NEW ISSUE RATINGS(Book-Entry Only) S&P: “AA+/Stable” (State Intercept)

“BBB+/Stable” (Underlying) See “MISCELLANEOUS - Ratings” herein.

In the opinion of Bond Counsel, subject to the limitations and conditions described herein, interest on the Bonds is exempt from present State of Georgia income taxation, is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; provided, however, that with respect to corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings for purposes of computing the federal alternative minimum tax imposed on such corporations. See “LEGAL MATTERS -- Tax Exemption.”

$14,075,000 SCHOOL DISTRICT OF THE CITY OF GAINESVILLE (GEORGIA)

GENERAL OBLIGATION BONDS, SERIES 2011

Dated: Date of Delivery Due: December 1, as shown below

The School District of the City of Gainesville (Georgia) General Obligation Bonds, Series 2011 (the “Bonds”) are being issued in fully registered form and in denominations of $5,000, or any integral multiple thereof, by the School District of the City of Gainesville (the “School District”), a political subdivision of the State of Georgia, for the purpose of paying a portion of the costs of (i) acquiring, constructing and equipping a new elementary school, acquiring, constructing and equipping additional classrooms, instructional and support facilities and physical education facilities, remodeling, renovating and equipping existing classrooms and instructional and support facilities at existing schools, acquiring land and conducting site preparation of real estate for school district purposes, acquiring furnishings, equipment and fixtures for new and existing facilities system-wide, and acquiring technology equipment, text books, teaching software and school buses; and (ii) paying expenses incident thereto. See “THE FINANCING PLAN -- Capital Projects.”

The Bonds are direct and general obligations of the School District. The principal of and interest on the Bonds are payable first from the School District’s share of a one percent sales and use tax for educational purposes (the “Sales and Use Tax”) collected within Hall County, Georgia. To the extent the proceeds from the Sales and Use Tax are insufficient to make such payments, the principal of and interest on the Bonds are payable from an ad valorem tax, unlimited as to rate or amount, to be levied upon all taxable property within the School District subject to taxation for school bond purposes. The Bonds are also payable from any State appropriation to which the School District may be entitled, which the State of Georgia Board of Education has been authorized to withhold from the School District and transfer to the Paying Agent under certain circumstances. See “THE BONDS -- Security and Sources of Payment for the Bonds.”

Interest on the Bonds is payable semiannually on June 1 and December 1 of each year (each such date, an “Interest Payment Date”), commencing on June 1, 2012. The Bonds bear interest from the Interest Payment Date next preceding their date of authentication, except as provided herein. See “THE BONDS -- Description.”

The Bonds will be issued in book-entry form registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Payment of the principal of and interest on the Bonds will be made by the Paying Agent directly to Cede & Co., as nominee for DTC, as registered owner of the Bonds, and will subsequently be disbursed to DTC Direct Participants and thereafter to Beneficial Owners (as such terms are defined herein) of the Bonds, all as described herein. See “THE BONDS -- Book-Entry System of Registration.”

The Bonds are not subject to redemption prior to maturity.

MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, AND YIELDS

Maturity Principal Amount* Interest Rate Yield CUSIP No.

2013 $2,840,000 2.000% 1.300% 363005BB4 2014 2,795,000 3.000% 1.600% 363005BC2 2015 2,910,000 4.000% 1.970% 363005BD0 2016 3,060,000 5.000% 2.350% 363005BE8 2017 2,470,000 5.000% 2.550% 363005BF5

THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS

ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION.

The Bonds are offered when, as, and if issued by the School District and accepted by the Underwriter, subject to prior sale, to the withdrawal or modification of the offer without notice, and subject to the approving opinion of Stewart, Melvin & Frost, LLP, Gainesville, Georgia, Bond Counsel. Certain legal matters will be passed on for the School District by its counsel, Harben, Hartley & Hawkins, LLP, Gainesville, Georgia, and for the Underwriter by Stewart, Melvin & Frost, LLP, Gainesville, Georgia, as Disclosure Counsel. The Bonds are expected to be delivered through The Depository Trust Company in New York, New York on or about November 7, 2011.

Dated: October 19, 2011

SCHOOL DISTRICT OF THE CITY OF GAINESVILLE

ELECTED OFFICIALS

Board of Education Willie Mitchell, Chairman

Maria Calkins Delores Diaz Sammy Smith David Syfan

ADMINISTRATIVE OFFICIALS

Dr. Merrianne Dyer, Superintendent Janet L. Allison, Chief Financial Officer

SPECIAL SERVICES

School District’s Counsel Harben, Hartley & Hawkins, LLP

Gainesville, Georgia

Underwriter Merchant Capital, L.L.C.

Atlanta, Georgia

Bond Counsel and Disclosure Counsel Stewart, Melvin & Frost, LLP

Gainesville, Georgia

Auditors State of Georgia Department of Audits and Accounts

Atlanta, Georgia

No dealer, broker, salesman or other person has been authorized to give any information or to make any representations, other than those contained in this Official Statement in connection with the offering contained herein, and if given or made, such other information or representations must not be relied upon. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

The information contained in this Official Statement has been obtained from representatives of the School District, public documents, records and other sources considered to be reliable. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The delivery of this Official Statement at any time does not imply that any information herein is correct as of any time subsequent to its date. Any statements in this Official Statement involving estimates, assumptions and matters of opinion, whether or not so expressly stated, are intended as such and not representations of fact.

NO REGISTRATION STATEMENT RELATING TO THE BONDS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) OR ANY STATE SECURITIES AGENCY. THE BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE SECURITIES AGENCY, NOR HAS THE SEC OR ANY STATE SECURITIES AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

In making an investment decision, investors must rely on their own examination of the School District and the terms of the offering, including the merits and risks involved. The Bonds have not been recommended by any federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Official Statement. Any representation to the contrary is a criminal offense.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

(THIS PAGE LEFT BLANK INTENTIONALLY)

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TABLE OF CONTENTS

INTRODUCTION.........................................................................................................................................................1 The School District..........................................................................................................................................1 Security and Sources of Payment for the Bonds .............................................................................................1 Purpose of the Bonds.......................................................................................................................................1 Description of the Bonds.................................................................................................................................2 Tax Exemption ................................................................................................................................................2 Bond Registrar, Paying Agent and Debt Service Fund Custodian ..................................................................2 Professionals Involved in the Offering............................................................................................................2 Authority for Issuance .....................................................................................................................................3 Offering and Delivery of the Bonds ................................................................................................................3 Continuing Disclosure.....................................................................................................................................3 Other Information............................................................................................................................................3

THE FINANCING PLAN .............................................................................................................................................4

Estimated Sources and Applications of Funds ................................................................................................4 Capital Projects ...............................................................................................................................................4 Change of Use of Bond Proceeds....................................................................................................................4

THE BONDS.................................................................................................................................................................5

Description ......................................................................................................................................................5 Security and Sources of Payment for the Bonds .............................................................................................5 Redemption .....................................................................................................................................................8 Registration Provisions; Transfer and Exchange.............................................................................................9 Book-Entry System of Registration.................................................................................................................9 Authority for Issuance ...................................................................................................................................11 Disbursement and Investment of Bond Proceeds and Other Moneys............................................................11 Principal and Interest Requirements..............................................................................................................14

THE SCHOOL DISTRICT..........................................................................................................................................14

General….... ..................................................................................................................................................14 Board of Education........................................................................................................................................15 Administration...............................................................................................................................................15 Schools…. .....................................................................................................................................................16 Enrollment.....................................................................................................................................................16 Employees, Employee Relations and Labor Relations..................................................................................17

SCHOOL DISTRICT DEBT STRUCTURE...............................................................................................................18

Summary of School District Debt by Category and Overlapping Debt.........................................................18 Proposed Debt ...............................................................................................................................................19 Limitations on School District Debt..............................................................................................................19 Debt Per Capita .............................................................................................................................................19

Debt Service Requirements ...........................................................................................................................20 SCHOOL DISTRICT AD VALOREM TAXATION .................................................................................................20

Introduction ...................................................................................................................................................20 Property Subject to Taxation.........................................................................................................................20 Assessed Value..............................................................................................................................................21 Annual Tax Levy...........................................................................................................................................21 Property Tax Collections...............................................................................................................................22 Historical Property Tax Data.........................................................................................................................23 Property Tax Levies and Collections ............................................................................................................24 Millage Rates.................................................................................................................................................25 Ten Largest Taxpayers ..................................................................................................................................26

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SCHOOL DISTRICT FINANCIAL INFORMATION ...............................................................................................27

Accounting System and Policies ...................................................................................................................27 General Fund History ....................................................................................................................................28 Statement of Revenues, Expenditures and Changes in Fund Balances - FY 2011........................................30 Restatement of Prior Year Net Assets and Fund Balances............................................................................31 Management's Discussion and Analysis........................................................................................................31 Budgetary Process .........................................................................................................................................33 Budget…….. .................................................................................................................................................33 Employee Benefits ........................................................................................................................................33 Insurance Coverage and Governmental Immunity ........................................................................................35

THE CITY...................................................................................................................................................................36

Introduction ...................................................................................................................................................36 Demographic Information .............................................................................................................................37 Per Capita Income .........................................................................................................................................37 Largest Employers.........................................................................................................................................38 Labor Force Data...........................................................................................................................................39 Industry Mix..................................................................................................................................................39 Building Permits............................................................................................................................................40 Banking Deposits ..........................................................................................................................................41

LEGAL MATTERS ....................................................................................................................................................41

Pending Litigation .........................................................................................................................................41 Tax Exemption ..............................................................................................................................................41 Validation Proceedings..................................................................................................................................43 Closing Certificates .......................................................................................................................................44

MISCELLANEOUS....................................................................................................................................................44

Ratings……...................................................................................................................................................44 Underwriting .................................................................................................................................................44 Experts……...................................................................................................................................................44 Additional Information..................................................................................................................................45

CERTIFICATION.......................................................................................................................................................46

APPENDIX A: Financial Statements of the School District For Fiscal Year Ended June 30, 2010 APPENDIX B: Form of Opinion of Bond Counsel APPENDIX C: Form of Continuing Disclosure Certificate

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INTRODUCTION

The purpose of this Official Statement, which includes the cover page and the Appendices hereto, is to furnish certain information in connection with the sale by the School District of the City of Gainesville (the “School District” or the “District”) of $14,075,000 in aggregate principal amount of its General Obligation Bonds, Series 2011 (the “Bonds”).

This introduction is not a summary of this Official Statement and is intended only for quick reference. It is only a brief description of and guide to, and is qualified in its entirety by reference to, more complete and detailed information contained in the entire Official Statement, including the cover page and the Appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement and of the documents summarized or described herein, if necessary. The offering of the Bonds to potential investors is made only by means of the entire Official Statement, including the Appendices hereto. No person is authorized to detach this Introduction from the Official Statement or to otherwise use it without the entire Official Statement including the Appendices hereto.

The School District

The School District is a political subdivision of the State of Georgia (the “State”). The School District is coextensive with the territorial limits of the City of Gainesville, Georgia (the “City”). See “THE SCHOOL DISTRICT” and “THE CITY.”

Security and Sources of Payment for the Bonds

The Bonds are direct, general obligations of the School District. The principal of and interest on the Bonds are payable first from the School District’s share of a one percent sales and use tax for educational purposes (the “Sales and Use Tax”) collected within Hall County, Georgia (the “County”) for a period of 60 months. The proceeds of the Sales and Use Tax will be divided between the School District, the City of Buford School District (the “Buford School District”) and the Hall County School District (the “Hall School District”) based upon a local law passed by the Georgia General Assembly (the “Local Act”). Pursuant to the Local Act, the Buford School District will receive monthly distributions of the proceeds of the Sales and Use Tax in the amount of $63,333.33 until such time as it receives $3,800,000, and the Buford School District will also receive up to an additional $300,000 of such proceeds from the final month’s collections, depending on the percentage by which the total proceeds of the Sales and Use Tax for the 60-month period of the Tax exceeds the total proceeds of the prior sales and use tax for educational purposes. The proceeds of the Sales and Use Tax in excess of $63,333.33 per month, subject to the additional payment to Buford School District described above, will be divided between the School District and the Hall School District based upon student population immediately prior to the local special election approving the Sales and Use Tax. The School District will receive 20.64% of such proceeds of the Sales and Use Tax, and the Hall School District will receive 79.36% of such proceeds of the Sales and Use Tax. To the extent that the School District’s share of the proceeds of the Sales and Use Tax received by the School District are insufficient to make such payments, the principal of and interest on the Bonds are payable from an ad valorem tax, unlimited as to rate or amount, which will be levied upon all taxable property within the territorial limits of the City subject to taxation for school bond purposes. The Bonds are also payable from any state appropriation to which the School District may be entitled, which the State of Georgia Board of Education has been authorized to withhold from the School District and transfer to the Paying Agent under certain circumstances. See “THE BONDS -- Security and Sources of Payment for the Bonds” and “SCHOOL DISTRICT AD VALOREM TAXATION.”

Purpose of the Bonds

The proceeds of the Bonds will be used for the purpose of (i) acquiring, constructing and equipping a new elementary school, acquiring, constructing and equipping additional classrooms, instructional and support facilities and physical education facilities, remodeling, renovating and equipping existing classrooms and instructional and support facilities at existing schools, acquiring land and conducting site preparation of real estate for school district purposes, acquiring furnishings, equipment and fixtures for new and existing facilities system-wide, and acquiring

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technology equipment, text books, teaching software and school buses; and (ii) paying expenses incident thereto. See “THE FINANCING PLAN -- Capital Projects.”

Description of the Bonds

Redemption. The Bonds are not subject to redemption prior to maturity.

Denominations. The Bonds are issuable in denominations of $5,000 or any integral multiple thereof.

Registration, Transfers and Exchanges. Ownership of the Bonds shall be registered on the registration books of the School District maintained by The Bank of New York Mellon Trust Company, N.A., Atlanta, Georgia, as Bond Registrar. The Bonds will initially be issued only as book-entry securities. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. Ownership of any Bond may be transferred upon surrender of such Bond to the Bond Registrar, together with an assignment duly executed by the registered owner or his duly authorized attorney or legal representative, subject to the conditions hereinafter described. The Bonds are exchangeable for a like aggregate principal amount of Bonds of the same maturity in authorized denominations. See “THE BONDS -- Registration Provisions; Transfer and Exchange” and “THE BONDS -- Book-Entry System of Registration.”

