PRELIMINARY OFFICIAL STATEMENT DATED MARCH 28, NEW ISSUE BOOK ENTRY ONLY Ratings: S&P AA+ Moody s Aa2 See RATINGS herein

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1 PRELIMINARY OFFICIAL STATEMENT DATED MARCH 28, 2012 This PRELIMINARY OFFICIAL STATEMENT AND THE INFORMATION CONTAINED HEREIN ARE SUBJECT TO COMPLETION AND AMENDMENT IN A FINAL OFFICIAL STATEMENT Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Bonds offered hereby, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of that jurisdiction. NEW ISSUE BOOK ENTRY ONLY Ratings: S&P AA+ Moody s Aa2 See RATINGS herein In the opinion of Squire Sanders (US) LLP, Bond Counsel, under existing law (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (ii) interest on, and any profit made on the sale, exchange or other disposition of, the Bonds are exempt from the Ohio personal income tax, the Ohio commercial activity tax, the net income base of the Ohio corporate franchise tax, and municipal, school district and joint economic development district income taxes in Ohio. Interest on the Bonds may be subject to certain federal taxes imposed only on certain corporations, including the corporate alternative minimum tax on a portion of that interest. For a more complete discussion of tax aspects, see TAX MATTERS herein. OFFICIAL STATEMENT 29,110,000* THE RIVERSOUTH AUTHORITY (OHIO) RIVERSOUTH AREA REDEVELOPMENT REFUNDING BONDS, 2012 SERIES A (Payable from City of Columbus, Ohio Annual Rental Appropriations) Dated: Date of Initial Delivery Due: As shown on the inside front cover The Bonds: The RiverSouth Authority, a new community authority and body corporate and politic (the Authority), is issuing its RiverSouth Area Redevelopment Refunding Bonds, 2012 Series A (the Bonds) to refund certain securities issued previously to pay the costs of acquiring and redeveloping the property as described herein under BONDS AUTHORIZATION AND PURPOSE. The Bonds will be issued and secured under a Master Trust Agreement, dated as of June 1, 2004 (the Master Trust Agreement), between the Authority and U.S. Bank National Association, as Trustee (the Trustee), as supplemented by the Third Supplemental Trust Agreement, dated as of April 1, 2012 (the Third Supplemental Trust Agreement and, together with the Master Trust Agreement, the Trust Agreement). Security and Sources of Payment. The Bonds are payable from the revenues, receipts and other moneys assigned under that Trust Agreement to secure payment of the Bonds, which include Pledged Receipts primarily composed of certain Redevelopment Payments to be paid over to the Authority under a lease agreement (the Master Lease) with the City of Columbus, Ohio (the City), as supplemented by the Third Supplemental Lease (the Third Supplemental Lease and, together with the Master Lease, the Lease). The obligation of the City to make Redevelopment Payments pursuant to the Lease is expressly made subject to the availability of annual appropriations for such purpose. THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY PAYABLE AS TO BOTH PRINCIPAL AND INTEREST SOLELY FROM CERTAIN REVENUES AND PLEDGED FUNDS. THE BONDS DO NOT CONSTITUTE A DEBT, OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF OHIO OR OF THE CITY OF COLUMBUS OR ANY OTHER POLITICAL SUBDIVISION THEREOF, AND THE HOLDERS THEREOF HAVE NO RIGHT TO HAVE TAXES LEVIED BY THE OHIO GENERAL ASSEMBLY, THE RIVERSOUTH AUTHORITY OR THE CITY OF COLUMBUS OR THE TAXING AUTHORITY OF ANY OTHER POLITICAL SUBDIVISION OF THE STATE FOR THE PAYMENT OF THE PRINCIPAL THEREOF OR INTEREST THEREON. BookEntry: The Bonds will be initially issued only as fully registered bonds, one for each maturity [and interest rate within a maturity], issuable under a book entry system, registered initially in the name of The Depository Trust Company or its nominee (DTC). There will be no distribution of Bonds to the ultimate purchasers. The Bonds in certificated form as such will not be transferable or exchangeable, except for transfer to another nominee of DTC or as otherwise described in this Preliminary Official Statement. See Appendix C. Payment: (See Maturity Schedule on inside cover.) Principal and interest will be payable to the registered owner (DTC), principal upon presentation and surrender at the designated corporate trust office of U.S. Bank National Association, in Cincinnati, Ohio (the Trustee and Bond Registrar), and interest transmitted by the Trustee on each interest payment date (June 1 and December 1 of each year, commencing December 1, 2012) to the registered owner (DTC) as of the 15th day of the calendar month preceding that interest payment date. (For Principal Amounts, Interest Rates and Prices or Yields, see inside cover) Prior Redemption: Bonds maturing on and after December 1, 2023 are subject to optional redemption by the Authority prior to maturity, beginning December 1, 2022, and Bonds that are term bonds are subject to mandatory prior redemption, as described in this Preliminary Official Statement. The Bonds are offered when, as and if issued, and accepted by Stifel, Nicolaus & Company, Incorporated and Rice Financial Products Company (the Underwriters), subject to the opinion on certain legal matters relating to their issuance by Squire Sanders (US) LLP, Bond Counsel. The Bonds are expected to be available for delivery to DTC or its Agent on April, This Preliminary Official Statement has been prepared by the Authority in connection with its original offering for sale of the Bonds. This cover page includes certain information for quick reference only. It is not a summary of the bond issue. Investors should read the entire Preliminary Official Statement to obtain information as a basis for making informed investment judgments. The date of this Official Statement is April, 2012, and the information speaks only as of that date. Stifel, Nicolaus & Co., Inc. Rice Financial Products Company *Preliminary, subject to change

2 PRINCIPAL MATURITY SCHEDULE * ON DECEMBER 1 29,110,000 Serial Bonds Year Principal Amount Interest Rate Price or Yield CUSIP ** Year Principal Amount Interest Rate Price or Yield CUSIP ** , ,570, ,215, ,645, ,280, ,775, ,350, ,915, ,425, ,065, ,495, ,215,000 (This Space Intentionally Left Blank) * Preliminary, subject to change ** Copyright 2011, CUSIP Global Services (see Regarding This Official Statement).

