$215,000 Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments) Taxable Series 2017B

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1 NEW ISSUE - Book Entry Only RATINGS: S&P Senior Bonds A- (Stable Outlook) S&P Subordinate Bonds BBB- (Stable Outlook) See RATINGS herein In the opinion of Butler Snow LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions, (i) interest on the Series 2017A Bonds and the Series 2017C Bonds will be excludible from gross income of the holders thereof for purposes of federal income taxation and (ii) interest on the Series 2017A Bonds and the Series 2017C Bonds will not be a specific item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. Bond Counsel expresses no opinion with respect to the treatment of interest on the Bonds under the laws of any state. See TAX MATTERS. $13,830,000 Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Series 2017 Consisting of $11,820,000 Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments) Series 2017A Dated: Date of Delivery $215,000 Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments) Taxable Series 2017B $1,795,000 Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments) Subordinate Series 2017C Due: As shown on inside front cover The Public Finance Authority (the Authority ) is issuing its (i) $11,820,000 Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Series 2017A (the Series 2017A Bonds ), (ii) $215,000 Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Taxable Series 2017B (the Series 2017B Bonds ), and (iii) $1,795,000 Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Subordinate Series 2017C (the Series 2017C Bonds and together with the Series 2017A Bonds and the Series 2017B Bonds, the Bonds or the Series 2017 Bonds ). The Series 2017A Bonds and the Series 2017B Bonds are sometimes referred to herein as the Senior Bonds. The Series 2017C Bonds are sometimes referred to herein as the Subordinate Bonds. The principal of, premium, if any, and interest on the Bonds are payable at the designated corporate trust office of Wilmington Trust, National Association, as Trustee (the Trustee ), in Dallas, Texas. Interest on the Bonds is payable on June 1 and December 1 of each year, commencing December 1, The Bonds are being issued only as fully registered bonds in denominations of $5,000 each and integral multiples thereof. The Bonds will be issued in book-entry form only under a global book-entry system operated by The Depository Trust Company, New York, New York ( DTC ), and purchasers will not be entitled to receive certificates representing their Bonds for so long as the global book-entry system is in effect. See THE BONDS-Book Entry-Only System. Principal of, premium, if any, and interest on the Bonds will be paid by the Trustee directly to DTC, as the registered owner thereof. Any purchaser as a beneficial owner of a Bond must maintain an account with a broker or dealer who is, or acts through, a DTC Participant to receive payment of the principal of, premium, if any, and interest on such Bond. The Bonds are subject to redemption prior to maturity as more fully described herein. The Bonds are being issued pursuant to and secured by a Trust Indenture dated as of September 1, 2017 (the Indenture ) between the Authority and the Trustee. The proceeds of the Bonds will be loaned to 2017 IAVF Rubix LLC, a Florida limited liability company (the Borrower ), whose sole member is Invest in America s Veterans Foundation, Inc. (the Sole Member ), a Florida nonprofit corporation recognized as an exempt organization pursuant to Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, to (a) finance the cost of the acquisition, renovation and equipping of a 236-unit multifamily residential rental housing facility located in Las Vegas, Nevada (the Project ), (b) fund separate accounts for the Senior Bonds and the Subordinate Bonds in the Debt Service Reserve Fund, and (c) pay certain costs of issuing the Bonds. THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM THE TRUST ESTATE (AS DEFINED HEREIN) AND, EXCEPT FROM SUCH SOURCE, NONE OF THE AUTHORITY, ANY SPONSOR (AS DEFINED HEREIN), ANY MEMBER (AS DEFINED HEREIN), ANY AUTHORITY INDEMNIFIED PERSON (AS DEFINED IN THE INDENTURE), THE STATE OF WISCONSIN (THE STATE ) OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE BONDS ARE NOT A DEBT OF THE STATE OR THE MEMBERS AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, ANY SPONSOR, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS, NOR THE FAITH AND CREDIT OF THE AUTHORITY, ANY SPONSOR OR ANY AUTHORITY INDEMNIFIED PERSON, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR ANY COSTS INCIDENTAL THERETO. THE AUTHORITY HAS NO TAXING POWER. INVESTMENT IN THE BONDS INVOLVES A SIGNIFICANT DEGREE OF RISK AND EACH PROSPECTIVE INVESTOR SHOULD CONSIDER ITS FINANCIAL CONDITION AND THE RISKS INVOLVED TO DETERMINE THE SUITABILITY OF INVESTING IN THE BONDS. SEE RISK FACTORS AND INVESTMENT CONSIDERATIONS HEREIN. The Bonds will be secured by a pledge and assignment of the Trust Estate (as defined herein), including certain revenues from the Project and funds deposited under the Indenture, including payments made by the Borrower pursuant to the Loan Agreement dated as of September 1, 2017 (the Loan Agreement ) among the Authority and the Borrower. The Borrower s obligations under the Loan Agreement are secured by the Mortgage, which include a pledge of Project Revenues (as defined in the Indenture). The Subordinate Bonds are subordinate to the Senior Bonds in the manner and to the extent described herein. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDS herein. A FAILURE TO PAY PRINCIPAL OR INTEREST ON THE SUBORDINATE BONDS WILL NOT CONSTITUTE AN EVENT OF DEFAULT AS LONG AS THE SENIOR BONDS ARE OUTSTANDING. See RISK FACTORS AND INVESTMENT CONSIDERATIONS Subordinate Status of Series 2017C Bonds herein and APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF THE TRUST INDENTURE Revenue Fund and Defaults and Remedies hereto. The Bonds are offered when, as, and if issued by the Authority, subject to prior sale, withdrawal or modification of the offer without notice and subject to the approval of legality by Butler Snow LLP, Atlanta, Georgia, Bond Counsel. Certain legal matters will be passed upon for the Authority by its counsel von Briesen & Roper, s.c., Milwaukee, Wisconsin; for the Borrower by its counsel Brennan Manna Diamond, Jacksonville, Florida, and by Clark Hill PLC, Las Vegas, Nevada, with respect to certain Nevada matters; and for Stifel, Nicolaus & Company, Incorporated (the Underwriter ) by Eichner Norris & Neumann PLLC, Washington, D.C. It is expected that delivery of the Bonds will be made against payment therefor through the facilities of DTC on or about September 26, This cover page contains limited information for reference only. It is not a summary of the issue. The entire Official Statement, including the Appendices, must be read to make an informed investment decision. Date: September 21, 2017

2 MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES AND YIELDS $11,820,000 PUBLIC FINANCE AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS (THE RUBIX APARTMENTS PROJECT) SERIES 2017A Maturity Date Principal Amount Interest Rate Yield CUSIP** December 1, 2027 December 1, 2042 December 1, 2052 $1,695,000 $4,690,000 $5,435, % 4.50% 4.625% 98.68% % % 74441X EM X EN X EP0 $215,000 PUBLIC FINANCE AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS (THE RUBIX APARTMENTS PROJECT) TAXABLE SERIES 2017B Maturity Date Principal Amount Interest Rate Yield CUSIP** December 1, 2019 $215, % % 74441X EQ8 $1,795,000 PUBLIC FINANCE AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS (THE RUBIX APARTMENTS PROJECT) SUBORDINATE SERIES 2017C Maturity Date Principal Amount Interest Rate Yield CUSIP** December 1, 2052 $1,795, % % 74441X ER6 **CUSIP numbers have been assigned by an independent company not affiliated with the Authority, the Borrower or the Underwriter and are included solely for the convenience of the holders of the Bonds. None of the Authority, the Borrower or the Underwriter are responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of the Bonds. ii

3 No dealer, broker, salesman, or other person has been authorized by the Borrower or the Authority to give any information or to make any representation with respect to the Bonds, other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the Borrower or the Authority. This Official Statement does not constitute an offer to sell or a 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 set forth herein has been obtained from the Borrower and other sources which are believed to be reliable but is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Borrower or the Authority. The information regarding DTC has been obtained from DTC, but is not guaranteed as to accuracy or completeness by the Borrower. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the information or opinions set forth herein after the date of this Official Statement. This Official Statement does not constitute a contract between or among the Authority, the Borrower or the Underwriter and any one or more of the purchasers or registered Holders of the Bonds. THE AUTHORITY HAS NOT PARTICIPATED IN THE PREPARATION OF, OR REVIEWED OR APPROVED, AND DOES NOT REPRESENT OR WARRANT IN ANY WAY, THE ACCURACY OR COMPLETENESS OF ANY OF THE INFORMATION SET FORTH IN THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES HERETO OTHER THAN THE STATEMENTS SET FORTH UNDER THE CAPTIONS THE AUTHORITY AND LITIGATION THE AUTHORITY. Wilmington Trust, National Association, as Trustee, has not reviewed, provided or undertaken to determine the accuracy of any of the information contained in this Official Statement and makes no representation or warranty, express or implied, as to any matters contained in this Official Statement, including, but not limited to, (i) the accuracy or completeness of such information, (ii) the validity of the Bonds, or (iii) the tax-exempt status of the Bonds. CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by the CUSIP Global Services, which is managed on behalf of the American Bankers Association by S&P Global Market Intelligence, as part of S&P Global Inc. The Bonds have not been registered under the Securities Act of 1933, and the Indenture has not been qualified under the Trust Indenture Act of 1939, in reliance on exemptions contained in such Acts. THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE REGISTRATION, QUALIFICATION OR EXEMPTION OF THE BONDS IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTIONS IN WHICH THESE SECURITIES HAVE BEEN REGISTERED, QUALIFIED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE JURISDICTIONS NOR ANY OF THEIR AGENCIES HAVE GUARANTEED OR PASSED UPON THE SAFETY OF THE BONDS AS AN INVESTMENT, UPON THE PROBABILITY OF ANY EARNINGS THEREON OR UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT 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, AND IF DISCONTINUED, MAY BE RECOMMENCED AT ANY TIME. iii

4 CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS This Official Statement contains forward-looking information within the meaning of the federal securities laws. Certain statements in this Official Statement that relate to the Project and the Borrower including, but not limited to, statements under the captions THE BORROWER AND THE PROJECT, ESTIMATED SOURCES AND USES OF FUNDS, and PRO FORMA FINANCIAL PROJECTIONS attached hereto as Appendix G are forward-looking statements that are based on the beliefs of, and assumptions made by, the management of the Borrower. The forward-looking information includes statements concerning the Borrower s outlook for the future, as well as other statements of beliefs, future plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. Forward-looking information and statements are subject to many risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of the Project and the Borrower to be materially different from any expected future results or performance. These risks and uncertainties include the availability and amount of governmental reimbursements, appropriations, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards, litigation and other risks and uncertainties described herein under RISK FACTORS AND INVESTMENT CONSIDERATIONS. Readers are cautioned not to place undue reliance on forward-looking statements because actual results may differ materially from those expressed in, or implied by, the statements. Any forward-looking statement made in this Official Statement speaks only as of the date of such statement, and the Borrower and the Authority undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. THE UNDERWRITER HEREBY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES ARISING UNDER WISCONSIN STATE LAW WITH RESPECT TO (1) THE VALIDITY OF THE TRUST INDENTURE OR OTHER DOCUMENTS ISSUED IN CONNECTION WITH THIS TRANSACTION, (2) THE SUBJECT MATTER OF OPINIONS GIVEN BY COUNSEL ISSUED IN CONNECTION WITH THIS TRANSACTION, AND (3) INFORMATION SUPPLIED BY OTHER PARTIES TO THE TRANSACTION. THIS DISCLAIMER DOES NOT APPLY AND IS NOT INTENDED TO APPLY TO THE UNDERWRITER S RESPONSIBILITIES UNDER THE FEDERAL SECURITIES LAWS. [Remainder of page intentionally left blank] iv

5 TABLE OF CONTENTS INTRODUCTION... 1 THE BONDS... 4 ANNUAL DEBT SERVICE REQUIREMENTS SECURITY AND SOURCES OF PAYMENT FOR THE BONDS THE AUTHORITY THE BORROWER AND THE PROJECT APPRAISAL ESTIMATED SOURCES AND USES OF FUNDS RISK FACTORS AND INVESTMENT CONSIDERATIONS LITIGATION APPROVAL OF LEGAL MATTERS TAX MATTERS RATINGS UNDERWRITING CONTINUING DISCLOSURE RELATIONSHIP AMONG PARTIES MISCELLANEOUS APPENDIX A DEFINITIONS OF CERTAIN TERMS APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF THE TRUST INDENTURE APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE LOAN AGREEMENT APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE LAND USE RESTRICTION AGREEMENT APPENDIX E SUMMARY OF CERTAIN PROVISIONS OF THE MORTGAGE APPENDIX F FORM OF BOND COUNSEL OPINION APPENDIX G COMPILATION OF HISTORICAL FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL PROJECTIONS APPENDIX H FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX I APPRAISAL v

6 OFFICIAL STATEMENT relating to the original issuance of $13,830,000 Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Series 2017 $11,820,000 Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments) Series 2017A Consisting of $215,000 Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments) Taxable Series 2017B $1,795,000 Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments) Subordinate Series 2017C INTRODUCTION This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and Appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of Bonds to potential investors is made only by means of the entire Official Statement. For the definitions of certain other terms used in this Official Statement and not otherwise defined herein, see Appendix A DEFINITIONS OF CERTAIN TERMS hereto. Purpose of this Official Statement. This Official Statement, including the cover page and the Appendices hereto, is provided to furnish information in connection with the original issuance by the Public Finance Authority (the Authority ) of its (i) $11,820,000 Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Series 2017A (the Series 2017A Bonds ), (ii) $215,000 Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Taxable Series 2017B (the Series 2017B Bonds ), and (iii) $1,795,000 Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Subordinate Series 2017C (the Series 2017C Bonds and together with the Series 2017A Bonds and the Series 2017B Bonds, the Bonds or the Series 2017 Bonds ). The Series 2017A Bonds and the Series 2017B Bonds are sometimes referred to herein as the Senior Bonds. The Series 2017C Bonds are sometimes referred to herein as the Subordinate Bonds. The Series 2017A Bonds and the Series 2017C Bonds are sometimes referred to herein as the Tax-Exempt Bonds. Purpose of the Bonds. The Bonds are being issued by the Authority to make a loan to 2017 IAVF Rubix LLC, a Florida limited liability company (the Borrower ), whose sole member is Invest in America s Veterans Foundation, Inc. (the Sole Member ), a Florida nonprofit corporation recognized as an exempt organization pursuant to Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Code ). The Loan will be made pursuant to a Loan Agreement dated as of September 1, 2017 (the Loan Agreement ), between the Authority and the Borrower, and will be used to (a) finance the cost of the acquisition, renovation and equipping of a 236-unit multifamily residential rental housing facility located in Las Vegas, Nevada (the Project ), (b) fund separate accounts for the Senior Bonds and the Subordinate Bonds in the Debt Service Reserve Fund, and (c) pay certain costs of issuing the Bonds. See the caption SECURITY AND SOURCES OF PAYMENT FOR THE BONDS and ESTIMATED SOURCES AND USES OF FUNDS. THE SERIES 2017C BONDS (ALSO REFERRED TO HEREIN AS THE SUBORDINATE BONDS ) ARE SUBORDINATE IN RIGHT OF PAYMENT, SECURITY AND PRIORITY TO THE SERIES 2017A BONDS AND THE SERIES 2017B BONDS (ALSO REFERRED TO HEREIN AS THE SENIOR BONDS ). The Bonds. The Bonds are to be issued pursuant to the provisions of Wisconsin law applicable to the Authority, including without limitation, Sections , and of the Wisconsin Statutes (as