Payments. Interest on the Bonds will be payable initially on June 1, 2012, and semiannually thereafter on June 1 and December 1 of each year until maturity (each an “Interest Payment Date”). Payment of the principal of and interest on the Bonds will be made by the Paying Agent (hereinafter defined) directly to Cede & Co., as nominee of DTC, and will subsequently be disbursed to Direct Participants (hereinafter defined) and thereafter to Beneficial Owners of the Bonds. When not in book-entry form, interest on the Bonds is payable by check or draft mailed, on or before the applicable Interest Payment Date, to the registered owner of record as of the May 15 or November 15 immediately preceding the applicable interest payment date. When not in book-entry form, the principal of the Bonds is payable upon the presentation and surrender of the Bonds to the Paying Agent. For more complete information, see “THE BONDS -- Description” herein.

Tax Exemption

In the opinion of Bond Counsel, subject to the limitations and conditions described herein, interest on the Bonds is exempt from present State of Georgia income taxation, is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; provided, however, that with respect to corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings for purposes of computing the federal alternative minimum tax imposed on such corporations. See “LEGAL MATTERS -- Tax Exemption” and APPENDIX B hereto for the form of the opinion Bond Counsel proposes to deliver in connection with the issuance of the Bonds.

Bond Registrar, Paying Agent and Debt Service Fund Custodian

The Bank of New York Mellon Trust Company, N.A., Atlanta, Georgia, will act as Bond Registrar, Paying Agent and Debt Service Fund Custodian for the Bonds.

Professionals Involved in the Offering

Certain legal matters pertaining to the School District and its authorization and issuance of the Bonds are subject to the approving opinion of Stewart, Melvin & Frost, LLP, Gainesville, Georgia, Bond Counsel. Copies of such opinion will be available at the time of delivery of the Bonds, and a copy of the proposed form of such opinion is attached hereto as Appendix B. Certain legal matters will be passed on for the School District by its counsel, Harben, Hartley & Hawkins, LLP, Gainesville, Georgia and for the Underwriter by Stewart, Melvin & Frost, LLP, Gainesville, Georgia, as Disclosure Counsel. The financial statements of the School District as of June 30, 2010 attached hereto as Appendix A have been audited by the Georgia Department of Audits and Accounts to the extent

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and for the period indicated in its report thereon and appears in Appendix A hereto. See “MISCELLANEOUS -- Experts.”

Authority for Issuance

The Bonds are being issued in accordance with the Constitution of the State of Georgia and laws of the State of Georgia and a resolution of the Board of Education authorizing the issuance of the Bonds adopted on July 8, 2011, as supplemented by a resolution adopted on October 19, 2011 (together, the “Bond Resolution”). The issuance of the Bonds was approved by a majority vote of voters in the School District voting in an election held on March 15, 2011. See “THE BONDS -- Authority for Issuance.”

Offering and Delivery of the Bonds

The Bonds are offered when, as, and if issued by the School District and accepted by the Underwriter, subject to prior sale and to withdrawal or modification of the offer without notice. The Bonds in definitive form are expected to be delivered through The Depository Trust Company in New York, New York, on or about November 7, 2011.

Continuing Disclosure

The School District has covenanted for the benefit of the owners of the Bonds in a Continuing Disclosure Certificate (the “Disclosure Certificate”) to provide (a) certain financial information and operating data relating to the District (the “Operating and Financial Data”) annually to the Municipal Securities Rulemaking Board (the “MSRB”), the present nationally recognized municipal securities information repository, through its Electronic Municipal Market Access system (“EMMA”), and to the state information depository (the “SID”), if any, and (b) notices of the occurrence of certain events (the “Significant Events Notices”), to the MSRB through EMMA and to the SID, if any. The form of the Disclosure Certificate containing the District’s undertaking to provide Operating and Financial Data and Significant Events Notices is set forth in Appendix C hereto. The covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12 (the “Rule”). As of the date of this Official Statement, there is no SID in the State of Georgia.

In connection with the issuance of its General Obligation Bonds, Series 2006 (the “Prior Bonds”) and pursuant to an undertaking (the “Prior Undertaking”) delivered contemporaneously with the issuance of the Prior Bonds, the School District covenanted to provide operating and financial data and material events notices. The School District has failed to comply in all material respects with the Prior Undertaking. Even though the School District filed its audit for each of the fiscal years 2006 through 2010 with the nationally recognized municipal securities information repositories (the “NRMSIRs”), the School District did not file the remainder of the Annual Report (as defined in the Undertaking) for fiscal years 2006 through 2010 within the time frames required by the Undertaking. However, the remainder of the information required by the Undertaking has been submitted to the NRMSIRs (i.e. EMMA).

Other Information

This Official Statement and the Appendices hereto contain brief descriptions of, among other matters, the School District, the Bonds, and the security and sources of payment for the Bonds. Such descriptions and information do not purport to be comprehensive or definitive. The summaries of various constitutional provisions, statutes, the Bond Resolution, and other documents are intended as summaries only and are qualified in their entirety by reference to such laws and documents, and references herein to the Bonds are qualified in their entirety to the form thereof included in the Bond Resolution. Copies of the Bond Resolution and other documents and information are available, upon request and upon payment to the School District of a charge for copying, mailing and handling, from Janet L. Allison, Chief Financial Officer, School District of the City of Gainesville, 508 Oak Street, Gainesville, Georgia 30501; telephone (770) 536-5275. During the period of the offering of the Bonds, copies of such documents are available upon request and upon payment of a charge for copying, mailing, and handling from Merchant Capital, L.L.C., One Buckhead Plaza, 3060 Peachtree Road, N.W., Suite 1700, Atlanta, Georgia 30305; telephone: (404) 504-2760.

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THE FINANCING PLAN

Estimated Sources and Applications of Funds

The sources and applications of funds in connection with the issuance of the Bonds are estimated below.

Sources of Funds Principal Amount of Bonds $14,075,000.00 Premium 1,109,932.80 Total Sources of Funds $15,184,932.80 Applications of Funds Deposit to Construction Fund Underwriter’s Discount

$15,070,856.55 33,076.25

Costs of Issuance(1) 81,000.00 Total Applications of Funds $15,184,932.80

_________________ (1) Includes certain legal fees, initial Bond Registrar’s and Paying Agent’s fees, printing costs, validation court costs,

and other costs of issuance.

Capital Projects

The School District plans to pay a portion of the costs of acquiring, constructing and equipping a new elementary school, acquiring, constructing and equipping additional classrooms, instructional and support facilities and physical education facilities, remodeling, renovating and equipping existing classrooms and instructional and support facilities at existing schools, acquiring land and conducting site preparation of real estate for school district purposes, acquiring furnishings, equipment and fixtures for new and existing facilities system-wide, and acquiring technology equipment, text books, teaching software and school buses (the “Capital Projects”). The School District has developed a plan to finance the Capital Projects which relies on a combination of proceeds of the Bonds, investment earnings, Sales and Use Tax proceeds and capital outlay funds from the State of Georgia Board of Education. The School District expects that these sources of funds will be sufficient to provide funding for the Capital Projects. A portion of the proceeds of the Bonds will be deposited into a fund designated “School District of the City of Gainesville Construction Fund - Series 2011 (the “2011 Construction Fund”). The moneys in the 2011 Construction Fund will be used to pay a portion of the cost of the Capital Projects and interest due on the Bonds on June 1, 2012 and December 1, 2012. Prior to the expenditure of the proceeds deposited in the 2011 Construction Fund, such moneys will be invested, all as more fully set forth herein under “THE BONDS – Disbursement and Investment of Bond Proceeds and Other Moneys.”

To be more specific, the District plans to acquire, construct and equip a new elementary school on the site of Fair Street Elementary School, after tearing down the old school. The School District may possibly use some of the proceeds of the Series 2011 Bonds for other smaller capital projects of the School District. The expected completion date of the new elementary school is August 1, 2013.

The School District has selected Robertson Loia Roof, PC to serve as the design and inspecting architects for construction of the new elementary school. After the architects complete and the School District approves a set of plans and specifications for the new elementary school, the School District will submit the plans and specifications to the State of Georgia Department of Education for approval. After the plans and specifications are approved by the State of Georgia Department of Education, the School District will advertise in local newspapers. After the advertisements have run for thirty days, the School District will award the contract for the contractor-at-risk, based on bid price and qualifications.

Change of Use of Bond Proceeds

The notice of the election regarding the issuance of the Bonds stated that the purpose for which the Bonds are being issued is to pay a portion of the costs of acquiring, constructing and equipping a new elementary school,

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acquiring, constructing and equipping additional classrooms, instructional and support facilities and physical education facilities, remodeling, renovating and equipping existing classrooms and instructional and support facilities at existing schools, acquiring land and conducting site preparation of real estate for school district purposes, acquiring furnishings, equipment and fixtures for new and existing facilities system-wide, and acquiring technology equipment, text books, teaching software and school buses.

Section 36-82-4.2 of the Official Code of Georgia Annotated allows the City of Gainesville Board of Education, subsequent to the issuance of the Bonds, to adopt a resolution by a two-thirds’ majority vote of the Board of Education declaring that (1) a portion of the proceeds of the Bonds remain after the purpose stated in the election notice has been accomplished, (2) the purpose stated in the election notice is no longer necessary, or (3) circumstances have changed such that expenditure of all or part of the proceeds of the Bonds is no longer practicable or feasible. Such resolution must (a) set forth the reason the proceeds of the Bonds were not expended for the purpose stated in the election notice and (b) state the purpose for which the proceeds of the Bonds will be expended. Upon the adoption of such a resolution, the City of Gainesville Board of Education will be authorized to expend such proceeds of the Bonds, including interest earnings thereon, for purposes of a nature substantially similar to the purpose stated in the election notice or to reduce the bonded indebtedness of the School District; provided the School District, not earlier than ten days prior to expending such Bond proceeds, publishes the resolution described above once in the official Hall County organ. In addition, the School District must send a copy of the resolution described above by registered or certified mail to the Paying Agent for the Bonds.

THE BONDS

Description

The Bonds will be dated the date of their initial issuance and delivery, and will bear interest from the Interest Payment Date next preceding their date of authentication to which interest has been paid (unless their date of authentication is an Interest Payment Date, in which case from such Interest Payment Date, or unless their date of authentication is after a record date and prior to the corresponding Interest Payment Date, in which case from such corresponding Interest Payment Date, or unless no interest has been paid on such Bonds, in which case from the date of initial issuance and delivery of the Bonds) at the rates per annum set forth on the cover of this Official Statement (computed on the basis of a 360-day year comprised of twelve 30-day months). Interest on the Bonds is payable on each Interest Payment Date, commencing June 1, 2012.

Payment of the principal of and interest on the Bonds will be made by The Bank of New York Mellon Trust Company, N.A., Atlanta, Georgia, as paying agent (the “Paying Agent”), directly to Cede & Co., as nominee of DTC, and will subsequently be disbursed to Direct Participants and thereafter to Beneficial Owners of the Bonds. See “Book-Entry System of Registration.”

When not in book-entry form, the principal of the Bonds is payable upon the presentation and surrender of the Bonds at the corporate trust office of The Bank of New York Mellon Trust Company, N.A., Atlanta, Georgia, as paying agent (the “Paying Agent”). When not in book-entry form, interest on the Bonds is payable by check or draft mailed by first class mail to the registered owner of record preceding the applicable Interest Payment Date, at such owner’s address as it appears on the bond registration books of the School District maintained by The Bank of New York Mellon Trust Company, N.A., Atlanta, Georgia, as bond registrar (the “Bond Registrar”). When not in book-entry form, interest on the Bonds is payable to any registered owner of more than $500,000 in aggregate principal amount of Bonds by wire transfer to such registered owner if written wire transfer instructions are given to the Paying Agent at least 30 days prior to the Interest Payment Date. Interest shall continue to be so paid until such wire instructions are revoked in writing.

Security and Sources of Payment for the Bonds

Generally. The Bonds will constitute valid and legally binding general obligations of the School District. The principal of and interest on the Bonds are payable from the School District’s share of the Sales and Use Tax collected within Hall County for a period of 60 months. See discussion of the Sales and Use Tax below. To the

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extent that the School District’s share of the proceeds of the Sales and Use Tax are insufficient to make such payments, the principal of and interest on the Bonds are payable from an ad valorem tax unlimited as to rate or amount, upon all taxable property within the School District subject to taxation for school bond purposes, including real and personal property, privately owned utilities, motor vehicles, and mobile homes. The Bonds are also payable from any state appropriation to which the School District may be entitled, which the Georgia State Board of Education is required to withhold from the School District and transfer to the Paying Agent for the Bonds under certain circumstances.

Sales and Use Tax. Pursuant to an amendment to the Constitution of the State of Georgia ratified on November 5, 1996 and the laws of the State of Georgia, including Article 3 of the Sales Tax Act (O.C.G.A. Section 48-8-140, et seq., as amended), an election was duly called by the School District, the Buford School District and the Hall School District, which comprise all of the school districts and independent school systems located in Hall County, Georgia (the “County”). Such election was held in the County on March 15, 2011 (the “Sales Tax Election”). A majority of the qualified voters of the County who voted in the Sales Tax Election, by a vote of 4,480 in favor and 2,277 opposed, approved the reimposition and collection of a sales and use tax for educational purposes (the “Sales and Use Tax”), commencing upon the expiration of the Existing Sales and Use Tax (defined below) for a period of time not to exceed five years or until such time as $197,000,000 is collected. The qualified voters of the City also approved the reimposition of the Sales and Use Tax and the issuance of general obligation bonds in a maximum principal amount of $19,000,000.

The proceeds of the Sales and Use Tax will be divided between the School District, the Buford School District and the Hall School District based upon the Local Act. Pursuant to the Local Act, the Buford School District will receive monthly distributions of the proceeds of the Sales and Use Tax in the amount of $63,333.33 until such time as it receives $3,800,000, and the Buford School District will also receive up to an additional $300,000 of such proceeds from the final month’s collections, depending on the percentage by which the total proceeds of the Sales and Use Tax for the 60-month period of the Tax exceeds the total proceeds of the Existing Sales and Use Tax (defined below). The proceeds of the Sales and Use Tax in excess of $63,333.33 per month, subject to the additional payment to Buford School District described above, will be divided between the School District and the Hall School District based upon student population immediately prior to the local special election approving the Sales and Use Tax. The School District will receive 20.64% of such proceeds of the Sales and Use Tax, and the Hall School District will receive 79.36% of such proceeds of the Sales and Use Tax.

