PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 18, 2013

Transcription

1 This Preliminary Official Statement and the information contained herein are subject to change, completion or amendment without notice. The Bonds may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, qualification or exemption under the securities laws of any such jurisdiction. NEW ISSUE Dated: Date of Issuance PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 18, 2013 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY $23,000,000* CHARTER SCHOOL REVENUE BONDS (SERIES 2013 PROJECT FOR THE TEAM ACADEMY CHARTER SCHOOL) RATING: Standard & Poor s: BBB Outlook: Stable See RATING herein. In the opinion of Wolff & Samson PC, West Orange, New Jersey, Bond Counsel, assuming continuing compliance by the Authority, the Borrower and the School with certain tax covenants described herein, under existing law, interest on the Bonds (i) is not includable in gross income for Federal income tax purposes under current law, (ii) is not an item of tax preference under Section 57 of the Code for purposes of computing the alternative minimum tax; however, for Bonds held by corporate taxpayers interest on the Bonds is included in adjusted current earnings, which is used as an adjustment in determining the Federal alternative minimum tax for certain corporations. No opinion is expressed regarding other federal tax consequences arising with respect to the Bonds Interest on the Bonds and any gain from the sale thereof are not includable in the gross income of owners thereof under the New Jersey Gross Income Tax Act.. For a more complete discussion see TAX MATTERS herein. Due: October 1, as shown on inside cover The Bonds described above (the Bonds ) are special, limited obligations of the New Jersey Economic Development Authority (the Authority ) and will be issued under and will be payable solely from and secured by (i) a pledge of certain funds held under the Trust Indenture, dated as of November 1, 2013 (the Indenture ), between the Authority and Manufacturers and Traders Trust Company, as trustee (the Trustee ) and certain payments to be made by Ashland School, Inc., a New Jersey not-for-profit corporation (the Borrower ), under a Loan Agreement dated as of November 1, 2013 (the Loan Agreement ). The Borrower will lease the facilities financed from the proceeds of the Bonds (the Project Facilities ) to TEAM Academy Charter School, Inc., a public charter school authorized by the State of New Jersey (the School ) for lease payments sufficient to pay the principal of, premium, if any, and interest on the Bonds. See SECURITY FOR THE BONDS The Lease Agreements herein. THE BORROWER, ASHLAND SCHOOL, INC., IS A SINGLE PURPOSE ENTITY, IS NOT A SCHOOL AND WILL HAVE NO OPERATIONS AND NO ASSETS EXCEPT FOR THE PROJECT FACILITIES. The Bonds will mature on the dates and in the amounts, and bear interest at the rates, set forth on the inside front cover hereof. Interest on the Bonds is payable semiannually on each April 1 and October 1, commencing on April 1, The Bonds will be issued 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 or the Securities Depository ), an automated depository for securities and a clearinghouse for securities transactions. Purchases of beneficial interests in the Bonds will be made in book-entry form (without certificates). The Bonds will be issued in minimum denominations of $25,000 or any integral multiple of $5,000 in excess thereof. So long as DTC, or its nominee, Cede & Co., is the registered owner of the Bonds, payments of the principal of, premium, if any, and interest on the Bonds will be made directly by the Trustee to Cede & Co., which will remit such payments to the beneficial owners of the Bonds. See THE BONDS -- Book-Entry System herein. THE BONDS ARE SUBJECT TO REDEMPTION PRIOR TO MATURITY, AS DESCRIBED HEREIN. Proceeds of the Bonds will be used by the Borrower to finance a project consisting of (i) acquisition of land and buildings located at 21 Ashland Street, Newark, New Jersey and 85 Custer Avenue, Newark, New Jersey; (ii) acquisition of land adjacent to 21 Ashland Street, Newark, New Jersey; (iii) completion of site work, (iv) construction and renovation of buildings on the property described in clause (i) above; (v) funding of a debt service reserve fund, and (vi) funding certain costs of issuing the Bonds. THE STATE OF NEW JERSEY IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE OF NEW JERSEY IS PLEDGED TO THE PAYMENT OF, THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS. THE BONDS ARE A SPECIAL, LIMITED OBLIGATION OF THE AUTHORITY, PAYABLE SOLELY OUT OF THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS OF THE AUTHORITY PLEDGED THEREUNDER, AND FROM ANY AMOUNTS OTHERWISE AVAILABLE UNDER THE INDENTURE FOR THE PAYMENT OF THE BONDS. THE BONDS DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. THE AUTHORITY HAS NO TAXING POWER. Investment in the Bonds involves a significant degree of risk and is speculative in nature as described under RISK FACTORS herein and under other sections of this Official Statement. This cover page contains certain information for quick reference only. It is not a summary of the Official Statement. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. The Bonds are offered when, as and if issued by the Authority, subject to the approval of the legality of the Bonds by Wolff & Samson PC, West Orange, New Jersey, Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the Borrower by Hill Wallack LLP, Princeton, New Jersey and the School by Porzio, Bromberg, and Newman, P.C., Morristown, New Jersey; and for the Underwriter by Ballard Spahr LLP, Philadelphia, Pennsylvania. It is expected that the Bonds in definitive form will be available for delivery to The Depository Trust Company in New York, New York on or about November, Dated:, 2013 * Preliminary, subject to change

2 $23,000,000 * NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY CHARTER SCHOOL REVENUE BONDS (SERIES 2013 PROJECT FOR THE TEAM ACADEMY CHARTER SCHOOL) MATURITY SCHEDULE * MATURITIES, AMOUNTS, INTEREST RATES, YIELDS, PRICES AND CUSIPS Maturity (October 1) Principal Amount Interest Rate Yield Price CUSIP ** $ % Term Bond due, Price % to Yield % CUSIP ** $ % Term Bond due, Price % to Yield % CUSIP ** $ % Term Bond due, Price % to Yield % CUSIP ** * Preliminary, subject to change. ** Copyright 2013, American Bankers Association. CUSIP data herein are provided by Standard & Poor s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. The CUSIP numbers listed above are being provided solely for the convenience of Bondholders only at the time of issuance of the Bonds and the Authority does not make any representation with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

3 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE OF THIS OFFICIAL STATEMENT, AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. This Official Statement does not constitute an offer to sell the Bonds in any jurisdiction to any person to whom it is unlawful to make such offer in such jurisdiction. No dealer, broker, salesman or other person has been authorized by the Authority, the Borrower, the School or the Underwriter to give any information or to make any representation other than that contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized. Neither the delivery of this Official Statement nor the sale of any of the Bonds implies that the information herein is correct as of any time subsequent to the date hereof. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create the implication that there has been no change in the matters described herein since the date hereof. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. All summaries of statutes and documents are qualified in their entirety by reference to such statutes and documents, respectively, and do not purport to be complete statements of any or all of such provisions. The information set forth herein has been provided by Authority, the Borrower, the School or the Underwriter and by other sources which such parties believe are reliable, but it is not guaranteed as to its accuracy or completeness, and it is not to be construed as a representation by the Underwriter. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or be used, as a whole or in part, for any other purpose. The Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon an exemption contained therein. THE ORDER AND PLACEMENT OF MATERIALS IN THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES HERETO AND INFORMATION INCORPORATED HEREIN BY REFERENCE, ARE NOT TO BE DEEMED TO BE A DETERMINATION OF RELEVANCE, MATERIALITY OR IMPORTANCE, AND THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES HERETO AND INFORMATION INCORPORATED HEREIN BY REFERENCE, MUST BE CONSIDERED IN ITS ENTIRETY. THE OFFERING OF THE BONDS IS MADE ONLY BY MEANS OF THIS ENTIRE OFFICIAL STATEMENT. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE BORROWER, THE SCHOOL AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE 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, but the Underwriter does not guarantee the accuracy or completeness of such information.

4 TABLE OF CONTENTS Page INTRODUCTORY STATEMENT... 1 THE AUTHORITY... 3 THE SCHOOL AND THE PROJECT... 4 ESTIMATED SOURCES AND USES OF FUNDS... 5 DEBT SERVICE SCHEDULE... 5 THE BONDS... 6 SECURITY FOR THE BONDS RISK FACTORS TAX MATTERS CONTINUING DISCLOSURE LITIGATION LEGAL MATTERS FINANCIAL STATEMENTS RATING UNDERWRITING TRUSTEE; CERTAIN RELATIONSHIPS MISCELLANEOUS Appendix A: Appendix B-1: Appendix B-2: Appendix C: Appendix D: Appendix E: Appendix F: Appendix G: Ashland School, Inc. and TEAM Academy Charter School, Inc. Financial Statements of the School for the Fiscal Year Ended June 30, 2012 Financial Statements of The Friends of TEAM Academy Charter School for the Fiscal Year Ended June 30,2012 Form of Loan Agreement Form of Indenture Form of Lease Agreements Form of Legal Opinion of Bond Counsel Form of Continuing Disclosure Agreement

5 OFFICIAL STATEMENT NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY $23,000,000 * CHARTER SCHOOL REVENUE BONDS (SERIES 2013 PROJECT FOR THE TEAM ACADEMY CHARTER SCHOOL) INTRODUCTORY STATEMENT This Official Statement is furnished in connection with the offering of $23,000,000 * aggregate principal amount of Charter School Revenue Bonds (Series 2013 Project for the TEAM Academy Charter School) (the Bonds ) of the New Jersey Economic Development Authority (the Authority ). The Bonds will be special, limited obligations of the Authority and will be issued under a Trust Indenture, dated as of November 1, 2013 (the Indenture ), between the Authority and Manufacturers and Traders Trust Company, as trustee (the Trustee ). The Authority is a public body corporate and politic constituting an instrumentality of the State of New Jersey. The Authority is authorized by Chapter 80 of the Laws of 1974 of New Jersey, as amended, codified at N.J.S.A. 34:1B-l, et seq. (the Act ) to borrow money by issuing its revenue bonds for the purposes provided in the Act to, including but not limited to, extend credit or make loans for the planning, designing, acquiring, constructing, reconstructing, and equipping of projects, which includes a project such as the Project as hereinafter described, which loans may be secured upon such terms and conditions as the Authority shall deem reasonable. The proceeds of the Bonds will be loaned to Ashland School, Inc., a New Jersey not-for-profit corporation (the Borrower ) pursuant to a Loan Agreement dated as of November 1, 2013 (the Loan Agreement ) between the Authority and the Borrower for the purpose of financing a project (the Project ) consisting of (i) the acquisition of land and buildings located at 21 Ashland Street, Newark, New Jersey and 85 Custer Avenue, Newark, New Jersey (collectively, the Mortgaged Property ); (ii) the acquisition of land located adjacent to 21 Ashland Street, Newark, New Jersey (the Field Property and, together with the Mortgaged Property, the Project Facilities ); (iii) completion of site work, (iv) construction and renovation of buildings on the Mortgaged Property; (v) funding of a debt service reserve fund; and (vi) funding certain costs of issuing the Bonds. The Borrower is a special purpose entity and is not a school. For more information on the Borrower, see APPENDIX A. The Project Facilities will be leased by the Borrower to TEAM Academy Charter School, Inc., a KIPP-affiliated public New Jersey charter school (the School ). The School received its charter from the State of New Jersey in A renewal and expansion of the School s charter was approved in 2006, with a further expansion approval in 2009 and a second renewal and expansion approval in 2011 for a five-year term. The School currently operates six school campuses located in Newark, New Jersey, including the Mortgaged Property. The Project Facilities consist of TEAM Academy and Rise Academy, both of which enroll students in grades 5-8, and the Field Property, on which athletic fields for use by all schools under the School s charter and parking will be constructed. Other school facilities operated by the School enroll students in grades K-4 and For more information on the Borrower and the School, see APPENDIX A hereto. The Borrower is required, pursuant to the provisions of the Loan Agreement and a Series 2013 Note from the Borrower to the Authority (the Note ), to make payments sufficient to pay the principal of and premium, if any, and interest on the Bonds when due. The Borrower s obligations under the Loan Agreement and the Note will be secured by a mortgage and security agreement in favor of the Trustee * Preliminary, subject to change 1

6 (the Mortgage ) granting a first mortgage lien in and to the Mortgaged Property to the Trustee and the Absolute Assignment of Leases (as defined herein). The Mortgaged Property will be leased to the School pursuant to separate lease agreements between the Borrower as lessor and the School as lessee (together, the Lease Agreements ), each dated as of November 1, Under the Lease Agreements, the School will agree to make lease payments to the Borrower in amounts which in total will be at least sufficient to pay the principal of, premium, if any, and interest on the Bonds when due. The obligations of the School under the Lease Agreements will be an unsecured general obligation of the School. See SECURITY FOR THE BONDS The Lease Agreements herein. The Form of Lease Agreements is attached hereto as APPENDIX E. The Field Property also will be leased to the School pursuant to a lease; however, the Field Property is not subject to the Mortgage. The Borrower, the Trustee and The Friends of TEAM Academy Charter School, A New Jersey Non-Profit Organization ( FOTA ), a New Jersey not-for-profit corporation and charitable organization formed to conduct fundraising and provide support for the School, will enter into a Support Agreement (the Support Agreement ) dated as of November 1, 2013 under which FOTA will agree to make up any deficiency if and to the extent the Trustee does not hold sufficient funds under the Indenture to pay the principal of and interest on the Bonds when due. See SECURITY FOR THE BONDS The Support Agreement herein. The Bonds will be secured by an assignment by the Authority to the Trustee of the Authority s right, title and interest in the Loan Agreement (except for certain reserved rights, including but not limited to the right to enforce certain covenants to collect certain fees and expenses and indemnification of the Authority), the Note and the Mortgage and by an Absolute Assignment of Leases and Rents by the Borrower to the Authority (the Absolute Assignment of Leases ). The Bonds are limited obligations of the Authority and will be payable solely from the payments made by the Borrower pursuant to the Loan Agreement and the Note (except to the extent payable, under certain circumstances, from proceeds of insurance, sale or condemnation awards) and by payments by the School pursuant to the Lease Agreements or by FOTA pursuant to the Support Agreement. See SECURITY FOR THE BONDS herein. THE BORROWER IS A SINGLE PURPOSE ENTITY AND IS NOT EXPECTED TO HAVE ANY OPERATIONS OR ASSETS OTHER THAN THE PROJECT FACILITIES. EXCEPT TO THE EXTENT SET FORTH IN THE SUPPORT AGREEMENT, NEITHER FOTA NOR ANY OF ITS AFFILIATES IS OBLIGATED TO MAKE PAYMENTS WITH RESPECT TO THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS. THE STATE OF NEW JERSEY IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE OF NEW JERSEY IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR REDEMPTION PREMIUM, IF ANY, OF OR INTEREST ON THE BONDS. THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY OUT OF THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS OF THE AUTHORITY PLEDGED UNDER THE INDENTURE, AND FROM ANY AMOUNTS OTHERWISE AVAILABLE THEREUNDER FOR THE PAYMENT OF THE BONDS. THE BONDS DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. THE AUTHORITY HAS NO TAXING POWER. If and when included in this Official Statement, the words expects, forecasts, projects, intends, anticipates, estimates, assumes, and analogous expressions are intended to identify forward-looking statements and such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those that have been projected. Such 2

7 risks and uncertainties include, among others, changes in economic conditions and various other events, conditions and circumstances, many of which are beyond the control of the Borrower, the School or the Authority. Such forward-looking statements speak of events, conditions and circumstances only as of the date of this Official Statement. The Borrower, the School and the Authority disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any changes in their expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. This Official Statement contains descriptions, summaries or forms of, as may be appropriate, among other matters, the Authority, the Borrower, the School, the Bonds, the Project, the Indenture, the Loan Agreement, the Note, the Mortgage, the Lease Agreements, the Absolute Assignment of Leases and the Support Agreement. Such descriptions and information do not purport to be comprehensive or definitive. Definitions of certain words and terms used in this Official Statement have the meaning ascribed to such terms in the Loan Agreement or the Indenture. All references herein to the Indenture, the Loan Agreement, the Note, the Mortgage, the Lease Agreements, the Absolute Assignment of Leases and the Support Agreement are qualified in their entirety by reference to such documents, and references herein to the Bonds are qualified in their entirety by reference to the form thereof included in the Indenture. Copies of such documents will be available for inspection at the corporate trust office of the Trustee in New York, New York, after delivery of the Bonds. The forms of the Loan Agreement, the Indenture and the Lease Agreements are attached to this Official Statement as Appendices C, D and E, respectively. THE AUTHORITY The Authority was established in 1974 as a public body corporate and politic, constituting an instrumentality of the State of New Jersey, exercising public and essential governmental functions, empowered by the Constitution and laws of the State, including specifically, The New Jersey Economic Development Authority Act, P.L. 1974, Chapter 80, as amended and supplemented ( Act ). The Act authorizes the Authority to assist in various ways in financing the cost of acquiring, constructing, improving and equipping projects, including machinery and equipment, for the manufacturing, processing and assembling of raw materials or manufactured products, for research, office, industrial or commercial facilities, or for the control, abatement or prevention of land, sewer, water, air, noise or general environmental pollution deriving from the operation of public utilities, industry, manufacturing, warehousing, commercial, office and research facilities. In order to discharge its responsibilities and fulfill the purposes mentioned above, the Authority is authorized to issue and sell bonds and notes for these purposes, including the Bonds herein described. The Authority consists of thirteen members and three alternate members. Of the thirteen members, an officer of the Executive Branch of the State of New Jersey appointed by the Governor, the Commissioner of Labor and Workforce Development, the Commissioner of Banking and Insurance, the Commissioner of Department of Environmental Protection, and the State Treasurer are ex-officio members and the remaining eight are public members, appointed by the Governor, all for terms of three years. In addition, a public member of the State Economic Recovery Board established pursuant to section 36 of P.L.2002,c.43(C.52:27BBB-36) appointed by the board, shall serve as a non-voting, ex-officio member of the Authority. Alfred C. Koeppe is a public member and Chairman of the Authority. The Act, as amended on July 18, 2000, provides that the appointment of new public members shall be as follows: there shall be eight public members, two public members (who shall not be legislators) are appointed by the Governor upon recommendation of the Senate President, and two public members (who shall not be legislators) are appointed by the Governor upon recommendation of the Speaker of the General Assembly, and four public members shall be appointed by the Governor. The appointments of the eight public members shall be as follows: the two members appointed upon the recommendation of the Senate President and the two members appointed upon the recommendation of the Speaker of the General Assembly shall serve terms of three years; 3