3 REGARDING THIS OFFICIAL STATEMENT This Official Statement does not constitute an offering of any security other than the original offering of the Bonds of The RiverSouth Authority (the Authority) identified on the cover. No person has been authorized by the Authority to give any information or to make any representation, other than that contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been given or authorized by the Authority. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall be no sale of Bonds by any person, in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. 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, under any circumstances, shall create any implication that there has been no change in the affairs of the Authority since the date hereof. This Official Statement contains statements that the Authority believes may be forwardlooking statements. Words such as plan, estimate, project, budget, anticipate, expect, intend, believe and similar terms are intended to identify forwardlooking statements. The achievement of results or other expectations expressed or implied by such forwardlooking statements involves known and unknown risks, uncertainties and other factors that are difficult to predict, may be beyond the Authority s control and could cause actual results, performance or achievements to be materially different from any results, performance or achievements expressed or implied by such forwardlooking statements. The Authority undertakes no obligation, and does not plan, to issue any updates or revisions to such forwardlooking statements. UPON ISSUANCE, THE BONDS WILL NOT BE REGISTERED BY THE AUTHORITY UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND WILL NOT BE LISTED ON ANY STOCK OR OTHER SECURITIES EXCHANGE. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL, STATE OR OTHER GOVERNMENTAL ENTITY OR AGENCY WILL HAVE AT THE REQUEST OF THE AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT OR APPROVED OR DISAPPROVED THE BONDS FOR SALE. CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by Standard & Poor s. CUSIP data herein are provided by Standard & Poor s, CUSIP Service Bureau, a division of The McGrawHill Companies, Inc. CUSIP numbers have been assigned by an independent company not affiliated with the Authority and are included solely for the convenience of the holders of the Bonds. The Authority, the Bond Counsel and the Underwriters are not responsible for the selection or use of these CUSIP numbers and make no representation as to their correctness on the Bonds or the Cover or as indicated above. The CUSIP number for a specific maturity is subject to change after the issuance of the Bonds as a result of various subsequent actions and events. 1

4 The Ohio Municipal Advisory Council (OMAC) has requested that this paragraph be included in this Official Statement. Certain information contained in the Official Statement is attributed to OMAC. OMAC compiles information from official and other sources. OMAC believes the information it compiles is accurate and reliable, but OMAC does not independently confirm or verify the information and does not guaranty its accuracy. OMAC has not reviewed this Official Statement to confirm that the information attributed to it is information provided by OMAC or for any other purpose. In connection with this offering, the Underwriters may overallot or effect transactions that stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriters may offer and sell the Bonds to certain dealers and dealer banks and banks acting as agent at prices lower than the public offering price stated on the Cover, which public offering price may be changed from time to time by the Underwriter. The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of their respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guaranty the accuracy or completeness of such information. Upon issuance, the Bonds will not be registered by the Authority under the Securities Act of 1933, as amended, or any state securities law and will not be listed on any stock or other securities exchange. Neither the Securities and Exchange Commission nor any other federal, state or other governmental entity or agency will have passed on the accuracy or adequacy of this Official Statement or approved the Bonds for sale. (This Space Intentionally Left Blank) 2

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6 TABLE OF CONTENTS Page Regarding this Official Statement... 1 General Introductory Statement... 6 Bonds Authorization and Purpose... 7 Basic Documents... 7 Sources and Uses of Funds... 8 Details of the Bonds... 9 Use of Proceeds Refunding... 9 Verification of Mathematical Computations... 9 General; Book Entry System... 9 Mandatory Sinking Fund Redemption Optional Redemption Selection of Bonds and Book Entry Interests to be Redeemed Notice of Call for Redemption; Effect Security and Sources of Payment Bond Service Account and Pledged Receipts Redevelopment Payments Under Lease and Related Budget General Lease Covenant Additional Bonds Bankruptcy Trust Agreement Special Funds and Flow of Funds Investment of Funds Other Trust Agreement Provisions Events of Default; Remedies Enforcement by Mandamus Defeasance Refunding NonPresentment of Bonds Supplemental Trust Agreements; Modifications Covenants of the Authority Trustee, Bond Registrar and Escrow Agent Lease Agreement General and Projects Redevelopment Payments The District and the Authority Creation and Amendment of the District; Powers of the Authority Board of Trustees Improvements Undertaken by the Authority Dissolution of Authority Financial Matters Introduction Financial Reports and Examinations of Accounts The Developer