Pursuant to an election held in the School District on June 17, 1997, the voters in the School District authorized the levy and collection of a sales and use tax (the “Original Sales and Use Tax”) for five years. The Original Sales and Use Tax began to be imposed on October 1, 1997, and ceased to be imposed on September 30, 2002, the maximum five-year period for the Original Sales and Use Tax.

In an election held on September 18, 2001, the voters in the School District approved the continuation of

the one percent sales and use tax for a period of five years upon the expiration of the Original Sales and Use Tax (the “Second Sales and Use Tax”). The Second Sales and Use Tax began to be imposed on October 1, 2002, and ceased to be imposed on September 30, 2007, the maximum five-year period for the Second Sales and Use Tax.

In an election held on July 18, 2006, the voters in the School District approved the continuation of the one

percent sales and use tax for a period of five years upon the expiration of the Second Sales and Use Tax (the “Existing Sales and Use Tax” and, together with the Original Sales and Use Tax and the Second Sales and use Tax, the “Prior Sales and Use Tax”). The Existing Sales and Use Tax began to be imposed on October 1, 2007, and will cease to be imposed on September 30, 2012, the maximum five-year period for the Existing Sales and Use Tax. Pursuant to a local act passed in 2006, the Buford School District is receiving monthly distributions of the proceeds of the Existing Sales and Use Tax in the amount of $50,000 until such time as it receives $3,000,000. All proceeds of the Existing Sales Tax in excess of $50,000 per month are being divided between the School District and the Hall School District based upon student population immediately prior to the election held on July 18, 2006. The School District is receiving 17.80% of such proceeds of the Existing Sales and Use Tax, and the Hall School District is receiving 82.20% of such proceeds of the Existing Sales and Use Tax.

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Set forth below are historical collections of the Prior Sales and Use Tax paid to the School District during the past 10 fiscal years. These historical collections are indicative of anticipated collections of the Sales and Use Tax, however, there can be no assurance that future collections of the Sales and Use Tax will equal or exceed past collections of the Prior Sales and Use Tax.

Fiscal Year

Collections

2011 $4,334,785.73 2010 4,414,674.06 2009 4,608,562.64 2008 4,930,327.13 2007 4,721,718.33 2006 4,358,096.21 2005 3,864,264.57 2004 3,630,136.59 2003 3,305,501.20 2002 3,295,391.66

In addition, the following chart sets forth the historical collections of the Prior Sales and Use Tax in Hall

County, Georgia for the past ten fiscal years. The portion of the collections paid to the School District are indicated in the immediately preceding table. The remainder of the collections were paid to the Buford School District and the Hall School District.

Fiscal Year

Collections

2011 $24,952,754.79 2010 24,924,665.05 2009 26,490,801.56 2008 29,380,554.84 2007 29,532,097.67 2006 27,304,020.79 2005 24,278,091.64 2004 22,843,483.87 2003 21,484,905.45 2002 21,730,142.26

Ad Valorem Taxation. The Bonds will constitute valid and legally binding general obligations of the

School District. The principal of and interest on the Bonds are payable from an ad valorem tax unlimited as to rate or amount to be levied, upon all taxable property within the School District subject to taxation for school bond purposes, including real and personal property, privately owned utilities, motor vehicles, and mobile homes.

Prior to the issuance of the Bonds, the City, upon the recommendation of the School District, as required by law, will levy an ad valorem tax on all taxable property within the School District subject to taxation for school bond purposes in an amount sufficient to pay the principal of and interest on the Bonds as the same becomes due and payable. See “SCHOOL DISTRICT DEBT STRUCTURE” and “SCHOOL DISTRICT AD VALOREM TAXATION” herein for a discussion of the School District’s outstanding debt and legal ability to incur future indebtedness and for a discussion of School District ad valorem taxation.

State Aid Intercept. Prior to the issuance of the Bonds, the Board of Education, pursuant to O.C.G.A. Section 20-2-480, will notify the State of Georgia Board of Education (the “State Board”) of the proposed issuance of the Bonds and authorize and direct the State Board to withhold from the School District sufficient moneys from any State appropriation to which the School District may be entitled and to apply so much of such moneys as shall be necessary to the payment of the principal of and interest on the Bonds then due. Thereafter, if the Paying Agent,

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as Debt Service Fund Custodian, for the Bonds notifies the State Board that the School District has failed to punctually pay the principal of or interest on the Bonds, the State Board is authorized to and shall withhold from any State appropriation to which the School District may be entitled and apply so much thereof as shall be necessary to the payment of the principal of and interest on the Bonds then due.

The amounts subject to interception by the State Board for the benefit of the owners of the Bonds will depend upon the amount and timing of annual appropriations made by the General Assembly of the State of Georgia to the School District. See “SCHOOL DISTRICT FINANCIAL INFORMATION--General Fund History” herein for the amounts paid to the School District by the State of Georgia for general operating purposes over the past five fiscal years. The State of Georgia disburses the amount committed to the School District for each fiscal year in twelve (12) approximately equal installments on or before the last day of each month of such fiscal year. The timing of the payment of any amounts subject to interception by the State Board to the Paying Agent for the benefit of the owners of the Bonds will depend upon the ability of the State Board to promptly liquidate investments of money appropriated but not disbursed by the General Assembly of the State of Georgia to the School District. No assurance can be given concerning the timing or amounts of future appropriations by the General Assembly of the State of Georgia to the School District or the timing of the payment of any amounts subject to interception by the State Board to the Paying Agent.

Financial Covenants. The School District has agreed, to the extent allowed by applicable law, that, so long as any of the Bonds are outstanding, it will not incur any additional debt or obligation of the School District payable from the State of Georgia appropriation to which the School District may be entitled unless the amount of any such appropriation to which the School District has been entitled for a period of twelve (12) consecutive months immediately preceding the adoption of the proceedings authorizing the issuance of such additional debt or obligation has been equal to at least 2.0 times the maximum aggregate annual debt service requirement for any succeeding year on the Bonds and any other outstanding debt or obligation payable from such appropriation and on the additional debt or obligation proposed to be issued.

The School District currently expects to receive approximately $28,600,000 of State appropriated funds for fiscal year 2012. These amounts do not include any additional State funds for capital projects.

Limitation on Enforceability of Remedies. The realization of value from the pledge of the taxing power of the School District to the payment of the Bonds upon any default will depend upon the exercise of various remedies specified by Georgia law. These remedies may require judicial actions, which are often subject to discretion and delay and which may be difficult to pursue. The enforceability of rights or remedies with respect to the Bonds may be limited by state and federal laws, rulings, and decisions affecting remedies and by bankruptcy, insolvency, or other laws affecting creditors’ rights or remedies heretofore or hereafter enacted.

Redemption

The Bonds are not subject to redemption prior to maturity.

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Registration Provisions; Transfer and Exchange

The Bonds will be issued only as fully registered bonds without coupons in denominations of $5,000 or any integral multiple thereof. The School District, the Bond Registrar, the Paying Agent and Debt Service Fund Custodian may deem and treat the registered owner as the absolute owner of such Bond for purposes of receiving payment of or on account of principal and the interest payable thereon, and for all other purposes; the School District, the Bond Registrar, the Paying Agent and Debt Service Fund Custodian will not be affected by any notice to the contrary.

When in book-entry form, Bonds held by DTC or Cede & Co., as its nominee, on behalf of the Beneficial Owners thereof, are transferable upon delivery to DTC or Cede & Co., as its nominee, of an assignment executed by the Beneficial Owner or the Beneficial Owner’s duly authorized attorney. See “Book-Entry System of Registration.”

When not in book-entry form, ownership of any Bond is transferable upon surrender thereof to the Bond Registrar, together with an assignment duly executed by the registered owner or his duly authorized attorney or legal representative, in such form as shall be satisfactory to the Bond Registrar. Upon any such transfer of ownership, the Bond Registrar will cause to be authenticated and delivered a new Bond or Bonds registered in the name of the transferee in any authorized denomination in the same aggregate principal amount, maturity, and interest rate as the Bonds surrendered for such transfer. The Bonds may be exchanged for a like principal amount of Bonds of the same maturity and interest rate and of any authorized denomination or denominations. For every exchange or registration of transfer, the Bond Registrar may charge an amount sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or registration of transfer, but no other charge may be made to the owner for any exchange or registration of transfer of the Bonds.

Book-Entry System of Registration

DTC will act as securities depository for the Bonds. The 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 Series 2011 Bond certificate will be issued for each maturity and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New

York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation, (NSCC, FICC 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 www.dtcc.com and www.dtc.org.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will

receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of Bonds

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(“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 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 Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all the Bonds deposited by Direct Participants with DTC are registered in

the name of DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to

Indirect Participants, and by 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 SHOULD MAKE APPROPRIATE ARRANGEMENTS WITH THEIR BROKER OR DEALER TO RECEIVE NOTICES (INCLUDING NOTICES OF REDEMPTION) AND OTHER INFORMATION REGARDING BONDS THAT MAY BE SO CONVEYED TO DIRECT PARTICIPANTS AND INDIRECT PARTICIPANTS.

Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed,

DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds

unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds and principal and interest payments on Bonds will be made to Cede & Co., or such

other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts, upon DTC’s receipt of funds and corresponding detail information from the Authority or the Trustee, on 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 District or the Paying Agent, 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 District or the Paying Agent, 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 Bonds at any time by giving

reasonable notice to the District or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, certificates for the Bonds are required to be printed and delivered.

The District may decide to discontinue use of the system of book-entry transfers through DTC (or a

successor securities depository). In that event, certificates for the Bonds will be printed and delivered.

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The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the accuracy thereof.

NEITHER THE DISTRICT NOR THE PAYING AGENT NOR THE UNDERWRITER (OTHER THAN

IN THEIR CAPACITY, IF ANY, AS A DIRECT PARTICIPANT OR AN INDIRECT PARTICIPANT) WILL HAVE ANY OBLIGATION TO THE DIRECT PARTICIPANTS OR THE INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO DTC’S PROCEDURES OR ANY PROCEDURES OR ARRANGEMENTS BETWEEN DIRECT PARTICIPANTS, INDIRECT PARTICIPANTS AND BENEFICIAL OWNERS.

NEITHER THE DISTRICT NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR

OBLIGATION TO PARTICIPANTS, BENEFICIAL OWNERS OR OTHER NOMINEES OF SUCH BENEFICIAL OWNERS FOR (1) SENDING TRANSACTION STATEMENTS; (2) MAINTAINING, SUPERVISING OR REVIEWING, THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY PARTICIPANT OR OTHER NOMINEES OF SUCH BENEFICIAL OWNERS; (3) PAYMENT OR THE TIMELINESS OF PAYMENT BY DTC TO ANY PARTICIPANT, OR BY ANY PARTICIPANT OR OTHER NOMINEES OF BENEFICIAL OWNERS TO ANY BENEFICIAL OWNER, OF ANY AMOUNT DUE IN RESPECT OF THE PRINCIPAL OF OR REDEMPTION PREMIUM, IF ANY, OR INTEREST ON BONDS; (4) DELIVERY OR TIMELY DELIVERY BY DTC TO ANY PARTICIPANT, OR BY ANY PARTICIPANT OR OTHER NOMINEES OF BENEFICIAL OWNERS TO ANY BENEFICIAL OWNERS, OF ANY NOTICE (INCLUDING NOTICE OF REDEMPTION) OR OTHER COMMUNICATION WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE TO BE GIVEN TO HOLDERS OR OWNERS OF BONDS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF BONDS; OR (6) ANY ACTION TAKEN BY DTC OR ITS NOMINEE AS THE REGISTERED OWNER OF BONDS.

Authority for Issuance

Paragraph I(a) of Section V of Article IX of the Constitution of the State of Georgia provides (1) that no political subdivision may incur any new debt without the assent of a majority of the qualified voters of such political subdivision voting in an election held for that purpose as provided by law and (2) that the debt incurred by any political subdivision may never exceed 10 percent of the assessed value of all taxable property within such political subdivision. Paragraph VI of Section V of Article IX of the Constitution of the State of Georgia requires a political subdivision, at or before the time of incurring bonded indebtedness, to provide for the assessment and collection of an annual tax sufficient in amount to pay the principal of and interest on the debt within 30 years from its incurrence.

The Bonds were authorized to be issued pursuant to an election in the School District held on March 15, 2011, and called under a resolution adopted by the City of Gainesville Board of Education on December 13, 2010. The resolution calling the election and the notice of the election stipulated an interest rate for the Bonds not exceeding 7.0% per annum. The Bonds are being issued in accordance with the Constitution of the State of Georgia and laws of the State of Georgia and a resolution of the Board of Education authorizing the issuance of the Bonds adopted on July 8, 2011, as supplemented by a resolution adopted on October 19, 2011 (together, the “Bond Resolution”).