7 amended, the Statute ), and a Trust Indenture dated as of September 1, 2017 (the Indenture ), between the Authority and Wilmington Trust, National Association, Dallas, Texas, as trustee (the Trustee ). The Bonds will be issued in the amounts, will be dated, will bear interest at the respective rates and will be payable on the dates and will mature on the respective dates set forth on the inside cover page of this Official Statement. The Bonds are subject to redemption as described herein under the caption THE BONDS Mandatory Redemption of Bonds; Optional Redemption of Bonds; and Mandatory Sinking Fund Redemption. For a more complete description of the Bonds, see THE BONDS herein. THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM THE TRUST ESTATE (AS DEFINED HEREIN) AND, EXCEPT FROM SUCH SOURCE, NONE OF THE AUTHORITY, ANY SPONSOR (AS DEFINED HEREIN), ANY MEMBER (AS DEFINED HEREIN), ANY AUTHORITY INDEMNIFIED PERSON (AS DEFINED IN THE INDENTURE), THE STATE (AS DEFINED HEREIN) OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE BONDS ARE NOT A DEBT OF THE STATE OR THE MEMBERS AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, ANY SPONSOR, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS, NOR THE FAITH AND CREDIT OF THE AUTHORITY, ANY SPONSOR OR ANY AUTHORITY INDEMNIFIED PERSON, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR ANY COSTS INCIDENTAL THERETO. THE AUTHORITY HAS NO TAXING POWER. Trust Estate. The Bonds are secured by the Trust Estate created in the Indenture which includes all right, title and interest of the Authority in and to (a) the Note, the Mortgage, the Land Use Restriction Agreement, and the Loan Agreement (other than the Unassigned Rights as defined in the Indenture), including the proceeds thereof or recovery thereon; (b) all funds, money and securities from time to time held by the Trustee under the terms of the Indenture (except with respect to money in the Rebate Fund) and any interest, profits and other income derived from the investment thereof, including the proceeds of the Bonds, subject to the application thereof in accordance with the Indenture, and including Net Proceeds; (c) any and all other rights and interests in property conveyed, mortgaged, pledged, assigned or transferred as and for additional security for the Bonds by the Authority or by anyone on its behalf or with its written consent to the Trustee; and (d) all proceeds of the foregoing. The Subordinate Bonds are subordinate in all respects to the Senior Bonds. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDS herein. The Note. The Borrower is obligated under the Loan Agreement to make payments (the Loan Payments ) in such amounts and at such times as will be sufficient to pay, when due, the principal of, premium, if any, and interest on the Bonds as well as pay certain other fees and expenses in connection with the Bonds. As evidence of its obligation to make the Loan Payments with respect to the Bonds, the Borrower will execute and deliver to the Trustee a promissory note (the Note ). Nonrecourse Obligations. The Borrower s obligations under the Loan Agreement, the Note and the hereinafter defined Mortgage are limited, nonrecourse obligations and the Borrower has no obligation to make payments of amounts due under the Loan Agreement except from Project Revenues and from amounts held in the Funds and Accounts created under the Indenture and the security provided by the Mortgage. No other revenues or assets of the Borrower or the Sole Member will be available for the payment of, or as security for, the Bonds. The right of the Authority to collect and receive payments under the Loan Agreement (other than payments related to the Unassigned Rights) has been assigned to the Trustee under the Indenture for the benefit of the Holders. No assets or other revenues of the Authority are or will be available for the payment of, or as security for, the Bonds. The Sole Member will not have any liability on account of the financial obligations of the Borrower under the Loan Agreement and the Note or the other Bond Documents. The Sole Member will enter into certain other of the Bond 2

8 Documents for the sole purpose of agreeing to comply with the tax covenants therein, but the Trustee s recourse against the Sole Member for any violation of those covenants will be limited to the Sole Member s interest in the Borrower. Subordination of Subordinate Bonds. The security for and payment of the principal of, premium, if any, and interest on the Subordinate Bonds is subordinated to the security for and payment of the principal of, premium, if any, and interest on the Senior Bonds. Principal and interest on the Subordinate Bonds is payable as described under SECURITY AND SOURCES OF PAYMENT FOR THE BONDS Relationship Among Series. Under the Indenture, amounts deposited in the Revenue Fund will be used to fund the Bond Fund for payment of the Senior Bonds prior to funding the Bond Fund for payment of the Subordinate Bonds. While any Senior Bonds are outstanding, a failure to make any debt service payments on the Subordinate Bonds does not constitute an Event of Default under the Indenture. If no Senior Bonds are outstanding, a failure to make payment on the principal of or premium, if any, or an installment of interest on any of the Subordinate Bonds shall constitute an Event of Default under the Indenture. See RISK FACTORS AND INVESTMENT CONSIDERATIONS Subordinate Status of Series 2017C Bonds herein. Mortgage. As further security for the Bonds, and to secure the Borrower s obligations under the Note and the Loan Agreement, the Borrower will grant to the Trustee a deed of trust, assignment of leases and rents, security agreement and fixture filing, dated on or about the date of issuance of the Bonds to be recorded against the Project (the Mortgage ) in the real property records of the jurisdiction where the Project is located. The Mortgage grants to the Trustee a first lien on and first security interest in the Borrower s interest in the Project and the site thereof. The first lien and first security interest are subject to Permitted Encumbrances identified therein and such liens and security interests will secure the Senior Bonds and the Subordinate Bonds in that order of priority. Certain Tax Matters. The Bonds will be issued as qualified 501(c)(3) bonds as defined in Section 145 of the Code. Although the Borrower is not an organization described in Section 501(c)(3) of the Code, in the opinion of Brennan Manna Diamond, counsel to the Borrower, the Borrower s existence should be disregarded as an entity separate from its owner, the Sole Member, for federal income tax purposes. Consequently, the Borrower should be treated as a part of the Sole Member, which is treated as a 501(c)(3) entity for federal income tax purposes. See the captions THE BORROWER AND THE PROJECT The Sole Member herein. Additionally, in order for the Bonds to be treated as qualified 501(c)(3) bonds, the Project must meet certain occupancy restrictions set forth in Section 142(d) and Section 145(d) of the Code. Therefore, the Borrower s operation of the Project will be subject to the terms and restrictions of a land use restriction agreement dated the Closing Date, entered into among the Authority, the Borrower and the Trustee and recorded in the official real property records of the jurisdiction in which the Project is located (the Land Use Restriction Agreement ) and the Tax Regulatory Agreement and No-Arbitrage Certificate dated the Closing Date, executed by the Authority, the Borrower, the Sole Member and the Trustee (the Tax Agreement ). The Land Use Restriction Agreement, among other things, will require that for the Qualified Project Period (as defined in each Land Use Restriction Agreement), at least 40% of the dwelling units in the Project subject to such agreement be occupied by low income tenants, defined as families or individuals whose income does not exceed 60% (adjusted for family size) of the median gross income for the area in which the Project is located ( Low Income Tenants ). Furthermore, the Borrower will be obligated to operate the Project in accordance with Revenue Procedure issued by the Internal Revenue Service in order to maintain the Sole Member s treatment as an entity described in Section 501(c)(3) of the Code. The terms of the Tax Agreement will therefore require that for so long as the Borrower is the owner of the Project, at least 75% of the dwelling units in the Project be occupied by families of moderate income (the Moderate Income Tenants ), defined as families or individuals whose income does not exceed 80% of the median gross income for the MSA (as defined in each Land Use Restriction Agreement) in which the Project is located, as adjusted for family size. The Land Use Restriction Agreement and the Tax Agreement will have the effect of reducing the potential universe of tenants eligible to reside in the Project. See THE BORROWER AND THE PROJECT Project Regulation and RISK FACTORS AND INVESTMENT CONSIDERATIONS Project Risks; Rental Housing Requirements herein and APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE LAND USE RESTRICTION AGREEMENT hereto. 3

9 Risk Factors. AN INVESTMENT IN THE BONDS INVOLVES A SIGNIFICANT DEGREE OF RISK, INCLUDING, AMONG OTHERS, RISKS ASSOCIATED WITH THE LIMITED SOURCE OF PAYMENT FOR THE BONDS AND VARIOUS REAL ESTATE AND OPERATING RISKS. PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE STATEMENTS AND INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT, INCLUDING THE MATERIAL UNDER THE CAPTION RISK FACTORS AND INVESTMENT CONSIDERATIONS. This Official Statement and the Appendices attached hereto contain descriptions of, among other matters, the Bonds, the Borrower, the Project, the Indenture, the Loan Agreement, the Mortgage, the Land Use Restriction Agreement, Tax Agreement, and the Continuing Disclosure Agreement. Such descriptions and information do not purport to be comprehensive or definitive. Definitions of certain terms and words used in this Official Statement and not otherwise defined are set forth in the Indenture. All references herein to any agreements are qualified in their entirety by reference to such agreements and documents, and all references herein to the Bonds are qualified in their entirety by reference to the forms thereof included in the Indenture. Copies of such agreements and all other documents referenced herein are available to the recipient of this Official Statement during the initial offering period by contacting the Underwriter. THE BONDS The Bonds are available in book-entry only form. See Book-Entry-Only System below. So long as Cede & Co., as nominee of The Depository Trust Company ( DTC ), is the registered owner of the Bonds, references herein to the Bondholders or holders or Holders or registered owners of the Bonds means Cede & Co. and not the beneficial owners of the Bonds. General Description The Bonds are issuable as fully registered bonds without coupons in denominations of $5,000 each and integral multiples thereof. The Bonds will be dated their date of delivery. The Bonds will bear interest at the rates, and will mature on the dates and in the amounts, all as set forth on the inside cover page of this Official Statement. Interest on the Bonds will be payable semiannually on each June 1 and December 1 of each year (the Interest Payment Dates ) commencing December 1, 2017, and will be payable as to principal on the dates and in the amounts as set forth in the Indenture. Interest shall be computed on the basis of a year of 360 days and twelve 30- day months. Each Bond shall bear interest from the Interest Payment Date preceding the date of authentication thereof, unless the date of such authentication is after the fifteenth day (whether or not a Business Day) of the calendar month preceding the applicable Interest Payment Date (the Record Date ), in which case it will bear interest from the next succeeding Interest Payment Date, or unless no interest has been paid on such Bond, in which case from their date of delivery; provided, however, that if at the time of registration of any Bond the interest thereon is in default, as shown by the records of the Trustee, such Bond shall bear interest from the date to which interest has been paid in full. Subordination of Series 2017C Bonds The Senior Bonds shall be secured by the assignment of and payments made in respect of the Note and further secured by the Mortgage on a senior lien basis prior in all respects to the payment of the Subordinate Bonds. The Subordinate Bonds shall be secured by the assignment of and any payments made in respect of the Note and further secured by the Mortgage, but on a subordinated lien and right of payment basis in all respects to the payment of the Senior Bonds. Transfer and Exchange of the Bonds So long as the Series 2017 Bonds are in book-entry only form, Cede & Co., as nominee of DTC, will be the sole registered owner of the Bonds. Transfers of beneficial interests in the Bonds will be made as described below under Book-Entry-Only System. 4

10 Book-Entry-Only System The following has been provided by DTC for use herein. While the information is believed to be reliable, none of the Authority, the Trustee, the Borrower or the Underwriter, subject to the standard of review found on the inside cover hereof, nor any of their respective counsel, members, officers or employees, make any representations as to the accuracy, sufficiency or completeness of such information. The Bonds initially are being issued solely in book entry form to be held in the book entry only system maintained by The Depository Trust Company ( DTC ), New York, New York. So long as such book entry system is used, only DTC will receive or have the right to receive physical delivery of Bonds and Beneficial Owners (as hereinafter defined) will not be or be considered to be, and will not have any rights as, owners or holders of the Bonds under the Resolution. The following information about the book entry only system applicable to the Bonds has been supplied by DTC. Neither the Authority nor the Trustee makes any representations, warranties or guarantees with respect to its accuracy or completeness. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of 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 DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has an S&P Global Ratings rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at 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 each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 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 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 affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts 5

11 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 of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Trustee and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds 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 the Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority, as issuer of the Bonds, as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments, redemption proceeds and distributions on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the Authority or the Trustee, on 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 Bonds held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Trustee or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered to DTC. The Authority may decide to discontinue use of the system of book entry only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. 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 AUTHORITY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE TRUSTEE AS BEING A HOLDER WITH RESPECT TO: (1) THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4) THE DELIVERY BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE RESOLUTION TO BE GIVEN TO HOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS HOLDER. 6