7 TABLE OF CONTENTS (continued) Page Litigation Legal Opinion Tax Matters Original Issue Discount/Original Issue Premium Eligibility for Investment and as Public Moneys Security Underwriting Ratings Transcript and Closing Certificates Continuing Disclosure Agreement Concluding Statement Appendix A Information Concerning the City of Columbus... A1 Appendix B Fiscal Year 2010 Basic Financial Statements of the City of Columbus... B1 Appendix C Book Entry Method; DTC... C1 Appendix D Proposed Form of Continuing Disclosure Agreement... D1 Exhibit A Proposed Text of Opinion Of Bond Counsel...Ex. A1 (This Space Intentionally Left Blank) 5

8 GENERAL INTRODUCTORY STATEMENT This Official Statement has been prepared by The RiverSouth Authority (the Authority) to provide certain information in connection with the original issuance and sale of the Authority s 29,110,000 * RiverSouth Area Redevelopment Refunding Bonds, 2012 Series A (the Bonds), to be issued (i) to advance refund the 2004 Series A Bonds (the Refunded Bonds), which were previously issued to pay costs of acquiring and redeveloping property and improvements, and (ii) to pay the costs of issuance of the Bonds. Certain information concerning the authorization, purpose, terms, and sources of payment and security is provided in this Official Statement. All financial and other information in this Official Statement has been provided by the Authority from its records, except for information expressly attributed to other sources and except for certain information on the inside cover and under UNDERWRITING and in APPENDICES A, B and C. The presentation of information, including tables of receipts, is intended to show recent historical information, and is not intended to indicate future or continuing trends in the financial position or other affairs of the Authority. No representation is made that past experience, as is shown by that financial and other information, will necessarily continue or be repeated in the future. This Official Statement should be considered in its entirety and no one subject considered less important than another by reason of location in the text. Reference should be made to laws, reports or documents referred to for more complete information regarding their contents. References to provisions of Ohio law or of the Ohio Constitution, are references to those current provisions. Those provisions may be amended, repealed or supplemented. All information concerning the Developer and the status of development of and plans and prospects for further development of the Authority s new community district (the District) has been provided by the Developer, and the Authority has not verified that information. The Authority assumes no responsibility with respect to any additional information that might be provided by the Developer to any person. As used in this Official Statement, County means Franklin County and State or Ohio means the State of Ohio, Act means Chapter 349 of the Ohio Revised Code, Fiscal Year means the twelve month period from January 1 to December 31, and Bond Service Charges or debt service means principal and interest payable on the Bonds or other obligations referred to, including any mandatory sinking fund or accreted amount payments. * Preliminary, subject to change. 6

9 BONDS AUTHORIZATION AND PURPOSE Basic Documents The Authority has authorized the issuance of the Bonds by adoption on June 22, 2004 of a General Bond Resolution (the General Bond Resolution) and by adoption on March 28, 2012 of a Series Resolution pertaining to the 2012 Series A Bonds (the Series Resolution), both pursuant to Chapter 349 of the Ohio Revised Code (the Act). For the security of the Bonds, the Authority has entered into a Master Trust Agreement (the Master Trust Agreement), dated June 1, 2004, with U.S. Bank National Association, in Cincinnati, Ohio, as Trustee (the Trustee), and as supplemented by both the First Supplemental Trust Agreement, dated June 1, 2004, and the Second Supplemental Trust Agreement, dated October 1, In connection with the 2012 Series A Bonds, the Authority has authorized and will enter into a Third Supplemental Trust Agreement (the Third Supplemental Trust Agreement). The General Bond Resolution is the basic bond resolution pertaining to all series of Bonds and forms part of the Trust Agreement. For each series of Bonds, the Authority adopts a Series Resolution, which forms part of the Supplemental Trust Agreement entered into with respect to that series of Bonds. In addition to the 2004 Series A Bonds and the 2012 Series A Bonds, the Authority has also authorized and issued 42,850, Series A Bonds under the Master Trust Agreement. Upon their issuance, the 2012 Series A Bonds will be secured on a parity basis with the outstanding 39,125, Series A Bonds and the 2004 Series A Bonds that remain outstanding. See SECURITY AND SOURCES OF PAYMENT. The Lease is the basic agreement between the Authority and the City pertaining to all series of RiverSouth Area Redevelopment Bonds and to all redevelopment activities to be financed under that Agreement. Under the Lease, the Authority leases to the City the Project Land (as defined in the Lease). A supplemental agreement is entered into with respect to each series of RiverSouth Area Redevelopment Bonds. In connection with the Bonds, the Authority and the City will enter into the Third Supplemental Lease Agreement (the Third Supplemental Lease Agreement). The Trust Agreement does not require a bond service reserve account for all Bonds issued pursuant to it. Instead it authorizes determination on an issuebyissue basis of the need for a reserve, and the amount and nature of funding of any such reserve. There is no reserve account for the RiverSouth Area Redevelopment Refunding Bonds, 2012 Series A. (This Space Intentionally Left Blank) 7

10 Sources and Uses of Funds * The estimated sources and uses of funds in connection with the issuance of the Bonds are: Sources of Funds Par Amount of Bonds 29,110, * Net Premium Cash Contribution Total Uses of Funds Deposit to Escrow Issuance Costs (a) Total (a) Includes Underwriters discount, legal and accounting fees, rating agency fees, printing and other incidental costs related to the issuance of the Bonds. (This Space Intentionally Left Blank) * Preliminary, subject to change. 8