Disbursement and Investment of Bond Proceeds and Other Moneys

Bond Proceeds. The proceeds derived from the sale of the Bonds will be held by and under the control of the School District and will be disbursed by the School District, as the School District desires, to pay the costs of issuing the Bonds and the costs of the Capital Projects described in “THE FINANCING PLAN - Capital Projects” herein. Prior to such use, said proceeds will be invested pending their disbursement. Section 36-82-7 of the Official Code of Georgia Annotated provides that the proceeds of the Bonds may be invested and reinvested by the governing authority of the School District in the following investments, and no others:

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(1) the local government investment pool created in Chapter 83 of Title 36 of the Official Code of Georgia Annotated;

(2) bonds or obligations of the State of Georgia or other counties, municipal corporations, and political subdivisions of the State;

(3) bonds or other obligations of the United States or of subsidiary corporations of the United States government which are fully guaranteed by such government;

(4) obligations of agencies of the United States government issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, and the Central Bank for Cooperatives;

(5) bonds or other obligations issued by any public housing agency or municipal corporation in the United States, which such bonds or obligations are fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States government, or project notes issued by any public housing agency, urban renewal agency, or municipal corporation in the United States which are fully secured as to payment of both principal and interest by a requisition, loan, or payment agreement with the United States government;

(6) certificates of deposit of national or state banks located within the State of Georgia which have deposits insured by the Federal Deposit Insurance Corporation and certificates of deposit of federal savings and loan associations and state building and loan or savings and loan associations located within the State of Georgia which have deposits insured by the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation or the Georgia Credit Union Deposit Insurance Corporation, including the certificates of deposit of any bank, savings and loan association, or building and loan association acting as depository, custodian, or trustee for any such bond proceeds, provided the portion of the certificates of deposit in excess of the amount insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation, or the Georgia Credit Union Deposit Insurance Corporation, if any, must be secured by deposit, with the Federal Reserve Bank of Atlanta, Georgia, or with any national or state bank or federal savings and loan association or state building and loan or savings and loan association located within the State of Georgia, of one or more of the following securities in an aggregate principal amount equal at least to the amount of such excess: direct and general obligations of the State of Georgia or of any county or municipal corporation in the State of Georgia, obligations of the United States or subsidiary corporations described in (3) above, obligations of the agencies of the United States government described in (4) above, or bonds, obligations, or project notes of public housing agencies, urban renewal agencies, or municipalities described in (5) above; and

(7) securities of or other interests in any no-load, open-end management type investment company or investment trust registered under the Investment Company Act of 1940, as from time to time amended, or any common trust fund maintained by any bank or trust company which holds such proceeds as trustee or by an affiliate thereof so long as:

(a) the portfolio of such investment company or investment trust or common trust fund is limited to the obligations described in paragraph (3) above and repurchase agreements fully collateralized by any such obligations,

(b) such investment company or investment trust or common trust fund takes delivery of such collateral either directly or through an authorized custodian,

(c) such investment company or investment trust or common trust fund is managed so as to maintain its shares at a constant net asset value, and

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(d) securities of or other interests in such investment company or investment trust or common trust fund are purchased and redeemed only through the use of national or state banks having corporate trust powers and located within the State of Georgia.

Other Moneys. Paragraph VI of Section V of Article IX of the Constitution of the State of Georgia requires the proceeds of the tax assessed and collected to pay the principal of and interest on the Bonds, together with any other moneys collected for this purpose, to be placed in a sinking fund to be used exclusively for paying the principal of and interest on the Bonds and to be held and kept separate and apart from all other revenues collected by the School District.

Section 36-80-3 of the Official Code of Georgia Annotated provides that the governing body of the School District may invest and reinvest money subject to its control and jurisdiction in:

(1) obligations of the United States and of its agencies and instrumentalities,

(2) bonds or certificates of indebtedness of the State of Georgia and of its agencies and instrumentalities, and

(3) certificates of deposit of banks which have deposits insured by the Federal Deposit Insurance Corporation; provided, however, that portion of such certificates of deposit in excess of the amount insured by the Federal Deposit Insurance Corporation must be secured by direct obligations of the State of Georgia or the United States which are of a par value equal to that portion of such certificates of deposit which would be uninsured.

Section 36-83-4 of the Official Code of Georgia Annotated provides that the governing body of the School District may invest and reinvest money subject to its control and jurisdiction in:

(1) obligations of the State of Georgia or other states,

(2) obligations issued by the United States government,

(3) obligations fully insured or guaranteed by the United States government or United States government agency,

(4) obligations of any corporation of the United States government,

(5) prime banker’s acceptances,

(6) the local government investment pool established by Section 36-83-8 of the Official Code of Georgia Annotated,

(7) repurchase agreements, and

(8) obligations of other political subdivisions of the State of Georgia.

Section 45-8-14 of the Official Code of Georgia Annotated provides that the School District shall designate one or more solvent banks, insured federal savings and loan associations, or insured state chartered building and loan associations as depositories of moneys belonging to the School District. Section 45-8-12 of the Official Code of Georgia Annotated prohibits the School District from having on deposit at any one time in any depository for a time longer than ten days a sum of money which has not been secured by a surety bond, by federal deposit insurance, or by pledged securities, with a face value of not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. Section 45-8-11 of the Official Code of Georgia Annotated allows the Superintendent or the Chief Financial Officer of the School District, in his or her discretion, to waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.

The School District presently deposits its general funds with Regions Bank. The School District may, in its discretion, but subject to the provisions of Georgia law described in the above paragraph, deposit these funds with other financial institutions.

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Principal and Interest Requirements

The following are the principal and interest payment requirements with respect to the School District’s General Obligation Bonds, Series 2006 (the “Prior Bonds”) and the Bonds for the years shown below. See “SCHOOL DISTRICT DEBT STRUCTURE - Debt Service Requirements” for debt service requirement of intergovernment contract debt of the School District.

Fiscal Year

Prior Bonds

Bonds

Principal Interest Total Principal Interest Total TOTAL

2012 $ 4,535,000 440,050 4,975,050 $ -- $ 302,345 $ 302,345 $ 5,277,395 2013 4,005,000 218,800 4,223,800 -- 533,550 533,550 4,757,350 2014 -- -- -- 2,840,000 505,150 3,345,150 3,345,150 2015 -- -- -- 2,795,000 434,825 3,229,825 3,229,825 2016 -- -- -- 2,910,000 334,700 3,244,700 3,244,700 2017 -- -- -- 3,060,000 200,000 3,260,000 3,260,000 2018 -- -- -- 2,470,000 61,750 2,531,750 2,531,750

TOTAL $8,540,000 $658,850 $9,198,850 $14,075,000 $2,372,320 $16,447,320 $25,646,170

THE SCHOOL DISTRICT

General

The School District is an independent school system of the State of Georgia. The boundaries of the School District are coextensive with the territorial limits of the City. There are two other public school systems in the area -- Hall School District’s school system and Buford School District’s school system. The School District’s school system is comprised of 8 schools with a total of approximately 485 teachers and other certified staff and 7,086 students.

Funds for the general maintenance and operation of the School District are derived from local, state, and federal sources. Local revenues consist primarily of ad valorem property taxes. See “SCHOOL DISTRICT AD VALOREM TAXATION”. Funds received from the State of Georgia are determined by certain formulas, generally based upon the number of students served and the relative wealth of the school district in relation to other school districts in Georgia, established by the State of Georgia Department of Education. Funds received from the federal government are primarily for programs for disadvantaged and handicapped students and for the school food service program. During the fiscal year ended June 30, 2011, approximately 45% of the School District’s total revenues were derived from local sources, 40% from state sources, and 15% from federal sources. See “SCHOOL DISTRICT FINANCIAL INFORMATION - General Fund History” herein.

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Board of Education

Under Georgia law, the School District is under the control and management of the Board of Education (the “Board”). The Board consists of five members. For the purpose of electing Board members, Georgia law divides the School District into five education districts and requires one member to be elected to the Board from each of the five education districts by the voters of the education district he or she represents. Georgia law requires each person seeking election from an education district to reside in that district. Georgia law provides that no person is eligible for membership on the Board unless he or she has resided in the education district from which he or she seeks election for at least two months immediately preceding the election to such office. Each January, the members of the Board select one of their number as Chairperson to serve as such for a term of one year.

Information concerning the current members of the Board of Education is set forth below:

Number of Name and Office Held Expiration of Term Years in Office Principal Occupation

Willie Mitchell, Chairman December 31, 2011 22 Construction Maria Calkins December 31, 2011 4 Homemaker Delores Diaz December 31, 2013 2 Professor Sammy Smith December 31, 2011 4 Public Relations David Syfan December 31, 2013 10 Attorney Administration

The School Superintendent of the School District is the executive officer of the School District and is employed by the Board of Education under written contract for a term of not less than one year and not more than three years. The School Superintendent acts as the Secretary of the Board of Education, ex officio. No person will be eligible, appointed or employed as School Superintendent unless such person is of good moral character, has never been convicted of any crime involving moral turpitude, and possesses acceptable business or management experience as specified by the Professional Standards Commission or the minimum valid certificate or a letter of eligibility for such certificate required by the Professional Standards Commission.

Merianne Dyer, Ph.D., has served as Superintendent since 2008. She has full responsibility for overseeing the operations of the school district. Prior to serving as Superintendent, Dr. Dyer was principal of Fair Street Elementary School for seven years. She has been in the education field for over thirty-five years with twenty-eight of those years serving the School District. She holds a doctor’s degree in educational policy from Georgia State University, and an educational specialists degree in educational leadership from the University of Georgia, a master’s of education degree from North Georgia College and State University and a bachelor of science degree from Mississippi College.

Janet L. Allison has served as Chief Financial Officer since 2007. She has full responsibility for the financial operations of the school district. Prior to serving as Chief Financial Officer, Ms. Allison was in private practice for seven years and was a Senior Accountant with Covenant Insurance for three years. Prior to that she worked for the Hall County School District for twenty years in Human Resources and in Accounting as Payroll Manager. She holds a bachelor of business administration for North Georgia College and State University and has been licensed as a Certified Public Accountant in the State of Georgia since 1992.

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Schools

The School District’s school system consists of 8 schools. Set forth below is information concerning the schools presently comprising the School District’s school system.

School Name

Grades

Enrollment

Number of Sites

Rooms(1)

New Holland Core Knowledge Academy PreK-5 681 1 44 Gainesville Exploration Academy PreK-5 866 1 44 Enota Multiple Intelligences Academy PreK-5 850 1 45 Centenniel Arts Academy PreK-5 856 1 39 Fair Street (Elementary) IB World School

PreK-5 709 1 39

Gainesville Middle School 6-8 1,437 1 91 Gainesville High School 9-12 1,543 1 70 Wood’s Mill Non-traditional School 6-12 144 1 10 Total 7,086 382 _________________ (1)Includes cafeterias, libraries, shops, gymnasiums, auditoriums and art and music classrooms.

There are currently 474 certificated personnel serving 7,086 students in the various schools. Specialists are available in the fields of speech, hearing, vision, learning disabilities, emotionally disturbed, psychological testing, physically handicapped, mentally retarded, hospital-home bound, and gifted children. The 2011-2012 estimated pupil-teacher ratio for all schools is approximately 1 to 15, including non-teaching personnel such as counselors and librarians.

All teachers in the school system hold Bachelor’s degrees, most have Master’s degrees, and many Specialist’s and Doctoral degrees. Most have a continuing interest in professional and personal growth through formal study and staff development workshops.

All schools are accredited by the Georgia Accrediting Commission and have met the requirements for Standard Schools as set forth by the Georgia Department of Education. The School District’s schools are also accredited by the Southern Association of Colleges and Schools.

Enrollment

Set forth below is information concerning enrollment in the School District’s school system for the past six school years, as of the beginning of each school year.

School Year Total Enrollment

2011-2012 7,086 2010-2011 6,870 2009-2010 6,502 2008-2009 6,355 2007-2008 6,139 2006-2007 5,673

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Employees, Employee Relations and Labor Relations

The School District’s school system has approximately 828 full-time employees as of August 19, 2011, in the following categories:

Classroom Teachers 454 Administrators and Supervisors 42 Media Specialists and Guidance Counselors 20 Professional/Technical Support 11 Aides and Clerical 185 Transportation and Maintenance 59 Food Service and Custodians 57

Total 828

No employees of the School District are represented by labor organizations or are covered by collective bargaining agreements, and the School District is not aware of any union organizing efforts at the present time. The School Superintendent believes that employee relations are good. For a description of employee benefits, see “SCHOOL DISTRICT FINANCIAL INFORMATION -- Employee Benefits.”

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SCHOOL DISTRICT DEBT STRUCTURE

Summary of School District Debt by Category and Overlapping Debt

Set forth below is information concerning direct debt of the School District as of June 30, 2011 assuming the issuance of the Bonds and the estimated overlapping property tax supported debt of certain governmental entities that is attributable to property owners in the School District based on the proportion to which the jurisdiction of the School District overlaps such entities. Although the School District has attempted to obtain accurate information as to the outstanding overlapping debt, it does not warrant its completeness or accuracy, as there is no central reporting entity which has this information available, and the amounts are based on information supplied by others.

Category of Debt

Amount of Outstanding

Debt

Percent of Outstanding Debt Chargeable to

Property in the District(1)

Debt Chargeable

Direct: School District 100% General Obligation Bonds(2) $22,615,000 $22,615,000 Intergovernmental Contracts(3) 7,165,253 7,165,253 Capital Leases(4) -- -- Total Direct Debt $29,780,253 $29,780,253 Overlapping(5): City of Gainesville 100% Notes Payable $113,800,132 $113,800,132 Intergovernmental Contracts 66,306,761 66,306,761 Capital Leases 1,776,084 1,776,084 Hall County 20.01% General Obligation Bonds $ -- $ -- Notes Payable 29,794,056 5,961,791 Certificate of Participation 12,890,000 2,579,289 Intergovernmental Contracts 26,838,595 5,370,403 Capital Leases 1,471,030 294,353 Total Overlapping $252,876,658 $196,088,813 TOTAL DIRECT AND OVERLAPPING $282,656,911 $225,869,066 _________________ (1) For overlapping indebtedness, determined by dividing the 2010 assessed value of the property of the School District

(adjusted for the 40% assessed value used by Hall County to levy tax) by the total assessed value of the property of the overlapping entity.

(2) Assumes the Bonds are issued and represent general obligations of the School District to which its full faith and credit are pledged. Also includes the outstanding General Obligation Bonds, Series 2006.

(3) Includes payments due from the School District under Intergovernmental Agreements between the School District and the Gainesville Redevelopment Authority to pay installment purchase payments which are applied to the payment of revenue bonds of the Authority issued to finance certain capital projects of the School District.

(4) The financial obligations under capital leases do not constitute general obligations to which the taxing power is pledged, but are subject to and dependent upon lawful appropriations of general revenues being made to pay the capital lease payments due in each year. Obligations under capital leases are from year to year only and do not constitute mandatory payment obligations in any year in which funds are not appropriated to pay the capital lease payments due in such year. Obligations under capital leases do not constitute debt for purposes of the constitutional debt limit described in “Limitations on School District Debt” herein and do not count against such debt limitation. The School District had no capital lease obligations outstanding as of June 30, 2011.

(5) As of June 30, 2011.

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Proposed Debt

The School District does not anticipate issuing additional general obligation bonds during the next five years.

Limitations on School District Debt

The Constitution of the State of Georgia provides that the School District may not incur long-term obligations payable out of general property taxes without the approval of a majority of the qualified voters of the School District voting at an election called to approve the obligations. In addition, under the Constitution of the State of Georgia, the School District may not incur long-term obligations payable out of general property taxes in excess of ten percent of the assessed value of all taxable property within the School District. The County and each municipality within the County may also incur general obligation debt up to the ten percent limitation.