12 Each Beneficial Owner for whom a Direct Participant or Indirect Participant acquires an interest in the Bonds, as nominee, may desire to make arrangements with such Direct Participant or Indirect Participant to receive a credit balance in the records of such Direct Participant or Indirect Participant, to have all notices of redemption, elections to tender Bonds or other communications to or by DTC which may affect such Beneficial Owner forwarded in writing by such Direct Participant or Indirect Participant, and to have notification made of all debt service payments. Beneficial Owners may be charged a sum sufficient to cover any tax, fee, or other governmental charge that may be imposed in relation to any transfer or exchange of their interests in the Bonds. THE AUTHORITY AND THE TRUSTEE CANNOT AND DO NOT GIVE ANY ASSURANCES THAT THE DIRECT PARTICIPANTS OR THE INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE BONDS (i) PAYMENTS OF PRINCIPAL OF AND INTEREST ON THE BONDS, (ii) BONDS REPRESENTING AN OWNERSHIP INTEREST OR OTHER CONFIRMATION OF BENEFICIAL OWNERSHIP INTERESTS IN THE BONDS OR (iii) REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS NOMINEE, AS THE REGISTERED OWNERS OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE CURRENT RULES APPLICABLE TO DTC ARE ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE CURRENT PROCEDURES OF DTC TO BE FOLLOWED IN DEALING WITH DIRECT PARTICIPANTS ARE ON FILE WITH DTC. Revision of Book-Entry-Only System In the event that either: (i) the Authority receives notice from DTC to the effect that DTC is unable or unwilling to discharge its responsibilities as a clearing agency for the Bonds or (ii) the Authority or the Borrower elects to discontinue its use of DTC as a clearing agency for the Bonds, then the Authority and the Trustee will do or perform or cause to be done or performed all acts or things, not adverse to the rights of the holders of the Bonds, as are necessary or appropriate to discontinue use of DTC as a clearing agency for the Bonds and to transfer the ownership of each of the Bonds to such person or persons, including any other clearing agency, as the holder of such Bonds may direct in accordance with the Indenture. Any expense of such a discontinuation and transfer, including any expenses of printing new certificates to evidence the Bonds, will be paid by the Borrower. Mandatory Redemption of Bonds The Bonds shall be called for redemption (a) in whole or in part in the event the Project or any portion thereof is damaged or destroyed or taken in a condemnation proceeding and Net Proceeds resulting therefrom are to be applied to the payment of the Note as provided in the Loan Agreement, which Net Proceeds are to be used to redeem the Bonds at the election of the Borrower made pursuant to the Loan Agreement, (b) in whole in the event the Borrower exercises its option to terminate the Loan Agreement (and causes all of the Series 2017 Bonds to be redeemed as provided in the Indenture), (c) in whole or in part from proceeds of the Title Policies pursuant to the Loan Agreement, (d) in whole or in part, at the earliest practicable date, in the event that the Borrower exercises its option under the Loan Agreement in regards to the continued operation of the Project or (e) in whole in the event the Borrower is required to prepay the Loan following a Default under the Loan Agreement. If called for redemption at any time pursuant to (a) through (e) above, the Series 2017 Bonds of a Series to be redeemed shall be subject to redemption by the Authority (in accordance with the provisions of the heading Notice of Redemption below) prior to maturity, in whole at any time or (in the case of a partial redemption pursuant to clause (a), (c) or (d) above) in part at any time (such Series 2017 Bonds to be redeemed in part to be selected in accordance with the provisions of the heading Selection of Bonds to be Redeemed below) at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date; such redemption date, to be a date determined by the Borrower and in the case of redemption pursuant to (d) above, to be the earliest practicable date, following acceleration of amounts due under the Loan. No Subordinate Bonds may be redeemed as described in this section if any Senior Bonds remain Outstanding except that the Subordinate Bonds may only be redeemed if the principal and interest due on the Senior Bonds at such time has been paid in full. 7

13 Optional Redemption of Bonds The Series 2017A Bonds are subject to optional redemption by the Authority, at the written direction of the Borrower to the Trustee on and after December 1, 2022, in whole or in part at any time, on the respective dates at the respective redemption prices set forth below, as a percentage of the outstanding principal amount thereof plus accrued interest to the date of redemption: Redemption Period Redemption Price December 1, 2022 through November 30, % December 1, 2023 through November 30, % December 1, 2024 through November 30, % December 1, 2025 through November 30, % December 1, 2026 through November 30, % December 1, 2027 and thereafter 100% The Series 2017B Bonds are not subject to optional redemption prior to maturity. No Series 2017C Bonds, or any portion thereof, may be redeemed pursuant to optional redemption if any Senior Bonds remain Outstanding. The Series 2017C Bonds are subject to optional redemption on and after December 1, 2022, in whole or in part at any time, on the respective dates at the respective redemption prices set forth below, as a percentage of the outstanding principal amount thereof plus accrued interest to the date of redemption, if the principal and interest due on the Senior Bonds at such time has been paid in full: Redemption Period Redemption Price December 1, 2022 through November 30, % December 1, 2023 through November 30, % December 1, 2024 through November 30, % December 1, 2025 through November 30, % December 1, 2026 through November 30, % December 1, 2027 and thereafter 100% The Borrower shall give the Trustee written notice of optional redemption pursuant to the Loan Agreement and, upon delivery of such written notice, the Authority shall be deemed, without the necessity of any action on the Authority s part, to have exercised its option to redeem the Series 2017 Bonds under this section. A copy of such notice shall be provided to the Authority, but failure or delay in providing such copy to the Authority shall not affect the validity of such notice or redemption. [Remainder of page intentionally left blank] 8

14 Mandatory Sinking Fund Redemption The Series 2017A Bonds are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest on June 1 and December 1 of each year and in the principal amounts shown below: SERIES 2017A BONDS DUE DECEMBER 1, 2027 Date Amount Date Amount June 1, 2019 $70,000 December 1, 2023 $100,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 Maturity SERIES 2017A BONDS DUE DECEMBER 1, 2042 Date Amount Date Amount June 1, 2028 $110,000 December 1, 2035 $155,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 Maturity SERIES 2017A BONDS DUE DECEMBER 1, 2052 Date Amount Date Amount June 1, 2043 $220,000 June 1, 2048 $275,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 Maturity 9

15 The Series 2017B Bonds are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest on June 1 and December 1 of each year and in the principal amounts shown below: SERIES 2017B BONDS DUE DECEMBER 1, 2019 Date Amount Date Amount December 1, 2017 $30,000 June 1, 2019 $10,000 June 1, ,000 December 1, ,000 December 1, ,000 Maturity The Series 2017C Bonds are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest on June 1 and December 1 of each year and in the principal amounts shown below: SERIES 2017C BONDS DUE DECEMBER 1, 2052 Date Amount Date Amount December 1, 2017 $5,000 December 1, 2035 $25,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 June 1, ,000 December 1, ,000 December 1, ,000 June 1, ,000 Maturity 10

16 Upon any redemption in part of the Series 2017 Bonds other than pursuant to this section, the principal amount of the Bonds redeemed will be credited against the remaining Mandatory Sinking Fund Requirements for such Bonds pursuant to this section (in multiples of $5,000 principal amount) as nearly as practicable by the Trustee by multiplying the total amount of moneys available to redeem such Bonds on the date fixed for redemption by the ratio which the Mandatory Sinking Fund Requirements due on each date bear to the principal amount of all such Bonds then outstanding. Money. Money used to pay premium, if any, on the Series 2017 Bonds to be redeemed must constitute Available Selection of Bonds to be Redeemed Bonds may be redeemed only in Authorized Denominations. If less than all of the Bonds are being redeemed: (a) the principal amount and Series of the Bonds to be redeemed shall be designated by a Borrower s Representative in writing to the Trustee (subject to the requirements herein with respect to redeeming Senior Bonds prior to Subordinate Bonds) and (b) the particular Bonds of the Series or portions thereof to be redeemed shall be selected by DTC or any successor depository in accordance with its procedures, or, if the book-entry system is discontinued, by the Trustee by lot, in such manner as the Trustee in its discretion may deem proper. If it is determined that less than all of the principal amount represented by any Bond is to be called for redemption, then, following notice of intention to redeem such principal amount, the Holder thereof shall surrender such Bond to the Trustee on or before the applicable redemption date for (i) payment on the redemption date to such Holder of the redemption price of the amount called for redemption and (ii) delivery to such Holder of a new Bond or Bonds of such Series in the aggregate principal amount of the unredeemed balance of the principal amount of such Bond, which shall be an Authorized Denomination. A new Bond of such Series representing the unredeemed balance of such Bond shall be issued to the Holder thereof, without charge therefor. Such provision shall not apply to scheduled mandatory sinking fund redemptions. If the Holder of any Bond or integral multiple of the Authorized Denomination selected for redemption shall fail to present such Bond to the Trustee for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the date fixed for redemption to the extent of the amount called for redemption (and to that extent only), and interest shall cease to accrue from the date fixed for redemption. Notice of Redemption In the event any of the Bonds are called for redemption and notice thereof has been given by the Borrower to the Trustee pursuant to the Loan Agreement, the Trustee shall give notice, in the name of the Authority, of the redemption of such Bonds, which notice shall (i) specify the Bonds to be redeemed, the redemption date, the redemption price and the place or places where amounts due upon such redemption will be payable (which shall be the Designated Office of the Trustee) and, if less than all of the Bonds are to be redeemed, the numbers of the Bonds, and the portions of the Bonds, to be so redeemed, (ii) state any condition to such redemption, including but not limited to a statement that redemption is conditional upon receipt by the Trustee of sufficient moneys to redeem the Bonds, including any redemption premium, and (iii) state that on the redemption date, and upon satisfaction of any such condition, the Bonds to be redeemed shall cease to bear interest. Such notice may set forth any additional information relating to such redemption. Such notice shall be given by Mail to the Holders of the Bonds to be redeemed, at least 30 days but no more than 60 days prior to the date fixed for redemption. If a notice of redemption shall be unconditional, or if the conditions of a conditional notice of redemption shall have been satisfied, then upon presentation and surrender of the Bonds so called for redemption at the place or places of payment, such Bonds shall be redeemed. The Trustee may give any other or additional redemption notice as it deems necessary or desirable. Any Bonds which have been duly selected for redemption and which are deemed to be paid in accordance with the Indenture shall cease to bear interest on the specified redemption date. 11

17 Payment of Redemption Price For the redemption of any of the Bonds of a Series, the Trustee shall cause to be deposited in the applicable Special Redemption Account of the Bond Fund, whether out of Project Revenues or any other money constituting the Trust Estate, including Net Proceeds of any Insurance Proceeds or Condemnation Awards available for such purpose pursuant to the Loan Agreement, or otherwise, an amount sufficient to pay the principal of, premium, if any, and interest to become due on the date fixed for such redemption. The obligation of the Trustee to cause any such deposit to be made under the Indenture shall be reduced by the amount of money in such Special Redemption Account available for and used on such redemption date for payment of the principal of, premium, if any, and accrued interest on the Bonds to be redeemed. No Partial Redemption After Default Anything in the Indenture to the contrary notwithstanding, if there has occurred and is continuing an Event of Default under the Indenture on account of a failure to pay the principal of or premium, if any, or any installment of interest on the Bonds when due and payable with respect to the Bonds, there shall be no redemption of less than all of the Bonds Outstanding. See APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF THE TRUST INDENTURE. ANNUAL DEBT SERVICE REQUIREMENTS The principal (including principal payable at maturity and by mandatory sinking fund redemption) and interest payment requirements with respect to the Bonds are as follows: Series 2017A Bonds Series 2017B Bonds Series 2017C Bonds Combined Year Principal Interest Total Principal Interest Total Principal Interest Total Total 12/1/2017 $- $93, $93, $30,000 $ $30, $5,000 $18, $23, $147, /1/ , , ,000 3, , , , , , /1/ , , , , , ,000 99, , , /1/ , , , ,000 98, , , /1/ , , , ,000 97, , , /1/ , , , ,000 96, , , /1/ , , , ,000 94, , , /1/ , , , ,000 93, , , /1/ , , , ,000 92, , , /1/ , , , ,000 90, , , /1/ , , , ,000 89, , , /1/ , , , ,000 87, , , /1/ , , , ,000 85, , , /1/ , , , ,000 84, , , /1/ , , , ,000 82, , , /1/ , , , ,000 80, , , /1/ , , , ,000 78, , , /1/ , , , ,000 75, , , /1/ , , , ,000 73, , , /1/ , , , ,000 71, , , /1/ , , , ,000 68, , , /1/ , , , ,000 65, , , /1/ , , , ,000 62, , , /1/ , , , ,000 59, , , /1/ , , , ,000 56, , , /1/ , , , ,000 52, , , /1/ , , , ,000 49, , , /1/ , , , ,000 45, , , /1/ , , , ,000 40, , , /1/ , , , ,000 36, , , /1/ , , , ,000 32, , , /1/ , , , ,000 27, , , /1/ , , , ,000 22, , , /1/ ,000 80, , ,000 16, , , /1/ ,000 52, , ,000 10, , , /1/ ,000 22, , ,000 4, , , Total $11,820,000 $12,057, $23,877, $215,000 $4, $219, $1,795,000 $2,341, $4,136, $28,233,

18 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS Trust Estate The Bonds are secured by a first lien on and pledge and assignment of a security interest in the Trust Estate. The Trust Estate includes (a) all right, title and interest of the Authority in and to the Note, the Mortgage, the Land Use Restriction Agreement and the Loan Agreement (other than the Unassigned Rights), including the proceeds thereof or recovery thereon; (b) all funds, money and securities from time to time held by the Trustee under the terms of the Indenture (except amounts on deposit in the Rebate Fund and except that money and securities on deposit in the Funds and Accounts established with respect to the Bonds shall be held solely for the Holders of the Bonds) and any interest, profits and other income derived from the investment thereof, including the proceeds of the Bonds, subject to the application thereof in accordance with the Indenture, including Net Proceeds; (c) excepting the Unassigned Rights, any and all other rights and interests in property conveyed, mortgaged, pledged, assigned or transferred as and for additional security for the Bonds by the Authority or by anyone on its behalf or with its written consent to the Trustee; and (d) all proceeds of the foregoing. The Subordinate Bonds are subordinate in all respects to the Senior Bonds. Special Limited Obligations of Authority THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM THE TRUST ESTATE (AS DEFINED HEREIN) AND, EXCEPT FROM SUCH SOURCE, NONE OF THE AUTHORITY, ANY SPONSOR (AS DEFINED HEREIN), ANY MEMBER (AS DEFINED HEREIN), ANY AUTHORITY INDEMNIFIED PERSON (AS DEFINED IN THE INDENTURE), THE STATE (AS DEFINED HEREIN) OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE BONDS ARE NOT A DEBT OF THE STATE OR THE MEMBERS AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, ANY SPONSOR, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS, NOR THE FAITH AND CREDIT OF THE AUTHORITY, ANY SPONSOR OR ANY AUTHORITY INDEMNIFIED PERSON, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR ANY COSTS INCIDENTAL THERETO. THE AUTHORITY HAS NO TAXING POWER. Repayment of Loan; Limited Recourse The Loan Agreement and the Note obligate the Borrower to pay to the Trustee, for the account of the Authority, ratable monthly payments equal to the amounts required to pay the interest coming due on each Interest Payment Date with respect to the Bonds plus the principal amount of the Bonds maturing or required to be redeemed. The Borrower s obligation to make Loan Payments with respect to the Bonds is a limited obligation of the Borrower, and holders of the Bonds will have recourse only to the Project, the moneys held in the Funds and Accounts created under the Indenture (except as specifically set forth therein) and the Project Revenues to satisfy the obligations of the Borrower with respect to the Bonds. No other revenues or assets of the Borrower or of the Sole Member will be available for the payment of, or as security for, the Bonds. Pursuant to the Indenture, the Authority will pledge and assign all its rights and interests (except certain reimbursement and indemnification rights of the Authority and its rights to perform discretionary acts) and all amounts payable (other than certain fees and expenses due to the Authority) under the Loan Agreement, the Note 13