11 DETAILS OF THE BONDS The Bonds are being issued pursuant to the Act, the General Bond Resolution and the Series Resolution described above. Use of Proceeds Refunding Proceeds from the sale of the Bonds that will be used to advance refund the Refunded Bonds will be deposited in an Escrow Fund held by U.S. Bank National Association (the Escrow Agent), pursuant to an Escrow Agreement between the Authority and the Escrow Agent dated April 1, 2012 (the Escrow Agreement). The money deposited in the Escrow Fund will be (a) held in cash to the extent not needed to make the investments described in (b) below, and (b) invested in direct obligations of or obligations guaranteed as to payment by the United States that mature or are subject to redemption by and at the option of the holder, in amounts sufficient, together with any uninvested cash in the Escrow Fund but without further investment or reinvestment, for the (i) payment of interest on the Refunded Bonds when due on June 1 and December 1 of each year from June 1, 2012 through June 1, 2014, and (ii) payment of the principal amount of the Refunded Bonds upon their prior optional redemption on June 1, 2014, as provided in the Authorizing Legislation. The Authorizing Legislation provides for an irrevocable call for optional redemption of the Refunded Bonds on June 1, 2014, at a redemption price equal to 100% of the principal amount redeemed, plus interest accrued to the redemption date. Any premium received by the Authority on the sale of the Bonds in excess of that necessary to fully fund the Escrow Fund as described above and to pay costs of issuing the Bonds and refunding the Refunded Bonds and any interest accrued on the Bonds will be deposited in the Bond Retirement Fund. Money in that Fund is used to pay debt charges on Authority debt obligations. Verification of Mathematical Computations. Prior to the delivery of the Bonds, Causey Demgen & Moore Inc., an independent public accounting firm, will deliver a report on the mathematical accuracy of certain computations contained in schedules provided to them by the Underwriter. These computations will relate to the adequacy of the money and maturing principal amounts of the direct obligations of or obligations guaranteed as to payment by the United States held in the Escrow Fund for the payment of (i) interest on the Refunded Bonds when due on June 1 and December 1 of each year from June 1, 2012 through and including June 1, 2014, and (ii) the principal of the Refunded Bonds being called for prior optional redemption on June 1, 2014 (at a redemption price of 100% of the principal amount optionally redeemed), all in accordance with the terms of the Escrow Agreement. General; Book Entry System The Bonds will be dated, will be payable in the amounts and on the dates, will bear interest (computed on the basis of a 360day year and twelve 30day months) at the rates and payable on the dates, and will be payable at the place and in the manner, described on the cover and inside cover pages. 9

12 The Trustee as Bond Registrar will keep all books and records necessary for registration, exchange and transfer of the Bonds. The Bonds will be delivered in bookentry only form and, when issued, registered in the name of The Depository Trust Company (DTC), New York, New York, or its nominee (Cede & Co., which will act as securities depository for the Bonds. For discussion of the bookentry system and DTC and the replacement of Bonds in the event that the bookentry system is discontinued, see Appendix C BookEntry Method. Mandatory Sinking Fund Redemption * The Bonds maturing on December 1, 20 (the 20 Term Bonds) are subject to mandatory sinking fund redemption in part by lot pursuant to the terms of the mandatory sinking fund redemption requirements of the Series Resolution. That mandatory redemption is to occur on December 1 in each of the years 20 through 20 (with the balance of to be paid at stated maturity on December 1, 20 ) at a redemption price equal to 100% of the principal amount redeemed, plus accrued interest to the redemption date, according to the following schedule: Year Amount Term Bonds redeemed by other than mandatory redemption, or purchased for cancellation may be credited against the applicable mandatory redemption requirement. Optional Redemption * The Bonds maturing on or after December 1, 2023 are subject to prior redemption on or after December 1, 2022 by and at the sole option of the Authority, either in whole or in part (as selected by the Authority) on any date and in integral multiples of 5,000, at a redemption price of 100% of the principal amount redeemed, plus accrued interest to the redemption date. Selection of Bonds and Book Entry Interests to be Redeemed. If fewer than all outstanding Bonds are called for redemption at one time, the Bonds to be called will be called as selected by, and selected in a manner as determined by, the Authority. If less than all of an outstanding Bond of one maturity under a book entry system is to be called for redemption (in the amount of 5,000 or any integral multiple), the Trustee will give notice of redemption only to DTC as registered owner. The selection of the book entry interests * Preliminary, subject to change. 10

13 in that Bond to be redeemed is discussed below under DETAILS OF THE BONDS Optional Redemption Notice of Call for Redemption; Effect. If bond certificates are issued to the ultimate owners, and if fewer than all of the Bonds of a single maturity are to be redeemed, the selection of Bonds (or those portions of Bonds in amounts of 5,000 or any integral multiples) to be redeemed will be made by lot in a manner determined by the Trustee. In the case of a partial redemption by lot when Bonds of denominations greater than 5,000 are then outstanding, each 5,000 unit of principal will be treated as if it were a separate Bond of the denomination of 5,000. Notice of Call for Redemption; Effect. The Trustee is to cause notice of the call for redemption, identifying the Bonds or portions thereof to be redeemed, to be sent by first class mail, at least 30 days prior to the redemption date, to the registered owner (initially, DTC) of each Bond to be redeemed at the address then shown on the Register on the 15th day preceding that mailing. Any defect in the notice or any failure to receive notice by mailing will not affect the validity of any proceedings for the redemption of any Bonds. On the date designated for redemption, Bonds or portions thereof called for redemption shall become due and payable. If the Trustee then holds in the Bond Service Fund sufficient moneys for payment of debt service payable on that redemption date, interest on each Bond (or portion thereof) so called for redemption will cease to accrue on that redemption date. So long as all Bonds are held under a book entry system by a securities depository (such as DTC), call notice is sent by the Trustee only to the depository or its nominee. Selection of book entry interests in the Bonds called, and giving notice of the call to the owners of those interests called, is the sole responsibility of the depository and of its participants and Indirect Participants. Any failure of the depository to advise any participant, or of any participant or any Indirect Participant to notify the book entry interest owners, of any such notice and in its content or effect will not affect the validity of any proceedings for the redemption of any Bonds or portions thereof. See DETAILS OF THE BONDS Book Entry Method. (This Space Intentionally Left Blank) 11