8 two members shall serve terms of two years and two members shall serve terms of one year. There shall be three alternate members. Of the three alternate members, one alternate member (who shall not be a legislator) is appointed by the Governor upon recommendation of the Senate President, one alternate member (who shall not be a legislator) is appointed by the Governor upon recommendation of the Speaker of the General Assembly, and one alternate member shall be appointed by the Governor. The appointments of the alternate members shall be as follows: the alternate member appointed upon the recommendation of the Senate President shall serve a term of three years; the alternate member appointed upon the recommendation of the Speaker of the General Assembly shall serve a term of two years and one alternate member shall serve a term of one year. The executive staff of the Authority includes professionals in the fields of industrial and commercial development and management, finance and mortgage lending. Michele A. Brown is the Chief Executive Officer and Timothy J. Lizura is the President and Chief Operating Officer. 990). The Authority maintains offices at 36 West State Street, Trenton, New Jersey (P.O. Box THE AUTHORITY HAS NOT REVIEWED OR APPROVED, AND DOES NOT REPRESENT OR WARRANT IN ANY WAY, THE ACCURACY OR COMPLETENESS OF ANY OF THE INFORMATION SET FORTH IN THIS OFFICIAL STATEMENT (OTHER THAN THE STATEMENTS AND INFORMATION SET FORTH UNDER THE CAPTION THE AUTHORITY AND UNDER THE CAPTION LITIGATION INSOFAR AS SUCH STATEMENTS AND INFORMATION RELATE TO THE AUTHORITY). THE SCHOOL AND THE PROJECT The School currently operates six school campuses, including the Mortgaged Property and four other school facilities, all located in Newark, New Jersey. The Project Facilities consist of (i) TEAM Academy, located at 85 Custer Avenue, and Rise Academy, located at 21 Ashland Street, both of which enroll students in grades 5-8, and (ii) the Field Property, located adjacent to 21 Ashland Street, which consists of land on which athletic fields for use by all of the School s students and parking will be constructed. Proceeds of the Bonds will finance the acquisition of the existing TEAM Academy and Rise Academy campuses and construction and renovation of buildings located on such campuses, completion of site work, the acquisition of the Field Property, funding a debt service reserve fund for the Bonds and funding certain costs of issuing the Bonds. Construction of the athletic fields to be located on the Field Property is expected to be financed with proceeds of the Authority s $14,635,000 Qualified School Construction Bond (TEAM Academy Charter School, Inc. Project), Series While the Field Property is part of the Project Facilities and will be leased by the Borrower to the School pursuant to a lease, it is not subject to the Mortgage or the Absolute Assignment of Leases. The Mortgaged Property will be leased by the Borrower to the School pursuant to the Lease Agreements. The four other school facilities operated by the School, the Field Property, and future locations expected to be operated by the School, are not subject to the Lease Agreements. For more information on the School and the Project, see APPENDIX A hereto 4

9 ESTIMATED SOURCES AND USES OF FUNDS Set forth below are the estimated sources and uses of funds in connection with the Project: SOURCES Par amount of Bonds Equity Contribution USES Costs of the Project Debt Service Reserve Fund Costs of Issuance * * Includes Authority Application Fee, Bond Counsel fees, Underwriter s Discount, Underwriter s Counsel fees, Trustee and Trustee s Counsel fees, Borrower s and School s Counsel fees, title insurance premium, printing costs and other miscellaneous costs associated with the issuance of the Bonds. DEBT SERVICE SCHEDULE The following table sets forth the amounts required to make debt service payments with respect to the Bonds, including principal due at maturity, and interest. Period Ending ([ ]) Principal Interest Total Debt Service 5

10 THE BONDS General Description The Bonds will be dated the date of issuance of the Bonds and will bear interest from that date at the rates and mature on the dates set forth on the inside front cover page of this Official Statement. The Bonds are issued pursuant to Resolutions adopted by the Authority on June 11, 2013, and August 13, 2013, as may be amended by the Authority prior to issuance of the Bonds, and the terms of the Indenture. The Bonds are payable (except to the extent payable from the proceeds of the Bonds and the investment earnings thereon and under certain circumstances, the net proceeds of insurance or condemnation awards) as to principal, premium, if any, and interest, solely from the payments to be made to the Authority under the Loan Agreement and the Note. Pursuant to the Loan Agreement, the proceeds from the sale of the Bonds will be loaned by the Authority to the Borrower for the purpose of providing funds for the financing of the Project. The Bonds are all issued under and are equally and ratably secured by, and entitled to the protection of, the Indenture. The obligations created under the Loan Agreement and the Note are limited obligations of the Borrower secured solely by the Mortgage and the Absolute Assignment of Leases. See SECURITY FOR THE BONDS herein. The Bonds are issuable as book entry only bonds registered in the name of Cede & Co. in minimum denominations of $25,000 or any integral multiple of $5,000 in excess thereof. Interest will be payable semi-annually on the first day of each April and October (each an Interest Payment Date ), beginning on April 1, 2014 until the final maturity of the Bonds. Interest on the Bonds will be computed on the basis of a 360-day year composed of twelve 30-day months. Interest payments (other than the final payment of interest due at the maturity or redemption of the Bonds) will be mailed by the Trustee, as Paying Agent (the Paying Agent ), on the payment date to each registered Holder of the Bonds as it appears on the registration books of the Authority maintained by the Trustee on the fifteenth (15 th ) day of the month next preceding any Interest Payment Date (the Record Date ), at the address listed for such Holders on such registration books. Upon written request received not later than the applicable Record Date, any holder of Bonds aggregating $1,000,000 or more shall be entitled to receive interest payments from the Trustee by wire transfer. The final payment of principal or Redemption Premium, if any, will be payable at the corporate trust office of the Trustee or such other place as the Trustee and the registered Holder of the Bond may agree, upon surrender of the Bond for cancellation. The Trustee is the registrar and Paying Agent for the Bonds. Payments of principal will be made at the corporate trust office of the Paying Agent in New York, New York, or at the office designated for such payment by the Paying Agent or any successor Paying Agent, upon proper presentation of the Bonds. A change in the registered owner of the Bonds can only be effected by presenting the Bonds, in accordance with the provisions of the Indenture, to the Trustee at its office in New York, New York (or such other office of which the Trustee or any successor registrar shall notify the Holders), together with the name, address and tax identification number of the new registered Holder. If any Bond is mutilated, lost, stolen or destroyed, the Trustee will deliver, subject to the provisions of the Indenture, a new bond of like series and aggregate principal amount. In the case of a lost, stolen or destroyed Bond, the Trustee will require satisfactory evidence of such loss, theft, or destruction and satisfactory indemnification. The Trustee may charge the Holders of the Bonds with its fees and expenses in connection with replacing mutilated, lost, stolen or destroyed Bonds. 6

11 Sinking Fund Redemption The Bonds maturing October 1, 20, October 1, 20 and October 1, 20 are subject to mandatory sinking fund redemption prior to maturity, in part by lot, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date on October 1 in the following years and in the amounts set forth below: Bonds Maturing on October 1, Bonds Maturing on October 1, Bonds Maturing on October 1, Year Amount Year Amount Year Amount *Final Maturity In lieu of the mandatory sinking fund redemption of the Bonds in any year, the Borrower may deliver to the Trustee for cancellation, or, under certain conditions set forth in the Indenture, request the Trustee to purchase, the Bonds of the applicable maturity in an amount up to but not exceeding the principal amount of such maturity scheduled for sinking fund redemption in such year. The Trustee shall reduce the principal amount of such Bonds subject to mandatory sinking fund redemption on the next succeeding redemption date by the principal amount of the Bonds so presented for cancellation or so purchased. Optional Redemption The Bonds maturing after October 1, 2023, are subject to redemption prior to maturity at the option of the Authority, at the direction of the Borrower, in whole or in part, at any time on or after October 1, 2023 at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. Extraordinary Redemption The Bonds are subject to redemption prior to maturity, in whole or in part, at any time from surplus money in the Project Fund which is transferred to the Redemption Fund, and from insurance proceeds, condemnation awards, proceeds of conveyances in lieu of condemnation or proceeds from the sale of the Project Facilities deposited in the Redemption Fund and available for such purpose, at a Redemption Price equal to 100% of the principal amount thereof, plus accrued interest to the redemption date. Extraordinary Mandatory Redemption The Bonds are subject to extraordinary mandatory redemption in whole at a Redemption Price equal to 100% of the principal amount thereof, plus accrued interest to the Redemption Date, when, at the option of the Authority, the Authority provides written notice to the Trustee that either of the following events has occurred: 7

12 (1) the Borrower ceases to operate the Project Facilities, or ceases to cause the Project Facilities to be operated, as an authorized project under the Act for twelve (12) consecutive months, without first obtaining the prior written consent of the Authority; or (2) any representation or warranty made by the Borrower in the Loan Agreement or in any report, certificate, financial statement or other instrument furnished by the Borrower in connection with the Loan Agreement shall prove to be false or misleading in any material respect when made. Extraordinary Mandatory Redemption Upon Determination of Taxability The Bonds are subject to extraordinary mandatory redemption in whole at a Redemption Price of 100% of the principal amount thereof, plus interest accrued to the Redemption Date, after receipt by the Trustee of a notice of the occurrence of a Determination of Taxability (as defined in the Indenture). Notice of Redemption The Trustee shall cause notice of any redemption of Bonds to be mailed by first class mail to the Holders of all Bonds to be redeemed at the registered addresses appearing in the registration books. Each such notice shall (i) be mailed not more than 45 nor less than 30 days prior to the redemption date, (ii) identify the Bonds to be redeemed (specifying the CUSIP numbers, if any, assigned to the Bonds) (iii) specify the redemption date, the Redemption Price and, if less than all of any particular Bond is to be redeemed, the principal amount so to be redeemed, (iv) state that on the Redemption Date the Bonds called for redemption will be payable at the corporate trust office of the Trustee, that from that date interest will cease to accrue, that no representation is made as to the accuracy or correctness of the CUSIP numbers (if any) printed therein or on the Bonds, and (v) provide any other descriptive information which may be necessary in order to identify the Bonds to be redeemed, including without limitation the original issuance date, maturity date and interest rate applicable to such Bonds. No defect affecting any Bond, whether in the notice of redemption or mailing thereof (including any failure to mail such notice), shall affect the validity of the redemption proceedings for any other Bonds. If, at the time of mailing of notice of any optional redemption, or any redemption described under Extraordinary Mandatory Redemption above, the Borrower shall not have deposited with the Trustee moneys sufficient to redeem all the Bonds called for redemption, the redemption notice shall state that it is conditional on the deposit of the redemption moneys with the Trustee not later than the Redemption Date, and such notice shall be of no effect unless such moneys are so deposited. If there shall be so called for redemption less than all of a Bond, the Authority shall execute and the Trustee shall authenticate and cause to be delivered, upon the surrender of such Bond, without charge to the owner thereof, for the unredeemed balance of the principal amount of the Bond so surrendered, Bonds of like series, designation, interest rates and maturities in any of the authorized denominations. On or before the redemption date specified in the notice above provided for, there shall be deposited with the Trustee an amount of cash sufficient to effect the redemption of the Bonds specified in such notice, except that such amount may be reduced to the extent that moneys then held by the Trustee under any of the provisions of the Indenture are available for such redemption. All moneys deposited with the Trustee, or set apart by the Trustee under the provisions of the Indenture, for the redemption of Bonds shall be held in trust for the account of the respective registered owners of the Bonds to be redeemed and applied in accordance with the provisions of the Indenture. On the redemption date designated in such notice, the principal amount of each Bond so to be redeemed, together with the accrued interest thereon to such date, and such premium, if any, as is due and payable on such Bond upon such redemption, shall become due and payable; and from and after such date (such notice having been given in accordance with the provisions of the Indenture and such deposit 8

13 having been made or moneys set apart as aforesaid), then, notwithstanding that any Bonds so called for redemption shall not have been surrendered, no further interest shall accrue on any such Bond (or on the portion thereof so to be redeemed). From and after such date of redemption (such notice having been given in accordance with the provisions of the Indenture and such deposit having been made or moneys set apart as aforesaid), or from and after the date upon which such notice is mailed, if such notice shall state that moneys to effect such redemption have been deposited with or set apart by the Trustee, all such Bonds or such portions thereof, as the case may be, insofar as such deposit shall have been made or moneys set apart as aforesaid, shall be deemed to have been paid in full as between the Authority and the respective Bondholders and shall no longer be deemed to be Outstanding thereunder, and the Authority shall be under no further liability in respect thereof. If notice of redemption has been duly mailed or duly waived by the Holders of all Bonds called for redemption and the redemption moneys have been duly deposited with the Trustee, then in either such case the Bonds called for redemption shall be payable on the redemption date at the applicable Redemption Price. Payment of the Redemption Price together with accrued interest shall be made by the Trustee, out of Revenues or other funds deposited for the purpose, to or upon the order of the Holders of the Bonds called for redemption upon surrender of such Bonds if redeemed in full. Upon the payment of the Redemption Price of Bonds being redeemed, each check or other transfer of funds issued by the Trustee for such purpose shall bear a description of the issue and maturity of the Bonds being redeemed with the proceeds of such check or other transfer. The DTC Book-Entry-Only System The following information concerning DTC and DTC s book-entry only system has been obtained from DTC. The Authority, the Borrower, the School and the Trustee make no representation as to the accuracy of such information. DTC will act as securities depository for the Bonds. The Bonds 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 certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, the Beneficial Owners of the Bonds will not receive or have the right to receive physical delivery of the Bonds, and references herein to the Bondowners or registered Owners of the Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners (as defined below) of the Bonds. 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 9

14 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 and, together with Direct Participants, the 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 and Purchase of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of a Bond ( Beneficial Owner ) is in turn to be recorded on the 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 Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds 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 Bonds 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 Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by 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 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds 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 Bonds are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in the Bonds to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, premium, if any, and interest payments on the Bonds 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 Authority or the Trustee on the payable date in accordance with their respective holdings shown 10

15 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 (or its nominee), the Trustee, the Borrower or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, and interest on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority, the Borrower or the Trustee, 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 Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Authority may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. NONE OF THE AUTHORITY, THE BORROWER, THE SCHOOL OR THE TRUSTEE SHALL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE TRUSTEE AS BEING A BONDHOLDER WITH RESPECT TO EITHER: (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT; (2) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (3) THE DELIVERY OR THE TIMELINESS OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE TO BE GIVEN TO THE OWNER OF THE BONDS; OR (4) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS BONDHOLDER. THE INFORMATION IN THIS SECTION CONCERNING DTC AND DTC S BOOK- ENTRY SYSTEM HAS BEEN OBTAINED FROM DTC. THE AUTHORITY, THE BORROWER, THE SCHOOL AND THE UNDERWRITER TAKE NO RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS THEREOF. Transfer fees. For every transfer and exchange of Bonds, owners of such Bonds requesting such transfer or exchange may be charged a sum sufficient to cover any tax, governmental charge or transfer fees that may be imposed in relation thereto, which charge may include transfer fees imposed by the Trustee, DTC or the DTC Participant in connection with such transfers or exchanges. General SECURITY FOR THE BONDS The Bonds are special, limited obligations of the Authority. There is no source of funds for payment of the Bonds except from revenues received under the Loan Agreement, the Lease Agreements, the Mortgage, the Absolute Assignment of Leases and the Support Agreement and certain funds held under the Indenture. The Borrower has no operations and no assets other than the Project Facilities. The Borrower s sole source of revenue to pay obligations under the Loan Agreement will be payments from the School under the Lease Agreements. The Lease Agreements Pursuant to the Lease Agreements, the Borrower will lease the Mortgaged Property to the School and the School will make bi-monthly payments of base rent in amounts equal, collectively, to 120% of the 11

