PRIVATE PLACEMENT MEMORANDUM DATED MARCH 11, 2015 NEW ISSUE

Transcription

1 PRIVATE PLACEMENT MEMORANDUM DATED MARCH 11, 2015 NEW ISSUE Book Entry Only RATING: Not rated. In the opinion of Frost Brown Todd LLC, Bond Counsel, under existing law,(i) assuming compliance with certain covenants, interest on the Series 2015 Bonds is excluded from gross income for federal income tax purpose and is not an item of tax preference for purposes of the alternative minimum income tax imposed on individuals and corporations under the Internal Revenue Code of 1986, as amended (the Code ), and (ii) interest on or any profit made on the sale, exchange or other disposition of the Series 2015 Bonds is exempt from certain taxes levied by the State of Ohio and its political subdivisions. The City has not designated the Series 2015 Bonds as qualified tax exempt obligations within the meaning of Section 265(b)(3) of the Code. Interest on the Series 2015 Bonds may be subject to certain federal income taxes imposed on certain corporations, and certain taxpayers may have certain other adverse federal income tax consequences as a result of owning the Series 2015 Bonds. See TAX EXEMPTION herein. PRIVATE PLACEMENT MEMORANDUM Relating to the Original Issuance by the CITY OF NORWOOD HAMILTON COUNTY, OHIO of $20,350,000 Special Obligation Development Revenue and Refunding Bonds, Series 2015 (Rookwood Exchange Project) Dated: March 11, 2015 Due: See Schedule I hereto. The principal of and interest on the City of Norwood, Ohio Special Obligation Development Revenue and Refunding Bonds, Series 2015 (Rookwood Exchange Project) (the Series 2015 Bonds ) are payable at the designated offices of U.S. Bank National Association, Cincinnati, Ohio, as Trustee (the Trustee ). Interest on the Series 2015 Bonds will be payable semi-annually on June 1 and December 1 of each year, commencing June 1, The Series 2015 Bonds are subject to redemption by the City prior to maturity in whole on any date or in part on any Interest Payment Date at (i) 103% of par plus accrued interest commencing June 1, 2025 through May 31, 2028, (ii) at 102% of par plus accrued interest commencing June 1, 2028 through May 31, 2032, (iii) at 101% of par plus accrued interest commencing June 1, 2032 through May 31, 2037, and (iv) at 100% of par plus accrued interest thereafter, and as otherwise described herein and in the Trust Agreement. The Series 2015 Bonds will be special revenue obligations of the City, payable solely from the Pledged Revenues (as defined herein) and assigned by the City to the Trustee pursuant to the Trust Agreement dated as of March 1, 2015, between the City and the Trustee. See SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015 BONDS herein. The Series 2015 Bonds are issuable only as fully registered bonds, one for each maturity, and, when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company ( DTC ), New York, New York, which will act as securities depository for the Series 2015 Bonds. Purchases of beneficial interests in the Series 2015 Bonds will be made in book-entry-only form, in denominations of $100,000 and integral multiples of $5,000 in excess thereof. So long as Cede & Co. is the registered owner of the Series 2015 Bonds, purchasers of beneficial interests ( Beneficial Owners ) will not receive certificates representing their interests in the Series 2015 Bonds, payments of the principal of, premium, if any, and interest on the Series 2015 Bonds will be made directly to DTC or Cede & Co., and references herein to the owners of the Series 2015 Bonds shall mean Cede & Co. See BOOK ENTRY SYSTEM. THE SERIES 2015 BONDS WILL BE SPECIAL REVENUE OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE PLEDGED REVENUES AND DO NOT CONSTITUTE A GENERAL OBLIGATION OR AN INDEBTEDNESS OF THE CITY OR THE STATE OF OHIO (THE STATE ) OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION OR LIMITATION. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE SERIES 2015 BONDS. NONE OF THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF SHALL BE OBLIGATED TO LEVY A TAX OR TO MAKE ANY APPROPRIATION FROM MONEYS RAISED BY TAXATION (OR ANY MONEYS OTHER THAN PLEDGED REVENUES) TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST (THE DEBT SERVICE CHARGES ) ON THE SERIES 2015 BONDS OR ANY OBLIGATION UNDER THE TRUST AGREEMENT. The Series 2015 Bonds involve a high degree of risk and may not be a suitable investment for all persons. Prospective purchasers should carefully evaluate the risks and merits of an investment in the Series 2015 Bonds, consult with their own legal and financial advisors and be able to bear the risk of loss of their investment in the Series 2015 Bonds. See BONDHOLDERS RISKS. The Series 2015 Bonds will be privately placed only with individuals and entities that represent that they are accredited investors as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (see PRIVATE PLACEMENT and NOTICE TO PURCHASERS herein).

2 This cover page contains certain information for general reference only. It is not a summary of the Series 2015 Bonds. Investors must read the entire Private Placement Memorandum to obtain information essential to the making of an informed investment decision. The Series 2015 Bonds are being privately placed, when, as and if issued by the City and received by the Placement Agent named below, subject to an opinion as to validity by Frost Brown Todd LLC, Bond Counsel, and certain other conditions (see LEGAL OPINION herein). Certain legal matters will be passed upon for the City by Josh Berkowitz, Law Director, Norwood, Ohio. It is expected that the Series 2015 Bonds will be available for delivery through the facilities of DTC on or about March 11, The date of this Private Placement Memorandum is March 11, 2015

3 SCHEDULE I PRINCIPAL MATURITY SCHEDULE The Series 2015 Bonds are serial bonds and will mature on December 1 of the following years in the amounts and order as follows years in the amounts and order as follows: $20,350,000 SERIAL BONDS Maturity Date (December 1) Principal Amount Interest Rate Price CUSIP $275, % % AF , % % AG , % % AH , % % AJ , % % AK , % % AL , % % AM , % % AN , % % AP , % % AQ , % % AR , % % AS , % % AT , % % AU , % % AV , % % AW , % % AX , % % AY ,010, % % AZ ,085, % % BA ,165, % % BB ,255, % % BC ,350, % % BD ,450, % % BE ,560, % % BF ,675, % % BG6 Copyright 2014, 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 the holders of the Bonds only at the time of issuance of the Bonds and the County 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 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.

4 REGARDING THIS PRIVATE PLACEMENT MEMORANDUM This Private Placement Memorandum does not constitute an offering of any security other than the original offering of the Series 2015 Bonds identified on the cover hereof. No person has been authorized by the City or the Placement Agent to give any information or to make any representation other than as contained in this Private Placement Memorandum, and if given or made such other information or representation must not be relied upon as having been given or authorized by the City or the Placement Agent. This Private Placement Memorandum does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Series 2015 Bonds by any person, in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. Statements contained in this Private Placement Memorandum that involve estimates, forecasts, or matters and opinion, whether or not expressly described herein are intended solely as such and are not to be construed as representations or facts. The information and expressions of opinion herein are subject to change without notice. Neither the delivery of this Private Placement Memorandum nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the City since its date. The Placement Agent has reviewed the information in this Private Placement Memorandum pursuant to its responsibilities to investors under the federal securities laws, but the Placement Agent does not guarantee the accuracy or completeness of such information. Upon issuance, the Series 2015 Bonds will not be registered by the City 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 upon the accuracy or adequacy of this Private Placement Memorandum or approved the Series 2015 Bonds for sale (except that the City will have authorized the issuance and sale of the Series 2015 Bonds). INVESTMENT CONSIDERATIONS The Series 2015 Bonds, like all obligations of state and local governments, are subject to changes in value due to changes in the condition of the market for tax-exempt obligations or changes in the financial position of the City. It is possible under certain market conditions, or if the financial condition of the City should change, that the market price of the Series 2015 Bonds could be adversely affected. With regard to the risk involved in a loss of the exclusion from gross income for purposes of federal income taxation of interest payable on the Series 2015 Bonds see TAX EXEMPTION and PROPOSED FEDERAL TAX LEGISLATION herein. Prospective purchasers of the Series 2015 Bonds may need to consult their own tax advisors prior to any purchase of the Series 2015 Bonds as to the impact of the Internal Revenue Code of 1986, as amended, upon their acquisition, holding or disposition of the Series 2015 Bonds. i

5 In recent years, the IRS has increased the frequency and scope of its examination and other enforcement activities regarding tax-exempt obligations. Currently, the primary penalty available to the IRS under the Code is the determination that interest on tax-exempt obligations is subject to federal income taxation. In addition, although the IRS has only infrequently taxed the interest received by holders of obligations that were represented to be tax-exempt, the IRS has examined a number of debt issues and concluded that such debt issues did not comply with applicable provisions of the Code and related regulations. No assurance can be given that the IRS will not examine the Placement Agent, a Bondholder, the City or the Series 2015 Bonds. If the Series 2015 Bonds are examined, it may have an adverse impact on their price and marketability. Based on the stated use of proceeds from the sale of the Series 2015 Bonds as described herein, and on representations, warranties and covenants of the City, Bond Counsel will deliver its opinion as to the tax-exemption of interest on the Series 2015 Bonds in the form set forth in EXHIBIT A hereto. There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters with respect to the Series 2015 Bonds or affect the market value of the Series 2015 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers of the Series 2015 Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation. For discussion of continuing disclosure matters, see CONTINUING DISCLOSURE UNDERTAKING herein. ii

6 TABLE OF CONTENTS COVER PAGE... Cover REGARDING THIS PRIVATE PLACEMENT MEMORANDUM... i INVESTMENT CONSIDERATIONS... i TABLE OF CONTENTS... iii INTRODUCTORY STATEMENT...1 AUTHORIZATION AND PURPOSE...2 ESTIMATED SOURCES AND USES OF FUNDS...3 THE SERIES 2015 BONDS...3 BOOK ENTRY SYSTEM...8 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015 BONDS...11 TAX INCREMENT REVENUES...13 PROJECTED STATUTORY SERVICE PAYMENTS AND NET DEBT SERVICE...22 ORDER OF SECURITY...23 BONDHOLDERS RISKS...23 SUMMARY OF TRUST AGREEMENT...30 ELIGIBILITY AS INVESTMENTS...41 CONTINUING DISCLOSURE UNDERTAKING...41 PRIVATE PLACEMENT...42 NOTICE TO PURCHASERS...42 LITIGATION...42 PROPOSED FEDERAL TAX LEGISLATION...43 ABOLITION OF SOVEREIGN IMMUNITY...43 LEGAL OPINION...43 TAX EXEMPTION...44 iii

7 TRANSCRIPT AND CLOSING DOCUMENTS...45 RATING...45 REGISTRAR...45 CONCLUDING STATEMENT...46 EXHIBIT A FORM OF LEGAL OPINION EXHIBIT B CERTIFICATE OF LAW DIRECTOR EXHIBIT C EXEMPTED PROPERTY EXHIBIT D FINANCIAL PROJECTIONS OF STATUTORY SERVICE PAYMENTS EXHIBIT E DESCRIPTION OF PUBLIC IMPROVEMENTS AND THE DEVELOPMENT APPENDIX I Bond Ordinance APPENDIX II Service Agreement APPENDIX III School Compensation Agreement APPENDIX IV Trust Agreement iv

8 INTRODUCTORY STATEMENT This Private Placement Memorandum has been prepared by the City of Norwood (the City ), Hamilton County, Ohio, in connection with the original issuance and sale by the City of the Series 2015 Bonds identified on the cover page (the Series 2015 Bonds ). Certain information concerning the authorization, purpose, terms, conditions of sale, and sources of payment and security is provided in this Private Placement Memorandum. The Series 2015 Bonds are being privately placed by Fifth Third Securities, Inc., as placement agent (the Placement Agent ). See PRIVATE PLACEMENT herein. All financial and other information presented in this Private Placement Memorandum has been provided by the City from its records, except for information expressly attributed to other sources, including EXHIBIT D FINANCIAL PROJECTIONS OF STATUTORY SERVICE PAYMENTS and information concerning the Development in EXHIBIT E DESCRIPTION OF PUBLIC IMPROVEMENTS AND DEVELOPMENTS, and except for certain underwriting information on the cover and in PRIVATE PLACEMENT. The presentation of information, including all financial and other data, is intended to show recent historic information, and is not intended to indicate future or continuing trends in the financial position or other affairs of the City. No representation is made that past experience, as might be shown by that financial and other information, including levels of financial support from the State of Ohio and federal sources, if any, will necessarily continue in the future. Certain of the information presented is not strictly current, because current information was in some cases unavailable at the date of completion of this Private Placement Memorandum. See CONTINUING DISCLOSURE UNDERTAKING herein. This Private Placement Memorandum should be considered in its entirety, and no one subject should be considered less important than any other by reason of location in the text. Descriptions of documents or instruments are qualified by reference to the entire text of those documents, and reference should be made to laws, reports, documents or instruments referred to for more complete information regarding their contents. Reference herein to provisions of Ohio law, whether codified in the Ohio Revised Code (the Revised Code ) or uncodified, the Ohio Constitution or federal law, are references to such provisions as they currently exist. Any of those provisions may from time to time be amended, repealed or supplemented. As used in this Private Placement Memorandum, debt service means principal of and interest on the obligations referred to, County means Hamilton County, and State or Ohio means the State of Ohio. Copies of the City s most recent audited general purpose financial statements and most recent unaudited general purpose financial statements are available upon written request directed to Timothy Moloney, City Treasurer, 4645 Montgomery Road, Norwood, Ohio ; telephone (513) Copies of the City s most recent audited general purpose financial statements in successive years will be filed in a timely manner with and will be available from the Auditor of the 1

9 State of Ohio at its website ( and from the Electronic Municipal Market Access system ( EMMA ) of the Municipal Securities Rulemaking Board ( MSRB ). For discussion of continuing disclosure matters, see CONTINUING DISCLOSURE UNDERTAKING herein. AUTHORIZATION AND PURPOSE The Series 2015 Bonds are being issued by the City pursuant to Ohio Revised Code Chapter 5709, as enacted and amended at the time, and includes any other applicable law pertaining to the Series 2015 Bonds, as the same may be amended, modified, revised, supplemented, or superseded from time to time (the Act ), and an ordinance authorizing their issuance adopted by the City Council (the Council ) on February 10, 2015 (the Bond Ordinance ). The Series 2015 Bonds are being issued as special obligation revenue bonds for the purpose of providing moneys to (i) refund the City s $20,000,000 Special Obligation Development Revenue Bonds, Series 2013 (Rookwood Exchange Project) (the Prior Bonds ) the proceeds of which financed a portion of, and (ii) finance a portion of, the acquisition and construction of the public infrastructure improvements (the Public Improvements ) described in EXHIBIT E hereto constructed in relation to a private development on the Exempted Property (defined infra) by Rookwood Partners Ltd., an Ohio limited liability company (the Redeveloper ). The Public Improvements will be constructed by the Redeveloper under the supervision of the City and pursuant to applicable law, including but not limited to Sections , , and et. seq. of the Revised Code. In addition to the foregoing, the Public Improvements will be constructed in accordance with the terms of the Service Agreement and the Redevelopment Agreement (as each such agreement is defined herein or in the Redevelopment Agreement). 2