14 Bond Service Account and Pledged Receipts SECURITY AND SOURCES OF PAYMENT Bond Service Charges on the Bonds are payable solely from and secured by a first pledge of (1) the Bond Service Account established by and as provided in the General Bond Resolution, to be applied solely for the purpose of meeting Bond Service Charges, and (2) the Pledged Receipts which consist of (a) all receipts of the Authority from the Redevelopment Payments pursuant to the Lease (as defined herein) and (b) all receipts standing to the credit of the Bond Service Account. THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY PAYABLE AS TO BOTH PRINCIPAL AND INTEREST SOLELY FROM CERTAIN REVENUES AND PLEDGED FUNDS. THE BONDS DO NOT CONSTITUTE A DEBT, OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF OHIO OR OF THE CITY OF COLUMBUS OR ANY OTHER POLITICAL SUBDIVISION THEREOF, AND THE HOLDERS THEREOF HAVE NO RIGHT TO HAVE TAXES LEVIED BY THE OHIO GENERAL ASSEMBLY, THE RIVERSOUTH AUTHORITY OR THE CITY OF COLUMBUS OR THE TAXING AUTHORITY OF ANY OTHER POLITICAL SUBDIVISION OF THE STATE FOR THE PAYMENT OF THE PRINCIPAL THEREOF OR INTEREST THEREON. Redevelopment Payments Under Lease and Related Budget General. The RiverSouth Authority and the City of Columbus entered into a Master Lease Agreement (the Lease), dated June 1, 2004, pursuant to which the City will pay the Authority certain Redevelopment Payments. The Redevelopment Payments paid by the City to the Authority are from moneys specifically appropriated for such purpose and are to be the primary source of money to pay Bond Service Charges. The obligation of the City to make Redevelopment Payments pursuant to the Lease is expressly made subject to the availability of annual appropriations for such purpose. The City s obligation to make Redevelopment Payments is binding only for the oneyear periods as annual appropriations are made. (See LEASE AGREEMENT General and Projects Redevelopment Payments.) The Columbus City Council meets annually for the adoption of a budget. As noted above, the City s obligation to make Redevelopment Payments is binding only for the oneyear periods as annual appropriations are made. While the Columbus City Council has, for each year of the Lease, appropriated amounts to the City sufficient to meet payments to the Authority consistent with budget recommendations, and while the Authority expects that the Columbus City Council will for each year continue to do so, the Columbus City Council is not under any legal obligation to make appropriations in accordance with such City budget recommendations for future years. For information regarding the City, see Appendix A Information Concerning the City of Columbus. Notwithstanding the requirement for annual appropriations of Redevelopment Payments for payment of Bond Service Charges, the City has agreed that all such Redevelopment Payments required to pay Bond Service Charges will be included in the estimated budgets of the City, as 12

15 provided in the Act. (See LEASE AGREEMENT General and Projects Redevelopment Payments.) Lease Covenant. The Authority and the City contemplate that the supplemental agreements to the Lease will make provision for Redevelopment Payments to be paid to the Authority in amounts at least adequate to meet the Bond Service Charges on the Bonds. Notwithstanding the provisions of any supplemental agreement but subject to the terms of the Lease, the minimum Redevelopment Payment required by the Lease shall at all times be in amounts and payable at times as shall be necessary to pay the Bond Service Charges on the Bonds and on any Additional Bonds issued under and secured by the Trust Agreement. (See LEASE AGREEMENT General and Projects Redevelopment Payments.) Additional Bonds Additional Bonds may be issued by the Authority, subject to approval by the City Council, to pay costs of land acquisition, land development activities, community facilities and other improvements that are consistent with the Petition of the Authority. Except as otherwise provided in the Trust Agreement, all Bonds (except refunded Bonds deemed paid and discharged under the Trust Agreement) are and will be equally and ratably secured without priority for any reason, by a pledge of annual Redevelopment Payments paid by the City pursuant to the Lease. Upon issuance of the 2012 Series A Bonds, there will be 88,600,000 * of Bonds (including 3,865, Series A Bonds and 39,125, Series A Bonds) outstanding issued under and secured by the Trust Agreement. In connection with any Additional Bonds issued by the Authority, the City and the Authority will enter into a supplemental lease agreement, which will identify the capital facilities to be financed with the Additional Bonds and provide for the additional applicable Redevelopment Payments. The minimum Redevelopment Payment required by a supplemental lease shall at all times be in amounts and payable at times as shall be necessary to pay the Bond Service Charges on any Additional Bonds. (See LEASE AGREEMENT General and Projects Redevelopment Payments.) Bankruptcy Federal and State laws provide procedures for the adjustment of indebtedness of political subdivisions, such as the City. Chapter 9 of the U.S. Bankruptcy Code would permit the City to make such an adjustment if (i) it were insolvent (i.e., the City was not paying its debt charges as they came due or it was unable to pay those debt charges as they became due), (ii) it met certain other criteria (e.g., having negotiated in good faith with its creditors and failed to reach agreement or such negotiation was impractical because of time restrictions, the number of creditors or other reasons) and (iii) it were authorized under State law (by legislation or by a governmental officer) to seek relief under Chapter 9. The State s Uniform Public Securities Law provides that the City, or any other subdivision must obtain the approval of the State Tax Commissioner in order to file a bankruptcy petition stating that it is insolvent and that it desires * Preliminary, subject to change. 13