16 debt service on the Bonds. The base rent payments will be made directly to the Trustee for the account of the Borrower and will be deposited to the Revenue Fund established under the Indenture. Provided that no event of default has occurred and is continuing under the Indenture or the Loan Agreement, the Trustee will return to the Borrower on October 1 of each year any surplus funds in the Revenue Fund not needed to pay debt service on the Bonds. The School s primary source of revenue is from payments made to the School by Newark Public Schools equal to the applicable per pupil payment, as described in Appendix A hereto. See also RISK FACTORS State Funding of Charter Schools herein. See Appendix E hereto for the Form of the Lease Agreements. Pursuant to the Absolute Assignment of Leases, as security for the Borrower s obligations under the Loan Agreement and the Note, the Borrower will irrevocably, absolutely and unconditionally assign to the Authority, as security for the Bonds, all of its rights, title, estates and interest in and to (i) the Lease Agreements; (ii) all proceeds from the cancellation, surrender, sale or other disposition of the Lease Agreements; (iii) the right to collect and receive rental payments paid by the School under the Lease Agreements; and (iv) the right to enforce and exercise all terms and conditions of the Lease Agreements. The Mortgage Pursuant to the Mortgage, the Borrower will grant to the Authority a first mortgage lien on the Mortgaged Property as security for the Borrower s obligations to make payments under the Loan Agreement and the Note. The Mortgage will be assigned by the Authority to the Trustee to secure the Bonds. Simultaneously with the issuance and delivery of the Bonds, the Borrower will deliver a mortgagee title insurance policy covering all of the Mortgaged Property under the Mortgage and insuring title to the Mortgaged Property and the lien of the Mortgage in an amount not less than the principal amount of the Bonds. The Support Agreement Pursuant to the Support Agreement, FOTA, upon written notice from the Trustee that insufficient funds are available in the Debt Service Fund to pay the full amount of principal of and/or interest on the Bonds on any payment date, will pay to the Trustee for deposit into the Debt Service Fund not later than ten days prior to such payment date an amount such that the total amount of funds on deposit in the Debt Service Fund shall be sufficient to pay the principal of and/or interest on the Bonds due on such payment date. Debt Service Reserve Fund The Trustee shall establish under the Indenture a Debt Service Reserve Fund into which the Trustee shall initially deposit an amount equal to the initial Reserve Fund Requirement for the Bonds. Amounts on deposit in the Debt Service Reserve Fund shall be invested pursuant to the Indenture. If any withdrawal is made under the Indenture, the amount of the withdrawal shall be restored by the Borrower on or prior to the next Interest Payment Date following the Interest Payment Date on which the withdrawal is made. If the value of the assets in the Debt Service Reserve Fund, determined in accordance with the Indenture, is less than 95% of the Reserve Fund Requirement (except to the extent that such deficiency relates to any withdrawal), the difference between such Reserve Fund Requirement and the value of the Debt Service Reserve Fund shall be restored by deductions from the Revenue Fund in approximate equal monthly amounts so as to restore the Debt Service Reserve Fund to its proper value on or prior to the next succeeding Interest Payment Date following the date of such valuation. Additional Bonds Under the Loan Agreement and the Indenture, Additional Bonds may be issued by the Authority upon compliance with specified requirements and limitations, for the purpose of providing funds for the 12

17 costs of undertaking or completing the Project or the cost of refunding or refinancing all or a portion of the Outstanding Bonds of any one or more series. Such Additional Bonds, if issued, will be equally and ratably secured with the Bonds (excluding, however, the Debt Service Reserve Fund) with respect to the Mortgage, without preference, priority or distinction of any bonds or indebtedness over any other thereof. THE STATE OF NEW JERSEY IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE OF NEW JERSEY IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR REDEMPTION PREMIUM, IF ANY, OF OR INTEREST ON THE BONDS. THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY OUT OF THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS OF THE AUTHORITY PLEDGED UNDER THE INDENTURE AND FROM ANY AMOUNTS OTHERWISE AVAILABLE THEREUNDER FOR THE PAYMENT OF THE BONDS. THE BONDS DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. THE AUTHORITY HAS NO TAXING POWER. Pursuant to the Indenture and to secure the performance of its obligations thereunder, the Authority has pledged and assigned to the Trustee substantially all of its rights under the Loan Agreement, including the present and continuing right to make claim for, collect and receive the revenues and other amounts payable thereunder. The Authority has, however, retained certain of its rights under the Loan Agreement including, but not limited to, the right to enforce all public purpose covenants thereunder and to cause the Bonds to be redeemed for any breach of such public purpose covenants. RISK FACTORS The following discussion of some of the risk factors associated with the Bonds is not, and is not intended to be, exhaustive, and such risks are not necessarily presented in the order of their magnitude. Sufficiency of School Revenues The Bonds, together with any Additional Bonds, are secured by and payable solely from a pledge of certain funds held under the Indenture and certain payments to be made by the Borrower under the Loan Agreement. The Borrower is a single purpose entity and is entirely dependent on payments from the School under the Lease Agreements to make payments under the Loan Agreement. Based on present circumstances (i.e., its charter and operating history), the School believes it will generate sufficient revenues to meet its obligations under the Lease Agreements. However, the School s Charter may be terminated or not renewed, or the basis of the assumptions utilized by the School to formulate this belief may otherwise change and no representation or assurance can be made that the School will continue to generate sufficient revenues to meet its obligations under the Lease Agreements. Economic and Other Factors Future economic and other factors may adversely affect the School s revenues and expenses and, consequently, the School s ability to make payments under the Lease Agreements. Factors that could have such adverse effects include, but are not limited to: decreases in the number of students seeking to attend the School at optimum levels for each grade level; the ability of the School to provide the education desired and accepted by the population served; demographic changes or economic developments in the affected service area, including inflation and interest rates; diminution of the School s reputation; competition from other educational institutions, including other charter schools, private schools and public schools; lessened ability of the School to attract and retain qualified teachers and staff at forecasted salaries; increased costs associated with technological advances; changes in government regulation of the education industry or in the New Jersey charter school statutes; decrease in per-student funding amounts by the State; future claims and torts (for accidents or any other reason) at the 13

18 School and the extent of insurance coverage for such claims; and the occurrence of natural disasters, such as floods. Funding of Charter Schools Funding for charter school students comes from the various school districts where the charter school students reside. School districts receive their funding from the State. If funds are not allocated by the State, or are reduced for any reason or delayed, either at the State or school district level, it could have a material adverse affect on the operations of the School. See APPENDIX A New Jersey Charter Schools TEAM Revenues: Per Pupil Funding for information regarding historic levels of funding. The School is the beneficiary of federal subsidies from programs such as Qualified School Construction Bonds and Qualified Zone Academy Bonds, and also may benefit in the future from additional Qualified School Construction Bonds and Qualified Zone Academy Bonds and other federal subsidies such as New Markets Tax Credit financing. These programs may be impacted by sequestration and any shutdown of the federal government. Revocation or Non-Renewal of Charter Unless renewed, the School s Charter will expire on June 30, The School s Charter may be terminated at any time if the School is not in substantial compliance with the Charter or any relevant provision of New Jersey law. In the event that the School s Charter is revoked or not renewed, the School would be forced to cease operations and the Lease Agreements would terminate. Competition for Students The School competes for students with other public schools, charter schools and private schools. There can be no assurance that the School will attract and retain the number of students that are needed to produce the revenues that are necessary to make sufficient Lease payments to pay the debt service on the Bonds. Several public and charter schools are located in close proximity to the School. See APPENDIX A Competition for information regarding other schools in the School s service area. Reliance on Projections The projections of revenues and expenses set forth in APPENDIX A were prepared by the School and have not been independently reviewed or verified by any other party. Such projections are derived from the actual operation of the School, to the extent possible, and from the School s assumptions about the student enrollment, funding and expenses. There can be no assurance that the actual enrollment revenues, funding and expenses for the School will be consistent with the projections contained herein. Factors Associated with Education There are a number of factors affecting schools in general, including the School, which could have an adverse effect on the School s financial position and ability to make the payments required under the Lease Agreements. These factors include, but are not limited to, increasing costs of compliance with Federal or state regulatory laws or regulations, including, without limitation, laws or regulations concerning environmental quality, work safety and accommodation of persons with disabilities; any unionization of the School s workforce with consequent impact on wage scales and operating costs of the School; changes in existing statutes pertaining to the powers of the School; decline of the School s reputation, the faculty or student body, either generally or with respect to certain academic or extracurricular areas; and the disruption of the School s operations by real or perceived threats against the 14

19 School, the employees or the students. The School cannot assess or predict the ultimate effect of these factors on its operations or its ability to make the required rental payments under the Lease Agreements. Key Management The creation of, and the philosophy of teaching in, charter schools generally initially may reflect the vision and commitment of a few key persons on the board of trustees and/or the upper management of the school (the Key Trustees/Managers ). Loss of such Key Trustees/Managers, and the inability of the School to find comparable qualified replacements, could adversely affect any of the School s operations or financial results, however the School operates its educational program as an affiliate of KIPP (Knowledge is Power Program) and adheres to KIPP management philosophies. School management personnel receive training through KIPP programs. Value of Project Facilities May Fluctuate The value of the Project Facilities at any given time will be directly affected by market and financial conditions which are not in the control of the parties involved in the transaction. Real property values can fluctuate substantially depending in large part on the state of the economy. There is nothing associated with the Project Facilities which would suggest that its value would remain stable or would increase if the general values of property in the community were to decline. Upon a default under the Mortgage, no assurances can be given that the Trustee would be able to lease the Mortgaged Property, or the rental amount that would be payable thereunder, or that the amount that the Trustee would otherwise receive in connection with a foreclosure of the Mortgaged Property would be sufficient to pay the principal of, premium, if any, or interest on the Bonds. Inability to Liquidate or Delay in Liquidating the Mortgaged Property. Upon the occurrence and continuance of an event of default, the Trustee shall be entitled to exercise certain rights, including the right to possession of, and the right to sell the Mortgaged Property pursuant to a foreclosure sale under the Mortgage. The Mortgaged Property is intended to be used solely for educational purposes of the School. Because of such use, a potential purchaser of the Bonds should not anticipate that a transfer of the Mortgaged Property could be accomplished rapidly, or at all. Any sale of the Mortgaged Property would require compliance with the laws of the State of New Jersey applicable thereto. Such compliance might be difficult, time-consuming and expensive. Any delays in the ability of the Trustee to foreclose on the Mortgage would likely result in delays in the payment of the Bonds. The Mortgaged Property is designed for use as school facilities and may not be readily adaptable to other uses. As a result, in the event of a sale of the Mortgaged Property, the number of uses that could be made of the property, and the number of entities which would be interested in purchasing the Mortgaged Property, could be limited, and the sale price would thus be adversely affected. The location of the Mortgaged Property might also limit the number of potential purchasers. The ability of the Trustee to sell the Mortgaged Property to third parties, thereby liquidating the investment, would be limited as a result of the nature of the Mortgaged Property. For these reasons, no assurance can be made that the amount realized upon any sale of the Mortgaged Property would be fully sufficient to pay and discharge the Bonds. In particular, there can be no representation that the cost of the property included in the Mortgaged Property would constitute a realizable amount upon any forced sale thereof. In the event the Trustee took possession of the Mortgaged Property, the Mortgaged Property might be subject to real property taxation. Risks of Real Estate Investment General. Development, ownership and operation of real estate, such as the Project Facilities, involves certain risks, including the risk of adverse changes in general economic and local conditions, 15

20 including population decreases; uninsured losses; operating deficits and mortgage foreclosure; lack of attractiveness of the property to students/parents; cyclical nature of the real estate market; adverse changes in neighborhood values; and adverse changes in zoning laws, other laws and regulations and real property tax rates (to the extent such taxes are applicable to the Project Facilities). Such losses also include the possibility of fire or other casualty or condemnation. If the Project Facilities, or any portion thereof, were not available during the period of restoration, such unavailability could adversely affect the School s ability to make payments under the Lease Agreements. Changes in general or local economic conditions and changes in interest rates and the availability of mortgage or other funding may render the sale or refinancing of the Project Facilities difficult or unattractive. Limitations of Appraisals. Appraisals are estimates of value and not an assurance of what any particular property would bring in sale. Appraisals also are subject to numerous other limitations set forth therein. Potential investors should not assume that the values represent reliable estimates of what the Project Facilities would bring in liquidation following an event of default. Damage, Destruction or Condemnation. Although the Borrower will be required to obtain certain insurance against damage or destruction as set forth in the Loan Agreement and the Mortgage, as applicable, there can be no assurance that any portion of the Project Facilities will not suffer losses for which insurance cannot be or has not been obtained or that the amount of any such loss, or the period during which the Borrower or the School, as a result of damage or destruction to the Project Facilities, cannot generate revenues, will not exceed the coverage of such insurance policies. If the Project Facilities, or any portion thereof, are damaged or destroyed, or are taken in a condemnation proceeding, the proceeds of insurance or any such condemnation award for the Project Facilities, or any portion thereof, must be applied as provided in the Loan Agreement to restore or rebuild the Project Facilities or to redeem the Bonds. There can be no assurance that the amount of revenues available to restore or rebuild the Project Facilities, or any portion thereof, or to redeem the Bonds will be sufficient for that purpose, or that any remaining portion of the Project Facilities will generate revenues sufficient to pay the expenses of the Borrower and the debt service on the Bonds remaining outstanding. Potential Environmental Risks. Phase I Environmental Site Assessments with respect to the Mortgaged Property were performed in October The Assessment with respect to the Custer Avenue property indicated the presence of three underground storage tanks, which the Borrower has arranged to have removed for an estimated cost of $21,600. No other recognized environmental conditions were noted on the properties. The value of the Mortgaged Property as security for the Bonds could be reduced by environmental problems, including environmental problems discovered in the future. There are other potential risks relating to environmental liability associated with the ownership or operation of, or secured lending with respect to, any real property. If hazardous substances are found to be located on real property, owners or operators of, or secured lenders regarding, such property may be held liable for costs and other liabilities relating to such hazardous substances on a strict liability basis. Potential Effects of Bankruptcy If the Borrower were to file a petition for relief (or if a petition were filed against either such entity as debtor) under the United States Bankruptcy Code, 11 U.S.C. 101 et. seq., as amended, or other similar laws that protect creditors, the filing could operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the property of the debtor. If the bankruptcy court so ordered, the Borrower s property and revenues could be used for the benefit of the Borrower despite the claims of its creditors (including the owners of the Bonds). In a bankruptcy proceeding, the Borrower could file a reorganization plan for the adjustment of its debts which modifies the rights of creditors generally or the rights of any class of creditors, secured or unsecured (including the owners of the Bonds). The plan, when confirmed by the court, binds all 16

21 creditors who had notice or knowledge of the plan and discharges all claims against the Borrower, as the case may be, provided for in the plan. No plan may be confirmed unless, among other conditions, the plan is in the best interest of creditors, is feasible and has been accepted by each class of claims impaired thereunder. The Borrower is prohibited from creating secured creditors except as provided in the Loan Agreement. Each class of claims has accepted the plan if at least two-thirds in dollar amount and more than one-half the number of the allowed claims of the class that are voted with respect to the plan are cast in its favor. Even if the plan is not so accepted, it may be confirmed if the court finds that the plan is fair and equitable with respect to each class of non-accepting creditors impaired thereunder and does not discriminate unfairly. Tax-Exempt Status Under present Federal and State law, regulations and rulings, the income of 501(c)(3) organizations, such as the Borrower and the School, is exempt from Federal and New Jersey income tax, except for any unrelated business income. Failure of the Borrower or the School to maintain its status as a 501(c)(3) organization or changes in such current laws, or the regulations, rulings or interpretations thereof could adversely affect the Borrower or the School, as applicable. Such failure would adversely affect the exclusion of interest on the Bonds from income for federal income taxation purposes. Moreover, the ongoing tax-exempt status of interest on the Bonds is conditioned, under relevant provisions of the Code, on compliance by the Borrower and the School with various requirements set forth, inter alia, in Sections 145 and 148 of the Code, requiring, among other things, that the Project Facilities be owned throughout the term of the Bonds by a governmental unit or an organization described in Section 501(c)(3) of the Code, that not more than five percent of the proceeds of the Bonds (inclusive of proceeds applied to defray issuance costs) be applied to any private business use, any use giving rise to unrelated business income, or other uses inconsistent with the charitable purposes of the Borrower or the School, as a 501(c)(3) organization, and that certain investment earnings in respect of the Bonds be subject to non-arbitrage requirements imposed under Section 148 of the Code, including requirements to perform certain rebate computations and to make certain rebate payments of arbitrage earnings all as further provided in applicable statues, regulations, rulings and decisions. Failure to comply with such requirements could result in the loss of the tax-exempt status of interest on the Bonds to the owners thereof, and such interest could become taxable to such owners retroactive to the date of issuance of the Bonds. Other Changes in Federal and State Tax Law From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the marketability or market value of the Bonds or otherwise prevent holders of the Bonds from realizing the full benefit of the tax exemption of interest on the Bonds. Further, such proposals may impact the marketability or market value of the Bonds simply by being proposed. Lack of Secondary Market Although the Underwriter intends to engage in secondary market trading of the Bonds (subject to applicable state securities laws), the Underwriter is not obligated to repurchase any of the Bonds at the request of the owners thereof and cannot assure that there will be a continuing secondary market in the Bonds. In the secondary market for securities similar to the Bonds, the difference between the bid and asked price may be greater than the bid and asked spread for more traditional types of municipal securities. It is not expected that an active trading market for the Bonds will ever develop. 17