Short-term obligations (those payable within the same calendar year in which they are incurred), lease and installment purchase obligations subject to annual appropriation and intergovernmental obligations are not subject to the legal limitations described above. In addition, refunded obligations cease to count against the School District’s debt limitations.

As computed in the table below, based upon the January 1, 2010 assessed value and after the issuance of the Bonds, the School District could incur (upon necessary voter approval) approximately $320,872,505 in additional long-term obligations payable out of general property taxes (or general obligation bonds).

Computation of Legal Debt Margin

General Obligation Bond Tax Digest as of January 1, 2010 $3,434,875,057 Debt Limit (10% of Assessed Value) 343,487,505 Amount of Debt Applicable to Debt Limit(1) 22,615,000 Legal Debt Margin 320,872,505

_______________________________ (1) Made up of $8,540,000 in bonds outstanding as of June 30, 2011, and the aggregate principal amount of the

Bonds ($14,075,000).

Section 20-2-506(b)(4) of the Official Code of Georgia Annotated provides that lease and installment purchase contracts subject to annual appropriation must contain provisions limiting the total combined annual payments for such contracts and intergovernmental contracts in any calendar year to an amount equal to 7.5 percent of the total local revenue collected for maintenance and operation of the District in the most recently completed fiscal year. The District presently has no such leases or installment purchase contracts.

Debt Per Capita(1)

Total direct debt per capita(2) $ 880.97 Total overlapping debt per capita(3) $5,800.76 Combined overall debt per capita $6,681.73 _______________________________ (1) Based upon 2010 Bureau of Census population estimate of 33,804. (2) Includes the $14,075,000 aggregate principal amount of the Bonds. (3) Calculated using the District’s percentage of the overlapping debt of Hall County.

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Debt Service Requirements

Set forth below are the debt service requirements of the District for all categories of debt upon the issuance of the Bonds.

Fiscal Year Ending June 30

General Obligation Bonds

Intergovernmental Contracts Capital Leases

Total Debt Service Requirements

2012 $ 5,277,395 $ 323,936 -- $5,601,331 2013 4,757,350 323,936 -- 5,081,286 2014 3,345,150 1,163,936 -- 4,509,086 2015 3,229,825 1,165,756 -- 4,395,581 2016 3,244,700 1,161,193 -- 4,405,893 2017 3,260,000 1,165,446 -- 4,425,446 2018 2,531,750 1,163,118 -- 3,694,868 2019 -- 72,500 -- 72,500 2020 -- 72,500 -- 72,500 2021 -- 72,500 -- 72,500 2022 -- 72,500 -- 72,500

SCHOOL DISTRICT AD VALOREM TAXATION

Introduction

An important source of revenue to fund the operations of the School District is ad valorem property taxes. Ad valorem property taxes are levied annually in mills (one tenth of one percent) upon each dollar of assessed property value.

Property Subject to Taxation

Ad valorem property taxes are levied, based upon value, against real and tangible personal property within the School District. There are, however, certain classes of property which are exempt from taxation, including public property, religious property and places of burial, charitable property, property of nonprofit hospitals, nonprofit homes for the aged, and nonprofit homes for the mentally handicapped, college and certain educational property, public library property, qualified farm products, livestock and plants, certain air and water pollution control property, personal effects and inventory qualifying for the freeport exemption. In addition, the City allows exemptions from ad valorem taxation for school purposes for homesteads, or owner-occupied residences, of households that have net incomes (jointly for the owner and spouse that reside at the residence) of $12,000 or less for the preceding taxable year. In addition, the homesteads of disabled veterans and the un-remarried surviving spouses of veterans are partially exempt from ad valorem taxation under Georgia law.

In addition, the City of Gainesville allows exemptions from ad valorem taxation for school purposes for (1) homesteads, or owner-occupied residences, of disabled veterans, not to exceed the greater of $50,000 of assessed value or an amount determined under federal law, (2) homesteads, or owner-occupied residences of disabled persons or of persons who are at least 62 years of age but less than 70 years of age and who have net income, together with net income of a spouse residing in the homestead, not exceeding $25,000 for the immediately preceding taxable year, up to $30,000 of the assessed value, (3) homesteads, or owner-occupied residences, of persons who are at least 70 years of age, for the full value of the homestead, (4) homesteads, or owner-occupied residences, of persons who are 62 years of age or older and who have net income, together with net income of a spouse residing in the homestead, not exceeding $10,000 for the immediately preceding taxable year, up to $10,000 of assessed value, (5) homesteads, or owner-occupied residences, of an unremarried surviving spouse of a peace officer or firefighter who was killed in the line of duty, for the full value of the homestead, (6) homesteads, or owner-occupied residences, of an unremarried surviving spouse of a member of the United States armed forces killed in war or armed conflict, not to exceed the greater of $32,500 of assessed value or an amount determined under federal law, and (7) the inventory of companies that manufacture or warehouse goods in the City of Gainesville, known as the “freeport” exemption.

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Assessed Value

Assessed valuation, which represents the value upon which ad valorem property taxes are levied, is calculated as a percentage of fair market value. Georgia law requires taxable real and tangible personal property to be assessed, with certain exceptions, at 40% of its fair market value. A levy is made annually by each respective tax jurisdiction and applied to 40% of the property’s fair market value to arrive at the tax due. Pursuant to the City Charter, it generally assesses taxable property at 100% of its fair market value. Georgia law requires certain agricultural real property to be assessed for ad valorem property tax purposes at 75% of the value of which other real property is assessed, requires certain historical property to be valued at a lower percentage or fair market value for ad valorem property tax purposes and requires certain agricultural, timber, and environmentally sensitive real property and certain single-family real property located in transitional developing areas to be valued based upon their current uses.

The chief appraiser of the County is required to submit a certified list of assessments for all taxable property, except motor vehicles and property owned by public utilities, within the County to the County Board of Tax Assessors. The Tax Commissioner of the County is required to present the tax returns of the County to the County Board of Tax Assessors by April 11 of each year. The County Board of Tax Assessors is required to complete its revision and assessment of returns by July 1 of each year (June 1 for counties providing for installment payments) and to forward a copy of the completed digest to the State of Georgia Revenue Commissioner for examination and approval. The State of Georgia Revenue Commissioner has the authority to examine the digest for the purpose of determining if the valuations of property are reasonably uniform and equalized between and within counties. Assessments may also be subject to review at various stages by the County Board of Equalization and by state courts if the assessment is appealed.

The Motor Vehicle Tax Division of the Georgia Department of Revenue assesses the value of motor vehicles by make, model, and year by county and provides this information to each county tax office. The Property Tax Unit determines the value of the property of public utilities and the Revenue Commissioner issues a proposed assessment to the utilities, and provides these amounts to each county board of tax assessors, which is responsible for issuing fiscal assessments to the utilities.

In the 2009 legislative session, the Georgia Assembly enacted legislation, known as House Bill 233 (“HB 233”), which became law on May 5, 2009. HB 233 imposes a moratorium on all increases (but not decreases) in the assessed value of all classes of property subject to ad valorem taxation for school purposes (as well as for country and municipal purposes). This moratorium is subject to certain limited exceptions, including corrections of errors in valuation, additions or improvements to taxable property, and changes in use of taxable property. The moratorium applies to tax years 2009, 2010, and 2011. HB 233 does not, however, prohibit the District from increasing the annual rate of levy, or millage rate, for the support and maintenance of the District’s school system (which is subject to the 20-mill limitation described below) or for the payment of debt service on the bonded indebtedness of the District.

Annual Tax Levy

Neither the School District nor the Board of Education has the power to levy ad valorem property taxes. The City Council of the City (the “City Council”) annually levies the ad valorem property taxes for the School District. The Board of Education is required by Georgia law to annually certify to the City Council the rate of levy needed to produce the necessary amount of property tax revenues to support and maintain the School District’s school system. The Board of Education determines a rate of levy for each fiscal year by computing a rate which, when levied upon the assessed value of taxable property within the territorial limits of the School District, will produce the necessary amount of property tax revenues. Under Georgia law, the City Council is required to annually levy the ad valorem property tax certified to it by the Board of Education, upon the assessed value of all taxable property within the School District.

Under Georgia law, the annual rate of levy for the support and maintenance of the School District’s school system may not exceed 8 mills per dollar upon 100% of the appraised value (equivalent to 20 mills per dollar upon 40% of the appraised value) of all property within the School District. Under Georgia law, there is no limitation on the annual rate of levy for the payment of principal of and interest on bonded indebtedness of the School District.

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Ad valorem property taxes received for the payment of debt service on general obligation bonds of the School District are required by law to be held and accounted for separately from other funds of the School District.

Property Tax Collections

The City bills and collects the property taxes of the School District on behalf of the School District. Under Georgia law, the tax collector of the City is required to pay over to the Board of Education once a month all taxes collected for school purposes, after deducting a commission for collecting the taxes. The City charges the School District a collection fee of 1.0% of taxes collected for the School District. Real and tangible personal property taxes are levied on January 1 of each year on the assessed value determined as of January 1. Taxes levied by the City on January 1 are normally billed in October and are due on or before a certain date in December.

All taxes levied on real and tangible personal property, together with interest thereon and penalties for late payment constitute a perpetual lien on and against the property taxed. The lien normally becomes enforceable on December 20 of each year. Georgia law provides that taxes must be paid before any other debt, lien, or claim of any kind, except for certain claims against the estate of a decedent and except that the title and operation of a security deed is superior to the taxes assessed against the owner of property when the tax represents an assessment upon property of the owner other than the property specifically subject to the title and operation of the security deed.

Collection of delinquent real property taxes is enforceable by tax sale of the realty. Delinquent personal property taxes are similarly enforceable by seizure and sale of the taxpayer’s personal property. There can be no assurance, however, that the value of property sold, in the event of a tax sale, will be sufficient to produce the amount required to pay in full the delinquent taxes, including any interest or penalties thereon.

When the last day for the payment of taxes has arrived, the tax collector notifies the taxpayer in writing of the fact that the taxes have not been paid and that, unless paid, an execution will be issued; however, no notice is required for tangible personal property and executions may be issued on the first day following the last day for payment. At any time after 30 days from giving the notice described in the preceding sentence, the City Clerk of the City issues an execution for nonpayment of taxes. The City Clerk then publishes a notice of the sale in a local newspaper weekly for four weeks and gives the taxpayer 10 days written notice by registered or certified mail. A public sale of the property is then made by the City Clerk on the first Tuesday of the month after the required notices are given.

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Historical Property Tax Data

Set forth below is information concerning the assessed value of taxable property within the School District for calendar years 2006 through 2010. The School District assesses taxes and sets its millage rates based upon 100% of fair market value. Thus, the assessed values set forth below represent 100% of the fair market value of the property.

Assessed Values Adjustments General Maintenance Maintenance

Calendar Real & Personal Public Motor Mobile to Certified Adjusted Bond Obligation Bond & Support & Support Year Property Utilities Vehicles Homes Digest Tax Digest Exemptions Tax Digest(1) Exemptions Tax Digest(2)

2010 $3,652,341,184 $56,924,528 $156,023,700 $ 6,190 $(224,302,316) $3,640,993,286 $(206,118,229) $3,434,875,057 $(206,118,229) $3,434,875,057 2009 3,786,670,872 64,903,013 183,716,250 6,190 (314,926,076) 3,720,370,249 (195,513,580) 3,524,856,669 (195,513,580) 3,524,856,669 2008 3,892,906,676 58,663,685 175,736,425 17,620 (390,055,794) 3,737,268,612 (178,813,021) 3,558,455,591 (200,651,202) 3,536,617,410 2007 3,836,510,664 57,712,475 172,402,475 17,620 (470,958,834) 3,595,684,400 (167,034,382) 3,428,650,018 (187,904,563) 3,407,779,837 2006 3,089,936,470 53,521,650 158,195,025 58,830 (323,988,765) 2,977,723,210 (137,716,505) 2,840,006,705 (157,860,572) 2,819,862,638

(1) Total assessed value, after deducting exemptions, for purposes of levying tax for the District’s general obligation bonds. (2) Total assessed value, after deducting exemptions, for purposes of levying tax for the support and maintenance of the District’s school system. ______________________ Source: City of Gainesville Finance Department.

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Property Tax Levies and Collections

Set forth below is information concerning property tax levies and collections of the School District for the past fiscal years 2007-2011.

City of Gainesville School District Property Tax Levies and Collections

Last Five Fiscal Years

Collected within Fiscal

Year of Levy(1) Total Collections

through June 30, 2011

Fiscal Year

Taxes Levied during the Fiscal

Year (Original Levy)

Adjustments After Levy

Adjusted Levy Amount

Percentage of Adjusted

Levy

Collections in

Subsequent Fiscal Years Amount

Percentage of Adjusted Levy

2007 $22,087,179 $238,762 $22,325,941 $22,324,607 99.99% $169,728 $22,494,335 100.75% 2008 23,725,244 165,221 23,890,465 23,377,783 97.85 574,802 23,952,585 100.26 2009 27,629,499 95,236 27,724,735 26,943,023 97.18 708,273 27,651,296 99.74 2010 27,176,645 61,881 27,238,526 26,188,463 96.14 681,657 26,870,120 98.65 2011 26,414,189 301,780 26,715,969 25,458,981 95.29 -- 25,458,981 95.29 - Property taxes levied based upon a particular calendar year digest are primarily collected and recorded as revenues in the fiscal year during which they

are levied. For example, taxes levied based upon digest year 2008 are primarily collected and recorded as revenues in fiscal year 2009. - Taxes levied include real and personal property, motor vehicle, mobile home, timber, and heavy equipment taxes. - Property taxes are normally billed in the fall of each year based on assessed values as of January 1 of that year. - Mobile home taxes are billed in the spring based on values as of January 1 of that year. The millage rate used is the rate for the previous calendar year’s

property taxes. - Because the mobile home digest is denoted with the digest year they are billed, they are included in the levy and collections for that digest year. ______________________ (1)Amounts shown are gross amounts collected and not adjusted for the 1% fee paid to the City of Gainesville for the collection of taxes for the School District.

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Millage Rates

Set forth below is information concerning the rate of levy of property taxes per $1,000 of assessed value, or millage rates, of the School District and all overlapping governments for the past five years.