10 ESTIMATED SOURCES AND USES OF FUNDS SOURCE OF FUNDS* Par Amount Series 2015 Bonds $20,350, Total Proceeds $20,350, USE OF FUNDS Refund the Prior Bonds $19,061, Public Improvements $ 90, Cost of Issuance $ 312, Capitalized Interest (through December 1, 2015) $ 886, Total Uses $20,350, THE SERIES 2015 BONDS The following is a summary of certain terms and provisions of the Series 2015 Bonds. Reference is hereby made to the Series 2015 Bonds and the provisions with respect to the Series 2015 Bonds in the Trust Agreement for the detailed terms and provisions thereof. All capitalized terms used herein that are not otherwise defined herein shall have the meanings given to such terms by the Trust Agreement. General Description The Series 2015 Bonds are being issued pursuant to and in compliance with the Constitution and statutes of the State, including particularly the Act. The Series 2015 Bonds will be issuable as fully registered bonds, without coupons, in denominations of $100,000 and integral multiples of $5,000 in excess thereof ( Authorized Denominations ). The Series 2015 Bonds will be dated as of the Closing Date. The Series 2015 Bonds shall become due at their stated maturities, and shall bear interest at the rates set forth, in Schedule I hereto (computed on the basis of a 360-day year and twelve 30-day months). Interest on the Series 2015 Bonds will be payable semi-annually on June 1 and December 1, commencing on June 1, 2015, calculated from the Closing Date, or from the most recent date on which interest on such Bond has been paid. Principal will be payable at maturity. Book Entry Form The Series 2015 Bonds, when issued, will be registered in the name of The Depository Trust Company, New York, New York ( DTC ) or its nominee. Payment of the premium, if any, and interest on each Bond will be made, and notices and other communications to Holders will be given, directly to DTC or its nominee, by the Trustee. In the event the Series 2015 Bonds are not in 3

11 a book-entry-only system, payment of the principal of, premium, if any, and interest on the Series 2015 Bonds will be made and such notices and communications will be given as described in the Trust Agreement. See BOOK ENTRY SYSTEM. Registration, Transfer and Exchange Upon Discontinuance of Book-Entry System Any Series 2015 Bond may be transferred or exchanged only upon the Register, upon its surrender at the designated office of the Trustee as Authenticating Agent together with an assignment or request for exchange duly executed by the registered owner or his duly authorized attorney in such form as is satisfactory to the Registrar. Upon the transfer or exchange of the Bond and on request of the Registrar, the City shall cause to be executed in the name of the transferee or the registered owner a new Bond in an aggregate principal amount equal to that amount of the previous Bond evidencing all or a portion of the same obligation as that evidenced by a particular Bond (the Predecessor Bond ), and bearing any interest at the same rate (or determined in the same manner) and maturing on the same date or dates as the Predecessor Bond. In all cases in which the Series 2015 Bonds are transferred or exchanged, the City shall cause to be executed, and the Trustee, as Authenticating Agent, shall authenticate and deliver a Bond in accordance with the provisions of the Trust Agreement and the Bond Ordinance. The City and the Trustee as Authenticating Agent: (a) Shall not be required to make any transfer or exchange of (i) a Bond if it is then subject to redemption during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption and ending at the close of business on the day of the mailing, or (ii) any Series 2015 Bond so selected for redemption, in whole or in part; and (b) Shall make the transfer or exchange without charge, except that the City and the Authenticating Agent may make a charge sufficient to reimburse them for any tax, excise, or governmental charge required to be paid with respect to the transfer or exchange, which charge shall be paid before a new Bond is delivered. Redemption Mandatory Sinking Fund Redemption. The Series 2015 Bonds are not subject to mandatory sinking fund redemption prior to redemption. Optional Redemption. Outstanding Bonds of any maturity or maturities, and in any principal amount, are subject to redemption at the option of the City, in whole on any date or in part on any Interest Payment Date, at (i) 103% of par, plus accrued interest to the redemption date, commencing June 1, 2025 through May 31, 2028, (ii) at 102% of par, plus accrued interest to the redemption date, commencing June 1, 2028 through May 31, 2032, (iii) at 101% of par, plus accrued interest to the redemption date, commencing June 1, 2032 through May 31, 2037, and (iv) at 100% of par, plus accrued interest to the redemption date, thereafter, and as otherwise described in this Trust Agreement; provided that, in the event Excess Funds become available for such redemption in accordance with the provisions of Section 4.C. of the Service Agreement, the City may direct a redemption of Bonds using such Excess Funds pursuant to the provisions for optional redemption set forth above. The Series 2015 Bonds shall be redeemed in the inverse order of 4

12 maturity, provided that any such credit shall be made so that any Series 2015 Bonds redeemed after giving effect to such credit shall be in Authorized Denominations and that any such partial redemption shall be consistent with the provisions described under THE SERIES 2015 BONDS Redemption Selection of Series 2015 Bonds for Redemption. Extraordinary Mandatory Redemption. The Series 2015 Bonds are subject to redemption in whole on any date or in part on any Interest Payment Date at a redemption price equal to 100% of the principal amount redeemed, plus interest accrued to the redemption date, from amounts remaining in the Public Improvements Account after the Public Improvements Completion Date (See SUMMARY OF TRUST AGREEMENT Public Improvements Fund herein). The Series 2015 Bonds shall be redeemed in the inverse order of maturity, provided that any such credit shall be made so that any Series 2015 Bonds redeemed and to be redeemed after giving effect to such credit shall be in Authorized Denominations and that any such partial redemption shall be consistent with the provisions described under THE SERIES 2015 BONDS Redemption Selection of Series 2015 Bonds for Redemption. Unless used to redeem Series 2015 Bonds as described under THE SERIES 2015 BONDS Redemption Extraordinary Optional Redemption herein, any Conversion Proceeds received by the City shall be deposited initially in the Rookwood Exchange Tax Increment Fund. Thereafter, all Conversion Proceeds to be used to repair or replace the portion or portions of the Public Improvements damaged, destroyed or taken shall be transferred to the Public Improvements Account and disbursed as described under SUMMARY OF TRUST AGREEMENT Public Improvements Fund herein, to repair, rebuild or replace such portion of the Public Improvements damaged, destroyed, or taken. Any remaining Conversion Proceeds shall be deposited in the Prepayment Account and applied to the redemption of the Series 2015 Bonds as described in the preceding paragraph. As used above, the following terms shall have the following meanings: Conversion Proceeds means moneys received by the City as the result of a casualty to the Public Improvements or from a governmental Person as result of the Condemnation or sale under threat of Condemnation of any portion of the Public Improvements. Condemnation means any condemnation, requisition, confiscation, seizure, or other taking or sale of the use, occupancy, or title to the Public Improvements Site, the Public Improvements, or any part thereof in, by or on account of any actual eminent domain proceeding or other action by any Governmental City or other Person under the power of eminent domain, or any transfer in lieu of or in anticipation thereof. A Condemnation shall be deemed to have occurred on the earliest of the dates that use, occupancy, or title is taken. Extraordinary Optional Redemption. The Series 2015 Bonds are subject to redemption at the option of the City, after consultation with the Redeveloper, in whole at any time or in part on any Interest Payment Date, at a redemption price of 100% of the principal amount redeemed, plus interest accrued to the redemption date, upon occurrence of any of the following events: (a) The Public Improvements, or a portion thereof, shall have been damaged or destroyed to such extent that the City has determined (i) that it cannot be reasonably expected to be 5

13 restored within a period of eighteen (18) months from the commencement of restoration to the condition thereof immediately preceding such damage or destruction, or (ii) that the Net Proceeds of any insurance (i.e., the gross proceeds thereof less the payment of all expenses, including reasonable attorneys fees incurred in connection with the collection of such gross proceeds) received with respect to the casualty causing such damage or destruction shall be insufficient to pay the costs of such restoration, or (iii) that it is reasonably expected that such event will result in the Public Improvements or such portion thereof being prevented thereby from operating normally or being used as contemplated in the Service Agreement (as defined in SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015 Bonds Pledged Revenues ) for a period of twelve (12) consecutive months, or (iv) that the cost of restoration thereof would exceed ninety percent (90%) of the then appraised value of the Public Improvements or such damaged portion immediately prior to the date on which such damage or destruction occurred; or (b) Title to, or the temporary or permanent use of, all or a significant portion of the Public Improvements shall have been taken, directly or indirectly, under the exercise of the power of eminent domain by any governmental authority, or Person acting under governmental authority to such extent that the City has determined that (i) the Public Improvements or such taken portion cannot be reasonably expected to be restored within a period of twelve months from the commencement of restoration to a condition of comparable usefulness to that existing prior to such taking, (ii) that the Net Proceeds of any award (i.e., the gross proceeds thereof less the payment of all expenses, including reasonable attorneys fees incurred in connection with the collection of such gross proceeds) received with respect to such taking shall be insufficient to pay the costs of such restoration, or (iii) it is reasonably expected that such taking will result in the Public Improvements or the taken portion thereof being thereby prevented from operating normally or being used as contemplated in the Service Agreement for a period of twelve months; or (c) The Trustee shall have received a certificate of the City, executed by an Authorized City Representative, stating that construction of the Public Improvements has stopped, will not resume and that a substantial portion (twenty-five percent (25%) or more) of the Public Improvements will not be completed; or (d) Interest on the Bonds is determined to be includable in gross income of the Holder (including, without limitation, any previous Holder) thereof as determined pursuant to either (A) an opinion of Bond Counsel, or (B) a final decree or judgment of any federal court or final action by the Internal Revenue Service that is delivered to the City. Selection of Series 2015 Bonds for Redemption. If fewer than all of the Outstanding Bonds of a given maturity are to be redeemed, the selection of Series 2015 Bonds within such maturity to be redeemed, or portions thereof in principal amounts equal to the lowest Authorized Denomination, or any integral multiples thereof, shall be made in such manner as the City shall direct (and to the extent that any Series 2015 Bond of a given maturity is to be redeemed in part, such redemption shall be credited against principal installments thereof in the manner in which the City shall direct), or, if the City shall not so direct, by lot by the Trustee in any manner which the Trustee may determine. Unless the City shall otherwise direct, in the event that any Series 2015 Bond of a maturity is redeemed in part, such partial redemption shall be credited pro rata against the installments of principal due at maturity. Notwithstanding the foregoing, any Series 2015 Bonds that will remain outstanding after any partial redemption, and any Series 2015 Bonds to 6

14 remain outstanding after operation of any new principal retirement schedule taking into account such credits, shall be in Authorized Denominations. In the case of a partial redemption of Series 2015 Bonds of a given maturity by lot when Series 2015 Bonds of such maturity have denominations greater than the lowest Authorized Denomination applicable to such maturity are then outstanding, each unit of face value of principal thereof equal to that lowest Authorized Denomination shall be treated as though it were a separate Bond of the same maturity of a principal amount equal to that lowest Authorized Denomination. If it is determined that one or more, but not all of such units of face value represented by a Series 2015 Bond of a maturity are to be called for redemption, then upon notice of redemption of one or more such units, the Holder of that Series 2015 Bond shall surrender the Series 2015 Bond to the Trustee for (a) payment on the redemption date of the redemption price of the unit or units of face value called for redemption (including without limitation, the interest accrued to the date fixed for redemption and any premium), and (b) issuance, without charge to the Holder thereof, of a new Series 2015 Bond or Series 2015 Bonds, of any Authorized Denomination in an aggregate principal amount equal to the unmatured and unredeemed portion of, and bearing interest at the same rate and maturing on the same date as, the Series 2015 Bond surrendered. Notice of Redemption and Payment of Redeemed Bonds. Except for Series 2015 Bonds subject to extraordinary mandatory redemption, the Series 2015 Bonds shall be redeemed only by written notice from the City to the Trustee. That notice shall specify the places where the amounts due upon redemption are payable, the redemption date, and the principal amount, Accreted Amount, and maturities of the Series 2015 Bonds to be redeemed, and it shall be given at least 45 days prior to the redemption date or such shorter period as shall be acceptable to the Trustee. When Bonds (or portions thereof) are to be redeemed other than upon mandatory sinking fund redemption, the City shall give or cause to be given notice of the redemption of the Series 2015 Bonds to the Trustee. The notice to the Trustee shall state (i) that it is conditioned upon the deposit of moneys, in an amount equal to the amount necessary to effect the redemption, with the Trustee no later than the date that is 5 Business Days prior to the redemption date, and (ii) that the City retains the right to rescind such notice on or prior to the scheduled redemption date (in either case, a Conditional Redemption ), and such notice and optional redemption shall be of no effect if such moneys are not so deposited or if the notice is rescinded. The Trustee shall send notice of any redemption, identifying the Series 2015 Bonds or portions thereof to be redeemed, the redemption date and the method and place of payment to each Holder of a Series 2015 Bond called for redemption to the Holder s address listed on the Register as of the close of business on the fifteenth day preceding that mailing. Such notice of redemption shall be sent by the Trustee by first class mail between 30 and 60 days prior to the scheduled redemption date. With respect to Bonds held in book entry form, if the Trustee sends the notice of redemption to the Depository, the Trustee shall not be required to give the notice set forth above. Failure to give the notice of redemption to, or failure to receive such notice by, the Holder of any Series 2015 Bond shall not affect in any respect the validity of the proceedings for the redemption of other Bonds. If moneys for the redemption of the Series 2015 Bonds or portions thereof to be redeemed are held on the redemption date by the City, Trustee or Paying Agent so as to be available therefor, then from and after that date the Series 2015 Bonds or the portions thereof so called for redemption 7

15 shall no longer be considered as outstanding and if interest-bearing shall cease to bear interest. To any extent that those moneys are not so available on the redemption date, or notices have not been mailed, those Series Bonds or portions thereof not paid at redemption shall continue to bear or accrue interest until paid at maturity or subsequent prior redemption at the same rate (or determined in the same manner) as they would have had they not been called for redemption. If a Series 2015 Bond is redeemed in part only, on or after the redemption date and upon surrender of the Series 2015 Bond to the Trustee, the City shall cause to be executed and an Authenticating Agent shall authenticate and deliver, without charge to the Holder, a new Bond or Bonds in Authorized Denominations and in a Principal Amount equal to that unmatured and unredeemed amount of that Predecessor Bond and bearing or accruing any interest at the same rate (or determined in the same manner) and maturing on the same date or dates as the Predecessor Bond. Interest The Series 2015 Bonds will bear interest at the rates of interest set forth in Schedule I hereto. An Interest Payment Date for the Series 2015 Bonds shall mean June 1 and December 1 of each year, commencing on June 1, The Series 2015 Bonds shall bear interest from the Closing Date, or from the most recent date on which interest on such Bond has been paid, based on a 360-day year and twelve 30-day months. Principal The Series 2015 Bonds become due at their stated maturities set forth in Schedule I hereto. A Principal Payment Date for the Series 2015 Bonds shall mean each date on which principal is payable on the Series 2015 Bonds, being December 1 of each year, commencing December 1, 2017 and ending on December 1, BOOK ENTRY SYSTEM The information contained in this section concerning DTC and DTC s book-entry only system has been obtained from materials furnished by DTC to the Placement Agent. The City, the Trustee and the Placement Agent do not make any representation or warranty as to the accuracy or completeness of such information. DTC will act as securities depository for the Series 2015 Bonds. The Series 2015 Bonds will be issued as fully-registered bonds 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 Bond certificate will be issued for each maturity of the Series 2015 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount and an additional certificate will be issued with respect to any remaining principal amount of such issue. DTC, the world s largest 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 8

16 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 2 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments from over 85 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, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor s highest rating: AAA. 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 Purchases of Series 2015 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2015 Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2015 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2015 Bonds, except in the event that use of the book-entry system for the Series 2015 Bonds is discontinued. To facilitate subsequent transfers, all Series 2015 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 Series 2015 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2015 Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Series 2015 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 9

17 Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2015 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2015 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Series 2015 Bonds may wish to ascertain that the nominee holding the Series 2015 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. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2015 Bonds unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the County 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 Series 2015 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Series 2015 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 City or the Trustee, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name and will be the responsibility of such Participant and not of DTC, the Trustee, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of 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 Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Series 2015 Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, certificates for the Series 2015 Bonds are required to be printed and delivered. The City may decide at the direction of the Beneficial Owners to discontinue use of the system of book-entry transfers for any or all Series 2015 Bonds through DTC (or a successor securities depository). In that event, certificates for the Series 2015 Bonds are required to be printed and delivered. For every transfer and exchange of a beneficial ownership interest in the Series 2015 Bonds, a Beneficial Owner may be charged a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto. 10