22 TAX MATTERS In the opinion of Wolff & Samson PC, West Orange, New Jersey, Bond Counsel, assuming continuing compliance by the Authority, the Borrower and the School with certain tax covenants described herein, under existing law, interest on the Bonds (i) is not includable in gross income for Federal income tax purposes under current law, (ii) is not an item of tax preference under Section 57 of the Code for purposes of computing the alternative minimum tax; however, for Bonds held by corporate taxpayers interest on the Bonds is included in adjusted current earnings, which is used as an adjustment in determining the Federal alternative minimum tax for certain corporations. No opinion is expressed regarding other federal tax consequences arising with respect to the Bonds. In addition, interest on the Bonds received or accrued in any taxable year by certain foreign corporations may be included in computing the dividend equivalent amount of such corporations subject to the branch profits tax imposed on such corporations under Section 884 of the Code. Further, interest on the Bonds may be subject to federal income taxation under Section 1375 of the Code for S corporations which have Subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross revenues of such S corporations is passive investment income. Ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers including, without limitation, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, and taxpayers, including banks, thrift institutions and other financial institutions subject to Section 265 of the Code, who may be deemed to have incurred or continued indebtedness to purchase or to carry the Bonds. Bond Counsel expresses no opinion as to any such consequences and prospective purchasers of the Bonds who may be subject to such collateral consequences should consult their tax advisors. In rendering its opinion, Bond Counsel has relied on the Authority s, the School s and the Borrower s covenants, contained in the Indenture, the Loan Agreement, the Lease Agreements and in the arbitrage certificates, that they will comply with the applicable requirements of the Code, relating to, inter alia, the use and investment of proceeds of the Bonds and rebate to the United States Treasury of specified arbitrage earnings, if any. Failure of the Authority, the School or the Borrower to comply with such covenants could result in the interest on the Bonds being subject to federal income tax from the date of issue. Bond Counsel has not undertaken to monitor compliance with such covenants or to advise any party as to changes in the law after the date of issuance of the Bonds that may affect the tax-exempt status of the interest. Ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers including, without limitation, life insurance companies, holders of an interest in a financial asset securitization investment trust, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits and individuals who otherwise qualify for the earned income credit. The Code denies the earned income credit to an individual who is otherwise eligible if the aggregate amount of disqualified income of the taxpayer for the taxable year exceeds certain limits set forth in Sections 32(i) and (j) of the Code. Interest on the Bonds will constitute disqualified income for this purpose. The Code also provides that for years beginning after December 31, 2010 the earned income credit is phased out if the modified adjusted gross income of the taxpayer exceeds certain amounts. Interest on the Bonds will be included in determining the modified adjusted gross income of the taxpayer. In addition, attention is called to the fact that Section 265(b)(1) of the Code eliminates the interest deduction otherwise allowable with respect to indebtedness deemed incurred by banks, thrift institutions and other financial institutions to purchase or to carry tax-exempt obligations acquired after August 7, 1986 other than qualified tax-exempt obligations as defined in Section 265(b)(3) of the Code. The Bonds do not constitute qualified tax-exempt obligations. 18

23 Owners of the Bonds should consult their own tax advisors as to the applicability and effect on their federal income taxes of the alternative minimum tax, the branch profits tax and the tax on passive investment income of corporations, as well as the applicability and effect of any other collateral federal income tax consequences. Bond Counsel is also of the opinion that interest on the Bonds and any gain from the sale thereof are not includable in the gross income of the owners thereof under the New Jersey Gross Income Tax Act, as presently enacted and construed. NO ASSURANCE CAN BE GIVEN THAT PENDING OR FUTURE LEGISLATION OR AMENDMENTS TO THE CODE IF ENACTED INTO LAW, OR ANY PROPOSED LEGISLATION OR AMENDMENTS TO THE CODE, WILL NOT ADVERSELY AFFECT THE VALUE OF, OR THE TAX STATUS OF INTEREST ON, THE BONDS. ALL POTENTIAL PURCHASERS OF THE BONDS SHOULD CONSULT WITH THEIR TAX ADVISORS IN ORDER TO UNDERSTAND THE IMPLICATIONS OF THE CODE. CONTINUING DISCLOSURE In order to assist the Underwriter in complying with the requirements of Rule 15c2-12 (the Rule ) promulgated by the Securities and Exchange Commission, the Borrower, the School and FOTA will enter into a Continuing Disclosure Agreement. The proposed form of the Continuing Disclosure Agreement is attached to this Official Statement as APPENDIX G. A failure by the Borrower, the School or FOTA to provide any information required under the Continuing Disclosure Agreement thereunder shall not constitute an Event of Default under the Indenture, the Loan Agreement, the Lease Agreements or any other document related to the issuance of the Bonds. The sole and exclusive remedy for such failure shall be an action by or on behalf of the Holders of the Bonds to compel specific performance of the obligations under the Continuing Disclosure Agreement. None of the Borrower, the School or FOTA have entered into any prior continuing disclosure undertakings. LITIGATION There is no action, suit or proceeding at law or in equity pending or, to the Authority s knowledge, threatened against the Authority to restrain or enjoin the issuance or sale of the Bonds or in any way contesting the validity or affecting the power of the Authority with respect to the issuance and sale of the Bonds or the documents or instruments executed by the Authority in connection therewith or the existence of the Authority or the right of the Authority to finance the Project. There is no litigation of any nature pending or threatened against the Borrower or the School to restrain or enjoin completion of the Project or which would materially adversely affect the Borrower s or the School s financial condition or ability to perform their respective obligations under the documents described herein to which they are a party. LEGAL MATTERS Legal matters incident to the authorization, issuance and sale by the Authority of the Bonds will be passed upon by Wolff & Samson PC, West Orange, New Jersey, Bond Counsel. Copies of Bond Counsel s approving opinion, a form of which is attached hereto as APPENDIX F, will be available at the time of delivery of the Bonds. Certain legal matters will be passed upon for the Borrower by Hill Wallack LLP, Princeton, New Jersey and the School by Porzio, Bromberg and Newman, P.C., Morristown, New Jersey; and for the Underwriter by Ballard Spahr LLP, Philadelphia, Pennsylvania. 19

24 FINANCIAL STATEMENTS The financial statements of the School included in APPENDIX B-1 of this Official Statement and the financial statements of FOTA included in APPENDIX B-2 of this Official Statement have been audited by Scott J. Loeffler, an independent certified public accountant, in each case to the extent and for the periods indicated in the reports which appear in APPENDIX B. RATING Standard & Poor s Ratings Services, a Division of The McGraw-Hill Companies, Inc. ( Standard & Poor s ) has assigned the Bonds a rating of BBB with a stable outlook. Such rating reflects only the views of Standard & Poor s and any explanation of the significance of the rating may only be obtained from Standard & Poor s. A rating is not a recommendation to buy, sell or hold securities. There is no assurance that any rating or outlook will continue for any given period of time or that it will not be revised downward or withdrawn entirely by Standard & Poor s if in its judgment circumstances so warrant. None of the Underwriter, the Authority, the School or the Borrower has undertaken any responsibility either to bring to the attention of the owners of the Bonds any proposed change in or withdrawal of a rating of the Bonds or to oppose any such proposed change or withdrawal. A downward revision or withdrawal of such rating may have a substantial adverse effect on the market price of the Bonds. Actual changes in ratings on the Bonds will be disclosed by the Borrower as described in the proposed form of the Continuing Disclosure Agreement attached to this Official Statement as APPENDIX G. UNDERWRITING The Bonds will be purchased by the Underwriter at a purchase price of $, which represents the par amount of the Bonds, less an underwriter s discount of $. The obligation of the Underwriter to accept delivery of the Bonds is subject to various conditions contained in the purchase contract. The purchase contract provides that the Underwriter will purchase all of the Bonds if any are purchased. The Bonds may be offered and sold to certain dealers, banks and others at prices lower that the initial offering prices, and such initial offering prices may be changed from time to time by the Underwriter. TRUSTEE; CERTAIN RELATIONSHIPS Manufacturers and Traders Trust Company, the Trustee for the Bonds, and M&T Securities, Inc., which is acting as Underwriter, are both wholly owned direct subsidiaries of M&T Bank Corporation. An employee of Manufacturers and Traders Trust Company ( M&T ) is a member of the Board of Trustees of FOTA and M&T currently has other credit relationships with FOTA. The Trustee, the Underwriter and their affiliates, in the ordinary course of their respective businesses, have engaged, currently are engaged, or may in the future engage in additional financial or other transactions with the Authority, the Borrower, the School or FOTA. The Trustee assumes no responsibility for this Official Statement and has not reviewed or undertaken to verify any information contained herein. MISCELLANEOUS The references herein to the Bonds, the Indenture, the Loan Agreement, the Note, the Lease Agreements, the Mortgage, the Absolute Assignment of Leases and the Support Agreement are brief outlines of certain provisions thereof. Such outlines do not purport to be complete. For full and complete statements of such provisions, reference is made to the Bonds, the Indenture, the Loan Agreement, the 20

25 Note, the Lease Agreements, the Mortgage, the Absolute Assignment of Leases and the Support Agreement, copies of which are available for inspection at the corporate trust office of the Trustee in New York, New York. The forms of the Loan Agreement, the Indenture and the Lease Agreements are attached to this Official Statement as Appendices C, D and E, respectively. The agreement of the Authority with the owners of the Bonds is fully set forth in the Indenture, and neither advertisements of the Bonds nor this Official Statement are to be construed as constituting an agreement with the owners of the Bonds. Statements made in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended merely as such and not as representations of fact. The attached appendices are integral parts of this Official Statement and must be read together with all of the preceding information. 21

26 The delivery of this Official Statement has been duly approved by the Authority and the Borrower. Approved by: ASHLAND SCHOOL, INC. NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY By: Name: Title: By: Name: Title: TEAM ACADEMY CHARTER SCHOOL, INC. By: Name: Title: 22

27 APPENDIX A Ashland School, Inc. and TEAM Academy Charter School, Inc.

28 [ THIS PAGE INTENTIONALLY LEFT BLANK ]

29 APPENDIX A ASHLAND SCHOOL, INC. AND TEAM ACADEMY CHARTER SCHOOL, INC. Introduction TEAM Academy Charter School, Inc. ( TEAM ) currently operates a network of six public charter schools located on six separate campuses in Newark, New Jersey, with over 2,230 students enrolled in grades K-12. TEAM is supported by The Friends of TEAM Academy Charter School, A New Jersey Non-Profit Organization ( FOTA ) related to activities such as fundraising and facilities development. The New Jersey Department of Education ( NJDOE ) precludes charter schools from participating in the traditional state school facility funding program (available to traditional New Jersey school districts) and, except in certain limited circumstances, prohibits a charter school from incurring long term debt. Therefore, FOTA was organized in 2004 to support TEAM by facilitating the acquisition and financing of school facilities and also to assist with fundraising to supplement public tuition revenues. Ashland School, Inc. (the Borrower ) was organized in 2011 and is a supporting organization for FOTA to assist with facilities financing. TEAM has no affiliates but a number of single purpose entity ( SPE ) organizations, such as the Borrower, support either TEAM or FOTA. SPE purposes may include fundraising, facility financing and the acquisition and development of facilities for use by TEAM. See TEAM Supporting Entities below. The Borrower The Borrower is a New Jersey not-for-profit 501(c)(3) corporation organized for charitable and educational purposes as a supporting organization for FOTA. The Borrower was created to purchase, hold title to, improve, develop, construct, renovate, operate, lease or otherwise manage educational facilities for lease by TEAM. The Borrower is governed by a four-member Board of Trustees, three members of which are voting trustees (see Table 1). Table 1 Board of Directors (Ashland School, Inc.) Name Position Occupation Beginning Year of Service Jordan Metzger President Attorney, Cole, Schotz, Meisel, 2010 Forman & Leonard, P.A. Daniel Adan Vice President Managing Director, Perry Capital 2013 Gideon Alpert Treasurer Tax/In-house Counsel, Ingersoll Rand 2010 Hannah Richman Secretary (non-voting) Director, Friends of TEAM Schools 2011 Source: Ashland School, Inc. A-1

30 Pursuant to the Borrower s bylaws, of the three voting trustees, one shall simultaneously sit on the Board of FOTA, one shall simultaneously sit on the Board of TEAM, and one shall not simultaneously sit on the Board of, or be an employee of, FOTA, TEAM or any other affiliated entity. The Borrower s immediate mission is to enter into long-term, tax-exempt financing for the acquisition of two of TEAM s existing school campuses located at 21 Ashland Street and 85 Custer Avenue and land adjacent to 21 Ashland Street to be used as athletic fields for the students of all of TEAM s schools and as a parking lot. New Jersey Charter Schools and TEAM s Charter Charter schools in New Jersey are governed by the State of New Jersey Charter School Program Act of 1995 (the Act ), which became effective January 11, A New Jersey charter school is a public school that operates as its own Local Education Agency under a charter granted by the Commissioner of Education of the State of New Jersey on behalf of the NJDOE, the State Education Agency and sole charter school authorizer in New Jersey. NJDOE is responsible for setting the standards for and holding current and future public charter schools accountable for providing New Jersey students with a high-quality public education. As of September 2012, there were 86 approved charter schools with over 30,000 students enrolled in public charter schools across the State of New Jersey. In July 2012, the NJDOE Office of Charter Schools released the Performance Framework which outlines academic, organizational and fiscal standards by which all New Jersey public charter schools are evaluated for renewal. The Performance Framework focuses on outcome measures that align with the NJDOE s major goal of providing a high quality education for all students regardless of zip code. Within the Performance Framework, the academic section carries the most weight related to decisions regarding replication, expansion, renewal and revocation. According to the NJDOE website, the decision to renew a charter for each subsequent five-year period is based upon a review guided by the following three questions: 1. Is the school s academic program a success? 2. Is the school financially viable? 3. Is the school equitable and organizationally sound? As stated on the NJDOE website, academic program success is the most important criteria for charter renewal. Academic performance of TEAM, including test scores and comparison to Newark Public Schools, is discussed below (See Academic Performance ). TEAM operates all of its schools under a single charter. In accordance with the Act, charters granted to New Jersey public charter schools are initially granted for four years with renewals in five year increments. TEAM s current charter runs through June 30, 2016 and TEAM plans to submit its next Charter School Renewal Application in A-2

31 TEAM Academy Charter School, Inc. TEAM is a New Jersey, not-for-profit 501(c)(3) corporation organized in TEAM is chartered by NJDOE to operate a public charter school in Newark, New Jersey and operates its educational program as an affiliate of the highly successful KIPP Schools, a national network of separately incorporated charter schools (see KIPP (Knowledge is Power Program) National School Network below). TEAM s vision is that one day, our nation will know Newark, New Jersey, as a city of world-class public education. TEAM operates tuition-free, open-enrollment, college-preparatory public charter schools on six different school campuses under a single charter, preparing students in underserved areas of Newark for success in college and in life. In 2002, TEAM received its initial charter from the State of New Jersey through NJDOE and opened its first campus, TEAM Academy middle school. From 2002 through 2006, TEAM Academy middle school (TEAM s first campus) grew to serve 360 students in grades 5-8. Five additional school locations have since been added (referenced in Table 2 below). In the current school year, TEAM has enrolled over 2,230 students in grades K-12 on six individual school campuses in Newark s lowest income wards, known as South, Central, and West. Charter School Table 2 Existing TEAM Charter School Campuses Address Year Opened Grades Offered (1) 10/15/12 Enrollment (2) 10/15/13 Enrollment (3) Planned Capacity % Low Income (4) TEAM Academy 85 Custer Ave ,6,7, % Rise Academy 21 Ashland St ,6,7, % Newark Collegiate 18 Norfolk St ,10,11, % Academy SPARK Academy 230 Halsey St K,1,2,3, % THRIVE Academy 333 Clinton Place 2012 K, % Seek Academy 333 Clinton Place 2013 K n/a (5) (1) Seek Academy and THRIVE Academy each opened with grade K and will add one grade level per year until they reach their planned capacity in grades K-4. (2) Actual 10/15/12 enrollment. (3) Anticipated 10/15/13 enrollment. (4) Most recent available data for the percentage of students who qualify for free or reduced cost lunches. (5) Data not yet available for school opened in August Source: TEAM Due to the academic success of its initial school campus, TEAM was granted a five year renewal of its charter in 2006, including authorization to expand its network. TEAM opened its second school campus, another middle school, Rise Academy, in 2006 followed by the opening of its first high school campus, Newark Collegiate Academy (NCA), in Due to TEAM s performance and the high demand by students and parents for its schools (there are currently more than 8,700 students on its wait list), in 2007 TEAM developed an expansion plan to grow A-3

32 to ten school campuses. In 2009, TEAM was granted an amendment to its charter to include two additional elementary school campuses and opened its first elementary school campus, SPARK Academy, in 2009, followed by another elementary campus, THRIVE Academy in In 2013 TEAM opened its third elementary school campus, Seek Academy. TEAM has consistently met all criteria for charter renewals and was granted renewal approvals in 2006 and 2011, as well as an expansion of its charter in The 2011 renewal specifically authorized TEAM to continue its planned expansion by allowing TEAM to serve up to 4,120 students through June 30, 2016, when its charter will be scheduled for renewal. TEAM plans to operate 10 individual school campuses (including its six existing schools) under its single charter by purposefully adding schools and expanding schools one grade at a time through the peak enrollment level of almost 5,000 students (approximately 11% of public school students in Newark). TEAM Growth Plan KIPP and TEAM adhere to a smart growth model based on opening new individual school campuses with a single founding grade and adding an additional grade each year (e.g., a Grade K-4 elementary school is opened with Grade K then expands as those students grow by one grade and new K students are admitted each year). In , TEAM operated five school campuses (its first cluster which spans grades K-12) comprised of two established, fully enrolled, 5 th -8 th grade middle schools (Rise Academy and TEAM Academy), one 9 th -12 th grade high school (Newark Collegiate Academy), and two K-4 th grade elementary schools (SPARK Academy and THRIVE Academy). As TEAM s first elementary school campus, SPARK Academy is serving kindergarten through fourth grade in the school year, THRIVE Academy welcomed its 105-student founding kindergarten class in August 2012 and enrolled 216 students in Grades K-1 as of August At the start of the school year, the TEAM network serves more than 2,230 students and is expected to serve over 2,460 students on these five school campuses when they are fully enrolled. TEAM initiated its second cluster of five school campuses by opening Seek Academy in August 2013 and plans to open one school campus per year for the next three years with a second high school campus planned to open in August Recognizing the importance of elementary education and the success of SPARK Academy and THRIVE Academy, TEAM is seeding this cluster with two elementary school campuses. Seek Academy will be followed by Life Academy in August By 2024, the second cluster of five school campuses is expected to serve its planned capacity of over 2,480 students and TEAM plans to provide college preparatory education to nearly 5,000 students across ten total campuses, approximately 11% of Newark s students. A-4