School District(1)

Calendar Year

Support and Maintenance

Debt Service Total(2)

Unincorporated Hall County(2)

Incorporated Hall County(3)

City of Gainesville(2)

State of Georgia(4) Total(5)

2010 7.39 0.30 7.69 7.76 8.96 2.92 0.25 19.82 2009 7.41 0.30 7.71 7.76 8.96 2.66 0.25 19.58 2008 7.42 0.39 7.81 7.76 8.96 2.66 0.25 19.68 2007 6.62 0.34 6.96 7.77 8.98 2.66 0.25 18.85 2006 7.45 0.38 7.83 8.10 9.45 2.89 0.25 20.42

(1) The legal limit is 20 mills per dollar upon 40% of the appraised value under Georgia law. Since the School District levies on 100% of appraised value, the millage limit

is 8.0 mills per dollar in order to comply with Georgia law. (2) City and the School District taxes levied on 100% of assessed value; County taxes levied on 40% of assessed value. (3) Millage rates in incorporated areas of Hall County, except for the City of Gainesville; County taxes levied on 40% assessed value. (4) State of Georgia taxes levied on 40% assessed value. (5) Total millage rates in the School District. Source: City of Gainesville; Hall County.

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Ten Largest Taxpayers

Set forth below are the ten largest taxpayers of the School District for calendar year 2010. A determination of the largest taxpayers within the School District can be made only by manually reviewing individual tax records. Therefore, it is possible that owners of several small parcels may have an aggregate assessment in excess of those set forth in the table below. Furthermore, the taxpayers shown in the table below may own additional parcels within the School District. No independent investigation has been made of, and consequently no representation can be made as to, the financial condition of any of the taxpayers listed below or that such taxpayers will continue to maintain their status as major taxpayers in the School District.

Taxpayer Nature of Business

Taxable Assessed Value(1)

School Taxes

Percent of 2010

School District

Tax Levy Kubota Manufacturer/Farm Equipment $83,780,080 $ 644,269 2.41% Cargill, Inc. Manufacturer/Soybean Products 51,462,701 395,748 1.48 Fieldale Farms Manufacturer/Poultry 37,319,632 286,988 1.07 Mid-America Apartments, LP Apartments 37,206,662 286,119 1.07 Ace Hardware Warehouse/Hardware 28,879,019 222,080 0.83 ZF Industries Manufacturer/Auto Components 26,260,804 201,946 0.76 Inland Western Gainesville Village Shopping Center 23,515,927 180,837 0.68 Pilgrim Pride/Country Pride Manufacturer/Poultry 23,160,705 178,106 0.67 Stork Gamco Manufacturer 18,727,676 144,016 0.54 Continental Tire Manufacturer 17,902,973 137,674 0.52 Total $348,216,179 $2,677,783 10.03%

(1) Assessed value includes real property, personal property and utilities taxes but does not include motor vehicle taxes. Selection is based on the taxpayers with the largest assessed valuation. Assessed value for School District taxes is 100% of appraised value.

Source: City of Gainesville.

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SCHOOL DISTRICT FINANCIAL INFORMATION

Accounting System and Policies

The accounting practices and policies of the School District conform to generally accepted accounting principles as applied to governments, except as described below. The School District’s accounting system is organized and operated on a fund basis. The School District’s funds are segregated for the purpose of accounting for the operation of specific activities or attaining certain objectives. The School District’s primary fund is the General Fund, which contains all School District revenues except revenues that are specifically allocated by law for other purposes. The School District may appropriate money from the General Fund for all ordinary School District expenses. The School District also maintains several other funds to account for specific activities or to attain certain objectives.

The funds of the School District are grouped into two broad categories: (1) Governmental Funds - This category includes the General Fund, the District-wide Capital Projects

Fund, and the Debt Service Fund. The General Fund is the principal operating fund of the School District and is used to account for all activities of the School District not otherwise accounted for in a specified fund. The School District’s General Fund is used to account for most of the instructional and administrative aspects of the School District’s operations. The District-wide Capital Projects Fund accounts for financial resources, including Special Purpose Local Option Sales Tax and bond proceeds, to be used for school construction and improvement projects. The School District has one Debt Service Fund that is used to account for the accumulation of resources for and the payment of debt service on general long-term debt and related costs.

(2) Fiduciary Fund - This category consists of one Agency Fund. This fund accounts for assets held

by the School District as an agent for various funds, governments, or individuals.

The School District’s basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements.

The District-wide financial statements are divided into the Statement of Net Assets and the Statement of Activities, which display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations are made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.

The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the District’s governmental activities.

• Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the District related to the administration and support of the District’s programs, such as office and maintenance personnel and accounting) are not allocated to programs.

• Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

The fund financial statements provide information about the School District’s funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The fund financial statements report the major governmental funds referenced above.

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Note 2 of the financial statements of the School District included as Appendix A contains a detailed discussion of the School District’s significant accounting policies.

General Fund History

Set forth below is a historical, comparative summary of the revenues, expenditures, and changes in fund balance of the School District’s General Fund for five fiscal years. Information in the following table has been extracted from audited financial statements of the School District for the fiscal years ended June 30, 2007 through 2010, and the unaudited financial statements for the fiscal year ended June 30, 2011. No representation is made that the information is comparable from year to year, or that the information as shown taken by itself presents fairly the financial condition of the School District for the periods shown. For more complete information, reference is made to the audited financial statements for the fiscal years ended June 30, 2007 through 2010, copies of which are available from persons listed herein under “INTRODUCTION -- Other Information.”

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School District General Fund Years Ended June 30 (Audited)

2007 (Audited)

2008 (Audited)

2009 (Audited)

2010 (Unaudited)

2011 Revenues

Property Taxes $ 22,309,565 $22,618,292 $26,020,422 $25,777,950 $24,639,806 Sales Taxes 72,523 73,255 19,680 64,635 105,363 State Funds 23,766,278 26,889,345 27,129,636 23,561,811 28,814,454 Federal Funds 6,764,623 8,081,594 8,130,125 12,318,094 10,795,926 Charges for Services 1,442,287 1,195,959 1,310,313 1,417,250 1,169,767 Investment Earnings 64,441 6,992 24,104 5,420 3,023 Miscellaneous 241,794 451,864 420,196 671,139 775,978

Total Revenues $54,661,511 $59,317,302 $63,054,476 $63,816,298 $66,304,317 Expenditures

Current Instruction $36,954,651 $39,572,047 $38,670,078 $37,113,530 $37,782,099 Support Services

Pupil Services 2,662,749 2,711,935 2,230,902 2,294,097 1,911,123 Improvement of Instructional Services 1,531,307 1,447,411 887,261 1,290,239 1,188,539 Educational Media Services 888,706 965,845 986,775 946,777 877,312 General Administration 1,167,503 1,109,358 992,667 955,094 789,700 School Administration 3,510,458 4,022,134 3,623,661 3,793,482 3,588,225 Business Administration 764,491 768,564 685,736 606,933 474,917 Maintenance and Operation of Plant 3,968,226 3,940,150 3,547,666 3,948,796 4,476,110 Student Transportation Services 1,849,743 2,622,154 1,862,790 2,291,281 2,082,644 Central Support Services 224,394 1,191,995 446,086 392,168 1,349,728 Other Support Services 682,875 1,334,898 627,418 582,324 686,496

Enterprise Operations 249,333 527,451 420,444 514,932 402,596 Food Services Operation 2,776,116 3,014,108 2,740,135 2,655,346 2,802,593

Debt Services Principal 371,288 637,898 929,122 1,187,157 975,712 Interest 68,523 71,659 124,810 77,914 37,716 Total Expenditures $57,700,363 $63,937,605 $58,775,550 $58,650,069 $59,425,510

Excess of Revenue Over (Under) Expenditures $(3,038,852) $(4,620,303) $ 4,278,926 $ 5,166,229 $ 6,878,807 Other Financing Sources (Uses)

Sale of Equipment $ -- $ 3,797 $ -- $ -- $ 2,893 Insurance Proceeds -- 59,768 286,321 -- -- Capital Leases 1,129,339 809,780 -- 378,130 -- Operating Transfer In 276,152 -- -- -- -- Operating Transfer Out -- (123,599) $ (14,664) $ (400,000) $ (750,000)

Total Other Financing Sources (Uses) $ 1,405,491 $ 749,745 $ 271,656 $ (21,870) $ (747,107) Net Change in Fund Balances $(1,633,361) $(3,870,558) $ 4,550,583 $ 5,144,359 $ 6,131,700 Fund Balances - Beginning $ 2,411,810 778,449 (6,073,685)1 (1,523,102) 3,621,257 Fund Balances - Ending $ 778,449 $(3,092,109)1 $(1,523,102) $ 3,621,257 $ 9,752,957

___________________________ 1See “Restatement of Prior Year Net Assets and Fund Balances” on the following page.

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Statement of Revenues, Expenditures and Changes in Fund Balances Fiscal Year Ended June 30, 2011 (Unaudited)

General Fund

Capital Project Fund

Debt Service Fund

Revenues Property Taxes $24,639,806 -- $1,006,830 Sales Taxes 105,363 $4,396,923 -- State Funds 28,814,454 -- -- Federal Funds 10,795,926 -- -- Charges for Services 1,169,767 -- -- Investment Earnings 3,023 1,646 25,127 Miscellaneous 775,978 -- Total Revenues $66,304,317 $4,398,569 $1,031,957 Expenditures Current Instruction $37,782,099 $ -- $ -- Support Services -- -- Pupil Services 1,911,123 -- -- Improvement of Instructional Services 1,188,539 -- -- Educational Media Services 877,312 -- -- General Administration 789,700 -- -- School Administration 3,588,225 -- -- Business Administration 474,917 -- 4,346 Maintenance and Operation of Plant 4,476,110 -- -- Student Transportation Services 2,082,644 -- -- Central Support Services 1,349,728 -- -- Other Support Services 686,496 -- -- Enterprise Operations 402,596 -- -- Food Services Operation 2,802,593 -- -- Capital Outlay -- 563,677 -- Debt Services Principal 975,712 -- 5,135,000 Interest 37,716 -- 877,241 Total Expenditures $59,425,510 $563,677 $6,016,587 Excess of Revenue Over (Under) Expenditures $ 6,878,807 $3,834,892 $(4,984,630) Other Financing Sources (Uses) Sale of Equipment $ 2,893 $ -- $ -- Insurance Proceeds -- -- -- Capital Leases -- -- -- Operating Transfer In -- 750,000 5,018,201 Operating Transfer Out $ (750,000) (5,018,201) -- Total Other Financing Sources (Uses) $ (747,107) $(4,268,201) $5,018,201 Net Change in Fund Balances $ 6,131,700 $ (433,308) $ 33,571 Fund Balances - Beginning 3,621,257 3,981,413 1,326,951 Fund Balances - Ending $ 9,752,957 $ 3,548,105 $1,360,522

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Restatement of Prior Year Net Assets and Fund Balances

For fiscal year 2009, the School District restated several items due to errors and omissions.

The School District discovered an error in the recording of property tax revenues received from the City of Gainesville in prior years. While the recording of total taxes received was correct, an error was made in the allocation of revenues between maintenance and operations and school bonds. The result of the error was an understatement of revenues recorded in the General Fund and overstatement in the Debt Service Fund. An adjustment was posted to increase the beginning fund balance in General Fund and to decrease beginning fund balance in the Debt Service Fund by $1,229,961.

An analysis of property tax revenues performed by the School District revealed that a portion of the funds received within 60 days of June 30, 2008, and accrued as available revenues were levied for the fiscal year beginning July 1, 2008. Therefore, these funds were not earned at June 30, 2008, under the modified accrual basis of accounting. A restatement to reduce beginning fund balance was recorded in the General Fund of $4,046,791.86 and in the Debt Service Fund of $209,476.64. Beginning Net Assets in the governmental funds were reduced by $4,256,268.50.

A cash analysis performed by the School District identified certain items that in prior years were considered unidentified variances between the bank reconciliations and the general ledger. An adjustment was posted to decrease beginning fund balance in the General Fund by $164,745.10 and to increase beginning fund balance in the Capital Projects Fund by $161,570.67. Beginning Net Assets in the governmental funds were reduced by $3,174.43.

The School District also reduced beginning Net Assets in the governmental funds for bond interest payable of $167,274.45 that was not accrued in the prior fiscal year.

The results are a decrease in Net Assets at July 1, 2008, of $4,426,717.38; a decrease in Fund Balance in the General Fund at July 1, 2008, of $2,981,575.96; an increase in Fund Balance in the Capital Projects Fund at July 1, 2008, of $161,570.67; and a decrease in Fund Balance in the Debt Service Fund at July 1, 2008, of $1,439,437.64. These changes were made in accordance with generally accepted accounting principles.

Management’s Discussion and Analysis

In the preparation of budgets for the fiscal years ended June 30, 2007, and June 30, 2008, errors were made in preparing the underlying details of budgeted revenues and expenditures, and in the subsequent summarization of these details into the School District level budget. Problems with the implementation of a new accounting system in fiscal year 2007 delayed the closing of the 2007 fiscal year which postponed the District’s realization of the budgeting errors in these two years until near the end of the 2008 fiscal year. Unaware of these errors and of their detrimental impact, the Board of Education had lowered the School District’s millage rate for fiscal year 2008, reducing revenues and thus increasing the deficit fund balance. A small June 30, 2007 deficit fund balance increased substantially by June 30, 2008.

When the School District became aware of the problem, it conducted a thorough review of its budget preparation process. Internal controls were instituted and used in the preparation of the 2009 budget. In addition to determining the expenditures to be reduced, the Board of Education increased the School District’s millage rate for fiscal year 2009, and adopted and received approval of a deficit reduction plan in accordance with instructions and guidance from the Georgia Department of Education.

In a separate matter, the amount of the deficit at June 30, 2008 was increased by a restatement of the School District’s General Fund balance by over $4 million in the fiscal year 2009 financial statements. A smaller restatement of slightly over two hundred thousand dollars was made in the Debt Service Fund resulting in a restatement of Net Assets in the governmental funds of $4.2 million. The restatement was made because of the manner in which tax revenues were recognized. The City of Gainesville sends out tax bills (on behalf of the School District) initially in August with a final bill due in December. Even though they are not legally required to pay, many taxpayers pay half of the annual tax amount upon receipt of the first bill which results in a portion of the taxes

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being collected in August. The School District was accruing Taxes Receivable at June 30th each year for taxes received with 60 days of the end of the fiscal year (through August 31st) as is allowed by generally accepted accounting standards. However most of the taxes being accrued were taxes levied for the following fiscal year’s operations. With this major adjustment along with several other smaller adjustments, the School District’s ending fund balance deficit as restated at June 30, 2008 was in excess of $6 million.

