DEBT FINANCING OPTIONS FOR REFINANCING OR CAPITAL PROJECTS CALIFORNIA ASSOCIATION OF INDEPENDENT SCHOOLS JANUARY 23, 2010 Presented By:Steven J. Stogel In Participation With:Deborah Richman Head of The Turning Point School Dated:January 23,

Turning Point School – Phase I 8780 National Boulevard Culver City, CA 2

Site Plan of Phase I (2.0 acres) and Phase II (1.8 acres) Increased enrollment capacity from 350 ± to 480! 3 PHASE II PHASE I

4 Phase II – Existing Condition

5 Interior of Phase II – As-Is

6 New Phase II Site Plan

7 New Lobby

8 Phase II Schematic

9 New Auditorium & Theater

10 Phase II Multi-Media Room

Phase II Project and Financing: Original (2006) Estimated Construction Costs (2012 start)$10, Original Estimated “Total Development Costs” including A&E, title, legal, insurance and other costs$15,000,000 Actual 2009 Construction Costs, all in$ 7,700,000 Actual Total Development Costs$11,500,000 11

Tax Exempt Debt Terminology:  Unenhanced  Enhanced (Letter of Credit (“L.C.”))  Fixed  Floating – LIBOR and SIFMA Index  Section 501(c)(3)  Section 145 – Bank Qualified Bonds (“BQBs”)  Issuer  Term of Bonds  Terms of Enhancement/Balloon Date  Prepayment Lock-out/Yield Maintenance  Project Financing  Pledge Financing 12

FORMAT OF TAX EXEMPT BONDS 501(C)(3) BQBs Issue:Qualifying AgencyQualifying Agency Trustee:Bank/CustodianBank/Custodian Offering:PublicDirect to Bank Securities Law:YesNo Legal & Other Costs:2-4%1.5-3% L. C. Bank:Rating of L.C. Bank is KeyDetermined by Bank Unenhanced:Rating/Condition of School is KeyDetermined By Bank Interest Mode:Fixed/FloatingFixed/Floating 13

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15 SECURITY INDUSTRY AND FINANCIAL MARKETS ASSOCIATION “SIFMA” INDEX

ORIGINAL TURNING POINT PHASE I FINANCING Issue Date:2001 Original Issue:$12,000,000 Issuer:California State-Wide Community Agency IRC Code Authorization:Section 501(c)(3) Form:Unenhanced Interest Rate:6.5% Term:30 year, self amortizing 16

Issue Date:September 19, 2009 Amount:$11,370,000 Issuer:California Municipal Finance Authority IRC Code:BQBs Form:Enhanced with a US Bank Letter of Credit Annual Floating Rate:13 b.p. (1/13/10) Annual L.C. Costs200 b.p. CAP Purchase:400 b.p. Amortization:Level 30 year schedule (after 16 month interest only period) Term of L. C.10 years 17 CURRENT TURNING POINT PHASE I REFINANCING

Issue Date:September 19, 2009 Amount:$6,865,000 (New Construction) Issuer:California Municipal Finance Authority IRC Code:BQBs Form:Enhanced with a US Bank Letter of Credit Annual Floating Rate:13 b.p. (1/13/10) Annual L.C. Fee200 b.p. CAP Purchase:400 b.p. Amortization:Level 30 year schedule (after 16 month interest only period) Term of L. C.10 years 18 CURRENT TURNING POINT PHASE II FINANCING

TOTAL COST OF PERMANENT FINANCING PHASE I AND PHASE II Phase IPhase I & II ** 2001 Series * 2009 Series Annual Cost$975,000$ 940,000 $ 385,000 Interest, L.C. Fee and Other 535, Principal 25,000 CAP $25,000 $ 940,000 * Original Phase I debt was $12,000,000. ** Based on $15,000,000 balance, as of 1/1/11, net of programmed reductions of principal. 19

SPECIAL RULES FOR BANK QUALIFIED BONDS (“BQBs”)  General Rule for Acquiring/Carrying Tax Exempt Debt  1986 “Rules” under TRA of 1986  $10,000,000 limit per City (including City and non-profits!)  Interest non-AMT  80% interest deduction  2% test for Banks as Purchaser  2009 Rules under the American Recovery & Reinvestment Act (the Obama Stimulus Bill)  $30,000,000 limit per City and per every (c)(3) non-profit  Interest non-AMT  100% interest deduction  Expand 2% test for Banks BQBs can be issued only until December 31,

BANK UNDERWRITING CONSIDERATIONS IN L. C. FORM OR BQB  Term of Bonds  Term of Enhancement  Financial Statement of School  Cash Flow Consistency  Enrollment History  Who is on the Board of Directors  Annual Giving  Percentage of Scholarship Support  Prior Capital Campaigns  Endowment  Real Estate Appraisal Tests  Real Estate Value-As-Is  Going Concern as a School  Recourse  School Assets  Negative Pledge  Financial Covenants  No Material Adverse Change  Liquidity Covenant  Relationship (Prior & Future) with Bank  Time Lines  Conventional Loan Alternative 21

INTEREST RATES RANGES (1/11/10) SECTION 501(c)(3) UnenhancedL. C. FloatingL. C. Fixed 5 yrs.L. C. Fixed 10 yrs. 6.5%SIFMA Index 3.75%± 4.5% ± % L.C. Fee & Other = % BQBs UnenhancedFloating 5 Year 10 Year N/A67% of 30 day 3.25% ± 4% ± LIBOR + 160– 200 b.p. “spread” = 1.75% to 2.25% 22

BOARD CONSIDERATION IN USE OF DEBT  Refinancing to Lower Costs  New Debt to Build  Costs of Construction Today!  Impact on Enrollment – A Positive!  Effects on Fund Raising For Construction of Capital Projects  Pre Construction Start: Easiest for both restricted or unrestricted gifts  During Construction: Well received as new construction is tangible and present  Post Completion of Construction – hardest, but multi-year (even up to 7 years!) pledges from “Day 1” are readily incorporated into Financing Model  Long After Completion of Construction  Next “Phase” Story  Debt Retirement  Enrollment Strategy  Each School’s Story is Unique 23