19 and the Mortgage to the Trustee, in trust, to be held and applied pursuant to the provisions of the Indenture, for the benefit of the Holders on a senior basis with respect to the Holders of the Senior Bonds relative to the Holders of the Subordinate Bonds. Mortgage To secure the payment of the Loan Payments payable under the Loan Agreement and the Note, the Borrower will grant to the Trustee under the Mortgage, a first priority lien on and a first security interest in the Project and the right, title and interests of the Borrower in the Project Revenues and other property as described in the Mortgage, including the Borrower s fee interests in the sites of the Project, subject only to certain Permitted Encumbrances identified therein and which Mortgage will secure the Senior Bonds and the Subordinate Bonds in that order of priority. The mortgaged property includes generally all the land and the buildings, fixtures and equipment comprising the Project. See APPENDIX E SUMMARY OF CERTAIN PROVISIONS OF THE MORTGAGE hereto. Operation of the Project Payments to be made by the Borrower pursuant to the Loan Agreement will be derived solely from revenues generated by the operation of the Project and the monies held in the Funds and Accounts held under the Indenture. NO REPRESENTATIONS OR ASSURANCES CAN BE MADE THAT REVENUES WILL BE REALIZED BY THE BORROWER IN AMOUNTS NECESSARY TO ENABLE THE BORROWER TO MAKE PAYMENTS PURSUANT TO THE LOAN AGREEMENT SUFFICIENT TO PAY THE PRINCIPAL OF AND PREMIUM, IF ANY, AND INTEREST ON THE BONDS. Rate Covenants The Borrower has agreed in the Loan Agreement to use its best efforts to fix, charge and collect, or cause to be fixed, charged and collected, rents, fees and charges in connection with the operation and maintenance of the Project, such that for each Fiscal Year, beginning with the Fiscal Year ending December 31, 2017, the Debt Service Coverage Ratio will not be less than the applicable Coverage Test (being 1.25 to 1.00 on all Outstanding Senior Bonds and all Senior Parity Indebtedness and 1.10 to 1.00 on all Outstanding Senior Bonds and Subordinate Bonds and all Senior Parity Indebtedness and all Subordinate Parity Indebtedness), determined as of the end of each such subsequent Fiscal Year. In the event that the Borrower should fail to meet such rate covenant, the Borrower is required to retain a consultant to make recommendations with respect to the operations of the Project and the sufficiency of the rates, fees and charges imposed by the Borrower to enable the Borrower to improve the Debt Service Coverage Ratio to at least the applicable Coverage Test. Failure by the Borrower to retain a consultant or implement the recommendations of that consultant in any calendar year in which the Debt Service Coverage Ratio is not met will constitute a Default as set forth in the Loan Agreement. Failure of the Borrower to meet the rate covenant does not constitute an Event of Default with respect to the Bonds. See APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE LOAN AGREEMENT hereto. 14

20 Flow of Project Revenues The following chart depicts the flow of Project Revenues described under Revenue Fund below: 15

21 Revenue Fund (a) There shall be deposited in the Revenue Fund (i) all Loan Payments and other amounts paid to the Trustee under the Loan Agreement (other than prepayments required to redeem Bonds pursuant to the Indenture, which shall be deposited in the related Special Redemption Account), (ii) all other amounts required to be so deposited pursuant to the terms of the Indenture or of the Tax Agreement, including investment earnings to the extent provided in the Indenture, (iii) any amounts derived from the Loan Agreement or the Mortgage to be applied to payment of amounts intended to be paid from the Revenue Fund, (iv) all Project Revenues, and (v) such other money as is delivered to the Trustee by or on behalf of the Authority or the Borrower with written directions for deposit of such money in the Revenue Fund. (b) Money on deposit in the Revenue Fund shall be disbursed on the 15th day of each month in the following order of priority: (1) To the Interest Account for the Senior Bonds, the applicable Interest Requirement for the Senior Bonds for that calendar month, together with an amount equal to any unfunded Interest Requirement for the Senior Bonds for any prior month and, at the written direction of a Borrower s Representative, to the holder of any Senior Parity Indebtedness an amount, as certified by a Borrower s Representative, equal to the interest due in such month, together with an amount, as certified by a Borrower s Representative, equal to any unfunded interest for any prior month; (2) To the Principal Account for the Senior Bonds, an amount equal to the Principal Requirement for the Senior Bonds, together with an amount equal to any unfunded Principal Requirement for the Senior Bonds from any prior month and to the holder of any Senior Parity Indebtedness, an amount equal to the principal due in such month, together with an amount equal to any unfunded principal for any prior month; (3) To the Debt Service Reserve Account for the Senior Bonds, the amount, if any, required to be paid into the Debt Service Reserve Account for the Senior Bonds pursuant to the Loan Agreement to restore the amount on deposit therein to the Debt Service Reserve Requirement; (4) To the Interest Account for the Subordinate Bonds, an amount equal to the Interest Requirement for the Subordinate Bonds, together with an amount equal to any unfunded Interest Requirement for the Subordinate Bonds for any prior month and to the holder of any Subordinate Parity Indebtedness, an amount equal to the interest due in such month, together with an amount equal to any unfunded interest for any prior month; (5) To the Principal Account for the Subordinate Bonds, an amount equal to the Principal Requirement for the Subordinate Bonds, together with an amount equal to any unfunded Principal Requirement for the Subordinate Bonds for any prior month and to the holder of any Subordinate Parity Indebtedness, an amount equal to the principal due in such month, together with an amount equal to any unfunded principal for any prior month; (6) To the Debt Service Reserve Account for the Subordinate Bonds, the amount, if any, required to be paid into such Debt Service Reserve Account pursuant to the Loan Agreement to restore the amounts on deposit therein to the Debt Service Reserve Requirement for the Subordinate Bonds; (7) Subject to the Indenture, for transfer to the Insurance and Tax Escrow Fund, an amount equal to one-twelfth of the amount budgeted by the Borrower for the current year for (i) annual premiums for insurance required to be maintained pursuant to the Loan Agreement to the Insurance Premium Account and (ii) for charges for governmental services for the current year (if 16

22 any), as provided in the Budget, provided that distribution by the Trustee to the Insurance and Tax Escrow Fund in respect of the first date or dates on which premiums for insurance and taxes or other payments described above are payable will be made in amounts equal to the respective quotients obtained by dividing the sum of (i) the amount of such premiums and (ii) the amount of such charges, by the respective number of months, including the month of computation, to and including the month prior to the month in which such premiums or taxes are payable; (8) To the Operating Fund, an amount equal to such month s Operating Requirement, as provided in the Budget, together with such additional Operating Expenses requested in writing by a Borrower s Representative pursuant to and after satisfaction of the conditions specified in the Loan Agreement; (9) Subject to the provisions of the Indenture, for transfer to the Repair and Replacement Fund, commencing with the month of October 2017, an amount equal to one-twelfth of the Replacement Reserve Requirement until the Replacement Reserve Requirement is met; (10) Subject to the provisions of the Indenture, for transfer to the Administration Fund, an amount equal to one-twelfth of the Administration Expenses scheduled to be due and payable on or before the next succeeding Principal Payment Date; (11) To the Rebate Fund, to the extent of any deposit required to be made thereto pursuant to the Tax Agreement; and (12) To the Surplus Fund, all remaining amounts. In the event that, for any month, there are insufficient funds in the Revenue Fund to fund any one or more of the uses set forth in clauses (1) through (11) above, the amount not funded in such month due to such insufficiency of revenues shall be added to the amount to be funded in subsequent months under the same clause until such amount has been in fact funded. If funds in the Revenue Fund are insufficient to fund the uses in clause (10) above, then the Borrower shall pay any shortfalls in the payment of Administration Expenses as they become due. Failure to deposit sufficient Project Revenues to make the deposits described above shall not, in itself, constitute an Event of Default under the Indenture. Debt Service Reserve Fund A Debt Service Reserve Fund with separate accounts for the Senior Bonds and the Subordinate Bonds will be established under the Indenture. The Debt Service Reserve Fund will be funded in an aggregate amount approximately equal to 50% of the Maximum Annual Debt Service for the Bonds; provided, however, that such amounts shall be reduced on a pro-rata basis to the extent of any reduction in Annual Debt Service on the aggregate principal amount of the Senior Bonds Outstanding and Subordinate Bonds Outstanding, as applicable, if any Bonds are redeemed other than pursuant to mandatory sinking fund redemption. Amounts on deposit in each account of the Debt Service Reserve Fund will be used solely to pay the principal of and interest on the applicable Series of Bonds secured thereby when due to the extent moneys on deposit in the related Principal Account or Interest Account are insufficient therefor after the transfer of any amounts from the Surplus Fund, and the Repair and Replacement Fund pursuant to the Indenture. Amounts on deposit in the applicable Debt Service Reserve Accounts will be transferred to the applicable Principal Accounts of the Bond Fund at the written direction of the Borrower s Representative for the purpose of paying the last maturing principal of the Senior Bonds or Subordinate Bonds, as applicable, on a Principal Payment Date or, if all of a series of the Bonds are being redeemed, to the applicable Special Redemption Accounts of the Bond Fund for redemption of Bonds; provided, however, that amounts may be transferred from the Debt Service Reserve Account for the Senior Bonds only in connection with shortfalls on the Senior Bonds and amounts may be transferred from the Debt Service Reserve Account for the Subordinate Bonds only in connection with shortfalls on the Subordinate Bonds. 17

23 In addition, if the amount on deposit in an account of the Debt Service Reserve Fund is less than the applicable Debt Service Reserve Requirement for the series of Bonds secured thereby, investment earnings thereon will remain in such account. See APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF THE TRUST INDENTURE hereto. Surplus Fund The Trustee shall deposit, into the Surplus Fund, amounts provided under the section Revenue Fund and any other amounts delivered to it with written instructions to deposit the same in the Surplus Fund. Money in the Surplus Fund shall be applied each month, when needed, for the following purposes and in the following manner: (1) transferred to the Interest Account for the Senior Bonds to pay interest on the Senior Bonds to the extent amounts on deposit in such Interest Account are insufficient therefor; (2) transferred to a Principal Account for the Senior Bonds to pay principal on the Senior Bonds to the extent amounts on deposit in such Principal Account are insufficient therefor; (3) transferred to the Interest Account for the Subordinate Bonds to pay interest on the Subordinate Bonds to the extent amounts on deposit in such Interest Account are insufficient therefor; (4) transferred to the Principal Account for the Subordinate Bonds to pay principal on the Subordinate Bonds to the extent amounts on deposit in such Principal Account are insufficient therefor; (5) transferred to the Revenue Fund to the extent of any deficiency in the amounts needed to fully make all transfers from the Revenue Fund pursuant to the heading Revenue Fund above (other than to the Surplus Fund); (6) transferred to or upon the direction of the Borrower s Representative for deposit into a Property Operating Account for the payment of Operating Expenses when the Borrower s Representative certifies to the Trustee that there are not sufficient money in the Operating Fund or the Property Operating Account to pay Operating Expenses; and (7) to pay any unpaid and due Administrative Expenses. If on or after any Annual Evaluation Date, the Trustee receives a certificate signed by the Borrower s Representative stating that (i) the Borrower has satisfied the Coverage Test for the Fiscal Year ending on such Annual Evaluation Date, upon which the Trustee may conclusively rely, (ii) no Event of Default, or event which with the passage of time or the giving of notice or both would constitute an Event of Default, has occurred and is continuing, (iii) the Debt Service Reserve Requirement and the Replacement Reserve Requirement have been fully funded, (iv) the Borrower is in compliance with the Liquidity Requirement and (v) the Borrower has delivered to the Trustee the financial reports and certificates required under the Loan Agreement, then within two Business Days after written request by the Borrower s Representative to the Trustee, the Trustee shall disburse cash in the Surplus Fund (the Surplus Cash ), less any amount to be retained to comply with the Liquidity Requirement, to the Borrower. Other Funds The Indenture also provides for a Bond Fund, a Project Fund an Operating Fund, an Operations and Maintenance Reserve Fund, an Insurance and Tax Escrow Fund, a Repair and Replacement Fund and an Administrative Fund. The purposes of such funds and the specific requirements related to each are described in APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF THE TRUST INDENTURE hereto. 18

24 No Credit Enhancement Facility THERE IS NO CREDIT ENHANCEMENT FACILITY SECURING ANY OF THE BONDS AS INITIALLY ISSUED, NOR IS THERE ANY PROVISION FOR A CREDIT ENHANCEMENT FACILITY TO BE PROVIDED TO SECURE ANY OF THE BONDS FOLLOWING ISSUANCE OF THE BONDS. Other Covenants of the Borrower Under the Loan Agreement, the Mortgage and the Land Use Restriction Agreement, the Borrower is required to comply with certain other covenants and agreements. See APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE LOAN AGREEMENT, APPENDIX E SUMMARY OF CERTAIN PROVISIONS OF THE MORTGAGE, and APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE LAND USE RESTRICTION AGREEMENT hereto. Relationship Among Series Under the Indenture, amounts deposited in the Revenue Fund (after all other required applications) will be applied to the payment of the Senior Bonds prior to the payment of the Subordinate Bonds. See APPENDIX B SUMMARY OF THE TRUST INDENTURE Revenue Fund hereto. Consequently, revenues will not be deposited equally towards the payment of interest and principal on each Series of Bonds. Amounts on deposit in the accounts of the Bond Fund for a Series of Bonds will be used solely to pay principal and interest on that Series of Bonds, on the applicable payment dates. If there is a shortfall of revenues, interest and principal on the Senior Bonds must be paid prior to any such payments being made with respect to the Subordinate Bonds. Under such circumstances, principal and/or interest on the Subordinate Bonds may remain unpaid. Pursuant to the Indenture, failure to pay any installment of interest on any Senior Bond when such interest becomes due and payable and failure to pay the principal of, or premium, if any, on any Senior Bond when such becomes due and payable, whether at maturity, by proceedings for redemption, by declaration or otherwise constitutes an Event of Default. If no Senior Bonds are Outstanding, failure to pay any installment of interest on any Subordinate Bond when such interest becomes due and payable and failure to pay the principal of, or premium, if any, or any Subordinate Bond when such becomes due and payable constitutes on Event of Default. Upon an Event of Default, however, the Indenture provides the Subordinate Bonds may not be accelerated unless the Senior Bonds have been paid in full, or provision for their payment in full has been made in accordance with the Indenture. Furthermore, amounts resulting from the exercise by the Trustee of any remedies available upon an Event of Default would be used to pay the Senior Bonds prior to the payment of the Subordinate Bonds. See APPENDIX B SUMMARY OF THE TRUST INDENTURE Revenue Fund and Defaults and Remedies hereto. THE SERIES 2017C BONDS ARE SUBORDINATE IN RIGHT OF PAYMENT, SECURITY AND PRIORITY TO THE SERIES 2017A BONDS AND THE SERIES 2017B BONDS. Issuance of Additional Bonds and Parity Indebtedness So long as no Event of Default under the Indenture has then occurred and is continuing, the Authority at the request of the Borrower s Representative, upon compliance with the terms of the Indenture, may but shall not be required to (in the Authority s sole and exclusive discretion), issue Additional Bonds (as defined in the Indenture) for the purpose of (i) financing the costs of making such Modifications as the Borrower may deem necessary or desirable, (ii) financing the cost of completing any Modifications, (iii) refunding any Bonds, and (iv) in each such case, paying the costs of the issuance and sale of the Additional Bonds, paying capitalized or funded interest and such other costs reasonably related to the financing as shall be agreed upon by the Borrower and the Authority. As a condition for the issuance of Additional Bonds, (i) such Additional Bonds shall be rated in a rating category that is not lower than the underlying rating (i.e., the rating of the respective Outstanding Bonds without giving effect to any credit enhancement) of the Series of Bonds of the same parity as such Additional Bonds, and (ii) prior to the issuance of such Additional Bonds, the Rating Agency then rating the Outstanding Bonds shall deliver a Confirmation of Rating stating that the issuance of the Additional Bonds will not result in a qualification, downgrade or withdrawal of the then current ratings on the Outstanding Bonds. 19