16 to effect a plan for the composition or adjustment of its debts and to take such further proceedings under the Bankruptcy Code. That law also states: No taxing subdivision shall be permitted, in availing itself of such acts of congress [the Bankruptcy Code], to scale down, cut down, or reduce the principal sum of its securities, except that interest thereon may be reduced in whole or in part. (Section of the Revised Code.) The County may also initiate proceedings under the Bankruptcy Code. Because it collects, distributes or otherwise provides revenues to the City, the City s and the Authority s respective financial conditions could be affected by such an action. TRUST AGREEMENT All Bonds will be issued pursuant to and secured by the Trust Agreement, including a supplemental trust agreement for each series of Bonds. The General Bond Resolution is incorporated in and constitutes part of the Trust Agreement. The Bonds will be issued pursuant to and secured by the Third Supplemental Trust Agreement. The Resolution is incorporated in and constitutes part of the Third Supplemental Trust Agreement. Special Funds and Flow of Funds The Bond Resolution creates the Bond Service Account as an account in the Bond Service Fund for the payment of Bond Service Charges on the Bonds. All moneys received by or on account of the Authority and required by the applicable Bond proceedings to be deposited, transferred, or credited to the Bond Service Fund, and all other moneys transferred or allocated to or received for the purpose of the Bond Service Fund are to be deposited with the Trustee and credited immediately to the Bond Service Fund and allocated to the Bond Service Account in the Bond Service Fund as provided by each Supplemental Trust Agreement. The Authority has covenanted in the General Bond Resolution not to make or create (except as authorized or permitted by the General Bond Resolution) any pledge or assignment of or lien or encumbrance upon the Bond Service Fund or the receipts pledged to the Bonds prior to or on a parity with the pledge under the Trust Agreement. (See TRUST AGREEMENT Covenants of the Authority.) The Authority has covenanted in the Third Supplemental Agreement that it will pay or cause to be paid directly to the Trustee any and all Pledged Receipts received by and for the account of the Authority. The Trustee will deposit such moneys to the Bond Service Account in the Bond Service Fund to pay the Bond Service Charges. Investment of Funds Under present law and the bond proceedings, moneys in the Bond Service Fund and the Project Fund may be invested in obligations of the United States or any agency or instrumentality thereof (including certain funds consisting exclusively of those obligations), and certificates of deposit which are eligible for investment under the Trust Agreement; provided those investments 14

17 shall mature or be subject to redemption by and at the option of the holder not later than five years from the date of that investment. Other Trust Agreement Provisions The Trust Agreement contains provisions as to bond authentication, registration, transfer, exchange and replacement, redemption, remedies upon default, duties of the Trustee, Bond Registrar, authenticating agents and paying agents (and their successors), supplemental trust agreements and defeasance, among others. Certain provisions of the Trust Agreement as to events of default, remedies, enforcement by mandamus, defeasance, optional redemption, nonpresentment and supplemental trust agreements are summarized below. Events of Default; Remedies Each of the following is an Event of Default : (a) Failure of the Authority to pay any interest on any Bond when such interest becomes due and payable; (b) Failure of the Authority to pay the principal or premium of any Bond when due and payable, whether at maturity or by acceleration or call for redemption; and (c) Any other failure to perform or observe duly and punctually any other covenants, agreements or conditions contained in the Bonds or the Trust Agreement and to be performed by the Authority, continued for a period of 60 days after written notice of the failure to the Authority given by the Trustee or by the holders of not less than 25% in aggregate outstanding principal amount of the affected Bonds. The Trustee will not be required to take notice, and will not be deemed to have notice or knowledge, of any Event of Default described in subparagraph (c) above, unless the Trustee is notified by the Authority or by the holders of at least 10% of the aggregate outstanding principal amount of Bonds. In the absence of delivery of a notice satisfying those requirements, the Trustee may assume conclusively that there is no Event of Default as described in subparagraph (c). If an Event of Default occurs, the Trustee, within five days after having knowledge of that Event of Default, shall give written notice of that Event of Default to the Authority. The Trustee shall give to the Bondholders, and to any other Paying Agents and Authenticating Agents, written notice by mail of each Event of Default known to the Trustee within 30 days after having knowledge of its occurrence, unless the Event of Default has been remedied or cured before the giving of that notice. Notice to the Bondholders shall be given by mailing notice to all holders of Registered Bonds, as their names and addresses appear on the Register at the close of business 15 days prior to the mailing of that notice. The Trust Agreement does not require the furnishing of periodic evidence to the Trustee as to the absence of defaults or Events of Default under the Trust Agreement or as to compliance with its terms. (See, however, TRUST AGREEMENT Covenants of the Authority.) 15