18 NONE OF THE CITY, THE PLACEMENT AGENT, THE BENEFICIAL OWNERS, OR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO PARTICIPANTS, OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES, WITH RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF NOTICE FOR THE DIRECT PARTICIPANTS, THE INDIRECT PARTICIPANTS, OR THE BENEFICIAL OWNERS OF THE SERIES 2015 BONDS. NO ASSURANCES CAN BE PROVIDED THAT IN THE EVENT OF BANKRUPTCY OR INSOLVENCY OF DTC, A DIRECT PARTICIPANT OR AN INDIRECT PARTICIPANT THROUGH WHICH A BENEFICIAL OWNER HOLDS INTEREST IN THE SERIES 2015 BONDS, PAYMENT WILL BE MADE BY DTC, THE DIRECT PARTICIPANT OR THE INDIRECT PARTICIPANT ON A TIMELY BASIS. SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015 BONDS Limited Obligations; Sources of Payment THE SERIES 2015 BONDS ARE SPECIAL REVENUE OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE PLEDGED REVENUES AND DO NOT CONSTITUTE A GENERAL OBLIGATION OR AN INDEBTEDNESS OF THE CITY OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION OR LIMITATION. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE DEBT SERVICE CHARGES ON THE SERIES 2015 BONDS. NONE OF THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF SHALL BE OBLIGATED TO LEVY A TAX OR TO MAKE ANY APPROPRIATION FROM MONEYS RAISED BY TAXATION TO PAY THE DEBT SERVICE CHARGES ON THE SERIES 2015 BONDS OR ANY OBLIGATION UNDER THE TRUST AGREEMENT. Reference is made to the Trust Agreement for a more complete description of the provisions, among others, with respect to the nature and extent of the security for the Series 2015 Bonds, the rights, duties and obligations of the City, the Trustee and the Bondholders, and the terms and conditions upon which the Series 2015 Bonds are issued and secured. The term Bondholder as used herein shall mean a Beneficial Owner of Bonds while Bonds are held in book-entry form. See BOOK ENTRY SYSTEM. Each Bondholder consents, by its acceptance of the Series 2015 Bonds in accordance therewith, to all of the provisions of the Trust Agreement. Pledged Revenues Pursuant to Ordinance No , passed by the City Council of the City on September 27, 2011, a copy of which is attached hereto as APPENDIX I (the TIF Ordinance ), the City has exempted improvements to the real property described in EXHIBIT C hereto (the Exempted Property ) from real property taxes for a period of 30 years, commencing with the tax year in which the increase in the incremental assessed value of the Exempted Property and any improvements constructed thereon first appears on the tax list and duplicate of real and public utility property and that begins after September 27, 2011 and ending on the earlier of the 30th anniversary thereof or the date the Series 2015 Bonds, and any other bonds secured by the Tax Increment Revenues, are retired (the TIF Exemption ). As provided in the Service Agreement 11

19 (defined infra), the Exempted Property may, in the future be placed entirely in its own parcel with its own property parcel number to facilitate filings necessary to effect the TIF Exemption. Pursuant to the TIF Ordinance and a Service Agreement dated November 22, 2011, a copy of which is attached hereto as APPENDIX II (the Service Agreement ), among the City and the Rookwood Partners Ltd, an Ohio limited liability company (the Redeveloper ), the City is requiring the owners of the parcels comprising the Exempted Property to make Statutory Service Payments as described in TAX INCREMENT REVENUES herein. In addition, if the sum of the Statutory Service Payments and any interest funded from the proceeds of the Series 2015 Bonds by an interest reserve or capitalized interest account established therefor is less than the Debt Service Charges then due on the Series 2015 Bonds, the Owners (as such term is defined in the Service Agreement) are required to pay a supplemental service payment under ORC Section , which shall at all times be treated as a lien on the Exempted Property in the same manner as the Statutory Service Payments, equal to the amount needed to pay the Debt Service Charges described above (the Supplemental Payment ). The Statutory Service Payments and Supplemental Payments are referred to herein as the Service Payments. The City has assigned its rights to all Service Payments (less any amounts owed under the School Compensation Agreement) to the Trustee under the Trust Agreement as Pledged Revenues. Except as otherwise provided in the Service Agreement, the obligation of the owners to make the Service Payments is binding on current and future Owners of the Exempted Property. The term Pledged Revenues includes: (a) the Service Payments intended to be used for Debt Service Charges pursuant to the Service Agreement; (b) all other moneys received or to be received by or otherwise pledged to the City or the Trustee and intended to be used for Debt Service Charges, including without limitation, all moneys and investments in the Bond Fund, the Rookwood Exchange Tax Increment Fund and the Surplus Fund; (c) any proceeds from the sale, lease, use or disposition of the Public Improvements by the City; and (d) all income and profit from the investment of the foregoing moneys. Pursuant to the Service Agreement, all Service Payments, are to be deposited by the City in the municipal public improvement tax increment equivalent fund (referred to herein as the Rookwood Exchange Tax Increment Fund ) established by the TIF Ordinance and, together with any Eligible Investments held therein, shall constitute Pledged Revenues under the Trust Agreement. See SUMMARY OF TRUST AGREEMENT Rookwood Tax Increment Fund herein. Limited Obligations; Service Payments The Series 2015 Bonds and the interest thereon are special revenue obligations of the City, payable from Special Funds and the Pledged Revenues. The Special Funds include the Bond Fund, the Rookwood Exchange Tax Increment Fund and the Surplus Fund. The Pledged Revenues, which are, generally, the Statutory Service Payments, any Supplemental Payments that may from time to time be paid, and all other moneys received or to be received by the City or the Trustee and intended to be used for Debt Service Charges, including moneys in the Bond Fund, and certain moneys and investments in the Surplus Fund and the Rookwood Exchange Tax Increment Fund, and all income and profit from the investment of the foregoing moneys. Under the Trust Agreement, the City pledges and assigns the Service Payments (less any amounts owed 12

20 under the School Compensation Agreement) on deposit in the Rookwood Exchange Tax Increment Fund and all income and profit from investment of the foregoing moneys, to the Holders of the Series 2015 Bonds as security for the payment of the Debt Service Charges. Based on certain financial projections (the Projections ) prepared by Fifth Third Securities, Inc., as project consultant ( the Project Consultant ), the Statutory Service Payments and amounts withheld from proceeds of the initial sale of the Series 2015 Bonds are expected to be sufficient to pay the Debt Service Charges and to make other payments required to be made therefrom. See EXHIBIT D Financial Projections of Statutory Service Payments herein. Overview TAX INCREMENT REVENUES Tax increment financing is a procedure whereby political subdivisions, including Cities, encourage the development of designated areas by requiring service payments in lieu of exempted real property taxes that would otherwise be payable with respect to improved property to pay costs of public improvements which will benefit the development. The theory of tax increment financing is that, by utilizing service payments in lieu of the increases in property taxes to pay for public improvements that benefit the development area, economic development will be encouraged within that area, thereby creating jobs for citizens of the community, providing services to residents, and generating increased property, wage and sales tax in the development area. When legislation approving tax increment financing is adopted with respect to a parcel of land, the future increase in real property assessed value resulting from the development on that parcel is exempted from real property taxation. The owner of that parcel continues to pay property taxes at the base level, usually the underlying land value. As the property is improved, the assessed value of real property in the development area should increase above the base level. By applying the total effective tax rate of each taxing district within the development area to the applicable increases in assessed valuation of the improved property over the base level, an exempted tax increment is produced. Property owners make service payments in lieu of the exempted real estate tax increment (the Statutory Service Payments ) in an amount equal to the increase in real property taxes that would have been payable with respect to the increases in the assessed valuation of the developed property, but for the exemption, and in the same manner and at the same times as real property taxes. The Statutory Service Payments are transferred by the County Treasurer to the treasurer of the political subdivision granting the exemption. In addition to Statutory Service Payments, the political subdivision establishing a tax increment financing exemption on certain parcels of land can require that owners of those parcels, or alternatively a third party (such as a developer of those parcels), pay in addition to the Statutory Service Payments, additional payments (herein defined as Supplemental Payments ), generally for the purpose of establishing an additional flow of revenues for purposes of covering debt service charges on bonds secured by the revenues generated by a tax increment financing structure. Supplemental Payment obligations may be structured in such a way that they, like Statutory Service Payments, run with the land or in the alternative are attached to a particular party (i.e. a developer) and do not run with the land. 13

21 In the case of the Exempted Property and the Development (defined infra) to be constructed thereon, the property owners are obligated to make Supplemental Payments pursuant to the Service Agreement in an amount necessary to supply any shortfall in Statutory Service Payments to fully cover the Debt Service Charges on the Series 2015 Bonds and to cover a certain portion of the School Compensation as more fully set forth in the Service Agreement. See SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015 BONDS Pledged Revenues. Under the Service Agreement, the Supplemental Payments run with the land. However, the Service Agreement permits the Original Owner or any subsequent Owner of the Exempted Property to designate the holder of any other interest in the Exempted Property such as a ground lessee, tenant, mortgagee or easement beneficiary, as an Owner for purposes of paying all or any portion of the Service Payments with respect to the Parcels in which such Owner has acquired an interest. In the case of the Original Owner, the Original Owner has designated the Redeveloper, as the ground lessee, as an Owner for such purpose and the Redeveloper will be obligated to make such payments, although in all cases the Service Payments will constitute a lien on the Exempted Property as described below. Ohio law provides that the Statutory Service Payments shall be charged and collected in the same manner and in the same amount as the real property taxes that would have been charged and payable against the improvement if it were not exempt from taxation. Ohio Revised Code Sections , and (the TIF Act ) create a lien that can be filed against the real estate to secure the Statutory Service Payments in substantially the same manner as a lien for property taxes generally. Additionally, the provisions of Ohio Revised Code Section specify that the Service Payments, including the Supplemental Payments, shall at all times be treated as a lien on the Exempted Property in substantially the same manner as real property taxes. Upon the occurrence of an Event of Default under the Service Agreement, the City, the Trustee or the holders from time to time of a majority of the Series 2015 Bonds may exercise any and all of the rights of the City set forth in the Service Agreement, or at law, against the Owners who are liable for the Statutory Service Payments and Supplemental Payments, including, but not limited to rights and remedies as set forth in the TIF Act. The Service Agreement provides that the Statutory Service Payments will be payable at the same times and will be charged and collected in the same manner as real property taxes. Any delinquencies in the Statutory Service Payments will be collected as described under TAX INCREMENT REVENUES Delinquency Procedures with Respect to Real Property Taxes. The Supplemental Payments will be billed by the City and paid by the Owners on each December 15 th and June 15 th preceding any scheduled payment date for the Series 2015 Bonds as provided in the in the Service Agreement. In the event of a default in the payment of Supplemental Payments, the City or the other beneficiaries of the Service Agreement may enforce the lien of the Supplemental Payments in the same fashion as a mortgage. The TIF Act was enacted in 1976 and has been amended many times. In order to become part of the TIF Act, such proposed amendments must pass review by certain committees of the General Assembly, be voted on by both the House and the Senate and then signed into law by the Governor of the State. It is not possible to predict whether any pending or future amendments to the Act will become law during the period while the Series 2015 Bonds are outstanding and if so, 14

22 what effect such amendments would have on the Service Payments or the Series 2015 Bonds in general. The Tax Increment Financing Proceedings and the School Compensation Agreement On September 27, 2011, the Norwood City Council (the Council ), acting pursuant to the Act, adopted the TIF Ordinance and thereby exempted the Exempted Property from real property taxes for the term of the TIF Exemption, as more fully described under SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015 BONDS Pledged Revenues. As described above under TAX INCREMENT REVENUES Overview, owners of parcels within the Exempted Property and their designees are required to make Statutory Service Payments and Supplemental Payments, which payments are to be used to finance the Public Improvements that benefit the Exempted Property. The Exempted Property is projected to be the situs of significant future commercial development in the City, as further described herein. The Exempted Property is situated entirely within the Norwood City School District (the School District ) and the payment of the Statutory Service Payments is, as a result, subject to a School Compensation Agreement among the City, the Redeveloper and the School District, a copy of which is attached hereto as APPENDIX III (the School Compensation Agreement ). Under the School Compensation Agreement, as compensation for revenues otherwise lost to the School District due to the TIF Exemption, the City has agreed to pay to the School District, from the Statutory Service Payments it receives, an amount equal to (the School Compensation ): 55% of the product of (a) the School District Millage for each Tax Year, multiplied by (b) the assessed value of the Exempted Portion for that same Tax Year; minus, the Baseline Benefit for that same year. However, while the Series 2015 Bonds are outstanding, in any year that Statutory Service Payments are insufficient to pay the Debt Service Charges on the Series 2015 Bonds and the School Compensation, the Debt Service Charges will be paid first, and to the extent there are remaining funds from the collection of Statutory Service Payments, the School District shall be paid second. Any School Compensation not paid in any year shall be a deficiency (a Deficiency ) for that year. Deficiencies shall accumulate and carryover into subsequent years. In any year in which there is an excess of Statutory Service Payments after payment of Debt Service Charges and School Compensation, such excess are to be used to pay any Deficiencies on a pro-rata basis determined according to their respective millage amounts for the tax year of the Deficiency. See SUMMARY OF TRUST AGREEMENT Transfers from the Rookwood Exchange Tax Increment Fund herein. As used herein: Baseline Benefit means an amount equal in any given Tax Year to the amount of real property taxes applicable to the Baseline Value multiplied by 55%. Baseline Value means the assessed value of the portion of the Exempted Property immediately prior to the effective date of the TIF Ordinance. Bonds means the same as that term is defined in the Redevelopment Agreement. 15

23 School District Millage means, for any given Tax Year, the total effective millage appearing on the tax bill of any parcel constituting Exempted Property that is attributable to the School District in such Tax Year. Tax Year means January 1 through December 31 of any given calendar year. Development of the Exempted Property The Redeveloper and the City have entered into a Redevelopment Contract (Agreement) executed on September 13, 2011, and acknowledged September 28, 2011, as amended by the First Amendment of Redevelopment Contract between the City and Redeveloper dated April 27, 2012 (altogether, the Redevelopment Agreement ), which contemplates that the Redeveloper will construct a mixed use development on the Exempted Property that may be built in phases (the Development ), and will include office facilities, hotel facilities, retail facilities and any additional private improvements developed and constructed by Redeveloper on the Exempted Property, as may be approved by the City through the planned unit development process. The Public Improvements will be constructed to benefit the Development. Under the Redevelopment Agreement, the Redeveloper is required to use commercially reasonable efforts to substantially complete construction of the first phase of the Development, which includes a 123-key Courtyard by Marriott hotel, approximately 230,000 square feet of Class-A office space, a 127 unit apartment building and approximately 15,000 square feet of street level retail (herein referred to as Phase One ), and the related Public Improvements (which are summarized in EXHIBIT E) on or before June 30, As of the date hereof, Phase One of the Development and the Public Improvements have been substantially completed. In addition, the Redeveloper plans to construct the second phase of he Development, which will include a Residence Inn hotel (herein referred to as Phase Two ), that is expected to be open by the fall of While Phase One and Phase Two are subject to the tax increment financing, some or all of the future phases of the Development will be built on property that is not part of the Exempted Property. The Redeveloper is not required to construct any subsequent phase of the Development. The amount of Statutory Service Payments available from the Exempted Property is in direct proportion to the amount of the Development and the resulting increase in assessed tax value. The Project Consultant has estimated that the incremental assessed value of Phase one and Phase Two of the Development will, upon completion, be approximately $33,804,530, representing 35% of the estimated incremental true or market value of $96,584,371. See Financial Projections of Statutory Service Payments below. Based upon the current Hamilton County Auditor s valuation of the Exempted Property, development plans for the Development, and other information available to the the Project Consultant, the Project Consultant has made certain assumptions as to the expected Statutory Service Payments generated by the Exempted Property, as further discussed under Financial Projections of Statutory Service Payments below. Such assumptions also include estimated values for completed project construction, and other impacts upon the future values of the Exempted Property. 16