25 Additionally, pursuant to the terms and conditions set forth in the Loan Agreement, under certain circumstances the Borrower is permitted to incur Parity Indebtedness that is secured by a lien on and security interests in all or any portion of the Project or the Project Revenues, secured on an equal and ratable basis with one or more Series of the then Outstanding Bonds under the Mortgage. THE AUTHORITY The following information has been provided by the Authority for use herein. While the information is believed to be reliable, none of the Trustee, the Borrower, the Underwriter nor any of their respective counsel, members, officers or employees make any representations as to the accuracy, sufficiency or completeness of such information. Formation and Governance In early 2010, both houses of the Wisconsin Legislature passed 2009 Wisconsin Act 205 (the Act ), which was signed into law by the Governor of the State of Wisconsin (the State ) on April 21, The Act added Section of the Wisconsin Statutes (the Statute ) authorizing two or more political subdivisions to create a commission to issue bonds under the Statute. Before an agreement for the creation of such a commission could take effect, the Act requires that such agreement be submitted to the Attorney General of the State to determine whether the agreement is in proper form and compatible with the laws of the State. The Authority was formed upon execution of a Joint Exercise of Powers Agreement Relating to the Public Finance Authority dated as of June 30, 2010 as amended by an Amended and Restated Joint Exercise of Powers Agreement Relating to the Public Finance Authority dated September 28, 2010 (as such may be amended from time to time, the Joint Exercise Agreement ) among Adams County, Wisconsin, Bayfield County, Wisconsin, Marathon County, Wisconsin, Waupaca County, Wisconsin and the City of Lancaster, Wisconsin (each a Member and, collectively, the Members, which term shall include any political subdivision designated in the future as a Member of the Authority pursuant to the Joint Exercise Agreement). The Joint Exercise Agreement was approved by the Wisconsin Attorney General on September 30, The Act also provides that only one commission may be formed thereunder. Pursuant to the Statute, the Authority is a unit of government and a body corporate and politic separate and distinct from, and independent of, the State and the Members. The Authority was established by local governments, primarily for local governments, for the public purpose of providing local governments a means to efficiently, and reliably finance projects that benefit local governments, and nonprofit organizations and other eligible private borrowers in the State and throughout the country. Powers Under the Statute, the Authority has all of the powers necessary or convenient to any of the purposes of the Act, including the power to issue bonds, notes or other obligations or refunding obligations to finance or refinance a project, make loans to, lease property from or to enter into agreements with a participant or other entity in connection with financing a project. The proceeds of bonds issued by the Authority may be used for a project in the State or any other state or territory of the United States, or outside the United States if a participating borrower is incorporated and maintains its principal place of business in, the United States or its territories. The Statute defines project as any capital improvement, purchase of receivables, property, assets, commodities, bonds or other revenue streams or related assets, working capital program, or liability or other insurance program, located within or outside of the State. Local and TEFRA Approvals Under the Subsection (11)(a) of the Statute and Section 4 of the Joint Exercise Agreement, financing for all capital improvement projects located outside the State requires approval from the governing body or highestranking executive or administrator of at least one political subdivision within whose boundaries the capital improvement project is located (the Authority Local Approval Requirement ). The issuance of the Bonds was approved on September 11, 2017 by the Clerk of Marathon County, Wisconsin, a Member of the Authority duly authorized to give such approval on behalf of the Authority. Based upon information provided by the Borrower, the 20

26 financing of the Project and issuance of the Bonds by the Authority was approved by the city of Las Vegas, Nevada, on August 15, 2017 with respect to the Project. Such approvals were given in satisfaction of and in accordance with the requirements of Section 147(f) of the Code and the Authority Local Approval Requirement, as applicable. Governing Body The Joint Exercise Agreement provides for a Board of Directors of the Authority (the Board ) consisting of seven directors (each a Director and collectively, the Directors ), a majority of whom are required to be public officials or current or former employees of a political subdivision located in the State. The Directors serve staggered three-year terms. The Directors are selected by majority vote of the Board based upon nomination by the organization that nominated the predecessor Director. Four Directors are nominated by the Wisconsin Counties Association, and one Director is nominated from each of the National League of Cities, the National Association of Counties and the League of Wisconsin Municipalities (said organizations being sometimes referred to herein collectively as the Sponsors ). Each of the nominating organizations may also nominate an alternate Director for each Director it nominates to serve on the Board in the place of and in the absence or disability of a Director. Directors and alternate Directors may be removed and replaced at any time by the Board upon recommendation of the Sponsor that nominated such Director. As of the date of this Official Statement the Authority s Directors are as set forth in the table below. There is one vacant Board seat (representing the nominee of the National League of Cities) and one Alternate Director (nominated by the Wisconsin Counties Association). Name Title Current Term Expires (May 31) Position William Kacvinsky Chair 2018 Former Board Chair--Bayfield County, Wisconsin Jerome Wehrle Vice Chair 2018 Former Mayor City of Lancaster, Wisconsin Heidi Dombrowski Treasurer 2019 Finance Director Waupaca County, Wisconsin, Allen Buechel Secretary 2019 County Executive Fond du Lac County, Wisconsin Del Twidt Director 2019 Former Board Chair Buffalo County, Wisconsin, Michael Gillespie Director 2020 Former Chair Madison County, Alabama Board of Commissioners John West** Alternate Director 2019 Board Chair Adams County, Wisconsin **Mr. West is an alternate for Directors Buechel, Dombrowski and Twidt. The Authority has no employees and contracts with a full-service program management firm, GPM Municipal Advisors, LLC, to manage the day-to-day operations of the Authority including but not limited to staff and administrative support and ongoing compliance matters. All of these services provided by GPM Municipal Advisors, LLC are subject to review and approval by the Board. Resolutions; Approval The Board adopted a Resolution approving the issuance of the Bonds on September 13, Special Limited Obligations THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM THE TRUST ESTATE (AS DEFINED HEREIN) AND, EXCEPT FROM SUCH SOURCE, NONE OF THE AUTHORITY, ANY SPONSOR (AS DEFINED HEREIN), ANY MEMBER (AS DEFINED HEREIN), ANY AUTHORITY INDEMNIFIED PERSON (AS DEFINED IN THE INDENTURE), THE STATE (AS DEFINED 21

27 HEREIN) OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE BONDS ARE NOT A DEBT OF THE STATE OR THE MEMBERS AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, ANY SPONSOR, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS, NOR THE FAITH AND CREDIT OF THE AUTHORITY, ANY SPONSOR OR ANY AUTHORITY INDEMNIFIED PERSON, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR ANY COSTS INCIDENTAL THERETO. THE AUTHORITY HAS NO TAXING POWER. Other Obligations The Authority has issued, sold and delivered in the past, and expects to issue, sell and deliver in the future, obligations other than the Bonds, which other obligations are and will be secured by instruments separate and apart from the Indenture and the Bonds. The holders of such obligations of the Authority will have no claim on the security for the Bonds, and the owners of the Bonds will have no claim on the security for such other obligations issued by the Authority. Limited Involvement of the Authority The Authority has not participated in the preparation of or reviewed any appraisal for the Project or any feasibility study or other financial analysis of the Project and has not undertaken to review or approve expenditures for the Project, to supervise the renovation of the Project, or to review the financial statements of the Borrower. The Authority has not participated in the preparation of or reviewed this Official Statement and is not responsible for any information contained herein, except for the information in this Section and under the caption LITIGATION The Authority as such information applies to the Authority. THE BORROWER AND THE PROJECT The following information has been provided by the Borrower. None of the Authority, the Trustee or the Underwriter has made any independent investigation regarding the information presented under this heading, nor have such parties verified the accuracy or completeness thereof, and none of the Authority, the Trustee or the Underwriter assumes any responsibility or liability therefor. The Borrower The Borrower, 2017 IAVF Rubix LLC, a Florida limited liability company, is a newly-created single asset entity whose sole member is Invest in America s Veterans Foundation, Inc., a Florida nonprofit corporation recognized as an exempt organization pursuant to Section 501(c)(3) of the Internal Revenue Code of The Borrower has no operating history and has no financial statements. The single asset of the Borrower is the Project owned by it. The Borrower does not intend to acquire any substantial assets or engage in any substantial business activities other than those related to the ownership of the Project, and the Borrower is required to be a single asset/sole purpose entity by the documents relating to the Loan Agreement. However, the Sole Member and its affiliated entities may engage in the acquisition, development, ownership and management of similar types of housing projects. 22

28 The Borrower has reserved the right to convert or otherwise reconstitute its form of organization from a limited liability company to a nonprofit corporation subject to certain conditions, including without limitation, delivery of an opinion of Bond Counsel to the effect that such actions will not adversely affect the tax-exempt status of interest earned on the Bonds. See APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE LOAN AGREEMENT Reorganization or Reconstitution of Form of Organization hereto. None of the directors, officers, members, managers, shareholders or employees of the Borrower or the Sole Member will be personally liable for payments on the Note. Furthermore, no representation is made that the Borrower will have substantial funds to meet operating deficits of the Project should they occur. Accordingly, the financial statements of the Borrower and the Sole Member have not been included in this Official Statement. The Sole Member The Sole Member is a Florida nonprofit corporation formed on February 6, 2009 for the purpose of assisting veterans with housing, employment, career counseling, education and other services related to veteran s affairs and to operate the Southwest Florida Military Museum & Library. The Sole Member has received a determination letter from the IRS dated May, 2010 for its tax-exempt status as an organization described in Section 501(c)(3) of the Code. IRS correspondence dated July 15, 2014 (the Determination Letter ) to the Sole Member confirmed that the Sole Member is described in section(s) 509(a)(1) and 170(b)(1)(A)(vi) to the effect that the Sole Member can reasonably be expected to be a publicly supported organization described in Section 509(a)(2) of the Code and not a private foundation. Veterans Housing Advisors ( VHA ) is the Sole Member s real estate operating group. Principles of VHA have approximately 35 years of experience operating in the multifamily housing sector. VHA currently has 2,100 units of multifamily housing under contract that will be closing over the coming months. In addition, VHA was involved in the Sole Member s acquisition of 1,869 units of multifamily housing it currently owns. VHA manages one of the largest HUD-VASH housing initiatives in the country. VHA is currently active in 12 states with a program portfolio in excess of 12,000 units of multifamily housing either through direct ownership, joint venture or support services agreement. Board of Directors. The Sole Member is governed by a Board of Directors, which currently consists of four members. The following are brief resumes of three founding the directors and current officers of the Sole Member: Ralph Santillo, Founder and President. Mr. Santillo created the Sole Member in In addition to providing services directly to, and working directly with, individual veterans, he and the Sole Member are active in many veterans organizations, helping veterans of all ages to help themselves to better their lives and their families. Some of these organizations include: Veterans of Foreign Wars (VFW) Disabled American Veterans (DAV) American Veterans (AmVets) American Legion Mr. Santillo has been involved in a number of retail, wholesale and manufacturing businesses since the age of 18 and has frequently been active in more than one job or business at a time. Over the years he maintained an interest in real estate and/or construction businesses and has been involved in several real estate investment and development opportunities. Mr. Santillo has produced and performed at hundreds of seminars and educational workshops. A number of his educational seminars have recently been directed to veterans to address their unique housing, loan, educational and business opportunities. 23

29 Judy Petrulavage, Founder and Vice President. Judy Petrulavage has had several roles in business, ranging from working in a candle shop to managing the electronics department in a photo lab. She was employed from in the Missile Systems division at Raytheon. She worked her way up from entry level to Head Assembly Line Leader and served as Trainer for all line employees and for other countries who bought the systems. Ms. Petrulavage has been affiliated with the Sole Member as one of the early founders in In her role as Vice President, she works hours a week overseeing much of the Sole Member s operations. In addition to providing services directly to, and working directly with, individual veterans, she is active in many veterans organizations, helping veterans of all ages to help themselves to better their lives and their families. Some of these organizations include: Veterans of Foreign Wars (VFW) Disabled American Veterans (DAV) American Veterans (AmVets) Nicholas A. Napolitano Jr., Secretary/Treasurer. Mr. Napolitano has been affiliated with the Sole Member since 2010 and became a current board member in January As the Sole Member s Secretary/Treasurer, Mr. Napolitano s duties include - collecting all donations, accounting for all Sole Member receivable/payable accounts and expenditures, coordinating the pick-up of furniture and various other items being donated to the Sole Member, and coordinating court ordered community service personnel with the Lee County Sheriff s Department. Mr. Napolitano is a fully certified Veteran Service Officer (VSO), and as such, has assisted hundreds of veterans and their families. Some of his areas of expertise include - assisting with filing paperwork with the Department of Veterans Administration (VA), supporting homeless veterans with applications to the HUD/VASH program, and researching and obtaining military records. He is also very well versed in job placement, and even assist the general community with applying for food stamps and social security benefits. Mr. Napolitano currently serves as the Commander of AMVETS Post 65 (FL), Finance Officer of American Legion Post 90 (FL), and is the past President of the Korean War Veterans Chapter 155 (FL). Mr. Napolitano has a successful business background, including a position in charge of finances with a textile business and A & R (Artist and Repertoire) Administrator with a major recording label. He also held the position of Director of Energy Programs for the city of New York. In that role he managed and directed the operation of Central Office Administrative Units, acted as personnel liaison, managed and accounted for program funds through the direct supervision of the grant payment process, coordinated the development and maintenance of agency relationships with utility companies and fuel vendors. He also oversaw the issuance of timely HEAP regular and emergency benefits to clients and/or vendors and directed the benefit fund recoupment process in case of duplicate inappropriate payments. Projects of the Sole Member. No entity has any legal responsibility for the debts of any other, and the financial covenants relating to the debt of each entity preclude that entity from providing any financial support to other entities. The subsequent success or failure of the individual financings have therefore turned on the performance of management, local and industry market conditions, reimbursement systems and other factors affecting the operations of the individual facilities. It is possible that under certain circumstances one or more projects of the Sole Member may have to restructure their debt in the future to comply with future financial liabilities. Following is a brief description of each project in which the Sole Member is a general partner or managing member: The Cove at Nola Apartments. The Cove at Nola Apartments consists of a 300-unit multifamily residential rental housing facility, including 20 three-story residential buildings and three one-story accessory buildings, located at Curran Boulevard, New Orleans, Louisiana 24