18 In the case of any Event of Default in the payment of Bond Service Charges, the Trustee must take those appropriate actions and, in addition, may apply to a court for the appointment of a receiver to receive and administer the applicable Pledged Receipts and to pay Bond Service Charges, and/or by notice in writing delivered to the Authority, declare the principal of and interest (and any accreted amount) accrued on all then outstanding Bonds immediately due and payable. Provision is made for the rescission of that declaration upon the payment or provision for payment of all amounts due, and for waivers in connection with Events of Default. Upon the happening and continuance of any Event of Default described in (c) above, the Trustee may, and upon the written request of the holders of not less than 25% of the then outstanding Bonds shall, upon being properly indemnified, take appropriate actions, including mandamus, to enforce all the rights of the bondholders, bring suit on the Bonds and enjoin any unlawful activities or activities in violation of the bondholders rights. The holders of a majority in principal amount of the Bonds then outstanding have the right, by written instrument delivered to the Trustee, to direct the method and place of conducting any and all remedial proceedings under the Trust Agreement, provided that the direction is in accordance with the provisions of law and of that Trust Agreement and the Trustee is indemnified to its satisfaction. Before taking remedial action the Trustee may require that a satisfactory indemnity bond be provided for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability adjudicated to have resulted from the Trustee s negligence or willful default by reason of any action so taken. The Trustee may act without this indemnity, in which case its expenses are reimbursable from moneys available for that purpose. The registered owners of the Bonds are not entitled to enforce the provisions of the Trust Agreement or to institute, appear in or defend any suit, action or proceeding to enforce any rights, remedies or covenants granted or contained in the Trust Agreement or to take any action with respect to any event of default under the Trust Agreement, except as provided in the Trust Agreement. Enforcement by Mandamus Pursuant to the Act and to the General Bond Resolution, the duties of the Authority and of its members, officers and employees, under the Bond proceedings are enforceable by mandamus. Defeasance If all Bond Service Charges due or to become due on the Bonds are paid or caused to be paid, and provision is made for paying all other sums payable under the Trust Agreement by the Authority, then the Trust Agreement will cease, determine and become null and void, and the covenants, agreements and other obligations of the Authority under it will be discharged and satisfied. Thereupon the Trustee will execute and deliver to the Authority any instruments to evidence that release and discharge as may be reasonably required by the Authority, and the Trustee and Paying Agents will deliver to the Authority any funds at the time subject to the lien of the Trust Agreement which may then be in their possession except for such funds held for the 16

19 payment of Bond Service Charges (subject to the provisions for unclaimed moneys described below). Bonds will be deemed to have been paid or caused to be paid for the purpose of defeasance (and for the purpose of particular Bonds being refunded and no longer deemed outstanding under the Trust Agreement) if: (a) the Trustee and Paying Agents, and the Authority, shall hold, in trust for and irrevocably committed thereto, sufficient moneys, or (b) the Trustee or Authority shall hold, in trust for and irrevocably committed thereto, noncallable Federal Securities (as defined below) certified by a firm of independent certified public accountants of national reputation to be of such maturities and interest payment dates and to bear such interest or other investment income as will be, without further investment or reinvestment of either the principal amount of or the interest earnings from them (likewise to be held in trust and committed, except as hereinafter provided), sufficient, together with any moneys referred to in (a) above, for the payment, at the maturity or redemption dates, of all applicable Bond Service Charges to the date of maturity or redemption as the case may be. If any Bonds are to be redeemed prior to their maturity, notice of that redemption must have been given or provision satisfactory to the Trustee have been made for the giving of that notice. Any moneys held in cash by the Trustee or Authority in accordance with these provisions may be invested only in Federal Securities the maturities or redemption dates (at the holder s option) of which will coincide as nearly as practicable with, but will not be later than, the time or times at which those moneys will be required for the purposes. Any income or interest earned by, or increment to, those investments, to the extent not required for the applicable purposes, will be transferred to the Authority, free of any trust or lien. The Trust Agreement authorizes partial defeasance as to any series of Bonds or as to certain of the Bonds of any series upon deposits described above. In addition, any Series Resolution may make separate or different provisions for defeasance of the Trust Agreement and the applicable Supplemental Trust Agreement as to some or all of the Bonds of that series. Federal Securities for purposes of defeasance means: (i) direct obligations of, or obligations representing principal and interest, or principal or interest, the full and timely payment of which is guaranteed by, or to the full and timely payment of which is pledged the faith of the United States of America; (ii) any certificates or other evidence of direct ownership interest in obligations of the character described in clause (i) or in specified portions of those obligations, including, without limitation, portions consisting solely of the principal of or solely of the interest on those obligations; or (iii) obligations of any state of the United States or any political subdivision thereof, the full payment of principal of and interest and any premium on which are provided for by an irrevocable deposit in trust of the Federal Securities described in clause (i) or (ii), to the extent such investments are permitted by applicable law, and which obligations carry the highest rating category of a rating service. With respect to Federal Securities described in clause (ii), the underlying obligations must be, as evidenced by a receipt held by the owner, held in safekeeping on behalf of the owner. 17