24 Redeveloper and Financing of the Development The Redeveloper is a special purpose entity formed by Jeffrey R. Anderson Real Estate, Inc. an Ohio corporation ( Anderson ). The members of the Redeveloper are entities and individuals that are affiliated with or employed by Anderson. The Anderson is a Cincinnati, Ohio based real estate developer founded in the 1970 s. While the members of the Redeveloper, and the members of its members, will contribute equity to the Development, none of them will guarantee completion of the Development or payment of the Debt Service Charges or be required to provide additional equity other than the initial equity provided by such members as of the Closing Date. For those reasons, no financial or other information is provided herein with respect to the members of the Redeveloper or the members of its members. 17

25 The following is an estimated sources and uses of funds for the construction of the Development that has been provided by the Redeveloper: Uses Totel (Courtyard by Marriott) $20,000,000 Apartment Building 18,000,000 Office and Retail 50,000,000 Hotel (Residence Inn) 20,000,000 Total Uses $108,000,000 Sources Bank Financing $103,500,000 Redeveloper Equity Contribution 4,500,000 Total Sources $108,000,000 As a condition to the closing of the Bank Financing, the bank required that the Redeveloper provide a guaranty in connection with the completion of the Development. These financial assurances are strictly for the benefit of the bank and may not be relied upon by the City, the Trustee or the Bondholders. Financial Projections of Statutory Service Payments EXHIBIT D Financial Projections of Statutory Service Payments contains Projections prepared by the Project Consultant with respect to the Statutory Service Payments available from the Exempted Property upon completion of the Development. Those Projections are, as described therein, based on projected estimated incremental valuations of the Development. Such valuations are speculative and based on timely completion of the Development. Any deviation from the plans or phasing for the Development or the timing would have an adverse impact on such projections and on the valuations as determined by the County Auditor for the Development. In addition, the Projections are based on the current tax levies in effect with respect to the Exempted Property and from which the Statutory Service Payments will be determined. Readers are cautioned that any levies which may expire prior to the final maturity of the Series 2015 Bonds must be renewed or replaced by the voters in order for that levy to provide increment to generate the Statutory Service Payments. See EXHIBIT D Financial Projections of Statutory Service Payments for 18

26 further details on the TIF Financial Projections and the assumed rates of taxation for the Exempted Property. Ad Valorem Taxes and Assessed Value of Real Property. For property taxation purposes, assessment of real property is performed on a calendar year basis by the elected County Auditor subject to supervision by the Tax Commissioner of Ohio (the Tax Commissioner ), and assessment of public utility property and tangible personal property is performed by the Tax Commissioner. Property taxes are billed and collected by the County Treasurer. Taxes collected from real property (other than public utility) in one calendar year are levied in the preceding calendar year on assessed values as of January 1 of that preceding year. The assessed valuation of real property is fixed at 35% of true value and is determined pursuant to rules of the Tax Commissioner and the Ohio Revised Code, except that real property devoted exclusively to agricultural use is assessed at not more than 35% of its current agricultural use value. Annually by the second Monday in each August, the County Auditor makes an initial determination of all real property in the County. The value for all parcels of real property is reviewed by the County Board of Revision, which may adjust the value of individual parcels. Upon completion, notice of the review is published twice by the Auditor in a newspaper of general circulation in the County. Also, immediately following receipt of the review by the Board of Revision, a copy is submitted to the Tax Commissioner. The Tax Commissioner may adjust the aggregate assessment of property in taxing districts by class. By the first Monday in each September, the County Auditor must incorporate the changes made by the Board of Revision and the Tax Commissioner. By the first day of each October, the County Auditor must prepare the final tax list and duplicate of real property in the County and submit one copy to the County Treasurer. The value assigned to a particular parcel; may be contested by either the property owner, another owner of property in the tax district or by the school district in which the parcel is located. This is done by filing a complaint with the County Board of Revision by March 31 of the following year. When a complaint is filed, both the owner and the school district have an opportunity to file a counter-complaint if they did not file the original complaint. The Board of Revision will conduct a hearing and issue a decision. A party before the Board of Revision that is dissatisfied with the result may appeal that decision to either the local court of common pleas or to the State Board of Tax Appeals. While an appeal is pending, a taxpayer may pay all of the tax for a parcel, or only that portion of the tax that is based upon the taxpayer s opinion of value for the parcel. At the conclusion of the appeal, the tax duplicate is adjusted to reflect the value that was determined. If the taxpayer has over-paid its taxes, it will be provided with a refund of the taxes with interest. If the taxpayer has underpaid its taxes, it will have 60 days to pay the deficiency plus interest. After 60 days, the unpaid taxes become delinquent. 19

27 Ohio law requires the County Auditor, subject to supervision by the Tax Commissioner, to adjust the true value of taxable real property every six years to reflect current fair market values. This sexennial reappraisal is done by individual appraisal of properties. In the third year following a sexennial reappraisal, the County Auditor, again subject to supervision by the Tax Commissioner, performs a triennial update to adjust the value of taxable real property to reflect true values. The triennial update is done without individual appraisal of properties, but with reference to a sales-assessment ratio over the three-year period. The sexennial reappraisal was last conducted in Hamilton County in 2011 (collected in 2012), and the next sexennial reappraisal will occur in tax year 2017 (collected in 2018). The General Assembly has from time to time exercised its power to revise the laws applicable to the determination of assessed valuation of taxable property and the amount of receipts to be produced by ad valorem real estate taxes levied on that property and may continue to make similar revisions. Ohio law grants tax credits to offset increases in taxes resulting from increases in the true value of real property due to inflation. Legislation implementing a 1980 constitutional amendment classifies real property as either (1) residential and agricultural or (2) all other real property, and provides for tax reduction factors to be separately computed for and applied to each class. These credits apply only to certain voted levies on real property and do not apply to unvoted tax levies or voted levies to pay debt service on general obligation debt. Statutory procedures limit the amount realized by each taxing subdivision from real property taxation, by the application of tax credits, to the amount realized from those taxes in the preceding year plus: (i) the proceeds of any new taxes (other than renewals) approved by the electors, calculated to produce an amount equal to the amount that would have been realized if those taxes had been levied in the preceding year and (ii) amounts realized from new and existing taxes on the assessed valuation of real property added to the tax duplicate since the preceding year. Such limitations are expressly inapplicable to amounts realized from taxes levied at a rate required to produce a specified amount, such as for debt service charges or emergency school levies, and from taxes levied inside the ten-mill limitation or any applicable municipal charter tax rate limitation. Further, such limitations will not reduce operating millage for school districts below 20 mills or for joint vocational school districts below 2 mills. To calculate the limited amount to be realized, a reduction factor is applied to the stated rates of tax levies subject to these tax credits. A resulting effective tax rate reflects the aggregate of those reductions, and is the rate based on which real property taxes are in fact collected. Real property tax amounts are further reduced by (a) a 10% reduction or rollback in all property taxes, (b) a 2.5% reduction applicable to certain homeowners, and (c) a 2.5% reduction applicable to certain elderly and handicapped homeowners. The State then distributes funds to the taxing districts to cover shortfalls in property tax revenues resulting from such reductions. Delinquency Procedures with Respect to Real Property Taxes The following is a general description of property tax delinquency procedures under Ohio law. The implementation of these procedures may vary in practice among Ohio counties. 20

28 Property taxes that remain unpaid after the due date shown on the bill (December 31 of the tax year with respect to the first half settlement and June 20 of the following year with respect to the second half settlement, unless the bill indicates otherwise) are considered delinquent. A penalty of 10% is added to all delinquent taxes; however, the penalty is reduced to 5% if payment is made within 10 days of the due date. In addition, interest accrues on delinquent taxes at a rate determined each year by the Tax Commissioner of Ohio in accordance with Ohio law. On the first day of the month following the due date for the second half payment of taxes, interest from the previous December 1 is added to the amount of delinquent taxes. Thereafter, on December 1, additional interest is charged from the first day of the month following the month in which the taxes became delinquent through November 30. Annually thereafter, additional interest is charged from the preceding December 1 to November 30. If real estate taxes and special assessments are not paid when due, they are to be immediately certified by the County Auditor s office as delinquent. The County Auditor compiles the list of delinquent properties, certifies that list to the County Treasurer, and publishes such list in a newspaper of general circulation in the County twice within a period of 60 days. If the delinquent taxes and special assessments are not paid within one year of the date of such certification, the properties are then also to be certified as delinquent to the County Prosecutor. The County Prosecutor is required to then undertake foreclosure proceedings to collect the delinquent taxes. An amount equal to 2-1/2% of all delinquent taxes and assessments collected by the County Treasurer are deposited in the County Treasurer s delinquent tax and assessment collection fund, and 2-1/2% of all delinquent taxes and assessments collected by the County Treasurer are deposited in the County Prosecutor s delinquent tax and assessment collection fund to be used solely for the collection of delinquent real property taxes and assessments. In addition, if a county land reutilization corporation is functioning as such on behalf of a county, an additional amount, not exceeding 5% of all delinquent taxes and assessments collected by the County Treasurer, shall be deposited in the County Treasurer s delinquent tax and assessment collection fund and made available for use of the corporation. If the property owner so requests, a payment plan with respect to delinquent taxes may be arranged with the County Treasurer pursuant to which semi-annual payments may be made for periods up to five years. During the period that a payment plan is in place, no additional interest or penalties accrue. If such a payment plan is not adhered to or none is arranged, foreclosure proceedings may be initiated by the County. Ohio law also provides for notice by publication and mass foreclosure proceedings and sales after two years delinquency. Proceeds from foreclosure sales of delinquent property become part of the current collection and are distributed as current collections to the taxing or assessing subdivisions in the County. No assurances can be given that the real property subject to sale will be sold or redeemed or, if sold or redeemed, that the proceeds of such sale or redemption will be sufficient to pay any delinquent real property tax. The provisions of the Ohio Revised Code pertaining to tax sales do not require the County to pay the delinquent real property tax 21

29 relating to any lot or parcel of property offered for tax sale if there is no purchaser at such tax sale. Ohio Revised Code sections to (the Delinquent Tax Lien Sale Act ) permit the County Treasurer to collect delinquent taxes and assessments by selling tax-lien certificates in exchange for payment of the entire delinquency. Delinquent taxes and assessments that are unpaid following the Second Half (June) tax collection period are advertised as delinquent in November and are eligible for tax certificate sale in October of the following year. Pursuant to the Delinquent Tax Lien Sale Act, the County Treasurer, in his or her discretion, may sell the tax-lien certificates at a discount from the full amount of the real estate taxes, assessments, penalties and interest that have become delinquent. General PROJECTED STATUTORY SERVICE PAYMENTS AND NET DEBT SERVICE The Projections prepared by the Project Consultant contain an estimate of the Statutory Service Payments based on the current real property tax rates. The information contained in the Projections is based on a number of assumptions and limitations set forth in executive summary of, and footnotes to, the Projections. Among those assumptions is the projected incremental assessed value of the Exempted Property. The Projections are also based on an assumption of future property tax rates, which are expected to change from year to year, and further assume that the Statutory Service Payments are paid as and when due. The Projections are not a forecast of future revenues, but an illustration based on certain assumptions. The actual revenues will be different from those shown in the Projections, and the differences may be material. The City and the Placement Agent make no representation or warranty, express or implied, as to the accuracy or completeness of the information in the Projections or in which the Projections are based, and there is no obligation to update such information after the delivery of the Series 2015 Bonds. Based on information obtained from the Ohio Department of Taxation, the County Auditor and the Redeveloper, the Project Consultant has prepared the Projections but makes no representation or warranty, express or implied, as to the assumptions set forth in the Projections or the completeness of the information in the Projections, and it has no obligation to update such information after the delivery of the Series 2015 Bonds. The Project Consultant has consented to the inclusion of the Projections in this Private Placement Memorandum. The Projections are forward looking and involve certain assumptions and judgments regarding future events. Although the Projections are based on currently available information, they are also based on assumptions about the future state of the national and regional economy and the local real estate markets as well as assumptions about future actions by various parties, which cannot be assured or guaranteed. The data set forth in the Projections is not a prediction or assurance that a certain level of performance will be achieved or that certain events will occur. The actual results will vary from the Projections, and the variations may be material. Prospective purchasers of the Series 2015 Bonds should review the Projections set forth below carefully and draw their own conclusions regarding the likelihood that projected revenues will be available. 22

30 ORDER OF SECURITY The Series 2015 Bonds are secured solely by a pledge by the City of the Pledged Revenues. By way of summary, the primary source of Pledged Revenues is the obligation by the owners of the parcels comprising the Exempted Property to pay, semi-annually on each January 15 and July 15 (each a Payment Date ), an amount equal to the amount that such owner would have paid in real estate taxes on the Exempted Property were it not for the TIF exemption, such amount being the aforementioned Statutory Service Payment. A portion of this Statutory Service Payment is not part of the Pledged Revenues as it is reserved for payment to the School District as discussed under TAX INCREMENT REVENUES The Tax Increment Financing Proceedings and the School Compensation Agreement. If and to the extent that the Statutory Service Payments are less than the Debt Service Charges due and payable on the Bonds and the School Compensation due under the School Compensation Agreement, the owners of the Exempted Property or any other entities with an interest in the Exempted Property to whom the owners have passed on their contractual duties to do so, shall make Supplemental Payments in the amount of such shortfall. See TAX INCREMENT REVENUES Overview. BONDHOLDERS RISKS An investment in the Series 2015 Bonds is subject to a number of significant risk factors. The following is a discussion of certain risks that could affect payments to be made with respect to the Series 2015 Bonds. Such discussion is not, and is not intended to be, exhaustive and should be read in conjunction with all other parts of this Private Placement Memorandum and should not be considered as a complete description of all risks that could affect such payments. Prospective purchasers of the Series 2015 Bonds should analyze carefully the information contained in this Private Placement Memorandum, including the Exhibits and Appendices hereto, and additional information in the forms of the documents attached hereto or referred to herein, copies of which are on file with the Trustee.. Nature of the Obligations The Series 2015 Bonds are special revenue obligations of the City and are payable solely from the Pledged Revenues, and certain other revenues pursuant to the Trust Agreement. The realization of such revenues is dependent upon, among other things, the capabilities of the owners of the parcels comprising the Exempted Property to make such payments. That capability may depend on future changes in economic and other conditions that are unpredictable and cannot be determined at this time. The Series 2015 Bonds are special revenue obligations of the City payable solely from the Pledged Revenues and do not constitute general obligations or an indebtedness of the City or the State or any political subdivision thereof within the meaning of any constitutional or statutory provision or limitation. Neither the full faith and credit nor the taxing power of the City, the State or any political subdivision thereof is pledged to the payment of the Debt Service Charges on the Series 2015 Bonds. None of the City, the State or any political subdivision thereof shall be obligated to levy a tax or to make any appropriation from moneys raised by taxation (or any moneys other than Pledged 23