30 AVHG Cove, LLC, a Louisiana limited liability company, whose sole member is the Sole Member, acquired rights to The Cove at Nola Apartments on April 11, 2017, in connection with the issuance by the Louisiana Local Government Environmental Facilities and Community Development Authority of (i) $16,990,000 in original aggregate principal amount of Multifamily Housing Revenue Bonds (The Cove at NOLA Apartments) Series 2017A and (ii) $2,400,000 in original aggregate principal amount of Multifamily Housing Revenue Bonds (The Cove at NOLA Apartments) Subordinate Series 2017B. S&P rated these bonds and these bonds currently have a credit rating of A / BBB (effective April 11, 2017). The Cove at NOLA Apartments was constructed in 1987 and renovated in 2014 and As of the date hereof, the project is in material compliance with its financial and operating covenants. As of September 1, 2017, The Cove at Nola Apartments was 92% occupied. Mission Springs Apartments. Mission Springs Apartments consists of a 444-unit multifamily residential rental housing facility consisting of 54 studio, 74 one-, 275 two-, and 41 three-bedroom units. Mission Springs Apartments consists of 69 one and two-story residential garden-style apartments and two accessory buildings, located at 5327 Timuquana Road, Jacksonville, Florida IAVF Mission Springs LLC, a Florida limited liability company, whose sole member is the Sole Member, acquired rights to Mission Springs Apartments on June 20, 2017, in connection with the issuance by the Capital Trust Agency of (i) $24,460,000 in original aggregate principal amount of Multifamily Housing Revenue Bonds (Mission Springs Apartments) Series 2017A, (ii) $1,175,000 in original aggregate principal amount of Multifamily Housing Revenue Bonds (Mission Springs Apartments) Taxable Series 2017B, and (iii) $4,035,000 in original aggregate principal amount of Multifamily Housing Revenue Bonds (Mission Springs Apartments) Subordinate Series 2017C. S&P rated these bonds and these bonds currently have a credit rating of A / BBB (effective June 20, 2017). Mission Springs Apartments was constructed in 1972 and renovated in 2014 and As of the date hereof, the project is in material compliance with its financial and operating covenants. As of September 1, 2017, Mission Springs Apartments was 94% occupied. Whispering Pines Apartments. Whispering Pines Apartments consists of a 312-unit multifamily residential rental housing facility consisting of 56 one-, 144 two-, and 112-three bedroom units. Whispering Pines Apartments consists of 37 two-story residential garden-style apartments and a two-story leasing office and is located at 408 Abner Road, Spartanburg, South Carolina IAVF Cedar Whispering LLC, whose sole member is the Sole Member, acquired rights to Whispering Pines Apartments on July 19, 2017, in connection with the issuance by Public Finance Authority of (i) $54,625,000 in original principal amount of Multifamily Housing Revenue Bonds (Cedar Grove Portfolio Project) Series 2017A and (ii) $6,105,000 in original principal amount of Multifamily Housing Revenue Bonds (Cedar Grove Portfolio Project) Subordinate Series 2017B. S&P rated these bonds and these bonds currently have a credit rating of A- / BBB- (effective July 10, 2017). As of the date hereof, Whispering Pines Apartments is in material compliance with its financial and operating covenants. As of September 1, 2017, Whispering Pines Apartments was 93% occupied. Twin City Apartments. Twin City Apartments consists of a 285-unit multifamily residential rental housing facility consisting of 76 one-, 135 two-, and 74-three bedroom units. Twin City Apartments consists of 27 two-story residential garden-style apartments and a singlestory community clubhouse and is located at 1805 Franciscan Terrace, Winston-Salem, North Carolina IAVF Twin City LLC, whose sole member is the Sole Member, acquired rights to Twin City Apartments on July 19, 2017, in connection with the issuance by Public Finance Authority of (i) $54,625,000 in original principal amount of Multifamily Housing Revenue Bonds (Cedar Grove Portfolio Project) Series 2017A and (ii) $6,105,000 in original principal amount of Multifamily Housing Revenue Bonds (Cedar Grove Portfolio Project) Subordinate Series 2017B. S&P rated these bonds and these bonds currently have a credit rating of A- / BBB- (effective July 10, 2017). As of the date hereof, Twin City Apartments is in material compliance with its financial and operating covenants. As of September 1, 2017, Twin City Apartments was 92% occupied. 25

31 Silas Creek Apartments. Silas Creek Apartments consists of a 234-unit multifamily residential rental housing facility consisting of 56 one-, 126 two-, and 52-three bedroom units. Silas Creek Apartments consists of 33 two-story residential garden-style apartments and a singlestory leasing office and is located at 1010 Oak Grove Road, Winston-Salem, North Carolina Cedar Silas LLC, whose sole member is the Sole Member, acquired rights to Silas Creek Apartments on July 19, 2017, in connection with the issuance by Public Finance Authority of (i) $54,625,000 in original principal amount of Multifamily Housing Revenue Bonds (Cedar Grove Portfolio Project) Series 2017A and (ii) $6,105,000 in original principal amount of Multifamily Housing Revenue Bonds (Cedar Grove Portfolio Project) Subordinate Series 2017B. S&P rated these bonds and these bonds currently have a credit rating of A- / BBB- (effective July 10, 2017). As of the date hereof, Silas Creek Apartments is in material compliance with its financial and operating covenants. As of September 1, 2017, Silas Creek Apartments was 83% occupied. Chesterfield Apartments. Chesterfield Apartments consists of a 294-unit multifamily residential rental housing facility consisting of 283 two-, and 11-three bedroom units. Chesterfield Apartments is located at 3411 Old Vineyard Road, Winston-Salem, North Carolina Cedar Chesterfield LLC, whose sole member is the Sole Member, acquired rights to Chesterfield Apartments on July 19, 2017, in connection with the issuance by Public Finance Authority of (i) $54,625,000 in original principal amount of Multifamily Housing Revenue Bonds (Cedar Grove Portfolio Project) Series 2017A and (ii) $6,105,000 in original principal amount of Multifamily Housing Revenue Bonds (Cedar Grove Portfolio Project) Subordinate Series 2017B. S&P rated these bonds and these bonds currently have a credit rating of A- / BBB- (effective July 10, 2017). As of the date hereof, Chesterfield Apartments is in material compliance with its financial and operating covenants. As of September 1, 2017, Chesterfield Apartments was 91% occupied. The Project The Rubix (the Project ) is an existing 236-unit multifamily residential rental housing development consisting solely of studio units, located at 5300 East Craig Road, Las Vegas, Nevada The Project was originally constructed as a hotel in 2009, was converted to multifamily apartments in 2015, and consists of one fourstory low rise-style building. The Project has a leasing office, tenant laundry room, tenant exercise room and a game room. The kitchens in all of the units are functional, with full size refrigerators and two-burner cooktop stoves. The Project offers approximately 145 uncovered, off-street parking spaces. The size of the Project is approximately 7.75 acres or 337,590 square feet. The Project is located in a mixed-use neighborhood consisting of multifamily residential uses, hotels, and commercial spaces. A brief description of the unit mix and rent is included below: Unit Type # of Units Square Footage Current Rent Potential Gross Rent (Month) Potential Gross Rent (Annual) Studio $ 700 $ 90,300 $ 1,083,600 Studio ,600 1,027,200 Total ,900 2,110,800 26

32 Regional and Local Area Overview. The Project is located in Las Vegas, Clark County, Nevada. As of the 2010 census, the city of Las Vegas had a population of 583,756 and a land area of square miles. The Project is located in the Las Vegas-Henderson-Paradise, Nevada metropolitan statistical area (MSA). As indicated in the table below, the largest employers in Las Vegas are heavily concentrated in the hospitality/gaming industry. Major Employers Las Vegas, Nevada Employer Industry Number of Employees MGM Resorts International Hospitality 56,000 + Clark County School District K-12 Education 35,000 + Caesars Entertainment Hospitality 26,600 + Nellis & Creech Air Force Base National Security 14,000 + Wynn Resorts Hospitality 11,000 + Stations Casinos Hospitality 10,000 + Source: Las Vegas Global Economic Alliance, June Novogradac & Company, LLP The table below illustrates the employment and unemployment rate for Las Vegas-Henderson-Paradise, Nevada metropolitan statistical area (the MSA ). Year Total Employment % Change Unemployment Rate % Change , % , % 5.2% - 0.6% , % 4.3% - 0.9% , % 4.1% - 0.3% , % 4.0% - 0.1% , % 4.5% 0.5% , % 6.6% 2.2% , % 11.5% 4.9% , % 13.8% 2.2% , % 13.2% - 0.5% , % 11.3% - 2.0% , % 9.7% - 1.6% , % 8.0% - 1.7% , % 6.9% - 1.1% , % 5.8% - 1.1% ,004, % 5.0% - 0.8% Source: U.S. Bureau of Labor Statistics, June Novogradac & Company, LLP. The 2017 numbers reflect data through March 2017 Between 2003 and 2008, total employment in the MSA exhibited strong positive growth, we above the nation and peaking in The MSA maintained positive employment growth through 2008, even as the nation tipped into the most recent national recession. The effects of the most recent national recession became evident in 2009, when local employment levels declined by more than six percent. The MSA employment levels rebounded in 2011, and employment growth in the MSA surpassed national growth from 2014 through As of March 2017, total employment in the MSA was 7.9 percent above its pre-recession peak. 27

33 Project Location. The Project is located at 5300 East Craig Road, Las Vegas, Nevada Limitation on Obligations of the Borrower The obligations of the Borrower under the Loan Agreement, the Note and the Mortgage are payable solely from Project Revenues and the Funds and Accounts created under the Indenture (except as specifically set forth therein), without recourse to the assets of any other person or entity, including the Sole Member. The Borrower s obligations to make Loan Payments with respect to the Bonds are limited recourse obligations of the Borrower; as a result, holders of the Bonds will have recourse only to the Funds and Accounts created under the Indenture (except as specifically set forth therein), the site of the Project, the Project and the other equipment and personal property secured under the Mortgage to satisfy the obligations of the Borrower with respect to the Bonds. No other revenues or assets of the Borrower will be available for the payment of, or as security for, the Bonds. No representation is made that the Borrower will have funds available sufficient to make payments due pursuant to the Loan Agreement. Accordingly, neither the Borrower s financial statements nor those of the Sole Member are included in this Official Statement. The Manager The Borrower will enter into a Management Agreement with The Lynd Company (the Manager ). The Manager was founded in 1980 and currently manages 19,792 multifamily units in 8 different states. Pursuant to the Management Agreement, the Manager will be the exclusive agent for the management of the Project subject to the agreement, including marketing, rental activities, collection of rents, enforcement of leases, maintenance and repair of the Project, and provision of utilities and services. Under the Management Agreement, the Manager will be paid a monthly fee. The initial monthly fee will be equal to approximately 4.00% of effective revenue for the Project. According to the Loan Agreement, no Person shall be engaged by the Borrower as a replacement manager unless such Person or a principal officer (or in the case of a limited liability company, manager) thereof (a) shall have at least five years of demonstrated experience in the management and leasing of affordable residential rental housing facilities, including having (or in the case of such officer or manager, overseeing) not less than 500 units under management subject to restrictions similar to those contained in the Land Use Restriction Agreement and (b) have its employees bonded for not less than the $500,

34 The following table is a list of multifamily residential rental housing properties currently and previously managed by the Manager: The Lynd Company Multifamily Housing Portfolio Property Name Location # of Units The Cove at NOLA Apartments New Orleans, Louisiana Memorial Houston, Texas Broadway San Antonio, Texas 307 Auburn Creek San Antonio, Texas 224 Autumn Oaks Apartments San Antonio, Texas 114 Avalon Apartments Los Angeles, California 15 Ashton Oaks Clute, Texas 520 Autumn Oaks Beaumont, Texas 152 Beauvoir Manor Apartments Biloxi, Mississippi 150 Bent Creek Apartments Atlanta, Georgia 324 Berkley Apartments Little Rock, Arkansas 252 Berrendo Square Apartments San Antonio, Texas 100 Briar Creek Apartments Houston, Texas 88 Briarcrest Apartments Spring, Texas 376 Bridges on Kinsey Tyler, Texas 232 Brightwaters Apartments Little Rock, Arkansas 256 Broadmoor Huston, Texas 235 Brookhollow Apartments Kerrville, Texas 48 Canlen West Apartments San Antonio, Texas 132 Cardinal Oaks Beaumont, Texas 152 Caswyck Trail Apartments Marietta, Georgia 403 Cedars of Baymeadows Jacksonville, Florida 160 Celina Plaza El Paso, Texas 289 Center Park Apartments San Antonio, Texas 395 Cranbrook Forest Houston, Texas 261 Champion at Marshall Meadows San Antonio, Texas 250 Champion at Mission Del Rio San Antonio, Texas 180 Champion at Port Royal San Antonio, Texas 252 Chesterfield Apartments City Parc II Winston-Salem, North Carolina Houston, Texas Pecan Grove Dallas, Texas 250 Champion at the Green Houston, Texas 238 CR Claremore Claremore, Oklahoma 104 CR Gallatin Gallatin, Tennessee 208 CR Jackson Jackson, Mississippi 144 CR Jackson Jackson, Tennessee 124 CR North Little Rock Little Rock, Arkansas 172 CR of Tinker Oklahoma City, Oklahoma 152 CR of Yukon Yukon, Oklahoma 200 CR Richland Richland, Mississippi 184 CR Sherwood Sherwood, Arkansas 160 CR Springdale Bethel Heights, Arkansas 184 Chenal Lakes Apartments Little Rock, Arkansas 456 Cheyenne Village Apartments San Antonio, Texas 60 Chisolm Trace Apartments San Antonio, Texas 126 City Parc II West Oaks Apartments Houston, Texas 192 Cleme Manor Houston, Texas 284 Clippers Cove Boynton Beach, Florida 384 Cobb Park Townhomes Fort Worth, Texas 172 Concord at Gulfgate Houston, Texas 288 Concord at LittleYork Houston, Texas