33 Table 3 Planned TEAM Charter School Campuses Charter School Address Planned Opening Year Planned Grades Offered Planned Capacity Life Academy th Ave K,1,2,3,4 540 MS #3 TBD ,6,7,8 401 MS #4 TBD ,6,7,8 401 HS #2 129 Littleton Ave ,10,11, Source: TEAM In 2012, TEAM s management team and support staff assisted KIPP New Jersey A NJ Nonprofit Corporation ( KIPP NJ ), a New Jersey nonprofit corporation and Cooper Lanning Square Renaissance School, Inc. (the Camden School ), a New Jersey nonprofit corporation, in preparing and submitting a successful application to the Camden Board of Education to operate a public school as a Renaissance School under the Urban Hope Act (N.J.S.A. 18A:36C). The Camden School is a planned network of public schools to be located in Camden, New Jersey, the first school campus of which is expected to open in August It is currently anticipated that TEAM s administrative and support staff, including the management team, will become employees of KIPP NJ, which is expected to function as a charter management company, by the end of the current fiscal year and that KIPP NJ will subsequently provide contracted management, administrative, and support services, in accordance with applicable law, to both TEAM and once operating, the Camden School. It is anticipated that no TEAM school specific staff, such as principals, will become employees of KIPP NJ. TEAM is not affiliated with KIPP NJ or the Camden School. Neither KIPP NJ nor the Camden School is obligated to make payments with respect to the Series 2013 Bonds and no revenues of TEAM shall be used in connection with the development or financing of the Camden School. TEAM s expansion goals are subject to ongoing review by the TEAM Board, the NJDOE, and TEAM Management. TEAM will only execute plans if it determines that thenprevailing conditions continue to support the expansion. KIPP (Knowledge is Power Program) National School Network TEAM is part of the growing national network of 141 KIPP Schools. This is a network of independently incorporated public charter schools that offer free, college preparatory education to over 50,000 students from underserved communities in 20 states and the District of Columbia. In 2000, the KIPP Foundation was created with the objective to develop and expand the KIPP network by recruiting and training outstanding school leaders to open and operate KIPP affiliated schools. The KIPP Foundation, through its KIPP School Leadership Programs ( KSLP ), has trained more than 250 KIPP school leaders, including six leaders of the TEAM schools, to open and/or operate locally governed KIPP affiliated schools. Over time, KSLP has evolved to offer additional leadership development programs for those transitioning into other A-5

34 leadership roles within their school or region, such as the positions of grade-level chair, dean, assistant principal, successor school leader, chief academic officer, and executive director. In addition to offering professional development for leaders, the KIPP Foundation is responsible for defining and evaluating school and regional performance, assessing the readiness of KIPP regions to expand, and facilitating the exchange of data and effective practices across the KIPP network. TEAM operates in accordance with a Trademark License Agreement with the KIPP Foundation. Under this agreement, TEAM is granted the exclusive right to use the KIPP name and various licensed marks in the Newark area, and in return, TEAM pays an annual licensing fee of no more than $30,000 per school. The agreement is renewed annually, unless either party exercises its termination rights. KIPP Foundation has the right to terminate immediately if TEAM operations come under control of a person other than the founder, or if TEAM or its personnel behave in a manner that may be irrevocably detrimental to KIPP Foundation s reputation, to the licensed marks, or to the goodwill associated therewith. TEAM may terminate for any reason at any time. Day-to-day operations are self-managed by TEAM, reporting to its own Board. The KIPP Foundation does not provide general management, directorial or administrative services to TEAM. TEAM Supporting Entities As mentioned above, TEAM has no affiliates but a number of SPE organizations support either TEAM or FOTA. SPE purposes may include fundraising, facility financing and the acquisition and development of facilities for use by TEAM. The following is a list of active SPEs, none of which, including the Borrower, is a school: The Borrower will own 21 Ashland Street, 85 Custer Avenue and land adjacent to 21 Ashland Street, the purchase of which is to be financed with the proceeds of the Series 2013 Bonds. FOTA was organized to fundraise and support financing, acquisition and development of facilities for lease by TEAM. NCA Facility, Inc. owns 18 Norfolk Street, funded primarily with Qualified School Construction Bonds. Kingston Educational Holdings 1, Inc. has borrowed the proceeds of Qualified School Construction Bonds and Qualified Zone Academy Bonds for the funding of facilities to lease to TEAM, A-6

35 including th Avenue and athletic fields to be constructed adjacent to 21 Ashland Street, and is expected to purchase 129 Littleton Avenue. PinkHulaHoop1, LLC owns th Avenue and is undertaking the renovation of such facility. Except for the Borrower and, to the extent provided for in the Support Agreement between FOTA and the Borrower, FOTA, none of the SPE entities described above is obligated to make payments with respect to the Series 2013 Bonds. TEAM Revenues: Per Pupil Funding In accordance with the New Jersey School Funding Reform Act of 2008, operating funds for New Jersey charter schools are determined using a student-weighted formula. Schools receive a base amount of funding for each student plus additional amounts according to each student s demographic characteristics, such as grade level and income status. Schools also receive additional funding for students with special needs and students for whom English is a second language. For most categories of state and local funding, charter schools receive 90% of the amount that the local school district would receive for the same student (i.e., the local district receives some categories of funding that are not available to charter schools). Table 4 TEAM Historical Average State/Local Per Pupil Tuition Funding Source: TEAM Finance Office A-7

36 Friends of TEAM Academy As stated above, NJDOE precludes charter schools from participating in the traditional state school facility funding program (available to traditional New Jersey school districts) and, except in certain limited circumstances, prohibits a charter school from incurring long term debt. Therefore, FOTA was organized in 2004 to support TEAM by facilitating the acquisition and/or financing of school facilities and also to assist with fundraising to supplement public tuition revenues when individual TEAM schools are in their growth phase, prior to becoming fully enrolled. For a list of members on the FOTA Board of Trustees, see TEAM Governance - Friends of TEAM (FOTA) Board of Trustees on page A-15. In 2011 TEAM and FOTA launched a multi-year comprehensive $30 million growth campaign fundraising drive to fund capital and operating needs through the point at which TEAM s core operations (academics and facility leasing) will be self-sufficient from public fund revenues. To date, this fundraising campaign has achieved $27 million of cash and pledges, including $11 million of written pledges through Sources of campaign proceeds are primarily philanthropic gifts from individuals, corporations, and foundations. These efforts are a significant focus of both the TEAM executive leadership team and its Board of Trustees and Board of Governors, supported by a full-time development team of four. The following table summarizes the combined total grants and donations received by FOTA and TEAM. Table 5 $30,000,000 Growth Campaign (As of June 2013) $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 $4,500,000 Anticipated $11,389,705 Pledged $15,717,165 Collected Source: TEAM Development Office TEAM plans to fund its core academic and facility operations (ten campuses) entirely with publicly-sourced revenue beginning in the school year. Unrelated to core program A-8

37 support, FOTA intends to continue to raise funds for TEAM through its annual Be the Change gala and fundraiser as well as other future fundraising efforts. These funds will be available to TEAM to support the KIPP Through College program, alumni support, field trips, and specific programs identified by TEAM leadership that cannot legally be funded from public revenues. Facilities TEAM currently conducts its academic program at five school campuses located in academically underserved areas of Newark; the two youngest elementary schools share one facility. Three additional permanent school campuses are currently being developed, two planned to open in August 2014 at th Avenue and one planned to open in August 2016 at 129 Littleton Avenue. An additional two permanent school campuses are anticipated to be developed for opening in August 2018 and August TEAM School Campuses #1 - #10 Legend: Source: Director, Friends of TEAM Schools All campuses are leased by TEAM. As previously described, there are restrictions that limit the authority of New Jersey charter schools to directly borrow funds to construct facilities. Two campuses are leased by TEAM from third parties that are not supporting organizations of TEAM. All other campuses are, or will be, in the case of planned campuses, leased by TEAM from an SPE. A summary of the first eight school campuses follows: A-9

38 Operating Leases: School Campus Lease Arrangement Clinton Place A portion of Newark Public Schools ( NPS ) building houses elementary students under a short-term lease (the Carver Lease ) from NPS to TEAM. The Carver Lease was executed in 2011 with an initial term through July 31, In an amendment to the Carver Lease, NPS has agreed to extend the term of the Carver Lease through July 31, 2014, with options to extend to July 31, 2015 and July 31, In the event NPS declines to extend the Carver Lease, NPS has agreed to lease to TEAM another school building owned by NPS of a sufficient size to accommodate TEAM s student population at this campus Halsey Street 520-student elementary school in first year of 20-year lease with two five-year renewals at TEAM s option. Leased from private developer. Series 2013 Bond Financed Facilities: TEAM s first campus (85 Custer Avenue) was originally leased by TEAM beginning in 2002 and was acquired by FOTA in TEAM s second campus (21 Ashland Street) was acquired by a FOTA affiliate in Both have been in continuous use by TEAM since 2002 and 2006, respectively. These facilities will be purchased by Borrower with proceeds of the Series 2013 Bonds and will continue to be leased by TEAM. In addition, proceeds of the Series 2013 Bonds will be used to purchase certain land adjacent to 21 Ashland Street which will also be leased by Borrower to TEAM. TEAM expects to construct playing fields on such land for use by students of all of TEAM s schools, and a parking lot. School Campus Lease Arrangement Custer Avenue 400-student middle school (TEAM Academy) originally purchased by FOTA in 2005 and occupied by TEAM since Ashland St. 400-student middle school (Rise Academy) originally purchased by an FOTA affiliate in 2006 and occupied by TEAM since A-10

39 QZAB/QSCB Financed Facilities: FOTA purchased Qualified School Construction Bonds ( QSCBs ) and Qualified Zone Academy Bonds ( QZABs ) which were issued in 2011 and The proceeds of such QSCBs and QZABs are being used primarily to fund four campuses: the NCA High School campus which opened in 2012 and three individual school campuses currently under development (two of which are co-located in a single large building on one site) (the QZAB/QSCB Financed Facilities ). All of these campuses are, or will be, leased by one of the SPEs to TEAM. 18 Norfolk Street (Newark Collegiate Academy) Location Lease Arrangement Norfolk St. 600-student high school (Newark Collegiate Academy) constructed by TEAM in & th Ave. Under development. 400-student middle school (MS #3) and 540-student elementary school (THRIVE Academy) to be colocated in a former Newark Public School building. Opening August Life Academy (Elementary School #4) will temporarily use this facility until MS #3 opens Littleton Ave. Under development. 600-student high school (HS #2) to be newly constructed. Site acquisition October Construction start March Opening August Life Academy (ES #4), MS #3, and/or MS #4 will temporarily use this facility until HS #2 opens. Facility Enhancements TEAM is also in the process of enhancing some of its existing campuses. Such improvements will not add classroom space or capacity. Planned enhancements include: Acquisition of property adjacent to 21 Ashland Street using proceeds of Series 2013 Bonds Construction of athletic fields on the property adjacent to 21 Ashland Street, using QSCB proceeds A-11

40 Construction of a gymnasium and minor cosmetic renovations at 85 Custer Avenue, using proceeds of the Series 2013 Bonds Acquisition of miscellaneous furniture and equipment as needed, using QZAB proceeds Lease Flow of Funds Regarding Campuses Financed with Series 2013 Bonds The proceeds of the Series 2013 Bonds will be used to (i) acquire the TEAM facilities at 85 Custer Avenue and 21 Ashland Street, (ii) construct a gymnasium at 85 Custer Avenue, (iii) reimburse TEAM for minor renovations at 85 Custer Avenue, and (iv) acquire land adjacent to 21 Ashland Street to be used as athletic fields and a parking lot. TEAM will lease these facilities from the Borrower. The rent payments under the leases for the 21 Ashland Street and 85 Custer Avenue properties will in total equal 120% of the annual debt service on the Series 2013 Bonds. Because TEAM receives its public revenues bi-monthly, TEAM will be required to make bimonthly lease payments equal to 120% of 1/24 of annual debt service associated with the Series 2013 Bonds. The Borrower will retain any excess lease income paid by TEAM and, at its sole discretion, may elect to donate excess lease income from any year to FOTA, TEAM, or other entities 60 days following the release of the Borrower s annual audit. QZAB/QSCB Financed Facilities FOTA recently finalized a long-term permanent refinancing/financing related to bridge funding it used to acquire the QSCBs and QZABs, the proceeds of which are funding the QZAB/QSCB Financed Facilities other than 129 Littleton Avenue. Under this taxable financing FOTA has $48,950,000 of debt from the purchase of QZABs and QSCBs in 2011 and 2012 and plans to incur an additional $24,000,000 of debt in December 2013 for the purchase of additional planned QSCBs to finance the 129 Littleton Avenue project. The TEAM lease payments are extremely low for these state-of-the-art facilities because the $5,580,000 QZAB/QSCB direct subsidy cash income funds a substantial portion of the $6,275,000 of debt service that would otherwise be paid by TEAM as lease payments. The estimated lease payment burden is $695,000 per year ($325 per student per year for 2,140 students of capacity). Future Facilities: 9 th and 10 th Campuses TEAM s expansion goals require development of two more facilities (#9 and #10) for occupancy in 2018 and It is anticipated that TEAM could lease existing facilities from private parties or enter into leases which provide for the construction of facilities. In either case, TEAM will fund the cost through lease payments. TEAM s internal operating projections conservatively plan for a cost of $2,000 per student per year for these facilities, compared to an average of about $635 per student per year (net of QZAB/QSCB subsidy) for the eight facilities described above. TEAM s expansion goals, future facility needs, and future lease payment obligations are subject to change in conjunction with continuous review by TEAM management and the TEAM Board. Additionally, pursuant to the Lease Agreements between TEAM and the Borrower (the form of which is included in Appendix E to this Official Statement), TEAM will covenant not to A-12

41 incur financial obligations, including lease rental payments, which would be expected to result in a rating downgrade of the Series 2013 Bonds to a rating below the lower of investment grade or the then-current rating of the Series 2013 Bonds. TEAM Governance In order to ensure strong governance and oversight, TEAM developed strong boards with diverse backgrounds. As a result, TEAM benefits from three outstanding boards: (i) TEAM Board of Trustees, (ii) Friends of TEAM Board of Trustees, and (iii) TEAM Board of Governors, which is an advisory board. This structure gives TEAM the benefit of focused governance and advisory input from financial and real estate professionals as well as seasoned community leaders. TEAM Board of Directors TEAM s Board of Directors functions as the official school board whose responsibilities include financial and operational oversight, regulatory compliance, and fiduciary responsibility for the operation of the schools. The Board holds monthly meetings and consists of seven voting members listed in the chart below. TEAM bylaws provide for up to nine Board members, who serve three-year terms and hold office until their successors are elected and qualified, or until their resignation or removal. The Board has an active Finance Committee consisting of members who may or may not be members of the Board, which reviews the technical details of TEAM s operating performance, financing matters and provides information and recommendations to the Board. Table 6 TEAM Board of Directors Name Position Occupation Beginning Year of Service Brendan Maher Chairman Portfolio Manager, Calamos Arista 2009 Partners Dan Adan Member Managing Director, Perry Capital 2008 Sheila Boyd Member Manager, Microsoft North America 2003 Thomas Dunn Member Managing Principal, New Holland 2006 Capital Ryan Hill Member (non-voting) Founder and CEO, TEAM Schools 2002 Heidi Fisher Teacher Teacher, TEAM Academy 2002 Representative (nonvoting) Amy Rosen Member President/CEO, Network for Teaching 2006 Entrepreneurship Patricia Ross Parent Representative Bank of America 2006 Linda Sterling Member Volunteer 2006 Source: TEAM A-13

42 TEAM Board of Governors The 12-member Board of Governors is a group of donors and advisors that meets three to four times per year along with members of the other TEAM-related boards to provide strategic advice to the management team in conjunction with the Board of Directors. This advisory board was formed in Table 7 TEAM Board of Governors Name Position Occupation Beginning Year of Service Lisa Amato Member Volunteer 2011 Judy Bedol Member Volunteer 2011 Richard Braddock Member Former CEO, Mozido.com, Priceline, 2011 Fresh Direct, and former President, CITICORP Fatimah Burnam-Watkins Member Executive Director, Teach For America 2011 Derek Capanna Member Managing Director Equity Sales, 2011 Deutsche Bank Gary DeBode Member CEO, Edison Properties 2012 Alan P. Fournier Member Managing Member and Founder, 2011 Pennant Capital Management Joseph C. Kusnan Member Chief Investment Officer, JAWS Estate 2012 Capital Coleen Mullens Member Senior Vice President, Asurion 2011 John Reid-Dodick Member Former Chief People Officer, AOL 2011 Josh Weston Member Honorary Chairman, Automatic Data 2011 Processing John Willian Member Managing Director, Goldman Sachs 2011 Source: TEAM [Remainder of page intentionally left blank] A-14