All of the problems that the School District encountered were fully documented and explained in audit reports issued during these periods. All corrections and restatements were made in accordance with generally accepted accounting principals. See “Restatement of Prior Year Net Assets and Fund Balances” above.

This deficit put the School District in a tough economic situation considering the downturn in the State and Federal economies. Substantial cutbacks in State funding for education required the School District to reduce expenditures by instituting employee furloughs of six days in fiscal year 2010 and nine days in fiscal year 2011. Relaxation of state minimum class size requirements allowed the School District to minimize hiring new teachers as enrollments increased each year. The Board of Education during the last three years has maintained expenditures at minimum levels without lowering the quality of instruction provided to its students or causing maintenance issues on its buildings and equipment.

General fund expenditures in the past three fiscal years are as follows: 2009 $58,775,550 2010 58,650,069 2011 59,425,510

The School District adhered to the financial goal of reducing the deficit and building adequate operating balances, and as a consequence the School District ended the 2010 fiscal year with a positive fund balance and will end the 2011 fiscal year with a fund balance in excess of $7 million dollars. At June 30, 2008, the School District had over $2.7 million in capital leases remaining for modular classrooms, computer equipment and energy enhancements. Three years later at June 30, 2011, all of these leases have been paid off. At June 30, 2008 the School District had $31 million in long-term debt not including the capital leases mentioned above and has reduced that debt to $15.7 million as of June 30, 2011. These reductions in debt have been accomplished without raising millage rates since the initial increase in fiscal year 2009 (rates have actually decreased slightly).

During the most recent fiscal year, the School District reroofed several buildings and prepared an older school building to house students during the planned construction of the new Fair Street Elementary School. The School District envisions its fund balance remaining at the current levels. This will allow the District to continue to be a leader among Georgia systems, as evidenced by being one of the first Georgia districts to be granted Charter System status and, most recently, being recognized and selected for inclusion in the national Race to the Top program.

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Budgetary Process

The School District, as required by the State Board of Education, uses a modified cash basis of accounting in its adopted General Fund budget, which is not in conformity with GAAP and which is not consistent with the basis of accounting used in the School District’s audited general fund financial statements summarized in this Official Statement under the caption “SCHOOL DISTRICT FINANCIAL INFORMATION -- General Fund History.”

Budget

Set forth below is a summary of the School District’s budget for its General Fund for the fiscal year ending June 30, 2012.

General Fund Budget Year Ending June 30, 2012

(Non-GAAP Budgetary Basis of Accounting)

Anticipated Revenues: Local (Taxes) $21,318,105 Local (Other) 636,980 State Funds 28,601,969 Federal Funds 8,371,889 TOTAL ANTICIPATED REVENUES $58,928,943 Anticipated Expenditures: Instruction $40,076,376 Support Services: Pupil Services 2,174,547 Improvement of Instructional Services 985,349 Educational Media Services 918,255 General Administration 735,212 School Administration 3,385,485 Business Support 533,143 Maintenance/Operation 5,098,640 Student Transportation 2,449,213 Central Support (Tech) 1,364,504 Other Support Services 610,545 Food Services Operations 3,330,662 Capital Outlay 260,000 Debt Services 235,950 TOTAL ANTICIPATED EXPENDITURES $62,157,881 ESTIMATED REVENUES OVER (UNDER) EXPENDITURES

$(3,228,938)

Employee Benefits

Substantially all of the teachers and the administrative and clerical personnel of the Board of Education are covered by the Teachers Retirement System of Georgia, a cost-sharing, multiple-employer defined benefit plan and a qualified excess benefit plan (collectively, the “TRS Plans”) administered by the State of Georgia for the benefit of education personnel. The District has no liability under the TRS Plans except for contributions established and made each year. The TRS Plans provide service retirement, disability retirement, and survivor’s benefits. The benefit structure of the TRS Plans are defined and may be amended by Georgia statutory law. A member is eligible

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for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service. Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member’s two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Death, disability and spousal benefits are also available. The TRS Plans are funded by member and employer contributions. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member’s contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member’s earnable compensation. The District’s contributions for the current fiscal year and the preceding two fiscal years are as follows: fiscal year 2010 - $3,178,587, fiscal year 2009 - $3,091,314, and fiscal year 2008 - $2,999,304. Reference is made to Note 15 of the general purpose financial statements of the District included as Appendix A for a description of the District’s pension plans.

The District contributes to the Georgia School Personnel Post-Employment Health Benefit Fund (the “School OPEB Fund”), a healthcare plan administered by the State Department of Community Health. The School OPEB Fund is a cost sharing multiple employer defined benefit healthcare plan that covers eligible active and former employees of public school systems, libraries and regional educational service agency and their qualified beneficiaries. The contribution requirements of plan members and participating employers, like the District, are established by the State Board of Community Health in accordance with the annual appropriations act adopted by the State, and may be amended by the Board. Contributions by plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage and Medicare eligibility and election. On average, retired plan members pay approximately 25% of the cost of health insurance coverage. The District is statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rate is established to fund both the active and retired employee health insurance plans based on projected “pay-as-you-go” financing requirements. The District pays from its own revenues the contributions for its active employees, but not for its retired employees. The District’s combined active and retiree contributions to the health insurance plans, which equaled 100% of the required contributions in each of fiscal years 2008, 2009 and 2010 were as follows: fiscal year 2010 - $4,543,898, fiscal year 2009 - $3,280,365, and fiscal year 2008 - $4,849,697. See Note 14 to the audited financial statements attached as Appendix A hereto for further information concerning the District’s participation in the healthcare plan.

Bus drivers, lunchroom personnel, and maintenance and custodial personnel are covered by the Pubic School Employees’ Retirement System of Georgia, a multiple-employer retirement system administered by the State of Georgia. The District has no liability under this plan. The District makes no contributions to plan on behalf of its employees. Employees covered by the Public School Employees’ Retirement System are required to contribute $4 per month to the plan. The District deducts the required payments from the employees’ salaries.

Employees covered under the Public School Employees’ Retirement System of Georgia are also covered under a supplemental tax-deferred annuity plan established under Section 403(b) of the Internal Revenue Code. The School District contributes an amount equal to 2% of earnings for employees with 5 years or less of service and 4% of earnings for those with 6 years or more of service. Employees do not make any contribution to this plan.

The District’s clerical and administrative employees and maintenance/custodial employees earn 1.25 days per month of paid sick/personal leave, subject to a maximum accumulation of 5 days that can be carried over, and 3 days of which may be used as personal leave each year. The District’s professional personnel earn 1.25 days of sick/personal leave each month, subject to a maximum accumulation of 125 days that can be carried over, and 3 days of which may be used as personal leave each year. Sick/personal leave does not vest with the employee. 12-month employees earn 15 days of paid annual leave (vacation) yearly, 5 days of which can be carried over to the next year.

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Insurance Coverage and Governmental Immunity

Under the Constitution of the State of Georgia, the defense of sovereign immunity is available to the School District for claims arising under state law, except for actions for breach of contract or where immunity is specially waived by an act of the General Assembly. The School District, however, may be unable to rely upon the defense of sovereign immunity and may be subject to liability in the event of suits alleging causes of action founded upon various federal laws, such as suits filed pursuant to 42 U.S.C. § 1983 alleging the deprivation of federal constitutional or statutory rights of an individual and suits alleging anti-competitive practices and violations of the federal antitrust laws by the School District in the exercise of its delegated powers.

The School District carries liability insurance for the types of claims and in amounts that are customary for similar entities for those categories of claims that are not subject to the defense of sovereign immunity. The School District also carries property and casualty damage insurance on buildings and other physical assets.

Present insurance coverages of the School District are summarized below:

Type Amount in Force Property $112,970,159 Public employee dishonesty $250,000 Superintendent Bond $50,000

Limits of Liability

Each Occurrence Aggregate School Board Errors and Omissions $1,000,000 $1,000,000 General Liability $1,000,000 $2,000,000 Automobile Liability (combined limit per auto) $1,000,000 $1,000,000 Worker’s Compensation Statutory Statutory

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THE CITY

Introduction

The City is a municipal corporation created and existing under the laws of the State of Georgia. The City is located in the northeast portion of the State of Georgia in Hall County, approximately 50 miles northeast of the City of Atlanta. The City was originally chartered on November 30, 1821.

The City operates under a Council-Manager form of government. Every two years the Council elects two members to serve as Mayor and Mayor Pro-Tem respectively. They are the Chairman and Vice Chairman of the legislative body, which is composed of a Mayor and four council members, and is responsible for enacting ordinances, resolutions, and regulations governing the City, as well as appointing the members of various statutory and advisory boards, and the City Manager, City Clerk, and City Attorney. The current City Council members and their expiration of terms are as follows:

Name of Member Expiration Date of Current Term Ruth Bruner, Mayor December 31, 2011 Danny Dunagan December 31, 2013 George Wangemann December 31, 2013 Robert L. Hamrick December 31, 2011 Myrtle Figueras December 31, 2011

The City employs a City Manager who is responsible for the overall operation of the City. Current City Manager, Kip Padgett, age 37, joined the City in June 2002 as Director of Planning and Development. He was named Assistant City Manager in May, 2007 and appointed City Manager in January, 2009. His public service began in 1994 with the Georgia Department of Transportation and continued in Athens-Clarke County, where he served as Administrator for the Metropolitan Planning Organization; Dawson County, where he served as Planning Director and currently the City of Gainesville. Mr. Padgett received his Bachelor’s degree in Business Administration from the University of Georgia and his Masters of Science in Administration from Georgia College and State University.

Melody N. Marlowe, age 47, is employed by the City as Chief Financial Services Officer. She joined the City in March, 1996, as Accounting Manager and has held increasingly responsible positions. Previous to employment with the City, Ms. Marlowe was employed for ten years by Rushton & Company, LLC as an accountant. She has a Bachelor of Business Administration degree from North Georgia College and State University.

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Demographic Information

According to the U.S. Census Bureau’s 2009 population estimates, Gainesville, the county seat of Hall County, is the 20th largest city in the State of Georgia and Hall County is the 11th largest of Georgia’s 159 counties. The following table reflects the population of the City of Gainesville, Hall County, the State of Georgia and the United States for the years 2005, 2006, 2007, 2008, 2009 and 2010.

Year City of Gainesville Hall County State of Georgia United States

2005 31,953 165,245 9,097,428 295,753,151 2006 33,018 171,867 9,330,086 298,593,212 2007 34,136 178,838 9,533,761 301,579,895 2008 35,476 184,731 9,697,838 304,374,846 2009 35,750 187,743 9,829,211 307,006,550 2010 33,804 179,684 9,687,653 308,745,538

____________________ Source: United States Census Bureau.

Per Capita Personal Income

The following table compares per capita personal income (PCPI) in Hall County with that of the State of Georgia and the United States for the time periods indicated. Hall County’s 2009 PCPI was 85% of the State average ($34,129) and 73% of the national average ($39,635).

Year Hall County State of Georgia United States

2005 $28,982 $32,164 $35,424 2006 29,887 33,432 37,698 2007 30,325 34,612 39,392 2008 30,501 34,849 40,166 2009 29,038 34,129 39,635

___________________ (1) Ranked 61st in the state (out of 159).

Source: U.S. Department of Commerce, Bureau of Economic Analysis. Information for 2009 is the latest information available at the county level.

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Largest Employers

Set forth below are the ten (10) existing industries located in Hall County (as of 2010), their industries or service, and their approximate number of employees. There can be no assurance that any employers listed below will continue to be located in Hall County or will continue employment at the level stated. No independent investigation has been made of, and no representation can be made as to, the stability or financial condition of the employers listed below.

Employer Industry or Service Employees Fieldale Farms Corporation Poultry processing 2,410 Pilgrim’s Pride Poultry Company Poultry processing 1,600 Mar-Jac, Inc. Poultry processing 1,100 Coleman Natural Foods Poultry - further processing 850 Wrigley Manufacturing Company Chewing gum 850 Kubota Manufacturing of America Tractors, sub-compact tractors & rtv’s 610 Koch Foods, Inc. Poultry processing 520 PFG Milton’s Food distributor 420 Beaulieu of America Textile-yarn division 360 Baldor Electric Electric motors 350 ________________________ Source: Greater Hall Chamber of Commerce Set forth below are the five (5) largest non-manufacturing employers (as of 2010), located in Hall County and their approximate number of employees (excluding government/education). Employer Employees Northeast Georgia Medical Center 3,330 The Longstreet Clinic 440 Lake Lanier Islands Resort 400 Wal-Mart Super Centers (2) 400 Mansfield Oil Company 365 ________________________ Source: Greater Hall Chamber of Commerce

Set forth below are the six (6) largest public employers (as of 2010), located in Hall County an their approximate number of employees.

Employer Employees Hall County School System 3,440 Hall County Government 1,390 Gainesville City School System 810 Gainesville City Government 730 Gainesville State College 530 GDOT District 1 Office 460 ________________________ Source: Greater Hall Chamber of Commerce

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Labor Force Data

The following table reflects the labor force and employment in Hall County and the unemployment rate for the State of Georgia and the United States for the past five years.

2006 2007 2008 2009 2010 2011(1)

Hall County Labor Force 86,774 90,367 92,322 89,289 89,018 88,717 Hall County Unemployment Rate 3.8% 3.6% 5.4% 9.2% 9.1% 8.6% State Unemployment Rate 4.6% 4.6% 6.2% 9.6% 10.8% 10.4% United States Unemployment Rate 4.6% 4.6% 5.8% 9.3% 9.6% 9.1% ___________________ (1)As of August, 2011; not seasonally adjusted. Source: Georgia Department of Labor.

Industry Mix

Set forth below is a list of major industries in Hall County. These industry figures are for the 1st quarter of 2011.