35 The Lynd Company Multifamily Housing Portfolio Property Name Location # of Units Concord at Williamcrest Houston, Texas 288 Copper Creek Apartments Abilene, Texas 228 Covina Plaza San Antonio, Texas 70 Creek Hollow Apartments Fort Worth, Texas 120 Crown Ridge of Edmond Edmond, Oklahoma 160 Dublin Apartments San Antonio, Texas 156 Dorado Ranch Odessa, Texas 224 Emerald Bay Houston, Texas 248 Enclave Amarillo, Texas 225 Fairfield Apartments Little Rock, Apartments 337 Fairways V San Antonio, Texas 205 Forest Hills Apartments Garner, North Carolina 136 Forest River Apartments Gadsden, Alabama 248 Fowler Square Apartments Little Rock, Arkansas 88 Fulton Village Houston, Texas 108 Gracie Square Houston, Texas 223 Golf Villas Gulf Breeze, Florida 136 Glen Oaks Beaumont, Texas 250 Greenhouse Houston, Texas 350 Greenview Gardens Apartments Butler, Pennsylvania 137 Greenview Manor St. Petersburg, Florida 52 Grove at Trinity Mills Dallas, Texas 320 Haven at Augusta Woods Houston, Texas 246 Haven at West 11 th Houston, Texas 121 Heatherbrook Apartments Houston, Texas 176 Heritage Square Apartments Dallas, Texas 112 Heritage Square Apartments Edinburg, Texas 204 Highland Ridge Overland Park, Kansas 370 Highlands Apartments Dallas, Texas 136 Hillcrest Apartments Grand Prairie, Texas 310 Hillstone at Centreport Fort Worth, Texas 318 Hillstone at Trinity Oaks Benbrook, Texas 166 Hillstone on the Trails Benbrook, Texas 168 Historic at Allen Parkway Houston, Texas 500 Howell Bridge Apartments Duluth, Georgia 256 Huntington Ridge DeSoto, Texas 198 Huntington Park New Orleans, La 161 Huebner Oaks Apartments San Antonio, Texas 344 Ingram Ranch Apartments San Antonio, Texas 164 Ironwood Crossing Apartments Fort Worth, Texas 280 Jacob s Crossing Magee, Mississippi 45 James Park St. Petersburg, Florida 82 Kingswood Manor Apartments San Antonio, Texas 129 Kitty Hawk Apartments Universal City, Texas 308 La Plaza Apartments El Paso, Texas 129 Lake Vista Warner Robbins, Georgia 234 Lakes at Indian Creek Clarkston, Georgia 603 Lakeside Villas Apartments Jackson, Mississippi 146 Landmark Beaumont, Texas 200 Las Colinas Apartments San Antonio, Texas 232 Las Villas de Merida San Antonio, Texas 160 Laurel Crossing Apartments San Antonio, Texas 112 Laurel Gardens Metairie, Louisiana 60 Le Chateau Lake Charles, Louisiana

36 The Lynd Company Multifamily Housing Portfolio Property Name Location # of Units Legends of El Paso El Paso, Texas 240 Limestone Houston, Texas 438 Lodge of Overland Park Overland Park, Kansas 548 Longfellow Arms Longivew, Texas 216 Madison Crossing Vernon, Texas 112 Madison Highlands Hillsboro, Texas 128 Madison Trails Altus, OK 112 Magnolia Terraces Montgomery, AL 176 Marbach Park Apartments San Antonio, Texas 304 Marianna Gardens Marianna, Florida 100 Maverick San Antonio, Texas 86 Meadows Universal City, Texas 216 Meadow Creek Apartments Houston, Texas 192 Mill Creek Apartments Spring, Texas 174 Mission Springs Apartments Jacksonville, Florida 444 Mountainside Apartments Jasper, Georgia 176 Nob Hill Apartments San Antonio, Texas 368 Oak Hills Apartments San Antonio, Texas 121 Oak Hollow Austin, Texas 409 Oak Park Village Lenexa, Kansas 511 Oaks at Ashford Point Houston, Texas 255 Oaks at Brandlewood Savannah, Georgia 324 Oakdell Way San Antonio, Texas 10 Palacio Del Sol San Antonio, Texas 222 Paramount Terrace Amarillo, Texas 181 Park at Summerhill Texarkana, Texas 184 Pawel Village San Antonio, Texas 76 Pebble Hills Apartments El Paso, Texas 104 Pepperidge Apartments San Antonio, Texas 144 Perrin Crest Apartments San Antonio, Texas 200 Perrin Square Apartments San Antonio, Texas 236 Pine Forest Houston, Texas 161 Pinhook South Apartments Lafayette, Louisiana 240 Pleasant Pointe Little Rock, Arkansas 239 Portland Courtyard Los Angeles, California 46 Portofino Villas Melbourne, Florida 160 Raintree Senior Apartments St. Louis, Missouri 102 Ranch on Guadalupe New Braunfels, Texas 184 Ranch at Waller Waller, Texas 224 Rankin Square Pearl, Mississippi 120 Regents Center Apartments Overland Park, Kansas 424 Reserve at Pecan Valley San Antonio, Texas 412 Residences at Fannin Station Houston, Texas 301 Residences at Stone Brook Nashville, TN 320 River Mill Apartments Hudson, Florida 136 River Road Terrace Ettrick, Virginia 128 River Oaks Wylie, Texas 180 Riverview Apartments Tampa, Florida 296 Riverwalk II Apartments Homestead, Florida 112 Rush Creek Apartments Arlington, Texas 248 Sabine Park Orange, Texas 200 Sandridge Pasadena, Texas 504 Sandpiper Houston, Texas 286 Savoy on Garland Garland, Texas

37 The Lynd Company Multifamily Housing Portfolio Property Name Location # of Units Shadow Ridge Apartments Houston, Texas 260 Shadowood Apartments Silas Creek Lake Charles, Louisiana Winston-Salem, North Carolina St. Luke s Plaza St. Louis, Missouri 216 Stations at Richmond Hills Atlanta, Georgia 181 Stonebridge at City Park Houston, Texas 240 Stone Creek Apartments Tyler, Texas 248 Stone Ridge Apartments Arlington, Texas 204 Stonehouse Apartments San Antonio, Texas 248 Stratford Landing Tallahassee, Florida 192 Suffolk Manor Lake Charles, Louisiana 220 Summertree Valley View Apartments Little Rock, Arkansas 232 Sunset Bay Apartments Miami, Florida 308 Sweetwater Point Houston, Texas 260 Terraces and Highbury Apartments Atlanta, Georgia 172 The Commons Texarkana, Texas 196 The Forum at Grand Prairie Grand Prairie, Texas 304 The Preserve at Collier Ridge Atlanta, Georgia 419 The Regents Jacksonville, Florida 304 The Villages at Cable Ranch Apartments San Antonio, Texas 272 Timber Ridge Apartments San Antonio, Texas 168 Townhouse Apartments San Antonio, Texas 574 Towne Oaks Beaumont, Texas 186 Trace Apartments Lake Charles, Louisiana 80 Travis Park Apartments Austin, Texas 199 Tribute at Rim San Antonio, Texas 380 Tupelo Trace Twin City Tupelo, Mississippi Winston-Salem, North Carolina Union Square White Settlement, Texas 144 Valley View Summertree North Little Rock, Ar 232 Valley Crossing Apartments Little Rock, Arkansas 211 Vantage at San Marcos San Marcos, Texas 240 Village Circle New Braunfels, Texas 50 Village Square Apartments Port Richey, Florida 92 Villages at Lost Creek San Antonio, Texas 260 Village at Uvalde Houston, Texas 446 Villas at Pinnacle Park Dallas, Texas 332 Villas Winkler Houston, Texas 234 Vista Houston, Texas 320 Waterford Apartments San Antonio, Texas 133 Waterside at Mason Richmond, Texas 246 Westchase Crossing Houston, Texas 366 Westgate Apartments Ocean Springs, Mississippi 90 Westridge Apartments Whispering Pines Fort Worth, Texas Spartanburg, South Carolina Willow Bend Apartments Lake Charles, Louisiana 105 Woodchase Apartments Gulfport, Mississippi 80 Woodland Heights Austin, Texas 288 Woodside Village Clarkston, Georgia 356 Wyncrest Clarkston Station Clarkston, Georgia 356 Wyndham Apartments Houston, Texas

38 Prior Operating Histories The Borrower has provided a compilation of financial statements for the Project for fiscal years ended December 31, 2016, 2015 and See APPENDIX D herein. The Underwriter makes no representations as to the accuracy or completeness of such financial statements. No assurance can be given that the prior operating revenues from the Project or operating expenses of the Project as set forth in these financial statements will be consistent with those historically experienced. Certain expenses incurred by the seller may not be incurred by the Borrower, and the Borrower may incur expenses that were not incurred by the seller. Occupancy The Borrower expects physical occupancy to be at least 95% for the Project in each year during which the Series 2017 Bonds are outstanding; however, no assurances can be made with respect to the actual physical occupancy of the Project during such time. See RISK FACTORS AND INVESTMENT CONSIDERATIONS Future Project Revenues and Expenses and Risks of Real Estate Investment herein. The physical occupancy rate is the proportion of units that are occupied by tenants. The economic occupancy rate is the proportion of the gross potential rent that is collected. As such, economic occupancy takes into consideration items such as model units, employee units, discounted units, rent incentives, loss to lease and bad debt expense. The table below sets forth the physical occupancy and economic occupancy of the Project for the fiscal years ending December 31 of each year. The Rubix Apartments Historical Occupancy Trends 2017** Physical Occupancy 95.0% 91.2% 93.9% 51.3% Economic Occupancy 88.0% 82.0% 84.3% 42.2% **Reflects market conditions as of September 1, Pro Forma Financial Projections Attached hereto as Appendix D are pro forma financial projections prepared by the Borrower setting forth an estimate of revenues and expenses for the Project for the period twelve months post closing, with adjustments related to changes in management, administrative costs associated with the Bonds and required deposits into the Repair and Replacement Fund. The Underwriter makes no representation for the accuracy of the financial projections. There are no assurances that operating revenues will not be less than, or that operating expenses will not be greater than those listed in the projections, and it is reasonably expected that such expenses will increase during the term of the Bonds. In the event of increases in the operating expenses of the Project, the Borrower will be primarily dependent upon increases in tenant rents in order to adequately operate and maintain the Project. See RISK FACTORS AND INVESTMENT CONSIDERATIONS Future Project Revenues and Expenses herein. Environmental Assessments The Borrower has obtained an independent Phase I Environmental Site Assessment for the Project (the Environmental Assessment ) as further described below. The Environmental Assessment was conducted utilizing the generally accepted Phase I industry standards using the American Society for Testing and Materials (ASTM) Standard Practice E During the initial offering period for the Bonds, the Environmental Assessment will be provided to any prospective purchaser upon request to the Underwriter. A summary of certain aspects of the Environmental Assessment follows. The following summary does not purport to be complete or definitive and are qualified in its entirety by reference to the full Environmental Assessment. 33

39 The Environmental Assessment for the Project was prepared by the National Due Diligence Services ( NDDS ) and is the subject of a written report dated June 16, Such Environmental Assessment did not reveal evidence of recognized environmental conditions. Physical Needs Assessments The Borrower has obtained independent physical condition reports for the Project (the Physical Needs Assessment ) as further described below. On June 16, 2017, the NDDS prepared a Property Condition Assessment Report ( PCA ) for the Project with an effective date of June 16, The purpose of the PCA is to provide information to evaluate the condition of the subject property in order to facilitate completion of due diligence by the addressee. The purpose is accomplished by describing the primary systems and components of the subject property, identifying conspicuous defects or material deferred maintenance, and presenting an opinion of costs to remedy the observed conditions. In addition, the PCA identifies systems or components that are anticipated to reach the end of their expected useful life during the specified evaluation period and includes an opinion for future capital replacements. The PCA identified $3,000 in immediate repairs. The PCA also noted the Borrower needs to fund $157 per unit per year for capital replacement reserve items. Nevertheless, the Borrower intends to fund $300 per unit per year for capital replacement reserve items. Prospective purchasers of the Bonds may obtain a copy of the PCA upon request to the Underwriter during the initial offering period of the Bonds. The proceeding summary does not purport to be complete or definitive and is qualified in its entirety by reference to the full PCA report. Project Regulation The Project is required to be operated in accordance with the terms of the Land Use Restriction Agreement, which requires that the Project be maintained as a residential rental housing project within the meaning of Section 142(d) of the Code, and the Treasury Regulations thereunder and that during the Qualified Project Period (as defined in such Land Use Restriction Agreement) at least 40% of the completed units be occupied by Low Income Tenants. The Tax Agreement further imposes certain requirements relating to the 501(c)(3) tax-exempt treatment of the Sole Member, including the requirement that 75% of the units in the Project be rented to Moderate Income Tenants. See APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE LAND USE RESTRICTION AGREEMEHT hereto. The Land Use Restriction Agreement further requires that the Project subject thereto be offered for rental to the general public, prohibits rental of certain units to persons related to the Borrower owning such Project and rentals on a transient basis, and imposes other restrictions on the operation of the Project (as defined in the Land Use Restriction Agreement, the Rental Restrictions ). These conditions and restrictions may continue in effect upon a sale or foreclosure under the Mortgage and can be expected to adversely affect the value of the Project to prospective purchasers of the Bonds in the event of a sale or foreclosure. In addition, failure by the Borrower to operate the Project in compliance with the provisions of the Land Use Restriction Agreement or the Tax Agreement could cause interest on the Tax-Exempt Bonds to be subject to federal income taxation, possibly retroactive to the date of issuance of the Bonds. Insurance Under the Loan Agreement, the Borrower is required to maintain: (i) insurance against loss or damage to the improvements by fire and other risks covered by fire and extended coverage insurance in an amount not less than the greater of the full replacement cost of the improvements and personal property or the outstanding principal amount of the Bonds, with a deductible for any casualty; (ii) business interruption or loss of rent insurance in amounts sufficient to make all payments due under the Loan Agreement and the Note during any twelve-month period, or the gross amount of annual rentals projected (or, if greater, actual) for the Project based upon the projected (or, if greater, actual) occupancy of the Project; provided that such coverage shall be increased annually on each anniversary date of the policy to comply with the Loan Agreement; (iii) comprehensive general liability insurance on an occurrence basis against claims for personal injury, including bodily injury, death or property damage; (iv) workers compensation insurance; (v) during the construction or repair of improvements on the Project, builders completed value risk insurance against all risks of physical loss; (vi) boiler and machinery insurance; (vii) 34