31 Revenues) to pay debt service on the Series 2015 Bonds or any obligation under the Trust Agreement or Service Agreement. Although the Pledged Revenues are secured, in part, by the City s ability to exercise their foreclosure lien in the event of unpaid Statutory Service Payments and Supplemental Payments with respect to the Exempted Property, prospective investors are advised that none of the property comprising the Development, the Exempted Property or the Public Improvements is directly pledged as a security for the Series 2015 Bonds, and none of the Redeveloper, its members or any affiliates of any such entities has pledged its credit or assets or has provided any guaranty, surety or undertaking of any kind, moral or otherwise, to pay the Debt Service Charges on the Series 2015 Bonds. See SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015 BONDS. Concentration or De-concentration of Ownership The timely payment of the Series 2015 Bonds depends on the ability of the Redeveloper and owners of the parcels comprising the Exempted Property to make Statutory Service Payments, and to the extent necessary, to pay Supplemental Payments, when due. The owners are required as covenants running with the land to make Statutory Service Payments and Supplemental Payments with respect to the Exempted Property (and the Redeveloper, as a designated owner pursuant to the Service Agreement, is obligated to make Supplemental Payments on behalf of the Original Owner). However, the present lack of diversity in the obligation to make the Statutory Service Payments, and to the extent necessary, to pay Supplemental Payments, presents a significant risk to Bondholders. Alternatively, pursuant to the Service Agreement and the Redevelopment Agreement, the owners may transfer or sell ownership of all or portions of their interests in the Exempted Property, potentially resulting in the redrawing of parcel lines within the Exempted Property and/or multiple owners of the Exempted Property, with each owner having separate and non-overlapping obligations to pay Statutory Service Payments and Supplemental Payments. Failure to Complete the Development Land development is subject to comprehensive federal, State and local regulations. Approval is required from various entities in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. As of the date hereof, Phase One has been substantially completed, and Phase Two is expected to be completed by the fall of The City is currently not aware of the precise status of approvals for Phase Two or any potential future phases of the Development as a whole, as many such approvals and permits are issued by governmental entities other than the City. Failure to obtain any such approvals or satisfy such governmental requirements could adversely affect planned land development of the Exempted Property. Development of land is also subject to economic considerations. The failure to complete the Development or the required infrastructure or substantial delays in the completion of the Development or the required infrastructure due to litigation, the inability to obtain required funding, or other causes may reduce the value of the property comprising the Exempted Property and may affect the ability of the owners and/or the Redeveloper to make the Service Payments 24

32 when due which may result in a default in payments of the principal of, and interest on, the Series 2015 Bonds. Financial Feasibility of the Development The financial feasibility of the Development depends in large part upon the ability of the Redeveloper to attract sufficient numbers of tenants to achieve and then to maintain substantial occupancy throughout the term of the Series 2015 Bonds. If the Redeveloper fails to achieve and maintain substantial occupancy of the Development, the incremental assessed value of the Development may not generate sufficient Statutory Service Payments to pay Debt Service Charges on the Series 2015 Bonds and thereby increase reliance on Supplemental Payments. See PROJECTED STATUTORY SERVICE PAYMENTS AND NET DEBT SERVICE. In addition, failure to maintain adequate occupancy and rental levels could impair the ability of the Redeveloper to pay its operating expenses and debt service on its project financing for the Development, resulting in foreclosure or change in ownership or use of all or a portion of the Development securing the construction loan for the Development. The Trustee and the City have no ability to control or influence the manner in which the Development is operated or the identity of the Development s operator, and any failure of the Redeveloper or other operator to maintain adequate occupancy or rental levels does not constitute a default under the Trust Agreement or the Service Agreement. Reliance on the Redeveloper and Subsequent Property Owners The Redeveloper has undertaken the Development. The Redeveloper is under no obligation to own the Development for the term of the Series 2015 Bonds. To the extent that the Redeveloper has sold or sells any part of the Development, the payment of debt service on the Series 2015 Bonds will be dependent (regardless of occupancy) on subsequent owners of the Exempted Property to provide for Statutory Service Payments and to the extent necessary, Supplemental Payments. As noted previously, the Development could, as a result of property transfers possible under the Service Agreement and Redevelopment Agreement, be owned by multiple owners. Risk of Catastrophic Loss In the event of a natural or manmade disaster, such as a hurricane, fire, earthquake, tornado, or war destroyed the Development or a portion thereof, the incremental assessed value of the Exempted Property could be drastically reduced with a corresponding decrease in the Statutory Service Payments, and increased reliance on Supplemental Payments. Dependence on Service Payments The amount of the Statutory Service Payments available to pay principal and interest on the Series 2015 Bonds (the primary source of Pledged Revenues) is determined by the incremental assessed value of the Exempted Property, the effective tax rate of the taxing district within which the Exempted Property is located, and the percentage of Statutory Service Payments actually collected and paid into the Statutory Service Payment Account of the Rookwood Exchange Tax Increment Fund. 25

33 There can be no guarantee that the Exempted Property will be initially appraised by the County Auditor at the levels contemplated by the Projections, nor can there be a guarantee that the value of the property will not decrease. Except as otherwise provided in the Service Agreement, property owners have the right to protest the appraised value of their property and are not required to tender their property for ad valorem taxation at any agreed upon level. The amount of the Statutory Service Payments is also dependent on the real property tax rates then in effect with respect to the taxing district within which the Exempted Property is located. Some of the tax levies that comprise the aggregate tax rates shown in the Projections set forth in EXHIBIT D TIF Financial Projections of Statutory Service Payments will expire before the final maturity of the Series 2015 Bonds and must be renewed or replaced in order to maintain the Statutory Service Payments at their current level. If such levies are not renewed or replaced, Statutory Service Payments will be reduced and may be considerably less than forecasted, thereby increasing the reliance on Supplemental Payments to pay Debt Service Charges on the Series 2015 Bonds. However, the millage amount used to determine the Statutory Service Payments may also increase in the event that any of the taxing districts within which the Exempted Property is located, approve additional levies or replace existing levies. The property tax rate used to determine the amount of Statutory Service Payments will also fluctuate by virtue of the operation of reduction factors, a unique provision under Ohio law in effect since the 1970 s, which will cause the effective rate of millage actually levied against all commercial/industrial real property by the various taxing authorities having jurisdiction over such property (including the Statutory Service Payments collected with respect to the Exempted Property) to be reduced so that the amount of real property taxes (and Statutory Service Payments) generated from such real property will not increase as the value of such property appreciates due to factors such as inflation. As a result, the real property tax rate will be reduced and, the increment available to generate Statutory Service Payments will be reduced unless the value of the Exempted Property increases at the same rate or faster than all other property within the jurisdiction of the respective taxing authority. Uncertainty of Methodology of Calculation and Collection of Service Payments Statutory Service Payments are based upon the incremental assessed value of the Exempted Property. The method of appraising the Exempted Property could have a significant impact on the Statutory Service Payments that become available. The appraisal method or combination of methods that the County Auditor uses with respect to the Exempted Property is within the discretion of the County Auditor and may change from time to time. The use of a particular method or combination of methods of appraisal with respect to the Exempted Property may, over time, cause a decrease in the incremental assessed value of the Exempted Property and, therefore, result in a shortfall in the Statutory Service Payments available to pay debt service on the Series 2015 Bonds. Currently, the general methodology for the State assessment system has been in place since No assurances can be given that such methodology will not be changed during the term of the Series 2015 Bonds. 26

34 Collection Risks No assurances can be given that, in the event of a delinquency in the payment of the Statutory Service Payments or the Supplemental Payments, the Exempted Property subject to sale will be sold or redeemed or, if sold or redeemed, that the proceeds of such sale or redemption will be sufficient to pay the delinquent Statutory Service Payments or the Supplemental Payments. Furthermore, if the Hamilton County Treasurer were to elect to collect delinquent Statutory Service Payments by selling tax-lien certificates pursuant to the Delinquent Tax Lien Sale Act, the Hamilton County Treasurer, in his or her discretion, could sell the tax-lien certificates at a discount from the full amount of the Statutory Service Payments that are delinquent. If the County Treasurer were to sell such tax-lien certificates at a discount, the proceeds of such sale representing the delinquent Statutory Service Payments might be insufficient to pay the Debt Service Charges. See TAX INCREMENT REVENUES Delinquency Procedures with Respect to Real Property Taxes. Dependence on Projections The amount of Statutory Service Payments that will be available to pay the Series 2015 Bonds on a year-to-year basis is unknown at the present time. The Projections, which set forth estimated amounts that will be available to pay Debt Service Charges on the Series 2015 Bonds, are based on the assumptions and limitations included in the Projections. These Projections constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance and achievements to be different from the future results, performance or achievements expressed or implied by such forward-looking statements. Investors are cautioned that the actual results could differ materially from those set forth in the forward-looking statements. The assumptions with respect to the Development used by the Project Consultant to make the Projections were provided entirely by or on behalf of the Redeveloper or obtained from sources other than the City or the Placement Agent. Neither the City nor the Placement Agent has commissioned an independent feasibility analysis or any analysis whatsoever of any of the assumptions upon which the Projections are based. The information in the Projections is based on various assumptions, estimates and opinions of the Project Consultant. The actual results will vary from the Projections and the variations may be material. There is no assurance that actual events will correspond with the projections or the assumptions, estimates and opinions on which they are based. No Mortgage on the Development; No Guaranty Payment of the principal of and interest on the Series 2015 Bonds is not secured by any deed of trust, mortgage or other lien on the Exempted Property or any portion thereof, nor is it guaranteed by Jeffrey R. Anderson Real Estate, Inc., or anyone else. 27

35 Failure to Maintain Levels of Incremental Assessed Valuation There can be no assurance that the incremental assessed value of the Exempted Property will equal or exceed the forecasted incremental assessed value. Even if the incremental assessed value is initially determined as forecasted in the Projections, there can be no assurance that such incremental assessed value will be maintained throughout the term of the Series 2015 Bonds. If at any time during the term of the Series 2015 Bonds the actual incremental assessed value is less than forecasted, the amount of the Statutory Service Payments will be less than forecasted and the amounts paid into the Statutory Service Payment Account of the Rookwood Exchange Tax Increment Fund may not be sufficient to pay Debt Service Charges on the Series 2015 Bonds. Even if the County Auditor s determination of the incremental assessed value of the Exempted Property equals or exceeds the forecasted incremental assessed value, the Redeveloper and successor owners of the property comprising the Exempted Property have the right to appeal such determination, except as otherwise set forth in the Service Agreement. Additionally, pursuant to certain leases, certain tenants may also be granted the right to appeal such determination should the Redeveloper and successor owners decline to do so. If any such appeal is not resolved prior to the time when real estate taxes and Statutory Service Payments are due, the taxpayer may pay the taxes and Statutory Service Payments under protest, or may tender the taxes and Statutory Service Payments that would be due on the lower value asserted by the taxpayer. In such event, that portion of taxes and Statutory Service Payments being contested or protested will not be available for deposit into the Rookwood Exchange Tax Increment Fund until the appeal has been concluded. If the appeal is resolved in favor of the taxpayer, the incremental assessed value of the Exempted Property will be reduced, in which event the Statutory Service Payments may be less than forecasted and thereby increases reliance on Supplemental Payments. In addition, if the taxpayer paid the full amount of taxes during an appeal that is ultimately resolved in the taxpayer s favor, the excess taxes must be refunded with interest from future collections, which will also thereby increase reliance on Supplemental Payments. Changes in State and Local Tax Laws The Projections assume no substantial change in the basis of extending, levying and collecting real property taxes, and of determining the Service Payments to be paid in lieu of the exempted real property taxes. Any change in the current system of collection and distribution of real property taxes or Service Payments in the City, including without limitation the reduction or elimination of any tax levy, judicial action concerning any tax levy or voter initiative, referendum or action with respect to any tax levy, could adversely affect the availability of revenues to pay the principal of and interest on the Series 2015 Bonds. There can be no assurance that the current system of collection and distribution of the real property taxes or Service Payments in the City will not be changed by any competent authority having jurisdiction to do so, including without limitation the State, the City, the School District, the courts or the voters. Reductions in State and Local Tax Rates Any taxing district with jurisdiction over the Exempted Property could lower its tax rate, which would have the effect of reducing the Statutory Service Payments derived from Exempted Property. In addition, levies currently in effect in taxing districts with jurisdiction over the 28

36 Exempted Property may expire during the term of the Series 2015 Bonds. Any such reduction in rates could be the result of the governing body of the taxing district s desire to lower tax rates, taxpayer initiative, lack of voter support for renewing or replacing existing levies or voting new levies necessary as a result of the reduction factors discussed above, or in response to state or local litigation or legislation affecting the broader taxing structure within the taxing district, such as litigation or legislation affecting the primary reliance on ad valorem property taxes to fund elementary and secondary education in the State. Limitations on Remedies; No Acceleration The remedies available upon a default under the Trust Agreement and other legal documents relating to the Series 2015 Bonds will, in many respects, be dependent upon judicial actions, which are often subject to discretion and delay. Under existing constitutional and statutory laws and judicial decisions, including the United States Bankruptcy Code, the remedies specified in the Trust Agreement, and other legal documents may not be readily available or may be limited. The various legal opinions to be delivered in connection with the issuance of the Series 2015 Bonds will be expressly subject to the qualification that the enforceability of the Trust Agreement and other legal documents is limited by bankruptcy, reorganization, insolvency, moratorium and other similar laws affecting the rights of creditors generally and by the exercise of judicial discretion in appropriate cases. Additionally, the Series 2015 Bonds are not subject to acceleration. Changes in Economic and Market Conditions The incremental assessed values and revenues contained in the Projections are based on the current status of the national and local business economy and assume a future performance of the real estate market similar to the historical performance of such market in the metropolitan Cincinnati area. Changes in real estate market conditions in the Cincinnati area, as well as changes in general or local economic conditions, could adversely affect the value of the property and the level of economic activity at the Exempted Property and, consequently, the amounts of Statutory Service Payments generated and collected for deposit into the Statutory Service Payment Account in the Rookwood Exchange Tax Increment Fund payment of Debt Service Charges on the Series 2015 Bonds, which will require a greater reliance on Supplemental Payments. Determination of Taxability Failure to comply with certain legal requirements (see TAX EXEMPTION ) could cause the inclusion of interest on the Series 2015 Bonds in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2015 Bonds. In the event of the taxability of the Series 2015 Bonds, Bondholders would continue to be entitled to receive payments of principal and interest as and when due, but would be required to include the interest payments in their gross income for federal income tax purposes. Lack of Rating and Market for the Series 2015 Bonds At the time of issuance, the Series 2015 Bonds have not received a credit rating by any rating agency. The absence of a rating could adversely affect the ability of Bondholders to sell 29