43 Friends of TEAM (FOTA) Board of Trustees The FOTA Board is comprised of real estate and finance professionals who donate their time in areas such as real estate law, finance, project management, and architecture. Table 8 FOTA Board of Trustees Name Position Occupation Beginning Year of Service Timothy Carden President Managing Director, PFM Group 2007 Reena Bhatia Member Vice President, Local Initiatives Support 2010 Corporation (LISC) Lea Ciavarra Member Principal, lubrano ciavarra architects, pllc 2010 Thomas Comiskey Treasurer Vice President and Group Manager, M&T 2011 Bank Carmen Maldonado Member Regional Director, Canyon-Agassi Charter 2006 School Facility Fund Connie Max Member Vice President, Chief Credit Officer and 2013 Director, Portfolio Management, Nonprofit Finance Fund Jordan Metzger Vice Cole, Schotz, Meisel, Forman & Leonard, 2009 President P.A. Hannah Richman Secretary Director, Friends of TEAM Schools 2004 (non-voting) Thad Sheely Member Senior Vice President, Operations, Related 2009 Hudson Yards Source: FOTA TEAM Management TEAM s leadership group consists of a Chief Executive Officer, Chief Academic Officer, Chief Operating Officer, Chief Financial Officer, Chief External Officer, Managing Director of KIPP Through College and Strategy, and Network Leadership Coach. Biographies are set forth below for the individuals currently in these roles as well as for the Director of FOTA. As mentioned above under TEAM Growth Plan, it is currently anticipated that TEAM s administrative and support staff, including the management team, will become employees of KIPP NJ by the end of the current fiscal year and that KIPP NJ will subsequently provide contracted management, administrative, and support services to both TEAM and once operating, the Camden School. Ryan Hill, Chief Executive Officer In 2002, Ryan Hill founded TEAM Academy, the first KIPP school in New Jersey, after completing the KIPP School Leadership Program s prestigious Fisher Fellowship. Now in his eleventh year with TEAM Schools, Mr. Hill s strategic leadership as Chief Executive Officer has grown TEAM from one to six schools, which serve over 2,230 students in grades K-12 for the school year. Prior to founding TEAM Academy, Mr. Hill was a Teach For America corps member in Washington Heights, New York. Mr. Hill also completed the Broad Fellowship for Education Leadership. A-15

44 Mr. Hill serves on the board of the New Jersey Charter School Association and on the advisory board of the New Jersey branch of Democrats for Education Reform. Mr. Hill was awarded the Bank of America Local Heroes Award and he was named one of eleven New Jerseyans to watch by the Newark Star-Ledger. He received a B.A. in Philosophy from the University of Wisconsin and an M.A. in Educational Administration from National Louis University. Steven Small, Chief Financial Officer Steve Small has served as Chief Financial Officer (CFO) since 2007 and also served as TEAM s Chief Operating Officer (COO) from 2007 through Mr. Small oversees the accounting and treasury functions, finance, human resources, fundraising, marketing, compliance reporting, and audit functions. He manages the annual operating budget, long term financial projections, and the debt portfolio. As CFO Mr. Small has overseen the TEAM operating budget as it has grown from $5 million to over $40 million annually and has utilized real estate financing structures that have saved more than $19 million versus traditional financing approaches. Mr. Small is a graduate of the Broad Residency in Urban Public Education and in 2011 was a finalist for the NJ Biz CFO of the Year in the Best Growth Manager category. Prior to his work in education, Mr. Small worked for six years at JP Morgan in New York City, primarily in the Private Banking division. He received a B.S. in Finance and Philosophy from the University of Scranton and earned his Masters in Business Administration and Masters of Education Policy and Administration degrees from the University of Michigan. Gabriella DiFilippo, Chief Operating Officer Gabriella DiFilippo joined TEAM Schools as Chief Operating Officer in February 2012 and oversees the day-to-day operations of the schools, including procurement, facilities management, information technology, nutrition, real estate, student recruitment and enrollment and other areas of operational management. From 2009 to 2012, Ms. DiFilippo was an independent real estate consultant to nonprofits, including FOTA. From 1998 to 2009, Ms. DiFilippo was Vice President of Real Estate Services at Chicago-based Illinois Facility Fund (IFF) where she developed IFF s consulting program into a $2 million business with twelve staff. Ms. DiFilippo provided executive oversight on more than 250 real estate consulting and development projects for more than 200 nonprofit clients, including more than twenty charter school clients. She participated in an IFF report on the need for charter schools in Chicago neighborhoods, worked closely with Chicago Public Schools (CPS) on its charter school facilities strategy and a disposition strategy for under-utilized school facilities, and participated in CPS s selection process for new charter school operators. Ms. DiFilippo earned an M.A. in Public Policy from the Harris School of Public Policy at the University of Chicago and a B.A. in English Literature from the University of Pennsylvania. Vincent Marigna, Chief Academic Officer Vincent Marigna joined TEAM Schools in 2007 as the Director of Strategic Human Assets. In this role, Mr. Marigna was responsible for the development and implementation of recruitment and selection strategies for TEAM s schools as well as supporting the executive staff A-16

45 on a network-wide leadership development initiative. In June 2011, Mr. Marigna moved to the CAO role, overseeing the academic program across all schools, curriculum and instruction, data and analytics, leadership development, talent recruitment, and the development, coaching and management of the school leaders. Mr. Marigna started his career in education in 2003 as a Teach For America corps member in Newark. He taught High School English, Journalism, and Creative Writing for two years at Weequahic High School. After this commitment, Mr. Marigna joined TFA staff as program director for TFA Newark, where he supported 1 st and 2 nd year corps members in their development as well as worked on district strategy and cultivation. In addition to working for Teach For America s program staff, Mr. Marigna served three summers at Teach For America s Philadelphia Institute as a corps member advisor and school director. He received his B.A. in English from Evangel University and an M.A. in Educational Leadership from National Louis University. Benjamin Cope, Chief External Officer Benjamin Cope joined TEAM Schools as the Director of Development in In 2012, he was promoted to Chief External Officer, where he oversees development and community relations. He has led TEAM s fundraising efforts to raise $30 million in order to support TEAM s growth to ten schools in Newark and achieve financial sustainability on public funding. The campaign has raised approximately $27 million in cash and pledges since Mr. Cope has also led the community outreach program in Newark. Mr. Cope began his career in education as an elementary school teacher in the Bronx as a Teach For America corps member from He went to work for Senator Edward Kennedy in the Senator s education policy office while No Child Left Behind legislation was written and passed. He then served as the Chief of Staff to State Delegate Peter Franchot of Maryland and worked as a campaign manager for a number of Maryland candidates. Mr. Cope began his work with KIPP as a volunteer, consultant and intern with a number of KIPP schools and the KIPP Foundation. Mr. Cope received a B.A. in Political Science from Colorado College and an M.B.A. from the University of Maryland. Eric Fisher, Managing Director of KIPP Through College and Strategy Eric Fisher is the Managing Director of KIPP Through College and Strategy for TEAM Schools. As such he is responsible for the development and implementation of TEAM s Strategic Plan, including directly managing key departments and identifying new opportunities that will help TEAM achieve its ambitious goal of doubling Newark s college graduation rate. After joining TEAM in 2007, Mr. Fisher worked in Development and was later responsible for building the network s Academic Support and Operations teams. This included development of TEAM s Instructional Vision and curriculum, as well as day-to-day management of Data and Analytics, Knowledge Management, Enrollment, Special Education, and Alumni Support. Currently, Mr. Fisher directly manages TEAM s KIPP Through College program and is responsible for coordinating and providing a cohesive K-16 program that prepares all students for success in top colleges across the country and post-graduate careers. Mr. Fisher graduated A-17

46 with a B.A. from Furman University and from Clemson University with a M.Ed. in Higher Education Administration. Shawadeim Reagans, Network Leadership Coach and Consultant Sha Reagans is in his eleventh year with TEAM Schools and was a founding teacher at TEAM Academy when the school opened with its first fifth grade class in Mr. Reagans is currently responsible for coaching principals and school leaders at all schools within the TEAM network while serving as Assistant School Leader at NCA. Mr. Reagans joined the founding team after teaching in Harlem as a Teach for America corps member. As a TEAM teacher, Mr. Reagans won the U.S. Department of Education s American Star of Teaching Award for the State of New Jersey in Mr. Reagans moved from the school leader role at TEAM Academy, where he served for six years, to become the school leader of NCA in the summer of Mr. Reagans is in his eleventh year of teaching in Harlem and Newark. He received his B.A. at Syracuse University and completed his Masters in Early Childhood Education at Bank Street College of Education. Hannah Richman, Director, FOTA Hannah Richman is the Founder and Director of FOTA, which supports TEAM Charter Schools in its facilities planning, construction and renovation projects. Ms. Richman is responsible for board development, as well as leasing, acquiring, financing, renovating, and constructing facilities. She served as CFO and Development Director for TEAM Schools from Before joining TEAM, she served as the Director for Charter School Development in the Massachusetts Department of Education s Charter Schools Office, where she authored a revised charter school application, managed the charter application process, and worked to assist the startup of successful charter schools throughout Massachusetts. Ms. Richman received her Master s Degree in Public Administration from New York University s Wagner School of Public Service, where she worked as a Research Assistant for Professors and education experts, Diane Ravitch and Joseph P. Viteritti. Hannah received her B.A. from Oberlin College, and served as a member of their Board of Trustees from She currently serves on the Oberlin College President s Advisory Council. She also serves on the Bloomfield College Board of Trustees, for which she Co-Chairs the Committee on Development and Trusteeship. A-18

47 Employees The following table provides information regarding TEAM s instructional staff, support staff, and central services staff. Instructional Staff Table 9 TEAM Staffing Regular Special Education Student and Instructional Related Services School Administrative Services Total Student/Teacher Ratio 9:1 10:1 10:1 9:1 12:1 16:1 Source: TEAM For the academic years ending 2013, 2012, and 2011, teacher retention rates were 86%, 82%, and 84%, respectively (Source: TEAM). None of TEAM s employees are represented by a union. Educational Philosophy TEAM schools are free, open enrollment, college-preparatory public charter schools with a goal for their students to develop the knowledge, skills and character traits necessary to succeed in and graduate from high school in order to succeed in and persist through college and in the competitive world beyond. TEAM achieves this goal by its unwavering commitment to KIPP s five pillars: High expectations all students will learn and achieve. Choice and commitment attending TEAM is a choice with each stakeholder committed to themselves and to each other to put in the time and effort to succeed. More time TEAM students have a longer day, week and year, using added classroom time to build the academic knowledge and skills necessary to succeed. A-19

48 Power to lead Passionate, committed teachers and staff are given the freedom over budgetary and hiring decisions and thus the power to lead effective schools. Focus on results KIPP schools focus relentlessly on high student performance on standardized tests and other objective measures, as they expect students to achieve a level of academic performance that will enable them to succeed at the nation's best high schools and colleges. Given its focus on academic achievement with the goal of college readiness and success, TEAM is committed to the alignment with and implementation of the Common Core State Standards ( CCSS ). In 2009 the State of New Jersey signed onto the CCSS Initiative, a stateled effort to establish a single set of clear educational standards for K-12 th grades in English language arts and mathematics. In addition, New Jersey will change its state proficiency tests to those developed by the Partnership for Assessment of Readiness for College and Careers (PARCC). It is expected that these tests will replace the New Jersey Assessment of Skills and Knowledge ( NJ ASK ) tests beginning in the school year. Elementary School Campuses: SPARK Academy, THRIVE Academy and Seek Academy Beginning in 2009 with the opening of its first elementary school, TEAM extended its mission of educating underserved students in Newark by reaching these students at the beginning of their educational career. Opening elementary schools gives these young students the chance to avoid falling behind grade level and avoid the remediation that is typically needed for middle school students who transfer from Newark Public Schools to TEAM. At the elementary school level a strong emphasis on reading and writing begins in kindergarten and gives students the foundation to excel in middle school and beyond. Independent reading goals include minutes spent on independent daily reading and progress versus goals is monitored by students, teachers, and families using the daily homework log. Trimester assessments are teacher-created using the Common Core standards and used across the network in all elementary schools. Every summer teachers review and revise assessments to create age-appropriate and challenging trimester benchmarks and milestones. Middle School Campuses: TEAM Academy and Rise Academy TEAM middle school campuses continue strong emphasis on reading and writing, as many of its students enter 5 th grade two or more grade levels behind the national average, not having had the benefit of attending a TEAM elementary school. Students are exposed to a wellrounded curriculum including math, science and social studies which is complemented by service learning opportunities, extracurricular activities, field trips, including highly anticipated end of year trips. TEAM middle school students attend classes for over eight hours a day and then participate in a broad range of activities that develop their talents and interests. TEAM middle schools have been early adaptors of personalized learning tools that have driven student academic success, especially in the 5 th and 6 th grades. Students are challenged to accelerate their math growth through Khan Academy, for example, building their level of mastery. In reading, they respond to the TEAM academic game millionaire challenge, in A-20

49 which students are recognized and celebrated among their peers for reading more than one million words in a school year. High School Campus: Newark Collegiate Academy TEAM s high school offers rigorous college-preparatory classes, designed to prepare students for success at both regional and national colleges and universities, some of which are recognized as the nation s best institutions of higher education. Students are required to study literature, math, science and history, and have a choice of art, drama or dance, as well as a foreign language (Spanish or French). Students also have opportunities for leadership development through clubs, athletics and student government. NCA high school students are also exposed to Life Skills seminars and test preparation as they prepare for the transition to college. NCA students take the PSAT, SAT and ACT tests in 11th and 12th grades. College visits and college fairs are part of the college preparation process. Each student has a college counselor and sets goals for college readiness. Tracking Academic Progress Success at TEAM is defined by its students progress towards achieving their goals. In addition to academic goals, TEAM values character education as well as a commitment to continuous improvement. These goals are measured through a variety of internally and externally designed assessments that measure student mastery and growth. To facilitate its students academic growth, TEAM trains its school leaders and teachers to collect data through frequent assessments, analyze this data, and use it to identify gaps and opportunities. For example, at the elementary school level, internal bi-weekly assessments are administered to determine student mastery of the material taught in the previous two week period. The results of these assessments impact teachers instructional methods, pacing the reintroduction of material. Trimester assessments testing all standards and objectives are also administered. In addition, external assessments are used to determine students progress against national standards. The primary testing tools include the Strategic Teaching and Evaluation of Progress Literacy Assessment ( STEP ) in the elementary schools, the state mandated New Jersey Assessment of Skills and Knowledge ( NJ ASK ) for grades 3-8, and the Northwest Evaluation Association s Measures of Academic Progress ( NWEA MAP ) assessment for grades K-8. Students in 11 th grade take the state mandated High School Proficiency Assessment ( HSPA ), which is used in New Jersey to determine student achievement in reading, writing, and mathematics as specified in the New Jersey Core Curriculum Content Standards. In addition, TEAM piloted MAP testing at the 9 th and 10 th grade levels in the school year. The NWEA MAP measures each student s learning growth over time in reading and mathematics, and is widely considered the gold standard in national norm referencing. Technology TEAM invests in the critical technology initiatives that bring access to cutting-edge tools to TEAM s students, teachers and schools. These initiatives include developing technology- A-21

50 literate students in preparation for college and life, supporting effective teaching through the deployment of instructional technology, and using effective technological tools to create personalized learning platforms and feedback systems for students, teachers and parents. KIPP Through College TEAM s KIPP Through College ( KTC ) program supports TEAM s students on their journey to college and its alumni on their journey through college. Its work with alumni is funded by grants and private donations. The director of KTC is joined by a team of five counselors who advise on college placement and support the college application process through a mix of personal counseling, programs, and services. The KTC team focuses its counseling work on the junior and senior classes, and works with students in earlier grades as they develop the character traits, self-advocacy and decision making skills necessary to persist through and graduate from college. TEAM s first class of college-bound seniors graduated from high school in June TEAM alumni from the classes of 2010, 2011, and 2012 are now attending both two and four year colleges around the country, with a majority in the eastern United States. In a nation where only 11% of low-income students finish college 1, 47% of the class of 2010 who were TEAM students in 8th grade are still in four-year colleges. An additional 16% are in two-year colleges. Having committed so much to its students in their K-12 years, TEAM is also committed to the college success of TEAM graduates. TEAM s KTC office is dedicated to supporting alumni, and continues to support all students after high school in critical ways, including financial assistance, academic advising, crisis navigation, internship assistance, and personal visits to their colleges. Academic Results TEAM is responsible to its stakeholders for delivering on its promise of providing a rigorous, college preparatory education to its students. These stakeholders include students, their families, educators, staff, and TEAM s authorizing body, the NJDOE. NJDOE s website indicates that academic program success carries the most weight in consideration for charter renewal. As demonstrated by the test scores of its students and its history of successful charter renewals, TEAM has met and believes that it will continue to meet the academic success requirements of NJDOE. In addition to the test scores and other growth measurements, TEAM gauges success by measuring the degree to which students are staying in school with TEAM. TEAM s most recent student attrition rate was 7.4%, with half of the students who left having done so because of family relocation out of the Newark area. TEAM also celebrates a high school graduation rate of 90% (Source: NJ DOE Graduate Data Report), and 81% of TEAM alumni have gone to college. A comparison of TEAM test scores to Newark Public Schools ( NPS, the sending district) along with graduation rates, exemplifies the success students attending TEAM have been able to achieve compared to that of their peers at traditional Newark Public Schools. In five 1 (Source: Haskins, R. (2008). Education and economic mobility. In J. B. Isaacs, I. V. Sawhill & R. Haskins (Eds.), Getting ahead or losing ground: Economic mobility in America (pp ). Washington, DC: The Brookings Institution) A-22