Industry Sector Establishments Employees Manufacturing 246 14,899 Healthcare and social assistance 439 10,539 Retail trade 568 7,478 Education 86 6,602 Administration, support, waste management, remediation 260 5,156 Accommodation and food services 251 4,050 Wholesale trade 313 3,536 Finance and insurance 240 3,291 Public administration 50 3,008 Construction 465 2,667

Source: Georgia Department of Labor

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Building Permits

The following table sets forth privately-owned residential and commercial building permits issued in unincorporated Hall County for the years 2006 through 2010.

Year

Number of Residential Permits(1)

Total Estimated Value

Number of Commercial Permits(2)

Total Estimated Value

2010 152 $23,615,800 58 $15,296,500 2009 180 29,479,500 50 10,319,500 2008 303 54,999,600 123 54,613,600 2007 999 188,693,350 155 107,324,100 2006 1,333 279,376,335 140 107,641,700

___________________

(1) Single-Family residences only; does not include mobile homes, additions, remodels or apartments. (2) Includes new construction, remodels and additions. Source: Hall County Building Inspection Department

The following table sets forth privately-owned residential and commercial building permits issued in the City of Gainesville for the years 2006 through 2010.

Year

Number of Residential Permits(1)

Total Estimated Value

Number of Commercial Permits(2)

Total Estimated Value

2010 1 $ 300,000 181 $ 48,915,876 2009 20 4,459,080 197 65,522,400 2008 51 6,978,850 231 54,817,230 2007 280 37,509,000 227 160,063,000 2006 183 37,842,528 241 189,534,570

___________________

(1) Single-Family residences only; does not include mobile homes, additions, remodels or apartments. (2) Includes new construction, remodels and additions.

Source: City of Gainesville Community Development Department, Building Inspection Division.

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Bank Deposits

Set forth below are total bank deposits within the City of Gainesville at June 30 for the past five calendar years.

Total Deposits in County Financial Institutions as of June 30 (in thousands)

Year Total Deposits 2010 $1,869,869 2009 1,883,191 2008 1,987,896 2007 2,077,370 2006 3,059,072

___________________ Source: State of Georgia Department of Banking and Finance.

According to the State of Georgia Department of Banking and Finance, as of June 30, 2010, there were 13 financial institutions in the City of Gainesville, with a total of 33 offices.

LEGAL MATTERS

Pending Litigation

The School District, like other similar bodies, is subject to a variety of suits and proceedings arising in the ordinary conduct of its affairs. The School District, after reviewing the current status of all pending and threatened litigation with its counsel, Harben, Hartley & Hawkins, LLP, believes that, while the outcome of litigation cannot be predicted, the final settlement of all lawsuits which have been filed and of any actions or claims pending or threatened against the School District or its officials in such capacity are adequately covered by insurance or sovereign immunity or will not have material adverse effect upon the financial position or results of operations of the School District.

There is no litigation now pending or, to the knowledge of the School District, threatened against the School District which seeks to restrain or enjoin the issuance or delivery of the Bonds, the levy of an ad valorem tax for the payment of the Bonds, or the use of the proceeds of the Bonds, or which questions or contests the validity of the Bonds or the proceedings and authority under which they are to be issued or the ad valorem tax which is to be levied to pay the Bonds. Neither the creation, organization, or existence of the School District, nor the title of the present members or other officials of the School District to their respective offices, is being contested or questioned.

Tax Exemption

Legal matters incident to the authorization, validity, and issuance of the Bonds are subject to the unqualified approving opinion of Bond Counsel. The form of the opinion of Bond Counsel is attached to this Official Statement as Appendix B. Copies of such opinion will be available at the time of the initial delivery of the Bonds.

Federal Tax Matters. In the opinion of Stewart, Melvin & Frost, LLP, Bond Counsel, under existing law interest on the Bonds is excludable from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and is not an item of tax preference for purposes of the federal 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 certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings.

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The opinion on tax matters will be based on and will assume the accuracy of certain representations and certifications, and continuing compliance with certain covenants, of the District contained in the transcript of proceedings and that are intended to evidence and assure the foregoing, including that the Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. Bond Counsel will not independently verify the accuracy of any certifications and representations of the District or the continuing compliance with the covenants of the District.

The opinion of Bond Counsel is based on current legal authority and covers certain matters not directly

addressed by such authority. It represents Bond Counsel’s legal judgment as to exclusion of interest on the Bonds from gross income for federal income tax purposes but is not a guaranty of that conclusion. The opinion is not binding on the Internal Revenue Service (“IRS”) or any court. Bond Counsel expresses no opinion about (i) the effect of future changes in the Code and the applicable regulations under the Code or (ii) the interpretation and the enforcement of the Code or those regulations by the IRS.

The Code prescribes a number of qualifications and conditions for the interest on state and local

government obligations to be and to remain excluded from gross income for federal income tax purposes, some of which require future or continued compliance after issuance of the obligations. Noncompliance with these requirements by the District may cause loss of such status and result in the interest on the Bonds being included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. The District has covenanted to take the actions required of it for the interest on the Bonds to be and to remain excluded from gross income for federal income tax purposes, and not to take any actions that would adversely affect that exclusion. After the date of issuance of the Bonds, Bond Counsel will not undertake to determine (or to so inform any person) whether any actions taken or not taken, or any events occurring or not occurring, or any other matters coming to Bond Counsel’s attention, may adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or the market value of the Bonds.

Interest on the Bonds may be subject to a federal branch profits tax imposed on certain foreign corporations

doing business in the United States and to a federal 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 may have certain adverse federal income tax consequences on items of income, deduction or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those that are deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations, and individuals otherwise eligible for the earned income tax credit. The applicability and extent of these and other tax consequences will depend upon the particular tax status or other tax items of the owner of the Bonds. Bond Counsel will express no opinion regarding those consequences.

Legislation affecting tax-exempt obligations is regularly considered by the United States Congress and may

also be considered by the State legislature. Court proceedings may also be filed the outcome of which could modify the tax treatment of obligations such as the Bonds. There can be no assurance that legislation enacted or proposed, or actions by a court, after the date of issuance of the Bonds will not have an adverse effect on the tax status of interest or other income on the Bonds or the market value of the Bonds.

On September 12, 2011, the Obama Administration announced a legislative proposal that would, among

other things, subject interest on tax-exempt bonds (including the Bonds) to federal income tax for taxpayers with incomes above certain thresholds for tax years beginning on or after January 1, 2013. The proposal, entitled the American Jobs Act of 2011, would limit the tax benefit of the tax exemption (along with several other listed tax benefits) to the 28% tax bracket. The American Jobs Act of 2011 or other legislative proposals, if enacted into law, may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to state income taxation, or otherwise prevent holders of the Bonds from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals may also affect the market price for, or marketability of, the Bonds. Holders of the Bonds should consult their own tax advisors regarding any such pending or proposed federal or state tax legislation, as to which Bond Counsel expresses no opinion. The proposal entitled the American Jobs Act of 2011 has not yet passed either of the two Houses of Congress, and it is not possible to predict whether this proposal will be enacted into law.

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Purchasers of the Bonds should consult their own tax advisers regarding pending or proposed federal and state tax legislation and court proceedings, and purchasers of the Bonds at other than their original issuance at the respective prices indicated on the inside cover of this Official Statement should also consult their own tax advisers regarding other tax considerations such as the consequences of market discount, as to all of which Bond Counsel expresses no opinion.

Bond Counsel’s engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless

separately engaged, Bond Counsel is not obligated to defend the District or the owners of the Bonds regarding the tax status of interest thereon in the event of an audit examination by the IRS. The IRS has a program to audit tax-exempt obligations to determine whether the interest thereon is includable in gross income for federal income tax purposes. If the IRS does audit the Bonds, under current IRS procedures, the IRS will treat the District as the taxpayer and the beneficial owners of the Bonds will have only limited rights, if any, to obtain and participate in judicial review of such audit. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the market value of the Bonds.

Bond Premium. The Bonds are being issued at initial offering prices in excess of the principal amount

payable on such Bonds (the “Premium Bonds”) at maturity. Under Section 171 of the Code, the excess of an owner’s cost basis of a bond over the principal amount of the bond payable at maturity (other than a bond held as inventory, stock in trade, or for sale to customers in the ordinary course of business) is generally characterized as “bond premium.” For federal income tax purposes, bond premium is amortized over the term of the related bond. An owner will therefore be required to decrease its basis in the Premium Bonds and offset any tax-exempt interest received from the Premium Bonds by the amount of amortizable bond premium attributable to each taxable year it holds the Premium Bonds. The amount of amortizable bond premium attributable to each taxable year is determined on an actuarial basis at a constant interest rate compounded at the close of each accrual period and properly adjusted for the length of the accrual period. The amortizable bond premium on a tax-exempt bond attributable to a taxable year is not deductible for federal income tax purposes. Purchasers of the Premium Bonds should consult their own tax advisors with respect to the precise determination and treatment of premium for federal income tax purposes and with respect to state and local tax consequences of owning such Premium Bond.

The foregoing is a general discussion of certain federal income tax consequences of original issue premium and does not purport to deal with all tax questions that may be relevant to particular purchasers or circumstances. Holders of the Premium Bonds should consult their own tax advisors with respect to the apportionment for federal income tax purposes of accrued tax-exempt interest upon a sale or exchange (including redemption) and with respect to the state and local tax consequences of original issue premium.

State Tax Matters. In the opinion of Bond Counsel, under existing statutes, interest on the Bonds is exempt

from all present state income taxation within the State of Georgia. Interest on the Bonds may or may not be subject to state or local income taxation in jurisdictions other than Georgia under applicable state or local laws. Purchasers of the Bonds should consult their tax advisors as to the taxable status of the Bonds in a particular state or local jurisdiction other than Georgia.

Owners of the Bonds should consult their own tax advisers as to the determination for federal income tax purposes of the amount of bond premium properly accruable or amortizable in any period with respect to the Bonds and as to other federal tax consequences and the treatment of bond premium for purposes of state and local taxes on, or based on, income.

Validation Proceedings

The Bonds have been validated by judgment of the Superior Court of Hall County, Georgia. Under Georgia law, the judgment of validation is final and conclusive with respect to the validity of the Bonds.

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Closing Certificates

The School District will deliver to the Underwriter a certificate that no litigation is pending or threatened against it which would have a material effect on the issuance or validity of the Bonds or the levy and collection of the Sales and Use Tax or an ad valorem tax to pay the Bonds or on the financial condition of the School District. In addition, the School District will represent to the Underwriter in the Bond Purchase Agreement that the information contained in this Official Statement does not contain any misrepresentation of a material fact and does not omit or state any material fact necessary to make the statements herein contained, in light of the circumstances under which they were made, not misleading.

MISCELLANEOUS

Ratings

Standard & Poor’s Ratings Group, a division of The McGraw Hill Companies, Inc. (“S&P”), has assigned the Bonds a rating of “AA+/Stable.” The rating assigned by S&P is based on the understanding of the rating agency that the School District will participate in the State Aid Intercept program. See “THE BONDS--Security and Sources of Payment for the Bonds-State Aid Intercept” herein. The School District has also received an underlying stand alone rating of “BBB+/Stable” by S&P. The underlying rating has been assigned without regard to the State Aid Intercept program. The ratings reflect only the view of the rating agency, and an explanation of the significance of any such rating may be obtained from the rating agency furnishing the same. There is no assurance that the ratings will remain unchanged for any given period of time or that they will not be revised downward or withdrawn entirely by the rating agency furnishing the same, if, in its judgment, circumstances so warrant. Due to the recent political uncertainty regarding the United State of America debt limit, obligations, issued by state and local governments in the United States, such as the Bonds, could be subject to a rating downgrade. Additionally, if a significant default or other financial crisis should occur in the affairs of the United States of America or of any of its agencies or political subdivisions, then such event could also adversely affect the market for an rating, liquidity, and market value of outstanding debt obligations, including the Bonds. Any downward revision or withdrawal of a rating or ratings may have an adverse effect on the liquidity and market price of the Bonds. The School District has not undertaken any responsibility to oppose any revision, suspension or withdrawal.

Underwriting

The Bonds will be purchased for re-offering at negotiated sale by Merchant Capital, L.L.C. (the “Underwriter”) from the School District at an aggregate purchase price of 99.765% of the principal amount of the Bonds plus original issue premium. The Underwriter will enter into a Bond Purchase Agreement which provides that the Underwriter will purchase all of the Bonds, if any are purchased. The obligations of the Underwriter to accept delivery of the Bonds will be subject to various conditions contained in the Bond Purchase Agreement.

The Underwriter intends to offer the Bonds to the public initially at the offering prices set forth on the cover page of this Official Statement, which offering prices may subsequently be changed from time to time by the Underwriter without any requirement of prior notice. The Underwriter has reserved the right to permit other securities dealers who are members of the National Association of Securities Dealers, Inc. to assist in selling the Bonds. The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts) at prices lower than the public offering prices set forth on the cover page of this Official Statement or otherwise allow concessions to such dealers who may re-allow concessions to other dealers. Any discounts or commissions that may be received by such dealers in connection with the sale of the Bonds will be deducted from the Underwriter’s underwriting profits.

Experts

The general purpose financial statements of the School District as of June 30, 2010 and for the year then ended, attached hereto as part of Appendix A, have been audited by the State of Georgia Department of Audits and

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Accounts. Such financial statements have been included herein in reliance upon the report of the State of Georgia Department of Audits and Accounts, given upon the authority of such agency as experts in accounting and auditing. The State of Georgia Department of Audits and Accounts, as a matter of policy, does not sign written consents to the inclusion of its audit reports in Official Statements and, pursuant to such policy, has not signed and will not sign a written consent to the inclusion of its audit report in Appendix A to this Official Statement. The State of Georgia Department of Audits and Accounts could use the defense of sovereign immunity against any claim based upon its negligence in performing the audit of the School District’s general purpose financial statements.

Additional Information

Use of the words “shall” or “will” in this Official Statement in summaries of documents to describe future events or continuing obligations is not intended as a representation that such event or obligation will occur but only that the document contemplates or requires such event to occur or obligation to be fulfilled.

Any statements made in this Official Statement involving estimates or matters of opinion, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates or matters of opinion will be realized. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the owners of the Bonds.

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CERTIFICATION

The execution and delivery of this Official Statement, and its distribution and use by the Underwriter, have been duly authorized and approved by the School District.

SCHOOL DISTRICT OF THE CITY OF GAINESVILLE

By: s/Willie Mitchell Willie Mitchell, Chairman

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