37 their Bonds or the price at which their Bonds can be sold. No assurance can be given that a secondary market for the Series 2015 Bonds will develop following the completion of the offering of the Series 2015 Bonds. SUMMARY OF TRUST AGREEMENT Following is a summary of certain provisions of the Trust Agreement dated as of March 1, 2015 (the Trust Agreement ), between the City and U.S. Bank National Association, Cincinnati, Ohio, a national banking association, as trustee (the Trustee ), a copy of which is attached hereto as APPENDIX IV. This summary is not to be regarded as a complete statement of the Bond Ordinance or the Trust Agreement, to which reference is made for a full statement of terms thereof. Rookwood Exchange Tax Increment Fund The Rookwood Exchange Tax Increment Fund constitutes a Special Fund of the City and the Rookwood Exchange Tax Increment Fund, and the accounts therein, and all moneys and the Eligible Investments therein will be used solely and exclusively for the payments and transfers described in Section 4.04 of the Trust Agreement and except for application thereof for the uses and purposes authorized therein, the City shall have no interest whatsoever in the moneys and investments in the Rookwood Exchange Tax Increment Fund. So long as there are any outstanding Series 2015 Bonds, all Service Payments shall, within seven Business Days after receipt of Final Settlement from the County Auditor, be paid by the City to the Trustee for the account of the City, with one Business Day s advance notice to the Trustee of the amount of each such payment and the source or sources thereof (and the amounts from each such source). The Service Payments shall be applied by the Trustee as described below. Within the Rookwood Exchange Tax Increment Fund there is a Statutory Service Payment Account and a Supplemental Payment Account. Upon receipt by the Trustee, whether from the City or otherwise, any amounts received from the following sources shall be deposited as follows: (a) Statutory Service Payments shall be deposited into the Statutory Service Payment Account, and (b) Supplemental Payments shall be deposited into the Supplemental Payment Account. The Statutory Service Payment Account and the Supplemental Payment Account are referred to herein collectively as the Rookwood Exchange Tax Increment Fund Accounts. All amounts deposited in the Rookwood Exchange Tax Increment Fund, and any moneys and Eligible Investments held therein, constitute Pledged Revenues under the Trust Agreement, pledged and assigned solely for the uses and purposes hereof, and the City shall not, except as to the uses and purposes of the Trust Agreement, have any interest whatsoever in the Rookwood Exchange Tax Increment Fund or the moneys and Eligible Investments under the Trust Agreement. 30

38 Transfers from the Rookwood Exchange Tax Increment Fund So long as there are any outstanding Series 2015 Bonds, all moneys and investments in the Rookwood Exchange Tax Increment Fund shall be allocated to, and shall be used to make, the transfers described below: (1) First, on the date of any transfer of moneys from the Rookwood Exchange Tax Increment Fund, to the Rebate Fund, the amount if any necessary to cause the Rebate Fund to contain the amount required to be on deposit therein on or prior to the date of such transfer. See SUMMARY OF TRUST AGREEMENT Rebate Fund herein. (2) Second, on each January 1, April 1, July 1, and October 1 of each year, commencing July 1, 2015, to the Administrative Expense Fund, an amount sufficient, after giving effect to amounts on deposit in that fund, to pay the anticipated Administrative Expenses due under the Administration Agreement (defined infra) due on or before the next Interest Payment Date. See SUMMARY OF TRUST AGREEMENT Administrative Expense Fund herein. (3) Third, on each Interest Payment Date and each Principal Payment Date, to the Interest Account and the Principal Account in the Bond Fund, after giving effect to any amounts on deposit in those accounts, an amount sufficient to pay the interest and principal due on all Outstanding Bonds on that Interest Payment Date or Principal Payment Date, as applicable. See SUMMARY OF TRUST AGREEMENT Bond Fund herein. (4) Fourth, in each case, and on each Project Revenue Allocation Date, any amount which may be necessary to make up any previous deficiency in any of the payments described above in subsections (i) through (iii) and to make up any deficiency or loss in the respective funds or accounts to which payments are required to be made in connection with investments or otherwise including, without limitation, the restoration of any amounts paid from any of those funds or accounts pursuant to the Trust Agreement, except as provided otherwise expressly herein. (5) Fifth, on each School Compensation Payment Date, an amount sufficient to pay any remaining School Compensation. (6) Sixth, on each School Compensation Payment Date, an amount sufficient to pay any School Compensation Deficiency. (7) Seventh, on the date of any transfer of moneys from the Rookwood Exchange Tax Increment Fun, the the Public Improvements Acount of the Public Improvements Fund, the amount agreed upon between the City and the Redeveloper, if any, necessary to pay any costs of Additional Public Improvements. 31

39 (8) Eighth, on each Project Revenue Allocation Date, beginning with calendar year 2022, the amount, if any, necessary to cause the Capital Improvement Reserve Fund to contain the amount required to meet the Capital Reserve Requirement. See SUMMARY OF TRUST AGREEMENT Capital Improvement Reserve Fund herein. All moneys deposited in the Supplemental Payments Account of the Rookwood Exchange Tax Increment Fund shall be used, but only if all moneys in the Statutory Service Payment Account on that date have been used, to make the transfers required by subsections (1) through (4) above and due to be made on or before the applicable date. Any amounts still remaining in the Statutory Service Payment Account on the Public Improvements Revenue Allocation Date, shall, but only after all transfers required above have been made, be transferred to the Surplus Fund and used as provided herein. Service Payment Reserve Amount Mercantile Title Agency, Inc., an Ohio corporation, has been appointed as Administrator pursuant to an Administration Agreement dated March 28, 2013, among the City, the Administrator and the Trustee (the Administration Agreement ). Not earlier than the Business Day following each Principal Payment Date, including any year in which Series 2015 Bonds are outstanding when there is no principal paid (each, a Public Improvements Revenue Allocation Date ), the Administrator, in consultation with the Trustee and based on all information then known to it as to the timing and amount of Service Payments anticipated to be received during the next year, the amount of Administrative Expenses due during the next year, any anticipated Rebate Amount due during the next year, the amount of interest due on the Outstanding Bonds during the next year, and the amount of principal due on the Outstanding Bonds during the next year, shall determine the Service Payment Reserve Amount and direct the Trustee to transfer such amount from the funds, if any, in the Surplus Fund to the Administrative Expense Fund, the Rebate Fund, the Interest Account or the Principal Account, as applicable. The Service Payment Reserve Amount shall mean the amount determined by the Administrator, as described above, to be necessaryto make the required transfers to the Administrative Fund, the Rebate Fund, the Interest Account and the Principal Account during the next year, after taking into consideration anticipated Administrative Expenses, Rebate Amounts, interest and principal due on Outstanding Bonds, and Service Payments to be received during such year, which amounts shall be transferred from the Surplus Fund to the Administrative Expense Fund, the Rebate Fund, the Interest Account, or the Principal Account, as applicable. If there are not enough funds in the Surplus Fund to fully fund the Service Payment Reserve Amount, money shall be transferred first to the Administrative Expense Fund, second to the Rebate Fund, third to the Interest Account, and fourth to the Principal Account to fund the respective reserve amounts expected to be paid out of such accounts over the next year. Public Improvements Fund The Public Improvements Fund does not constitute a Special Fund, nor shall any money or Eligible Investments held therein, except for excess amounts in the Public Improvements Fund not required to pay Public Improvement Costs as described below, be pledged or used towards the payment of any Outstanding Bonds. 32

40 The Public Improvements Fund, and the accounts therein, and all moneys and Eligible Investments therein, will be used solely and exclusively for the payments and transfers described in the Trust Agreement, and will be disbursed to pay Public Improvement Costs (as defined below). Within the Public Improvements Fund there is a Costs of Issuance Account, a Capitalized Interest Account and a Public Improvements Account. The Trustee must cause to be kept and maintained adequate records pertaining to the Public Improvements Account and all disbursements therefrom. Money in the Public Improvements Account must be disbursed for payment of Public Improvement Costs (other than Costs of Issuance and Capitalized Interest) pursuant to the terms of Trust Agreement. Public Improvements Costs means Costs of the Public Improvements within the meaning of the Act consisting of (a) costs incurred directly or indirectly for or in connection with the provision of the Public Improvements, including costs incurred with respect to the Public Improvements for preliminary planning and studies; architectural, legal, engineering, accounting, consulting, supervisory and other services; labor, services and materials; and recording of documents and title work; (b) costs incurred directly or indirectly in seeking to enforce any remedy against any contractor or subcontractor in respect of any actual or claimed default under any contract relating to the Public Improvements; (c) financial, legal, accounting, printing and engraving fees, charges and expenses, and all other fees, charges and expenses incurred in connection with the authorization, sale, issuance and delivery of the Series 2015 Bonds including, without limitation, the fees and expenses of the City, counsel to the City and Bond Counsel, the fees and expenses of the Trustee and the fees and expenses of the Underwriter and its counsel; and (d) any other incidental and necessary costs, expenses, fees and charges relating to the acquisition or installation of the Public Improvements; and interest on the Series 2015 Bonds during the Construction Period. After the occurrence of an Event of Default, moneys on deposit in the Public Improvements Account must be used only upon the direction of the City. The Public Improvements Completion Date for the Public Improvements will be the date on which the City and the Trustee have approved a certification by the Redeveloper to the City of the completion of the Public Improvements and all payments have been made from the Public Improvements Fund for the Public Improvements, which Public Improvements Completion Date must occur on or before June 30, 2015) (unless extended by reason of a Construction Force Majeure Event). Any amount remaining in the Public Improvements Fund on the Public Improvements Completion Date, must, unless otherwise directed by the City, be transferred to and deposited in the Prepayment Account of the Bond Fund and used, together with any investment earnings thereon, on the next succeeding Interest Payment Date to redeem Bonds subject to optional redemption, or must be deposited or applied in accordance with the direction of the City to one or more of the following purposes: (a) transfer to the Principal Account to be used for the payment of principal of the Series 2015 Bonds due on the next succeeding Principal Payment Date, (b) transfer to the Interest Account to be used for the payment of interest due on the Series 2015 Bonds on the next succeeding Interest Payment Date, or (c) transfer to the provider of a Credit Support Instrument to reimburse such provider for any draws on the Credit Support Instrument; provided, that any such direction of the City may only be given if it is accompanied by an opinion of Bond Counsel to the effect that such directed use of any such amounts will not cause the interest on the 33

41 Series 2015 Bonds to be included in gross income of the Holders of the Series 2015 Bonds for federal income tax purposes. Moneys in the Costs of Issuance Account must be disbursed in accordance with the Trustee Instructions and used to fund the Costs of Issuance of the Series 2015 Bonds; provided, that the Trustee Instructions may provide that the Costs of Issuance be paid directly from the proceeds of the Series 2015 Bonds. Costs of Issuance means the costs of issuing the Series 2015 Bonds, including, without limitation, fees charged by the Trustee, Bond Counsel, the Underwriter and the Administrator. Any funds remaining in the Costs of Issuance Account after paying all Costs of Issuance pursuant to the Trustee Instructions must be transferred to the Interest Account. Moneys in the Capitalized Interest Account must be disbursed to the Interest Account of the Bond Fund in the amount, if any, necessary to cause the Interest Account to contain the amount required to pay Debt Service during the Capitalized Interest Period on or prior to each respective Interest Payment Date during that time. Any balance of funds remaining in the Capitalized Interest Account after the final Business Day of the Capitalized Interest Period must be transferred in full to the Interest Account within 5 Business Days of that date. Administrative Expense Fund The Administrative Expense Fund does not constitute a Special Fund, nor will any money or Eligible Investments held therein be pledged or used towards the payment of any Outstanding Bonds. At the written direction of the City, the Trustee must disburse, as required, moneys held in the Administrative Expense Fund to pay, or reimburse the City or the Trustee for the payment of, Administrative Expenses. Administrative Expenses means (a) the reasonable fees and expenses of the Administrator, the Trustee, the Registrar, the Paying Agent, or the Authenticating Agent, (b) amounts required to be deposited in the Rebate Fund pursuant to the Trust Agreement, (c) reasonable fees charged by the provider of a Credit Support Instrument, if any, and (d) any other reasonable expenses incurred by the City, if any, including, without limitation, legal fees for Counsel to the City, and fees and expenses incurred by the City to comply with continuing disclosure obligations, or to comply with rebate obligations. The Administrative Expenses will be paid to the party to whom those amounts are due or, if applicable, transferred to the Rebate Fund. If the amount on deposit in the Administrative Expense Fund on any date on which Administrative Expenses are due and payable is less than the amount necessary to pay such Administrative Expenses, the Trustee must transfer to the Administrative Expense Fund first from the Rookwood Exchange Tax Increment Fund, second from the Capital Improvement Reserve Fund (provided that such transfer shall not cause the amount in the fund to fall below the Capital Reserve Requirement), third from the Surplus Fund, and fourth from the Reserve Fund (provided that such transfer shall not cause the amount in the fund to fall below the Reserve Requirement) an amount sufficient to make up such deficiency. 34

42 Bond Fund The Bond Fund is a Special Fund pledged to the payment of Debt Service Charges on Series 2015 Bonds. Except as specifically and expressly provided in the Trust Agreement, the City shall not have any interest whatsoever in the Bond Fund, and the accounts therein, or the moneys or Eligible Investments therein. The Bond Fund, and the accounts therein, and the moneys and Eligible Investments therein, shall be used solely and exclusively for the payment of Debt Service Charges as they become due at stated maturity, by redemption or otherwise. Within the Bond Fund there is an Interest Account, Principal Account, and a Prepayment Account. Subject to the terms of the Trust Agreement, the Trustee shall transmit to the Paying Agent from moneys in the Interest Account and the Principal Account, as applicable, amounts sufficient to make timely payments of interest on and principal of and any premium on the Series 2015 Bonds to be made by the Paying Agent and then due and payable. The City has authorizes and directed the Trustee to cause withdrawal of moneys from the Bond Fund which are available for the purpose of paying, and are sufficient to pay, the principal of and interest and any premium on the Series 2015 Bonds as they become due and payable, for the purposes of paying or transferring moneys to the Paying Agent which are necessary to pay such Debt Service Charges when due. Debt Service Charges shall be payable, as they become due, (a) first, from the Interest Account and the Principal Account to pay, respectively, the interest and principal on the Series 2015 Bonds; (b) second, if amounts on deposit in the Bond Fund on any Interest Payment Date or Principal Payment Date are not sufficient to pay the Debt Service Charges due and payable hereunder, then from moneys transferred to the Bond Fund first from the Surplus Fund, and second from a Credit Support Instrument, if any; (c) to the extent that the foregoing sources are insufficient on any date on which Debt Service Charges are then due and payable, from other Pledged Revenues to the extent then available; and (d) from any other source lawfully available to the Trustee, including without limitation, proceeds from the sale or liquidation of any collateral then assigned or pledged to the Trustee. In addition to the deposits to be made in the Bond Fund as otherwise contemplated herein, there shall be deposited into the applicable account of the Bond Fund (the Prepayment Account therein unless otherwise directed), as and when received, any amount remaining in the Public Improvements Fund after completion of the Public Improvements and payment of all costs and expenses to be paid from the Public Improvements Fund (see SUMMARY OF TRUST AGREEMENT Public Improvements Fund above). Amounts so deposited shall be used by the Trustee at the first opportunity to redeem the Series 2015 Bonds subject to optional redemption, unless otherwise directed by the City in accordance with applicable provisions of the Trust Agreement or in the Service Agreement. Capital Improvement Reserve Fund. The Capital Improvement Reserve Fund does not constitutes a Special Fund nor shall any money or Eligible Investments held therein be pledged or used towards the payment of the Series 2015 Bonds. Amounts will be transferred from the Rookwood Exchange Tax Increment Fund to 35