51 out of eleven tests, the proficiency levels of TEAM students are 20 or more percentage points higher than NPS scores and they are 15 to 19 points higher on an additional five of the eleven tests in the chart below. Table 10 New Jersey State Test Scores TEAM vs. Newark Public Schools Comparison of (% Proficient) TEAM Newark NJ ASK Math NJ ASK Math NJ ASK Math NJ ASK Math NJ ASK Reading NJ ASK Reading NJ ASK Reading NJ ASK Reading NJ ASK Science HSPA Reading ( ) HSPA Math ( ) Source: New Jersey State Department of Education For the past four years, at each grade level, TEAM students have scored above NPS on all standardized tests and TEAM students have scored above the State average 11 of 44 times. TEAM s success is also reflected in its high school graduation rate relative to Newark Public Schools and the State of New Jersey: 90% TEAM high school graduation rate compared to 69% for Newark Public Schools and 86% New Jersey state average (Source: NJ DOE Graduate Data Report). Standardized Testing TEAM students are administered the following New Jersey standardized tests: NJ Assessment of Skills and Knowledge (NJ ASK) High School Proficiency Assessment (HSPA) A-23

52 TEAM students also take the Northwest Evaluation Association (NWEA) Measures of Academic Progress (MAP) to compare their progress relative to students nationwide. NJ Assessment of Skills and Knowledge (NJ ASK) The NJ ASK, administered annually in April, is a series of tests that assess student proficiency in reading and math in grades 3 8 and science in grade 8. Four levels of proficiency are assessed based upon the New Jersey Core Curriculum Content Standards, giving the state and TEAM a snapshot of a student s proficiency at a given point in time. Comparative results for the school years , , and are set forth in the charts below. Highlights include the following: TEAM students have outperformed their peers in Newark Public Schools in all subjects and across all grades. In the spring of SPARK Academy (TEAM s first elementary school) third graders took the NJ-PASS, the elementary school form of the NJ-ASK for the first time. While comparative data for Newark Public Schools is not yet available, TEAM 3 rd graders outperformed the State of New Jersey in both Math (TEAM 85% vs. New Jersey 78%) and English Language Arts ( ELA ) (TEAM 81% vs. New Jersey 66%). TEAM s goal is for its students to outperform the state in terminal grades (4, 8 and 11), a high bar for students who enter middle school two to three years below grade level. Yet TEAM students have outperformed students around the state in 6 th grade math for two of the past four years and eighth grade ELA and science for two of the past four years. TEAM s year-to-year proficiency levels in 5 th and 6 th grade math and 5 th grade ELA improved more than year-to-year proficiency levels of the state. Table 11 NJ ASK Scores for TEAM s Middle Schools NJ ASK NJ ASK NJ ASK Math State TEAM NPS Math State TEAM NPS Math State TEAM NPS % Proficient % Proficient %Proficient % Proficient % Proficient %Proficient % Proficient % Proficient %Proficient 5 83% 80% 56% 5 81% 77% 56% 5 77% 75% 59% 6 79% 84% 55% 6 77% 74% 49% 6 71% 75% 42% 7 63% 56% 40% 7 66% 61% 34% 7 66% 65% 39% 8 72% 61% 45% 8 72% 73% 41% 8 72% 70% 42% Reading State TEAM NPS Reading State TEAM NPS Reading State TEAM NPS % Proficient % Proficient %Proficient % Proficient % Proficient %Proficient % Proficient % Proficient %Proficient 5 62% 46% 30% 5 61% 45% 38% 5 66% 46% 39% 6 65% 47% 40% 6 67% 57% 34% 6 70% 56% 47% 7 61% 51% 34% 7 63% 53% 41% 7 72% 74% 44% 8 82% 77% 57% 8 82% 82% 58% 8 82% 88% 56% Science State TEAM NPS Science State TEAM NPS Science State TEAM NPS % Proficient % Proficient %Proficient % Proficient % Proficient %Proficient % Proficient % Proficient %Proficient 8 82% 81% 56% 8 81% 86% 61% 8 84% 94% na Source: New Jersey Department of Education A-24

53 High School Proficiency Assessment (HSPA) HSPA tests provide a snapshot of student achievement in reading, writing and mathematics as specified in the New Jersey Core Curriculum Content Standards. Students take this test in March of their junior year. Comparative results for the school years , , and are set forth in the charts below. Highlights include the following: TEAM students have matched or outperformed the New Jersey state-wide average in reading in three of the last four years and in math two of the past four years. Newark Public Schools comparative data on the school year are not yet available but TEAM students scored 82% proficient in math and 94% proficient in reading, outperforming their New Jersey peers by 2% points on both exams. Table 12 HSPA Scores *n/a = data not available at this time Source: New Jersey State Department of Education Northwest Evaluation Association (NWEA) Measures of Academic Progress (MAP) Beginning in the school year, TEAM began to administer the MAP test, which measures each student s learning growth over time in reading and mathematics and is widely considered the gold standard in national norm referencing. This test is particularly important to TEAM, as students typically enter 5 th grade two-to-three grade levels behind in reading and math, which makes proficiency on the 5 th and 6 th grade NJ-ASK exams difficult to attain. Longitudinal analysis of the MAP results provides TEAM Schools with valuable information about student growth in learning. The MAP test is administered at the beginning and end of each school year. Results are set forth in Table 13 below. These charts are organized by class cohort, following the academic progress of each class from its entry into TEAM through the present. Thus it includes 4 years of data for 8 th graders, 3 for 7 th, 2 for 6 th, and 1 for 5 th. For A-25

54 the elementary school, it depicts 3 years of testing for the 2 nd graders, 2 for the 1 st graders and 1 for kindergarten students. The results are compared to the national average. Highlights include the following: TEAM elementary students enter kindergarten behind grade level but on average surpass the national averages in reading and math after one year. TEAM middle school students, who to date have entered 5 th grade from outside the TEAM network, typically enter TEAM considerably below grade level and behind their national peers, but usually enjoy substantial gains in reading growth over time. On average, TEAM middle school students are able to close their educational achievement gaps, relative to national peers in math by the 8 th grade. It is anticipated that students matriculating from TEAM elementary school campuses to TEAM middle school campuses will be at a level consistent with national peers and on par with New Jersey state averages, so TEAM can focus on moving students forward rather than catching them up to necessary academic levels. Table 13 - NWEA MAP Assessment A-26

55 A-27

56 Source: Northwest Evaluation Association test results. Admissions and Wait List TEAM school campuses are tuition free, open enrollment public schools for City of Newark children. TEAM does not discriminate in admissions for any reason, including race, religion, national origin, language spoken, intellectual or athletic ability, measures of achievement or aptitude, or status as a student with special needs. Open enrollment for the following school year begins each November, and the first recruitment cycle ends in January. If the number of enrollment applications exceeds the number of spaces available, which has been the case for all but the very earliest years of TEAM s history, a lottery is held to determine the order in which students are offered enrollment. Pursuant to the New Jersey Charter School Law, siblings of current students receive preference should they apply during the open enrollment period. [Remainder of page intentionally left blank] A-28

57 The following table shows TEAM s historical and projected enrollment at its schools and total wait list numbers. Table 14 - Enrollment Chart Historical Budgeted Projected * Fiscal Year TEAM Academy Rise Academy NCA SPARK Academy THRIVE Academy Seek Academy Life Academy Middle School # Middle School #4 108 TOTAL TEAM 768 1,084 1,306 1,506 1,805 2,238 2,571 3,003 3,538 Schools WAITING LIST 3,000 4,000 6,000 8,000 8,705 Source: TEAM Enrollment Office * Projected enrollment after June 30, 2016 is subject to charter renewal. After each lottery TEAM reviews its applicant list and prepares a wait list for the following school year. For the past two school years, the wait list is set forth below. Table 15 Wait List Grade * * K TOTAL 5,960 8,705 *Tabulated as of January of each school year. Source: TEAM Schools, Annual Reports to NJDOE, and A-29

58 Retention The rates of retention at each of the TEAM schools for the school years 2011 and 2012 are shown in the table below. In both years, approximately 50% of the students who left TEAM (approximately 4% of students) did so due to a move out of Newark or out of the State of New Jersey. No students left due to expulsion as TEAM has a no expulsion policy. Table 16 - Re-Enrollment Data School * * TEAM Academy 92% 89% Rise Academy 90% 93% Newark Collegiate Academy 94% 92% SPARK Academy 92% 95% OVERALL 92% 92% *Tabulated as of October 15 of each school year. Source: TEAM Demographics TEAM is committed to (i) serving students who require the most academic support and (ii) serving a student population that closely resembles the demographics of the most underserved students in Newark Public Schools. To do so, TEAM takes great care to ensure that Newark parents are aware of its application process through outreach in the community, targeted mailings, and its website. TEAM s application is straightforward, requiring only a name, address and child s birthdate. TEAM s enrollment department also proactively reaches out to families in the South, Central and West wards of Newark in order to reach all parents and potential students in these areas. TEAM s student demographics are as follows: 94% are African-American and 5% are Latino 86% are from low income homes (as reflected by the number of students receiving free and reduced price meals) 13% have special needs. NCLB Accountability Under the accountability provisions of Title I of the Elementary and Secondary Education Act, as reauthorized by the No Child Left Behind Act of 2001 ( NCLB ), all schools are evaluated for Adequate Yearly Progress ( AYP ). On February 9, 2012, the U.S. Department of Education provided to the State of New Jersey a waiver from certain of the NCLB requirements, A-30

59 including the AYP targets. The waiver provides that it was granted in exchange for rigorous and comprehensive plans designed to improve educational outcomes for all students, close achievement gaps, increase equity, and improve the quality of instruction. To date, New Jersey and 31 states, plus the District of Columbia, have been provided waivers. The waiver became effective for the school year and is valid through the end of the school year, after which the State of New Jersey may request an extension of the waiver. TEAM is considered one school under one charter for NCLB purposes and is a Title I school, as determined by its high proportion of low-income students. Market Share Based on a national study completed in November 2012 by the National Alliance for Public Charter Schools entitled A Growing Movement: American s Largest Charter School Communities, charter school students make up over 17% of total Newark Public School students. For the year , the timeframe of this study, TEAM s market share of charter students was 20.6%, which equated to 3.6% of total district students. TEAM s share of total charter school and district school enrollment in Newark has increased almost two fold from approximately 1.7% of all public school students in to approximately 3.6% of the public school enrollment in In addition, TEAM increased its market share even as new charters were opening and Newark public school enrollment increased. TEAM students comprised approximately 20.6% of all public charter school enrollments in the year , up from 16.9% in TEAM is the second largest public charter school network in Newark. Table 17 Public Schools Students, Newark, New Jersey School Year TEAM Students Charter Enrollment Non- Charter Enrollment Total District Enrollment TEAM Students as % of Charter Students TEAM Students as a % of District Students ,506 7,310 35,415 42, % 3.6% ,306 6,281 33,253 39, % 3.3% ,084 5,391 39,442 44, % 2.4% ,544 39,992 44, % 1.7% Source: National Alliance for Public Charter Schools Competition In general TEAM s competition for students from Newark Public Schools occurs in the South, Central and West wards. While all Newark public school students are eligible to participate in the lottery, TEAM s Enrollment Department estimates that the overwhelming majority of students who enter the lottery are from these wards. Families sending their students to district schools are currently required to send their children to the closest neighborhood school A-31

60 for elementary and middle school. At the high school level, Newark also has six magnet (selective enrollment) schools to which students can apply. TEAM also competes with all Newark charter schools regardless of the location of those schools. Charter school applications can be made any time before each charter school s deadlines by any student who is a Newark resident. Charter school applications are available on a school-by-school basis. Since its beginning, TEAM has demonstrated the ability to retain its existing students while managing periods of high growth. Since , TEAM has increased its enrollment from 768 students to over 1,800 students as TEAM grew from three to five schools and from 10 to 15 grades. During this period demand for seats in TEAM schools remained strong as evidenced by the January 2013 lottery at which only 550 students could be admitted from the wait list of approximately 8,700 students. Currently the charter landscape in Newark is comprised primarily of stand-alone charter schools; however, it also includes another large charter management organization, Uncommon Schools, which, like TEAM, is expected to expand. TEAM works closely with other likeminded high performing charter schools to share best practices and engages in various educational opportunities. In addition, TEAM works closely with the Newark Public Schools Office of the Superintendent and with George Washington Carver Elementary School in particular as TEAM elementary schools currently share space at the 333 Clinton Place Campus. Pension and Benefits As New Jersey state employees, all eligible full-time employees of TEAM are required to participate in one of two state operated retirement systems: Public Employees Retirement System (PERS) or the Teachers Pension and Annuity Fund (TPAF). Eligibility is based upon a tiered system which defines the plan benefits. TEAM employees who do not meet the criteria of the PERS or TPAF pension plans, but who earn more than $5,000 per year, are enrolled in the New Jersey Defined Contribution Retirement Program (DCRP) which is administered for the Division of Pensions and Benefits by Prudential Retirement Insurance and Annuity Company. Insurance TEAM maintains insurance coverage related to property, casual and liability claims that is comparable to insurance coverage maintained by other New Jersey public schools. Accounting Matters: TEAM, FOTA and the Borrower Because TEAM is a party to the Lease Agreements between TEAM and the Borrower and due to FOTA s role associated with the Support Agreement, potential purchasers of the Bonds should read TEAM s and FOTA s financial statements as of and for the year ended June 30, 2012 in their entirety for more complete information regarding the their financial positions A-32

61 and the results of their operations (see Appendix B-1 and B-2 to this Official Statement). The financial statements of TEAM and FOTA as of and for the year ended June 30, 2012 included in this official statement have been audited by Scott J. Loeffler, New Jersey Certified Public Accountant. In the opinion of both TEAM and FOTA, there have been no material adverse changes in the financial condition of either TEAM or FOTA since June 30, 2012, the most recent date for which audited financial statements are available. Beginning with the year end of June 30, 2014, audited financial statements will be published concerning the Borrower, TEAM, and FOTA, as required by the Continuing Disclosure Agreement. Litigation TEAM is not aware of any litigation pending or threatened with respect to itself, Borrower, or FOTA, wherein any unfavorable decision would have a materially adverse effect on the financial condition, property, or operation of TEAM, taking into consideration available insurance coverage. Related Parties From time to time credit is provided to FOTA by M&T Bank, a New York banking corporation, including a credit facility that funds a portion of the QZAB/QSCB Funded Facilities described above. M&T Securities, Inc., the underwriter associated with the Series 2013 Bonds and Manufacturers and Traders Trust Company, the Trustee associated with the Series 2013 Bonds are both wholly owned direct subsidiaries of M&T Bank Corporation. A credit facility from The Prudential Insurance Company of America also funds a portion of the QZAB/QSCB Funded Facilities and The Prudential Insurance Company of America may purchase some of the 2013 Bonds. Financial Statements Although the Borrower was established in 2010, it has not previously had any significant financial activity, incurred any liabilities, or held any assets and therefore it has not prepared any financial statements. Financial information for TEAM and FOTA are provided below. [Remainder of page intentionally left blank] A-33

62 TEAM Academy Charter School, Inc. Statement of Financial Position For the Years Ended June 30, 2009 through 2013 (unaudited) ASSETS CURRENT ASSETS Cash in Bank $2,095,338 $2,189,663 $3,231,990 $4,827,642 $7,023,807 Cash Equivalents Intergovernmental A/R - State 83,731 35, , , ,396 Intergovernmental A/R - Federal , ,198 Intergovernmental A/R - Other ,434 1,332,298 3,578,367 Other Accounts Receivable 168, ,269 37,641 37,009 48,283 Total CURRENT ASSETS 2,348,002 2,763,791 3,765,728 6,595,737 11,987,552 OTHER ASSETS Other Assets ,118 12,118 12,953 Prepaid Expenses , ,783 Total OTHER ASSETS , , ,736 Total ASSETS 2,348,002 2,763,791 3,777,846 7,041,637 12,148,288 LIABILITIES & FUND BALANCE CURRENT LIABILITIES Account Payable 203, , ,199 2,010,758 2,772,451 Due to School Districts 81, , , ,199 1,845,668 Accrued Payroll Liabilities , , ,947 Deferred Revenues 329, , , , ,231 Total CURRENT LIABILITIES 614,596 1,228,893 1,422,292 2,579,201 5,135,297 LONG-TERM LIABILITIES Copiers Lease Buyout ,652 81,227 Total LONG-TERM LIABILITIES ,652 81,227 FUND BALANCE Current Year Fund Balance 1,086,126 (198,508) 820,656 1,893,230 2,682,980 Prior Year Fund Balance 647,280 1,733,406 1,534,898 2,355,554 4,248,784 Total FUND BALANCE 1,733,406 1,534,898 2,355,554 4,248,784 6,931,764 Total LIABILITIES & FUND BALANCE $2,348,002 $2,763,791 $3,777,846 $7,041,637 $12,148,288 Source: TEAM A-34

