ratio of the County s property tax levy to the total property tax levies of all taxing units in the County decrease, the County s EDIT Revenues and CAGIT Revenues distributions would drop without any action by the County Council. Among the factors that could cause the percentage of EDIT Revenues and CAGIT Revenues distributions to 13