43 the Capital Improvement Reserve Fund (see SUMMARY OF TRUST AGREEMENT Transfers from the Rookwood Exchange Tax Increment Fund ) to fund the Capital Reserve Requirement. The Capital Reserve Requirement will mean a balance of up to $500,000 which may be deposited in the Capital Improvement Reserve Fund to pay the cost of future Capital Repairs or improvements (excluding maintenance or operating costs) to the Public Improvements. At the written direction of the City, the Trustee shall disburse moneys held in the Capital Improvement Reserve Fund to pay or reimburse the City or the Trustee for the payment of Capital Repairs. Capital Repairs means any work or purchases which reasonably are required to be performed in and about the Public Improvements to repair, restore, or replace the Public Improvements other than Routine Maintenance (as defined in the Trust Agreement) and which are necessitated by any damage, destruction, ordinary wear and tear, defects in construction or design, or any other cause. Such amounts shall be paid to the party to whom those amounts are due to pay the costs of any future Capital Repairs. Surplus Fund The Surplus Fund constitutes a Special Fund and shall be pledged to the payment of Debt Service Charges on the Series 2015 Bonds until released or otherwise used in accordance with the Trust Agreement. In the event that moneys in the Rookwood Exchange Tax Increment Fund are insufficient on any date to make the payments or transfers required by the Trust Agreement, the Trustee shall, after withdrawing amounts in the Rookwood Exchange Tax Increment Fund for that purpose, withdraw and use such amount as is necessary for that purpose from the Surplus Fund. In the event that moneys in the Interest Account or the Principal Account in the Bond Fund are insufficient on any date on which Debt Service Charges on the outstanding Series 2015 Bonds are due (whether at stated maturity or by mandatory redemption) to pay such Debt Service Charges, the Trustee must, after withdrawing amounts from the Capitalized Interest Account and the Rookwood Exchange Tax Increment Fund for that purpose, and before withdrawing moneys from any other Fund for that purpose, apply moneys in the Surplus Fund, to the extent necessary, in the aggregate, to make up the deficiency and shall deposit those moneys first in the Interest Account and second in the Principal Account. In the event that moneys in the Administrative Expense Account of the Public Improvements Fund are insufficient on any date on which Administrative Expenses are due to pay such Administrative Expenses, the Trustee must, before withdrawing moneys from any other Fund for the purpose, apply moneys in the Surplus Fund to the extent necessary in the aggregate to make up the deficiency, and must deposit those moneys in the Administrative Expense Account. Use of Surplus Fund The Surplus Fund, to the extent not otherwise used for other purposes authorized or directed by the Trust Agreement, including as described above under Surplus Fund, must be used as follows: 36

44 First, as required in the Trust Agreement, to fund amounts otherwise to be funded from the Rookwood Exchange Tax Increment Fund, including the reimbursement of draws made under a Credit Support Instrument as provided for by the Trust Agreement; Second, on each Public Improvements Revenue Allocation Date, if any amounts remain in the Surplus Fund after the preceding amounts have been paid or transferred, the Trustee must transfer the amount required to make any payments due the School District under the School Compensation Agreement, including to pay a School Compensation Deficiency; Third, on each Public Improvements Revenue Allocation Date, if any amounts remain in the Surplus Fund after the preceding amounts have been paid or transferred, the Trustee must transfer, in the respective amounts determined in accordance with the definition thereof, the Service Payment Reserve Amount to the Administrative Expense Fund, the Rebate Fund, the Capital Improvement Reserve fund, the Interest Account, and the Principal Account; Fourth, on each Public Improvements Revenue Allocation Date, if any amounts remain in the Surplus Fund after the preceding amounts have been paid or transferred, the Trustee shall transfer all remaining amounts to the Prepayment Account of the Bond Fund. Rebate Fund The Rebate Fund does not constitute a Special Fund, nor shall any money or Eligible Investments held therein be pledged or used towards the payment of any Outstanding Bonds. At the end of each Bond Year, and within 20 days after the payment in full of all outstanding Series 2015 Bonds, the Administrator shall calculate or cause the calculation of the Rebate Amount (defined below) as of the end of that Bond Year or the date of such final payment. The Administrator shall notify the Trustee in writing of each Rebate Amount so calculated and the Trustee shall notify the City in writing of the amount then on deposit in the Rebate Fund. If the amount then on deposit in the Rebate Fund is in excess of the Rebate Amount, the Trustee shall forthwith transfer that excess amount to the Statutory Service Payment Account in the Rookwood Exchange Tax Increment Fund. If the amount then on deposit in the Rebate Fund is less than the Rebate Amount, the Trustee shall forthwith transfer to the Rebate Fund, from the Statutory Service Payment Account in the Rookwood Exchange Tax Increment Fund, an amount sufficient to cause the Rebate Fund to contain an amount equal to the Rebate Amount. Within 30 days after, the end of the fifth Bond Year and every fifth Bond Year thereafter (each, an Installment Computation Date ), the City shall direct the Trustee to pay, and the Trustee, acting on behalf of the City, shall pay, to the United States in accordance with Section 148(f) of the Code from the moneys then on deposit in the Rebate Fund (and from any amounts then on deposit in any of the Pledged Revenues, in the same order identified in the penultimate sentence of the immediately preceding paragraph, if the amount on deposit in the Rebate Fund is less than 90% of the Rebate Amount) an amount such that the aggregate amount paid under this paragraph is equal to 90% (or such greater percentage not in excess of 100% as the City may direct the Trustee to pay) of the Rebate Amount for the Series 2015 Bonds (as of such Installment Computation Date). Within 30 days after the payment in full of all Outstanding Bonds (the Final Computation Date ), the City shall direct the Trustee to pay, and the Trustee, acting on behalf of 37

45 the City, shall pay, to the United States in accordance with Section 148(f) of the Code, from the moneys then on deposit in the Rebate Fund, an amount such that the aggregate amount paid under this paragraph is equal to 100% of the Rebate Amount for the Series 2015 Bonds as of the Final Computation Date, and any moneys remaining in the Rebate Fund following such payment shall be paid to the City. The Trustee shall be entitled to rely on the calculations made pursuant to the applicable provisions of Section 4.05 of the Trust Agreement and shall not be responsible for any loss or damage resulting from any action taken or omitted to be taken in reliance upon these calculations. The Trustee shall keep and make available to the City, such records concerning the investments of the gross proceeds of the Series 2015 Bonds and the investments of earnings from those investments as may be requested in order to enable the City to make, or cause to be made, the aforesaid computations as are required under Section 148(f) of the Code. If all the gross proceeds of the Series 2015 Bonds, within the meaning of Section 148(f) of the Code, are expended for the governmental purpose for which the Series 2015 Bonds were issued within six months of the date of issuance of the Series 2015 Bonds, and it is not anticipated that any other gross proceeds will arise during the remainder of the term of the Bond, the provisions of Section 4.05 of the Trust Agreement shall be applicable only to such subsequent proceeds, if any, that actually do arise during the term of the Series 2015 Bonds. Furthermore, if all of the gross proceeds of the Series 2015 Bonds are invested at all times only in obligations of any state, or political subdivision thereof, the interest on which is excluded from gross income for federal income tax purposes, the provisions of Section 4.05 of the Trust Agreement shall not be applicable to the Series 2015 Bonds. Notwithstanding the foregoing, any or all of the provisions of Section 4.05 of the Trust Agreement need not be complied with if an Opinion of Bond Counsel is delivered to the Trustee and the City to the effect that the failure to comply with such provisions will not adversely affect the exclusion from gross income of interest on the Series 2015 Bonds. As used herein: Bond Year means, during the period while the Series 2015 Bonds remain outstanding, the twelve month period immediately preceding and ending on the last date on which principal payments on the Series 2015 Bonds are due in any calendar year. Computation Date means either an Installment Computation Date or the Final Computation Date, as applicable. Rebate Amount means as of each Computation Date an amount equal to the sum of (i) plus (ii) where: (i) is the excess of: (a) the aggregate amount earned from the date of issuance of the Series 2015 Bonds on all nonpurpose investments in which gross proceeds of the Series 2015 Bonds are invested (other than investments attributable to an excess described in this clause (i)) including any gain or deducting any loss from disposition of nonpurpose investments, over 38

46 (b) the amount that would have been earned if those nonpurpose investments (other than amounts attributable to an excess described in this clause (i)) had been invested at a rate equal to the yield on the Series 2015 Bonds; and (ii) is any income attributable to the excess described in clause (i) of this definition. The foregoing sums shall be determined in accordance with Section 148(f) of the Code and the applicable Treasury Regulations thereunder. As used herein, the terms gross proceeds, nonpurpose investments and yield have the meanings assigned to them for purposes of Section 148(f) of the Code. Investment of Moneys in Funds Moneys in the funds, accounts, and subaccounts held by the Trustee shall be invested by the Trustee, pursuant to written instructions from the City, in any Eligible Investments of those funds, accounts and subaccounts as provided in the Trust Agreement; provided, however, moneys in the Bond Fund and moneys in the Public Improvements Fund shall only be invested in Eligible Investments that mature or are subject to redemption by and at the option of the holder not later than five (5) years from the date of that investment. In addition, investments of moneys in the Bond Fund shall mature or be redeemable at the times and in the amounts necessary to provide moneys to pay Debt Service Charges as they become due at stated maturity or by redemption. The Trustee may from time to time sell such investments and reinvest the proceeds of such sales in similarly rated Eligible Investments maturing or redeemable as provided above. The Trustee shall sell or redeem investments standing to the credit of the Interest Account, the Principal Account, and the Prepayment Account to produce sufficient moneys at the times required for the purpose of meeting Debt Service Charges when due. Subject to the provisions of the Bond Proceedings, investments made from moneys credited to the Interest Account, the Principal Account, and the Prepayment Account shall constitute part of those respective subaccounts, and those subaccounts shall be credited with all respective proceeds of sales and income from those investment. For purposes of the Trust Agreement, those investments shall be valued at the lesser of face amount or market value. Any investment made from moneys in any fund, account, or subaccount shall constitute part of that fund, account, or subaccount. All proceeds of sale and income from any investment in any fund, account, or subaccount shall be credited to that fund, account, or subaccount. Covenants of the City The City has made the following covenants in the Trust Agreement and a Certificate under Sections 103(b)(2) and 148 of the Internal Revenue Code of 1986, as Amended, and agrees with the Holders and the Trustee as follows: (a) Payment of Debt Service Charges. The City will pay all Debt Service Charges, or cause them to be paid, solely from the sources provided herein, on the dates, at the places and in the manner provided in the Trust Agreement. 39

47 (b) Pledged Revenues and Assignments. The City will not assign the Pledged Revenues, or create or authorize to be created any debt, lien or charge thereon or on the Pledged Revenues, other than the assignments thereof and any security interests granted therein under the Trust Agreement. (c) City to Maintain Exclusion of Interest on the Series 2015 Bonds. The City will take all actions that may be required of it for the interest on the Series 2015 Bonds to be and remain excluded from gross income of the Holders for federal income tax purposes and for the Series 2015 Bonds to be and remain obligations that are not private activity Series 2015 Bonds within the meaning of Section 141 of the Code, and represents that it has not taken, and has not authorized to be taken on its behalf, and covenants that it will not take or omit to take, or authorized to be taken or omitted on its behalf, any actions, which if taken or omitted, would adversely affect such exclusion from gross income of the interest on the Series 2015 Bonds, or the status of the Series 2015 Bonds as obligations that are not such private activity bonds, for federal income tax purposes. (d) Rebate Calculations. The City will make all calculations of rebate as required under Section 4.05 of the Trust Agreement and the Code. (e) Additional Bonds. Other than bonds issued to refinance the Series 2015 Bonds, the City will not issue Additional Bonds in an aggregate principal amount exceeding $4,000,000 for the purpose of financing additional Public Improvements unless, among other things, the City Finance Director certifies that the TIF Reveneus for the prior fiscal year and subsequent fiscal years will equal or exceed 130% of the estimated annual aggregate Bond Service Charges paid or to be paid in such respective fiscal years on the Series 2015 Bonds and the Additional Bonds, all as further described in the Trust Agreement. (f) Extension of Payment of Bonds and Interest. The City will not directly or indirectly extend or assent to the extension of the maturity of any of the Series 2015 Bonds or the time of payment of any interest on the Series 2015 Bonds, by the purchase or funding of those Bonds or claims for interest or by any other arrangement. In case the maturity of any of the Series 2015 Bonds or the time for payment of any interest is extended with the consent of the Holder, such Bonds or claims for interest shall not be entitled in case of any Event of Default to the benefit of the Trust Agreement or to any payment out of the Special Funds (except moneys specifically held for the payment of the particular Bonds or interest thereon pursuant to this Trust Agreement), except subject to the prior payment of all Outstanding Bonds the maturity of which has not been extended and of such portion of any accrued interest on the Series 2015 Bonds as is not represented by such extended claims for interest. Nothing in the foregoing will limit the right of the City to issue any refunding Bonds, which issuance shall not be or be deemed to constitute an extension of maturity of the Series 2015 Bonds or of payment of interest. (g) Service Agreement. The City will not modify the Service Agreement, or otherwise take any action in a way that would materially adversely affect the amount of Pledged Revenues projected to be received in any year. While the Series 2015 Bonds remain outstanding, the City shall forward any notices that the City receives under the Service Agreement to the Trustee within 10 days of receipt. 40

48 City Audit Disclosure The most recent audit of the City published by Ohio State Auditor is for the year ended December 31, 2012 (the Audit ). A full copy of the Audit is available on the Ohio State Auditor s website. The Audit noted several material weaknesses in Norwood s accounting and disbursement procedures and made recommendations for corrections. ELIGIBILITY AS INVESTMENTS To the extent the subject matters are governed by Ohio law, the Series 2015 Bonds are lawful investments for banks, savings and loan associations, credit union share guaranty corporations, trust companies, paying agents, fiduciaries, insurance companies, including domestic for life and domestic not for life, paying agents or other officers having charge of sinking and bond retirement or other funds of the State of Ohio, subdivisions and taxing districts of the State of Ohio, the commissioners of the sinking fund of the State of Ohio, the administrator of workers, compensation, the state teachers, public employees and school employees retirement systems, and the police and firemen s disability and pension fund of the State of Ohio and are also acceptable as security for the repayment of the deposit of public monies in the State of Ohio. CONTINUING DISCLOSURE UNDERTAKING Although the Placement Agent is not required to comply with SEC Rule 15c2-12 promulgated by the SEC, pursuant to the Securities Exchange Act of 1934 (the Rule ) with respect to the Series 2015 Bonds, the City will enter into a Continuing Disclosure Agreement to be dated as of the closing date of the Bonds (the Continuing Disclosure Agreement ). Pursuant to the Continuing Disclosure Agreement, the City will agree to provide its Annual Report. The Annual Report shall contain (a) the Administrator s calculation of the Annual Projected Service Payments, any required Supplemental Payments, the Service Payment Reserve Amount and School Compensation as required by Section 9.02(a) of the Trust Agreement and the Administrative Agreement, and (b), when and if available, audited general purpose financial statements of the City for the prior fiscal year prepared in accordance with generally accepted accounting principles applicable to governments as promulgated by the Governmental Accounting Standards Board. Specifically, the City agrees to provide the Annual Report to the Municipal Securities Rulemaking Board (the MSRB ) in an electronic format, if required, and to provide notice of the enumerated events to the MSRB in an electronic format, if required. The City has never failed to comply in all material respects with any previous undertakings under the Rule to provide annual reports or notices of material events. A failure by the City to comply with the Continuing Disclosure Agreement will not constitute a default or event of default on the Series 2015 Bonds (although holders will have any available remedy at law or in equity). Nevertheless, such a failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Series 2015 Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Series 2015 Bonds and their market price. 41