63 TEAM Academy Charter School, Inc. Statement of Revenues and Expenditures For the Years Ended June 30, 2009 through 2013 (unaudited) Revenue State/Local Funding $11,266,569 $15,970,150 $20,235,889 $25,657,542 $32,069,261 Federal Funding 1,145,090 1,669,865 $2,563,287 $2,939,078 $4,304,686 Grants (fundraising) 787,434 1,145,180 3,238,586 2,615,437 3,179,534 Other 370, ,223 93, , ,532 Total Revenue 13,569,600 19,254,418 26,131,010 31,383,235 39,892,013 Expenditures Instruction Salaries of Teachers 3,883,461 6,493,647 8,294,366 8,845,577 11,641,971 Supplies and Materials 634,170 1,408,283 1,289,644 1,876,506 2,036,190 Miscellaneous Expenses 650, ,989 1,008,348 1,010, ,372 Total Instruction 5,168,538 8,682,919 10,592,358 11,732,718 14,626,533 General Administration Administrative Salaries 2,148,055 2,764,221 3,668,848 4,096,863 5,823,780 Total Benefit Costs 1,255,268 1,649,258 3,019,629 4,009,150 5,358,363 Other Expenses 857,908 1,354,978 1,511,636 1,704,345 1,811,604 Total General Administration 4,261,231 5,768,457 8,200,113 9,810,358 12,993,747 Support Services Salaries 349, ,674 1,598,195 2,190,579 2,666,066 Purchased Professional/Technical Services 101, , , ,107 1,029,168 Other Purchased Services 873,661 1,129,211 1,120,430 1,220,875 1,503,204 Rent of Land and Buildings 999,280 1,677,580 2,135,823 2,319,947 2,320,340 Energy Costs 145, , , , ,539 Transportation 372, , , , ,014 Other 122, ,907 91, , ,302 Total Support Services 2,964,877 4,957,276 6,004,081 7,108,256 8,744,634 Equipment and Capital Outlay Purchased Professional/Technical Services 0 20, , , ,699 Supplies and Materials 88,828 23, , , ,420 Total Capital Outlay 88,828 44, , , ,120 Total Expenditures 12,483,474 19,452,926 25,310,354 29,490,005 37,209,034 Operating Surplus / (Deficit) $1,086,126 ($198,508) $ 820,656 $1,893,230 $2,682,980 Source: TEAM A-35

64 Friends of TEAM Academy Charter School, Inc. Consolidated Statement of Financial Position For the Years Ended June 30, 2009 through 2013 (Unaudited) CURRENT ASSETS Cash and cash equivalents $1,727,186 $1,920,545 $2,686,668 $3,646,127 $6,858,173 Accrued interest receivable , ,322 1,089,573 Loan receivables 5,106 5, Contributions receivable ,165, ,665 Accounts receivable/other receivable , ,104 1,528,119 Deferred expenses 27, , Rent receivable/other 45, ,666 65,106 45,973 88,442 Total Current Assets 1,804,670 2,277,448 3,354,974 5,781,471 10,191,973 FIXED ASSETS Land 450, , , , ,000 Buildings 6,504,397 6,687,449 7,235,256 7,319,098 7,529,971 Furniture/equipment 34,762 38,508 38,508 38,508 38,508 Total 6,989,159 7,175,957 7,723,764 7,807,606 8,018,479 Less: accumulated depreciation (488,704) (658,688) (840,489) (1,028,881) (1,241,532) Total Fixed Assets 6,500,455 6,517,269 6,883,275 6,778,725 6,776,947 OTHER ASSETS Investment in QZABs, QSCBs and Taxable Bonds ,317,595 40,300,050 62,310,602 Unamortized bond closing cost ,368 0 Note Receivable Kingston Education ,875 Other 50,000 50,000 58, , ,606 Total Other Assets 50,000 50,000 22,375,928 40,645,418 62,985,082 TOTAL ASSETS 8,355,125 8,844,717 32,614,177 53,205,614 79,954,002 CURRENT LIABILITIES Loan payable - Current 214, , ,669 14,207,119 34,177,391 Deferred revenue ,000 1,300,724 Accounts payable ,324 2,443,202 Other 100, , , ,970 Total Current Liabilities 314, , ,968 15,550,687 38,584,287 NONCURRENT LIABILITIES Loans Payable 3,398,571 3,199,047 24,133,290 24,398,176 24,020,844 Total Noncurrent Liabilities 3,398,571 3,199,047 24,133,290 24,398,176 24,020,844 TOTAL LIABILITIES 3,712,963 3,401,071 24,901,258 39,948,863 62,605,130 NET ASSETS Temporarily restricted 0 600, ,623 0 Unrestricted 4,642,162 4,843,646 7,712,919 12,755,128 17,348,871 TOTAL NET ASSETS $4,642,162 $5,443,646 $7,712,919 $13,256,751 $17,348,871 Source: FOTA A-36

65 Friends of TEAM Academy Charter School, Inc. Consolidated Statements of Activities For Years Ended (Unaudited) INCOME Contributions Restricted contributions $1,046,400 $ 615,000 $ 98,104 $ 635,616 $ 651,502 Unrestricted contributions 1,148,719 1,583,453 2,468,321 5,121,377 3,155,380 In-kind contribution 53,021 74,375 Total contributions 2,195,119 2,198,453 2,619,446 5,831,368 3,806,882 Other income Rental income 990,915 1,677,580 2,080,818 2,174,310 1,874,766 Gain on sale of property 1,096,618 Amortization bond discount 174, ,455 1,143,352 Interest income - bonds 2,302,637 3,669,351 Interest income - other 5,493 25, , Sublease Income/Other 216,929 Total other income 996,408 1,703,046 3,941,058 5,159,684 6,904,709 TOTAL INCOME 3,191,527 3,901,499 6,560,504 10,991,052 10,711,591 EXPENSES Administrative expense 11,273 7,384 23,697 19,009 22,062 Fundraising 194, , , , ,220 Interest expense 209, , ,206 1,607,667 2,162,724 Alumni Support 132, ,183 62, , ,371 Professional fees 64, ,146 76, ,856 18,300 Rent expense 403, ,315 1,527,354 1,551,978 1,398,774 Occupancy Expenses 269, , , , ,671 In-kind - legal fees 53,021 74,375 Grants to TEAM 750, ,000 1,163, ,095 1,259,575 Emergency Financial Assistance 33,137 School Wide Support 361,747 Amortization of bond closing costs 6,632 Other Expenses 256, , , , ,905 Depreciation 164, , , , ,651 Total Expenses 2,455,507 3,100,015 4,291,231 5,447,220 6,616,136 INCREASE IN NET ASSETS BEFORE REALIZED GAIN (LOSS) Realized Loss 736, ,484 2,269,273 5,543,832 4,095,455 (3,335) NET ASSETS - BEGINNING 3,906,142 4,642,162 5,443,646 7,712,919 13,256,751 NET ASSETS - ENDING $4,642,162 $5,443,646 $7,712,919 $13,256,751 $17,348,871 Source: FOTA A-37

66 Financial Projections This Appendix A and other portions of the Official Statement contain certain forwardlooking statements, as described in the Official Statement under the heading INTRODUCTORY STATEMENT. Although TEAM believes that the assumptions upon which the forward-looking statements contained in this Appendix A and other portions of the Official Statement are reasonable, any of the assumptions could prove to be inaccurate and, as a result, the forward-looking statements based on those assumptions could also be incorrect. All phases of TEAM s operations involve risks and uncertainties, many of which are outside of TEAM s control and any one of which, or a combination of which, could materially affect TEAM s results with respect to its operations. Certain factors that could cause actual results to differ from those expected are described in the section of the Official Statement entitled RISK FACTORS. TEAM is providing the following Projected Income and Expenses table for illustrative purposes only. [Remainder of page intentionally left blank] A-38

67 Projected Income and Expense TEAM Academy Charter School, Inc. Friends of TEAM Academy Charter School, Inc Enrollment 1,809 2,233 2,571 3,003 3,538 TEAM Revenues State/local $32,069,261 $38,098,843 $44,339,191 $52,330,970 $62,539,265 Federal 4,304,686 5,623,140 6,687,150 8,067,086 9,714,767 Fundraising/FOTA Support 3,179,534 3,101,046 2,192, ,905 0 Other 338, , , , ,712 TEAM Subtotal 39,892,013 47,119,356 53,753,863 61,600,912 73,043,744 FOTA Revenues Fundraising 3,806,882 3,698,954 4,307,080 4,314,963 1,000,000 Lease/Interest/Other (excl. QZAB/QSCB) 3,929,735 4,008,330 4,088,496 4,170,266 4,253,672 QZAB/QSCB Subsidy 3,219,669 5,177,595 6,048,429 6,048,429 6,048,429 QZAB/QSCB Subsidy Sequestration (244,695) (393,497) (459,681) (459,681) (459,681) FOTA Subtotal 10,711,591 12,491,382 13,984,324 14,073,978 10,842,420 COMBINED TOTAL 50,603,604 59,610,738 67,738,188 75,674,890 83,886,164 TEAM Expenses Instruction 14,626,533 17,791,870 20,233,130 23,342,792 27,203,477 General Administration 12,993,747 15,805,732 17,974,470 20,736,994 24,166,705 Support Services (excluding leases) 6,424,294 7,814,579 8,886,834 10,252,666 11,948,364 Capital Outlay 844,120 1,026,797 1,167,685 1,347,149 1,569,955 Lease Payments 2,320,340 3,680,378 4,491,744 4,921,311 5,068,950 TEAM Subtotal 37,209,034 46,119,356 52,753,863 60,600,912 69,957,451 FOTA Expenses Grants to TEAM 1,259,575 1,500,000 1,500,000 1,000,000 0 Interest 2,162,724 3,520,894 4,536,810 4,456,556 4,358,313 Lease Payments 1,398,774 2,120,234 2,227,113 2,246,680 2,266,637 Other 1,795,063 2,990,635 3,229,012 3,399,807 3,363,265 FOTA Subtotal 6,616,136 10,131,763 11,492,934 11,103,043 9,988,214 COMBINED TOTAL $43,825,170 $56,251,119 $64,246,798 $71,703,954 $79,945,665 TEAM Net Income 2,682,979 1,000,000 1,000,000 1,000,000 3,086,293 FOTA Net Income 4,095,455 2,359,619 2,491,390 2,970, ,206 Combined Net Income $6,778,434 $3,359,619 $3,491,390 $3,970,935 $3,940,499 Combined EBITDA $9,422,542 $8,735,447 $10,534,518 $11,684,851 $11,573,372 Source: TEAM and FOTA A-39

68 TEAM Management Statement Since opening in 2002, TEAM has created a network of schools in Newark that instill in their students the desire and ability to succeed in college, in order to change the world. Currently enrolling over 2,230 students, TEAM is on a growth trajectory to serve nearly 5,000 students (11% of students in Newark) by TEAM is one of the top performing KIPP Schools in the nation and as a leading school in Newark has an outstanding working relationship with the NJDOE, its charter authorizer. Based on TEAM s history of renewal and expansion approvals and its high level of academic performance demonstrated over the past 11 years, TEAM s management and Board are confident that TEAM will be granted its fourth charter renewal in 2016 with full authorization to continue implementing its planned expansion. Recent accomplishments Over 90% of TEAM students graduate from high school and 81% of all TEAM alumni have gone to college. The KIPP Through College program works with TEAM alumni to support them to and through college. 94% of TEAM juniors passed the state high school proficiency exam in English in % of TEAM fifth graders are behind grade level by 1-4 years entering TEAM middle schools. By the end of their first year, 56% are reading at grade level or above. On average, incoming TEAM kindergarten school students outperform the national average in reading and in math after their first year. TEAM s most recent attrition rate was 7.4%, with half of departing students leaving TEAM because their family moves away from Newark. A consortium of KIPP Schools, including TEAM, has received more than $34.2 million from the Department of Education s Charter School Program (2010, 2011 and 2012 awardees) to support the replication and expansion of high-quality charter schools. TEAM has received over $650,000 in funding through CSP since In 2010, KIPP Foundation was awarded a five-year, $50 million Investing in Innovation (i3) grant from the U.S. Department of Education to support innovative practices in school leadership development and KIPP s expansion over five years. TEAM has received over $400,000 in funding through i3. Over the past three years, two TEAM middle school teachers have been honored with the Harriett Ball Excellence in Teaching Award out of more than 2,000 teachers who work for KIPP nationwide. A-40

69 APPENDIX B - 1 Financial Statements of the School for the Fiscal Year Ended June 30, 2012

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71 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE TEAM ACADEMY CHARTER SCHOOL FOR THE FISCAL YEAR ENDED JUNE 30, 2012

72 TEAM ACADEMY CHARTER SCHOOL JUNE 30, 2012 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal...1 Roster of Trustees and Officers...5 Consultants and Advisors...6 FINANCIAL SECTION Independent Auditor's Report on General Purpose Financial Statements and Supplementary Schedule of Expenditures of Federal Awards and State Financial Assistance...7 Required Supplementary Information - Part I Management's Discussion and Analysis...9 Basic Financial Statements: A. School-wide Financial Statements A-1 Statement of Net Assets...20 A-2 Statement of Activities...21 B. Fund Financial Statements: Governmental Funds: B-1 Balance Sheet...22 B-2 Statement of Revenues, Expenditures and Changes in Fund Balances...23 B-3 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities...24 Proprietary Funds: B-4 Statement of Net Assets...25 B-5 Statement of Revenues, Expenses, and Changes in Fund Net Assets...26 B-6 Statement of Cash Flows...27 Fiduciary Funds: B-7 Statement of Fiduciary Net Assets...28 B-8 Statement of Changes in Fiduciary Net Assets...29 Notes to Financial Statements...30

73 TEAM ACADEMY CHARTER SCHOOL JUNE 30, 2012 TABLE OF CONTENTS Required Supplementary Information - Part II C. Budgetary Comparison Schedules: C-1 Budgetary Comparison Schedule General Fund...47 C-2 Budgetary Comparison Schedule Special Revenue Fund...50 Notes to Required Supplementary Information: C-3 Budget to GAAP Reconciliation...52 E. Special Revenue Fund: E-1 Combining Schedule of Program Revenues and Expenditures, Special Revenue Fund - Budgetary Basis...53 G. Proprietary Funds: Enterprise Fund: G-1 Combining Statement of Net Assets...55 G-2 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets...56 G-3 Combining Statement of Cash Flows...57 Fiduciary Funds: H-1 Combining Statement of Fiduciary Net Assets...58 H-2 Combining Statement of Changes in Fiduciary Net Assets...59 H-3 Student Activity Agency Fund Schedule of Receipts and Disbursements...60 H-4 Payroll Agency Fund Schedule of Receipts and Disbursements...61 H-5 Unemployment Compensation Insurance Trust Fund...62 J. Financial Trends: J-1 Net Assets by Component...63 J-2 Changes in Net Assets...64 J-2A Combined Balance Sheet - Governmental Funds...66 J-2B Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds...67 J-2C Statement of Cash Flow - Governmental Funds...68 J-3 Fund Balances Governmental Funds...69 J-4 Changes in Fund Balances Governmental funds...70

74 TEAM ACADEMY CHARTER SCHOOL JUNE 30, 2012 TABLE OF CONTENTS J. Revenue Capacity: J-5 Revenue Capacity...71 J-6 Assessed Value and Actual Value of Taxable Property...72 J-7 Direct and Overlapping Properties...73 J-8 Principal Property Taxpayers...74 J. Debt Capacity: J-9 Property Tax Levies and Collections...75 J-10 Ratios of Outstanding Debt by Type...76 J-11 Ratios of Net General Bonded Debt Outstanding...77 J-12 Direct and Overlapping Governmental Activities Debt...78 J. Demographic and Economic Information: J-13 Demographic and Economic Statistics...79 J-14 Principal Employers...80 J. Operating Information: J-15 Full Time Equivalent Charter School Employees by Function/Program...81 J-16 Operating Expenses...82 J-17 School Building Information...83 J-18 Insurance Schedules...84 J-19 General Fund-Other Local Revenue by Source...85 J-20 Schedule of Allowable Maintenance Expenditures by School Facility...86 SINGLE AUDIT SECTION K. K-1 Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...87 K-2 Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 and New Jersey OMB Circular letter K-3 Schedule of Expenditures of Federal Awards, Schedule A...91 K-4 Schedule of Expenditures of State Financial Assistance, Schedule B...92 K-5 Notes to the Schedule of Awards and Financial Assistance...93 K-6 Schedule of Findings of Noncompliance...95 K-7 Summary Schedule of Prior Audit Findings...99

75 September 12, 2012 Commissioner New Jersey Department of Education 100 Riverview Executive Plaza CN 500 Trenton, NJ Dear Commissioner: The Comprehensive Annual Financial Report of the TEAM Academy Charter School for the fiscal year ended June 30, 2012, is hereby submitted. Responsibility for both the accuracy of the data and completeness and fairness of the presentation, including all disclosures, rests with the management of the school. To the best of our knowledge and belief, the data presented in this report are accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the school. All disclosures necessary to enable the reader to gain an understanding of the school s financial activities have been included. The Comprehensive Annual Financial Report is presented in four sections: introductory, financial, statistical and single audit. The introductory section includes this transmittal letter and list of principal officials. The financial section includes the general-purpose financial statements and schedules, as well as the auditor s report. The statistical section includes audited data from the school s first six fiscal years. The school is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1996 and the U. S. Office of Management and Budget Circular A-133, Audits of State and Local Governments and Non-Profit Organizations, and the State Treasury Circular Letter OMB, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid Payments. Information related to this single audit, including the auditors reports on internal control and compliance with applicable laws and regulations and findings and recommendations is included in the single audit section of this report. 1) REPORTING ENTITY AND ITS SERVICES: TEAM Academy Charter School is an independent reporting entity within the criteria adopted by the Governmental Accounting Standards Board (GASB) as established by GASB No. 34. All funds and account groups of the TEAM Academy Charter School are included in this report 1