20 Refunding State law authorizes the refunding and advance refunding of all or a portion of the Bonds. If the Authority places in escrow either money or direct obligations of, or obligations guaranteed as to payment by, the United States, or a combination of both, that with investment income thereon will be sufficient for the payment of debt charges on the refunded Bonds, those Bonds will no longer be considered to be outstanding. They will also not be considered in determining any direct or indirect limitation on Authority indebtedness, and the levy of taxes to pay debt charges on them will not be required. For this purpose, direct obligations of or obligations guaranteed by the United States include rights to receive payments or portions of payments of the principal of or interest or other investment income on (i) those U.S. obligations and (ii) other obligations fully secured as to payment by those U.S. obligations and the interest or other investment income on those obligations. NonPresentment of Bonds If a Bond is not presented for payment when due or an interest payment check is uncashed, and if moneys for the purpose of paying and sufficient to pay that amount have been made available to the Trustee for the benefit of the bondholder, all liability of the Authority to the holder for the payment will thereupon cease and be completely discharged. It is the duty of the Paying Agents to hold those moneys in trust, without liability for interest thereon, for the benefit of the registered owner of that Bond, who thereafter will be restricted exclusively to those moneys for any claim of whatever nature under the Trust Agreement or on or with respect to that Bond. Moneys so held by the Paying Agents and which remain unclaimed for three years after the due date of that Bond or that interest payment, will be paid to the Trustee and thereafter the holder may look only to the Trustee for payment and then only to the amounts so received by the Trustee (without any interest thereon) and the Paying Agents will have no further responsibility with respect to those moneys. Any moneys so paid to the Trustee will be credited to a special subaccount in the Bond Service Account, and the Trustee will keep a record of the amounts with respect to each series of Bonds so deposited in that special subaccount and will credit investment income from investments of those amounts to the general portion of that Bond Service Account. Supplemental Trust Agreements; Modifications A supplemental trust agreement is entered into in connection with the issuance of each series of Bonds providing for, among other things, the forms of those Bonds. The applicable Series Resolution is included in and constitutes part of that supplemental trust agreement. The Authority has entered into the First Supplemental Trust Agreement dated as of June 1, 2004 in connection with the 2004 Series A Bonds and the Second Supplemental Trust Agreement dated as of October 1, 2005 in connection with the 2005 Series A Bonds, and is entering into the Third Supplemental Trust Agreement in connection with these Bonds. Supplemental trust agreements, other than those described above and in the next paragraph, modifying, altering, amending, adding to or rescinding in particular any of the terms or provisions of the Trust Agreement, require the consent and approval of the owners of not less than a majority in aggregate outstanding principal amount of the Bonds (excluding any owned by the Authority), except that (i) an extension of the maturity of any Bond s principal or interest, or a reduction in the principal amount of or the rate of interest or redemption premium on any Bond, or a reduction in 18

21 the amount or extension of the time of any payment required by any mandatory sinking fund requirements, will require the consent of the holder of any affected Bond, and (ii) a reduction in the aggregate outstanding principal amount of the Bonds required for consent to that supplemental trust agreement will require the consent of the holders of all of the Bonds then outstanding. The Authority and the Trustee, without consent of or notice to any bondholders, may enter into supplemental trust agreements which, in the opinion of the Authority and the Trustee, are not inconsistent with the terms and provisions of the Trust Agreement: to cure any ambiguity, inconsistency or formal defect or omission in the Trust Agreement; to grant to or confer upon the Trustee for the benefit of the bondholders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the bondholders or the Trustee; to subject additional revenues or receipts to the lien and pledge of the Trust Agreement; to add Authority covenants and agreements thereafter to be observed for the protection of the bondholders, or to surrender or limit any right, power or authority reserved to or conferred upon the Authority in the Trust Agreement, including the limitation of rights of redemption so that in certain instances Bonds of different series will be redeemed in some prescribed relation to one another; to evidence any succession to the Authority and the assumption by that successor of the Authority s covenants and agreements in the Trust Agreement and the Bonds; to permit the transfer of Bonds from one securities depository to another and the succession of depositories; to permit the withdrawal of Bonds from a securities depository and the issuance of replacement bonds in fully registered form to other than a securities depository; to make such provisions as may be appropriate in connection with interest rate swaps, caps or other hedges; to comply with changes in federal or state tax or securities laws; and for other purposes stated in the Bond proceedings, including any other amendment which in the Trustee s judgment (i) is not to the prejudice of the Trustee or holders of any outstanding Bonds which that amendment may affect, or (ii) in certain cases is consented to and approved by the owners of at least a majority in aggregate outstanding principal amount of the Bonds which that amendment affects. Covenants of the Authority In addition to other covenants, the Authority has covenanted in the General Bond Resolution to pay or cause to be paid promptly Bond Service Charges from the sources provided in that Resolution; not to make or create (except as authorized or permitted by that Resolution) any prior or parity pledge or assignment of or lien or encumbrance upon the Bond Service Fund or Pledged Receipts; subject to the limitations described herein under SECURITY AND SOURCES OF PAYMENT Redevelopment Payments Under Lease and Related Budget; to faithfully observe and perform all agreements, covenants, undertakings, stipulations and provisions contained in the General Bond Resolution, the Trust Agreement, the applicable Bond proceedings, and any and every outstanding Bond executed, authenticated and delivered under the Trust Agreement; to permit the Trustee, original purchasers and representatives of holders of 25% of the principal amount of the Bonds to inspect at all reasonable times the records, books, and accounts relating to the Trust Agreement and Special Funds and Accounts; and to waive the benefit or advantage of any stay or extension law which may affect the covenants and agreements in the General Bond Resolution, Trust Agreement, Series Resolution or the Bonds. 19