49 PRIVATE PLACEMENT The City and Fifth Third Securities, Inc., as Placement Agent (the Placement Agent ) have entered into a Bond Placement Agreement ( Placement Agreement ) with respect to the Series 2015 Bonds pursuant to which the Placement Agent has agreed, subject to the terms and conditions of the Placement Agreement, to use its best efforts to privately place the Series 2015 Bonds. The Series 2015 Bonds will be placed on a best efforts, all or none basis and all of the Series 2015 Bonds must be placed in order for any of the Series 2015 Bonds to be placed. In addition, the Series 2015 Bonds initially will be privately placed by the Placement Agent only with individuals or entities (each, a Purchaser ) that represent that he, she or it is an accredited investor as defined in Rule 501(a) of Regulation D under the Securities Act of 1933 (See NOTICE TO PURCHASERS ). NOTICE TO PURCHASERS Each Purchaser of the Series 2015 Bonds will, by his, her or its purchase, be deemed to have acknowledged and agreed to the following: (1) The Purchaser has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment; (2) The Purchaser is purchasing the Series 2015 Bonds for no more than one account and not with a view to distributing the Series 2015 Bonds, except that the disposition of the Series 2015 Bonds purchased by such Purchaser shall at all times be within its sole control; and (3) The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D under the Securities Act of LITIGATION To the knowledge of the appropriate City officials, no litigation or administrative action or proceeding is pending or threatened, restraining or enjoining, or seeking to restrain or enjoin, the issuance and delivery of the Series 2015 Bonds, or the implementation and collection of Service Payments to pay the debt service on the Series 2015 Bonds, or contesting or questioning the proceedings and authority under which the Series 2015 Bonds have been authorized and are to be issued, sold, signed or delivered, or the validity of the Series 2015 Bonds, or questioning or contesting the creation of the tax increment financing. The City will deliver to the Placement Agent a certificate of the Law Director of the City to that effect as of the Closing Date. The form of that certificate is attached hereto as Exhibit B. The City is from time to time a party to various legal proceedings seeking damages or injunctive or other relief and generally incidental to its operations, but no such legal proceedings are currently pending that are expected to have a material impact on the City s financial operations. 42

50 PROPOSED FEDERAL TAX LEGISLATION A number of tax reform or revision measures from time to time have been proposed by members of the United States Congress and by the Administration which, if enacted by both houses of the Congress and signed by the President, would variously eliminate the federal income tax altogether, subject all interest income, including interest income on the Series 2015 Bonds, to federal taxation, or otherwise make tax-exempt interest income less attractive than under present law to certain owners of bonds like the Series 2015 Bonds. The City is unable to predict which, if any, of such proposals may become law. Any such proposal, however, if it were to become law, could have an adverse impact on the value of the Series 2015 Bonds and the interest income thereon. ABOLITION OF SOVEREIGN IMMUNITY On December 15, 1982, in the case of Haverlack v. Portage Homes, Inc., the Supreme Court of Ohio held that the defense of sovereign immunity is unavailable (absent a statute conferring such immunity) to a municipal corporation in an action for damages alleged to be caused by negligent operation of a sewage treatment plant. From 1985 to 2001, the Ohio General Assembly enacted and amended a new Chapter 2744 of the Ohio Revised Code, dealing with the tort liability of political subdivisions, including the City. In general, Chapter 2744 confirms the liability of political subdivisions for the negligent performance of acts by their employees with respect to proprietary functions; establishes a number of defenses and immunities in connection with governmental and proprietary functions and a two-year period within which most suits must be brought; precludes demands for any stated monetary amount of damages; forbids award of punitive damages; requires a successful plaintiff s insurance benefits to be deducted from damage awards; limits damages arising from the same occurrence which do not represent actual losses, as defined, to $250,000; prohibits seizure of a political subdivision s real or personal property, moneys, accounts, deposits, or investments to satisfy a judgment; permits payment of judgments, with interest, over not more than ten years, at the request of a political subdivision, and with the court s permission; and requires political subdivisions to defend and hold harmless their employees in lawsuits where the employee was acting in good faith and within the scope of his or her employment or official responsibilities. LEGAL OPINION Legal matters incident to the issuance of the Series 2015 Bonds and with regard to the tax-exempt status of the interest on the Series 2015 Bonds (see TAX EXEMPTION ) are subject to the legal opinion of Frost Brown Todd LLC, whose legal services as bond counsel have been retained by the City. The legal opinion, dated and premised on law in effect as of the date of original delivery of the Series 2015 Bonds, will be delivered to the Placement Agent at the time of original delivery and the text of the opinion will be printed on the Series 2015 Bonds. The proposed text of the legal opinion is set forth as EXHIBIT A. The legal opinion to be delivered may vary from that text, if necessary, to reflect facts and law on the date of delivery. The opinion will speak only as of its date, and subsequent distribution of it by recirculation of the Private Placement Memorandum or otherwise shall create no implication that bond counsel has 43

51 reviewed or expresses any opinion concerning any of the matters referred to in the opinion subsequent to its date. In addition to rendering the legal opinion, bond counsel will assist in the preparation of and advise the City concerning documents for the transcript of proceedings. While bond counsel has participated in the preparation of portions of this Private Placement Memorandum and the transcript of proceedings with respect to the Series 2015 Bonds, it has not been engaged to confirm or verify, and expresses and will express no opinion as to, the accuracy, completeness or fairness of any statements in this Private Placement Memorandum, or in any other reports, financial information, offering or disclosure documents or other information pertaining to the City or the Series 2015 Bonds that may be prepared or made available by the City, the Placement Agent, the Redeveloper, or others to the holders of the Series 2015 Bonds. General TAX EXEMPTION In the opinion of Frost Brown Todd LLC, Bond Counsel to the City, under existing law, interest on the Series 2015 Bonds is excluded from gross income for federal income tax purposes under Section 103(a) of the Code, and is not treated as an item of tax preference under Section 57 of the Code for purposes of the alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. Further, the Series 2015 Bonds are not private activity bonds as defined in Section 141(a) of the Code. Interest on the Series 2015 Bonds, the transfer thereof, and any profit made on their sale, exchange or other disposition, 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. The opinion on tax matters will be based on and will assume the accuracy of certain representations and certifications made by the representatives of the City and others, and the compliance with certain covenants of the City, to be contained in the transcript of proceedings and which are intended to evidence and assure the foregoing, including that the Series 2015 Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. Bond Counsel has not and will not independently verify the accuracy of such certifications and representations. The City has not designated the Series 2015 Bonds as qualified tax-exempt obligations as defined in Section 265(b)(3) of the Code. The Code prescribes a number of qualifications and conditions for the interest on state and local government obligations to be and remain excluded from gross income for federal income tax purposes, some of which require future or continued compliance after issuance of the obligations in order for the interest to be and continue to be so excluded from the date of issuance. Noncompliance with these requirements could cause the interest on the Series 2015 Bonds to be 44

52 included in gross income for federal income tax purposes and thus to be subject to regular federal income tax retroactively to the date of their issuance. The City has covenanted to take such actions that may be required of it for the interest on the Series 2015 Bonds to be and remain excluded from gross income for federal income tax purposes, and not to take any actions which would adversely affect that exclusion. Under the Code, interest on the Series 2015 Bonds may be subject to a branch profits tax imposed on certain foreign corporations doing business in the United States of America and a tax imposed on excess net passive income of certain S corporations. Under the Code, the exclusion of interest from gross income for federal income tax purposes can have certain adverse federal income tax consequences on items of income or deductions for certain taxpayers, including among them financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, and those that are deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations and individuals otherwise eligible for the earned income credit. The applicability and extent of these or other tax consequences will depend upon the particular tax status or other items of income and expenses of the holders of the Series 2015 Bonds. Bond Counsel will express no opinion and make no representation regarding such consequences. From time to time, legislation affecting tax-exempt obligations is regularly considered by the United States Congress, and may also be considered by the State legislature, that would, if enacted, alter or amend one or more of the tax treatments of the Series 2015 Bonds referred to above in certain respects or would adversely affect the market value or marketability of the Series 2015 Bonds. It cannot be predicted whether or in what form any of such proposals, either pending or that may be introduced, may be enacted, and there can be no assurance that such proposals will not apply to the Series 2015 Bonds. TRANSCRIPT AND CLOSING DOCUMENTS A complete transcript of proceedings and a certificate (described under LITIGATION ) relating to litigation will be delivered by the City when the Series 2015 Bonds are delivered by the City to the Placement Agent. The City at that time will also provide to the Placement Agent a certificate, signed by the City officials who sign this Private Placement Memorandum and addressed to the Placement Agent, relating to the accuracy and completeness of this Private Placement Memorandum. Series 2015 Bonds are not rated. RATING REGISTRAR The Bond Ordinance appoints U.S. Bank National Association, Cincinnati, Ohio, as Trustee, and as paying, transfer and authenticating agent, for the Series 2015 Bonds. As such, it will keep all books and records necessary for registration, exchange and transfer of the Series 2015 Bonds in accordance with the terms of the Bond Ordinance and an agreement between it and the City. 45

53 CONCLUDING STATEMENT To the extent that any statements made in this Private Placement Memorandum involve matters of opinion or estimates, whether or not expressly stated to be such, they are made as such and not as representations of fact or certainty and no representation is made that any of those statements have been or will be realized. Information in this Private Placement Memorandum has been derived by the City from official and other sources and is believed by the City to be accurate and reliable. Information other than that obtained from official records of the City, including information provided by the Placement Agent, the Redeveloper, and by and with respect to DTC, has not been independently confirmed or verified by the City and its accuracy is not guaranteed. Neither this Private Placement Memorandum nor any statement that may have been or that may be made orally or in writing is to be construed as or as part of a contract with the original purchasers or subsequent holders of the Series 2015 Bonds. The delivery of this Private Placement Memorandum has been duly authorized by the City. CITY OF NORWOOD HAMILTON COUNTY, OHIO Dated: March 11, 2015 By: /s/ Thomas F. Williams Thomas F. Williams Mayor By: /s/ James Stith James Stith Auditor 46

54 EXHIBIT A FORM OF LEGAL OPINION March 11, 2015 City of Norwood, Ohio Rookwood Partners Ltd. Cincinnati, Ohio Fifth Third Securities, Inc. Cincinnati, Ohio Re: Maximum Aggregate Amount of $20,350,000 City of Norwood, Ohio Special Obligation Development Revenue and Refunding Bonds, Series 2015 (Rookwood Exchange Project) We have acted as bond counsel to the City of Norwood, Ohio (the City ) in connection with the issuance by the City of its maximum aggregate amount of $20,350,000 Special Obligation Development Revenue and Refunding Bonds, Series 2015 (Rookwood Exchange Project) (the Bonds ), dated March 11, The Bonds are being issued for the purposes as set forth in Ordinance No passed by the City Council of the City on February 10, The Bonds bear interest from the date thereof at the rate identified on the face of the Bonds, payable on each June 1 and December 1, commencing June 1, 2015, and mature on December 1, 2041, and are subject to call and redemption provisions as described in the Trust Agreement (the Trust Agreement ), dated as of March 1, 2015 between the City and U.S. Bank National Association, as Trustee. All terms not defined herein have the meaning assigned to them in the Trust Agreement. In such capacity, we have examined such laws, the transcript of proceedings and such other certified proceedings, certifications and other documents as we have deemed necessary to render this opinion. Regarding questions of fact material to our opinion, we have relied on the certified proceedings and other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based upon the foregoing, we are of the opinion that, under existing law: 1. The Bonds are special revenue obligations of the City payable solely from the Pledged Revenues and do not constitute a general obligation or an indebtedness of the City or the State of Ohio or any political subdivision within the meaning of any constitutional or statutory provision or limitation. 2. The Bonds are secured solely by the Pledged Revenues, in an amount projected to be sufficient to pay the principal of and interest on the Bonds. A-1

55 3. The Bonds have been duly authorized and executed by the City. 4. The interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103(a) of the Internal Revenue Code of 1986, as amended (the Code ), and is not treated as an item of tax preference under Section 57 of the Code for purposes of the alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence is subject to the condition that the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. 5. Interest on the Bonds, the transfer thereof, and any profit made on their sale, exchange or other disposition, 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. Please be advised that the rights of the holders of the Bonds and the enforceability thereof are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights generally, and by equitable principles, whether considered at law or in equity. We express no opinion herein regarding the accuracy, adequacy or completeness of the Private Placement Memorandum dated March 11, 2015 relating to the Bonds. Further, we express no opinion and make no representation as to any other tax consequences regarding the Bonds, except as set forth above. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. We bring to your attention the fact that our legal opinions are an expression of our professional judgment and are not a guarantee of a result. Very truly yours, FROST BROWN TODD LLC A Member A-2

56 EXHIBIT B CERTIFICATE OF LAW DIRECTOR March 11, 2015 Fifth Third Securities, Inc. 38 Fountain Sq. Plaza Cincinnati, Ohio Re: $20,350,000 Special Obligation Development Revenue and Refunding Bonds, Series 2015 (Rookwood Exchange Project) (the Series 2015 Bonds ), of the City of Norwood ( City ), Hamilton County, Ohio Gentlemen: This is to certify that as of December 31, 2012, and at the date hereof no litigation or administrative action or proceeding was or is pending or threatened restraining or enjoining, or seeking to restrain or enjoin, the issuance and delivery of the Series 2015 Bonds, or the levy or collection of taxes, if any, to pay the debt service on the Series 2015 Bonds, or contesting or questioning the proceedings and authority under which the Series 2015 Bonds have been authorized and are to be issued, sold, signed or delivered, or the validity of the Series 2015 Bonds. The City is a party to various legal proceedings seeking damages or other relief and generally incidental to its operations. These proceedings are unrelated to the Series 2015 Bonds, the security for the Series 2015 Bonds, or the permanent improvements being financed thereby. The ultimate disposition of these proceedings is not now determinable, but will not, in my opinion, have a material adverse effect on the Series 2015 Bonds, the security for the Series 2015 Bonds, or the improvements financed with the proceeds of sale of the Series 2015 Bonds. Very truly yours, cc: Frost Brown Todd LLC, Bond Counsel Josh Berkowitz Law Director B-1

57 EXHIBIT C EXEMPTED PROPERTY The Exempted Property depicted below is generally bounded by Edwards Road on the east, I-71 on the west, Edmondson Road on the south, and Williams Avenue on the north and specifically includes all rights-of-way, easements and fee simple ownership of public streets that may be vacated in connection with the Project, as well as the parcels listed in the table following the map. C-1

58 C-2

59 EXHIBIT D FINANCIAL PROJECTIONS OF STATUTORY SERVICE PAYMENTS D-1

60 D-2

61 EXHIBIT E DESCRIPTION OF PUBLIC IMPROVEMENTS AND DEVELOPMENT The Public Improvements are generally set forth in Exhibit B to the TIF Ordinance and are therein described as follows: The Public Improvements consist generally of: (1) construction, reconstruction, extension, opening, improving, widening, grading, draining, curbing or changing of the lines and traffic patterns of roads, highways, streets, sidewalks and medians, and providing lighting systems, along with all other appurtenances therefor; (2) acquisition, construction, and installation of new, improved or relocated water, sanitary sewer, storm sewer, gas, and electric distribution systems and related improvements, together with all appurtenances thereto; (3) construction of one or more parking structures and related improvements, together with all appurtenances thereto; (4) installation of streetscape improvements including curbs, sidewalks and street and sidewalk lighting, burial of overhead utility lines and related improvements, together with all appurtenances thereto; (5) design and traffic studies preliminary to the foregoing; (6) any other necessary public infrastructure improvements that shall benefit or serve the Exempted Property; (7) acquisition of real estate or interests in real estate necessary to accomplish the improvements enumerated in clauses (1) through (7); or (8) design, engineering, bond consulting, issuance and legal costs and miscellaneous expenses relating to the foregoing. Development The Development is currently comprised of two phases. The first, which includes a 123-key Courtyard by Marriott hotel, approximately 230,000 square feet of Class-A office space, a 127 unit apartment building and approximately 15,000 square feet of street level retail (herein referred to as Phase One ) has been substantially completed as of the date hereof. The second phase, which includes a Residence Inn hotel, is expected to be completed in the fall of E-1

62 APPENDIX I BOND ORDINANCE

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72 APPENDIX II SERVICE AGREEMENT Appendix II - 1

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96 APPENDIX III SCHOOL COMPENSATION AGREEMENT Appendix III - 1

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