40 flood insurance if the Project is in an area identified as a special flood hazard area; (viii) and such other insurance as may from time to time be reasonably required by the Trustee, in such amounts and against such hazards and risk, as is commonly obtained by prudent owners of property similar in use as to the Project and in the respective area in which the Project is located. All policies of insurance will contain an endorsement or agreement by the insurer that any loss will be payable in accordance with the terms of such policy notwithstanding any act or negligence of the Borrower, which might otherwise result in forfeiture of such insurance, and the further agreement of the insurer waiving all rights of set-off, counterclaim or deductions against the Borrower. APPRAISAL The Project has been appraised by Novogradac, as independent appraiser (the Appraiser ) selected by the Sole Member (the Appraisal ). A summary of the Appraisal follows. The summary does not purport to be complete or definitive and is qualified in its entirety by reference to the full Appraisal. A copy of the Appraisal is attached hereto as APPENDIX I. The Appraisal includes information regarding the procedures utilized in preparing the Appraisal and the underlying general assumptions and limiting conditions. The conclusions and much of the other information included in the Appraisal are based on the assumptions and rationale stated therein. In some instances the currently available information may be incomplete, may not necessarily disclose all material facts that might affect the Project, and, in any case, may change after the date of the Appraisal. Accordingly, the assumptions and other information in the Appraisal should be carefully evaluated by a prospective investor in the light of the circumstances then prevailing. Appraisals, by their nature, are based on the judgment of the respective appraisers, represent only estimates of value and should not be relied upon as a measure of realizable value. The Appraisal is dated as of its date. There can be no assurance that information set forth therein continues to be accurate in all respects as of the date hereof. In any event, the accuracy of the Appraisal is dependent upon the occurrence of specified assumptions and other future events which cannot be assured, and therefore, the actual results achieved will vary from the forecasts, and the variation may be material. Information taken from the Appraisal prepared by the Appraiser should be evaluated within the context of the related full narrative report. Information presented out of the context of the full narrative report may be misleading. There is no assurance that the as is values set forth in the Appraisal would be realized in the event of the foreclosure or forced sale of the Project. Project Appraisal. Novogradac determined as of June 29, 2017 the market value of the fee simple interest of the Project as is to be $15,700,000. A copy of the appraisal is attached hereto as APPENDIX I. [Remainder of page intentionally left blank] 35

41 ESTIMATED SOURCES AND USES OF FUNDS The Borrower expects the proceeds of the Bonds to be used and applied in the following manner: Sources of Funds: Series 2017A Bonds $11,820,000 Taxable Series 2017B Bonds Subordinate Series 2017C Bonds 215,000 1,795,000 Original Issue Discount (219,490) Total Sources of Funds $13,610,510 Uses of Funds: Project Fund $12,725,000 Debt Service Reserve Fund 403,197 Cost of Issuance 300,500 Underwriter s Fee 172,875 Additional Proceeds 8,938 Total Uses of Funds $13,610,510 RISK FACTORS AND INVESTMENT CONSIDERATIONS AN INVESTMENT IN THE BONDS INVOLVES A SIGNIFICANT DEGREE OF RISK. PROSPECTIVE PURCHASERS OF THE BONDS SHOULD CAREFULLY CONSIDER ALL POSSIBLE FACTORS WHICH MAY AFFECT THEIR INVESTMENT IN THE BONDS. IN ADDITION TO THE OTHER INFORMATION SET FORTH HEREIN, THE FOLLOWING LIST, WHILE NOT SETTING FORTH ALL THE FACTORS, CONTAINS SOME OF THE FACTORS THAT SHOULD BE CONSIDERED PRIOR TO PURCHASING THE BONDS. In order to identify risk factors and make an informed investment decision, prospective investors should be thoroughly familiar with this entire Official Statement (including the Appendices hereto, the documents describing the transactions, the third party reports with respect to the Project and the documents relating to the formation and organization of the Borrower and the Sole Member) and review the actual documents summarized herein to make a judgment as to whether the Bonds are an appropriate investment for the investor. Moreover, the order of presentation of the risk factors does not necessarily reflect the order of their importance. Special Limited Obligations of Authority THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM THE TRUST ESTATE (AS DEFINED HEREIN) AND, EXCEPT FROM SUCH SOURCE, NONE OF THE AUTHORITY, ANY SPONSOR (AS DEFINED HEREIN), ANY MEMBER (AS DEFINED HEREIN), ANY AUTHORITY INDEMNIFIED PERSON (AS DEFINED IN THE INDENTURE), THE STATE (AS DEFINED HEREIN) OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE BONDS ARE NOT A DEBT OF THE STATE OR THE MEMBERS AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, ANY SPONSOR, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS, NOR THE FAITH AND CREDIT OF THE AUTHORITY, ANY SPONSOR OR ANY AUTHORITY INDEMNIFIED PERSON, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR 36

42 INTEREST ON THE BONDS OR ANY COSTS INCIDENTAL THERETO. THE AUTHORITY HAS NO TAXING POWER. Limited Resources of Borrower; Security for Repayment The Borrower is a newly formed entity whose only asset is its interest in the Project. As a result, the Borrower s sole source of funds with which to pay its obligations under the Loan Agreement and Note is the revenue generated by the operation of the Project. There can be no assurance that such amounts will be sufficient to repay the Borrower s obligations with respect to the Bonds. No other revenues or assets of the Borrower or the Sole Member will be available for the payment of, or as security for, the Bonds. The security for the Bonds (subject to Permitted Encumbrances) will consist entirely of (a) all right, title and interest of the Authority in and to the Note, the Mortgage, the Land Use Restriction Agreement and the Loan Agreement (other than the Unassigned Rights), including the proceeds thereof or recovery thereon; (b) all funds, money and securities from time to time held by the Trustee under the terms of the Indenture (except with respect to money in the Rebate Fund) and any interest, profits and other income derived from the investment thereof, including the proceeds of the Bonds, subject to the application thereof in accordance with the Indenture, including Net Proceeds; (c) any and all other rights and interests in property conveyed, mortgaged, pledged, assigned or transferred as and for additional security for the Bonds by the Authority or by anyone on its behalf or with its written consent to the Trustee; and (d) to the extent not covered above, all proceeds of the foregoing. Prospects for uninterrupted payment of principal and interest on the Bonds in accordance with their terms are dependent upon the success of the Borrower in renovating and operating the Project to generate adequate cash flow to meet its obligations under the Loan Agreement and the Note. The Borrower and Related Parties; Conflicts of Interest The Borrower was organized for the sole purpose of acquiring and operating the Project owned by it. The Borrower has no assets other than the Project owned by it and the rights and revenues incident thereto and no intention to acquire other assets. The ability of the Borrower to pay and perform its obligations under the Loan Agreement and the Note will depend primarily upon the ability of the Project to generate sufficient revenues. Under the terms of the Loan Agreement and applicable law relating to limited liability companies, the Sole Member is not liable for the debts or losses of the Borrower, nor is it obligated to contribute any funds to or on behalf of the Borrower or any of them, irrespective of whether the revenues of the Project are sufficient to pay operating expenses and debt service requirements with respect to the Bonds. The Sole Member has engaged in, and may continue to engage in, business for its own accounts, independently or with others, and whether or not in the vicinity of or in competition with the Project. As a result of its other interests and activities, the Sole Member may have a conflict of interest with its role in the Project, including conflicts in allocating its time and resources between the Project and other activities in which it is involved. Future Project Revenues and Expenses As noted herein, and except to the extent payable from investment income or, under certain circumstances, proceeds of casualty insurance or condemnation awards, principal of and premium, if any, and interest on the Bonds is payable solely from Project Revenues, which include payments from tenants, from the security provided by or pursuant to the Indenture, the Loan Agreement and the Mortgage. No representation or assurance is given or can be made that Project Revenues, as presently estimated or otherwise, will be realized by the Borrower, the Trustee, or by any other person in amounts sufficient, together with such other moneys available under the Indenture and pledged to the Bonds, to pay debt service on the Bonds when due and to make other payments necessary to meet the obligations of the Borrower. Future revenues and expenses of the Project are subject to conditions which may change. 37

43 The realization of Project Revenues from the Project by the Borrower generally is subject to, among other factors, federal and state policies affecting rental housing and the housing market generally, demand for multifamily rental housing, the capability of management of the Project, the nature and condition of the housing stock in the neighborhood in which the Project is located, future economic conditions and other conditions which are impossible to predict. Such conditions may include an inability of management at the Project to control expenses during periods of inflation, changes in government involvement in and regulation of rental housing, changes in local real estate taxes and zoning restrictions, and competition from other sources of assisted or market-rate multifamily housing. The payment of debt service on the Bonds is, among other things, dependent upon the Borrower s ability to maintain occupancy of the Project, charge and collect rents which are sufficient to pay operating expenses of the Project, debt service requirements with respect to the Bonds and to fund necessary reserves as required under the Indenture. Occupancy levels (which also affect Project Revenues) will depend principally upon the desirability of the Project as rental housing, taking into account factors such as its cost, location, physical condition and amenities. See THE BORROWER AND THE PROJECT and the subheadings thereunder herein for a description of the Project. Occupancy levels may also be affected by a variety of future events, including but not limited to failure of the Project to attract such tenants because of competition from other rental housing, changes in zoning restrictions, or development activities near the Project. Subordinate Status of Series 2017C Bonds The Series 2017C Bonds (also referred to as the Subordinate Bonds) are subordinate to the Senior Bonds as described herein and as set forth in the Indenture. Under the Indenture, amounts deposited in the Revenue Fund (after all other required applications) will be used to fund the accounts in the Bond Fund for payment of the Senior Bonds and the account in the Debt Service Reserve Fund for the Senior Bonds prior to funding the accounts in the Bond Fund and the account in the Debt Service Reserve Fund for payment of the Subordinate Bonds. See APPENDIX B SUMMARY OF THE TRUST INDENTURE Revenue Fund hereto. Amounts on deposit in the Bond Fund for a particular Series of Bonds will be used solely to pay principal and interest on the related Series of Bonds, on the applicable payment dates. If there is a shortfall of revenues, deposits to the Bond Fund and the Debt Service Reserve Fund for the Senior Bonds must be made prior to any such deposits being made with respect to the Subordinate Bonds. Under such circumstances, principal and/or interest on the Subordinate Bonds may remain unpaid. Risks of Real Estate Investment General. Development, ownership and operation of real estate, such as the Project, involves certain risks, including the risk of adverse changes in general economic and local conditions, the possible future oversupply and lagging demand for housing; adverse use of adjacent or neighboring real estate; community acceptance of the Project; changes in the cost of operation of the Project; difficulties or restrictions in the Borrower s ability to raise rents charged; adverse weather and delays in rehabilitation; population decreases; uninsured losses; failure of residents to pay rent; operating deficits and mortgage foreclosure; lack of attractiveness of the property to residents; adverse changes in neighborhood values; and adverse changes in zoning laws, federal and local rent controls, other laws and regulations and real property tax rates. Such losses also include the possibility of fire or other casualty or condemnation. If the Project, or any part of the Project, was uninhabitable during restoration after damage or destruction, the residence units or common areas affected would not be available during the period of restoration, which could adversely affect the ability of the Project to generate sufficient revenues to pay debt service on the Bonds. Changes in general or local economic conditions and changes in interest rates and the availability of mortgage funding may render the sale or refinancing of the Project difficult or unattractive. These conditions may have an adverse effect on the demand for the Project as well as the market price received for the Project in the event of a sale or foreclosure of the Project. Many other factors may adversely affect the operation of facilities like the Project and cannot be determined at this time. Risks of Competition, the Rental Market and Occupancy and Rental Rates. The Project may compete with other current and future multifamily housing developments in their market areas, some of which may offer lower rentals. It is difficult to assess the current and future demand for units of the Project or future rental rates. Therefore, there can be no assurance that the Project will achieve the occupancy levels or the rental rates necessary to cover debt service requirements. 38

44 Failure to Maintain Occupancy. The economic feasibility of the Project and its ability to provide revenues to the Borrower sufficient to make payments on the Note depend in large part upon their being substantially occupied. Occupancy of the Project may be affected by competition from existing competing facilities or from competing facilities which may be constructed in the area served by the Project, including facilities which the Sole Member, or its or their affiliates, may acquire or construct. None of the participants in the Project have agreed to a covenant not to compete with the Project. Circumstances may occur, including but not limited to, insufficient demand for affordable multifamily housing in the Project s location, decreases in the population, deterioration of the structure and living facilities of the Project, and construction of competing projects for low income individuals or other more attractive living accommodations, which could increase the rate of vacancy. Further, the sustained failure of tenants to meet their rental payment obligations would make it difficult for the Project to meet its current operating expenses which could result in a curtailment of essential services and decrease the desirability of the Project to existing or prospective tenants. Damage, Destruction or Condemnation. Although the Borrower will be required to obtain and maintain certain insurance against damage or destruction as set forth in the Loan Agreement and the Mortgage, there can be no assurance that the Project will not suffer losses for which insurance cannot be or has not been obtained or that the amount of any such loss, or the period during which the Project cannot generate Project Revenues, will not exceed the coverage of such insurance policies. If the Project or any portion of the Project is damaged or destroyed, or are taken in a condemnation proceeding, funds derived from proceeds of insurance or any such condemnation award for the Project must be applied as provided in the Loan Agreement to restore or rebuild the Project or to redeem the Bonds (in whole or in part, as applicable). There can be no assurance that the amount of funds available to restore or rebuild the Project or to so redeem the Bonds will be sufficient for that purpose, or that any remaining portion of the Project will generate Project Revenues sufficient to pay the expenses of the Project and the debt service on the Bonds remaining outstanding. Marketing and Management The successful operation of the Project is heavily dependent upon the efforts of the Manager. The Borrower has contracted with the Manager pursuant to the Management Agreement for marketing and day-to-day management and operation of the Project. If the Manager was to terminate its relationships with the Borrower, the Borrower would need to hire and train management teams for the Project or contract for similar services at equivalent rates with another company. No assurance can be given that the Manager can continue to successfully manage or operate the Project, that the Borrower will not terminate the relationship with the Manager or that another experienced successor management/consulting company will undertake the management or operation of the Project under the terms required by the Indenture. A failure to maintain the Manager as the management/consulting company for the Project or to hire, train and retain a successor management/consulting company may have an adverse effect on the ability of the Project to operate and could negatively impact occupancy levels and revenues of the Borrower. For more information see THE BORROWER AND THE PROJECT The Manager herein. Effect of Increases in Operating Expenses It is impossible to predict future increases in operating expenses. An extended period of inflation may cause the rate of increases in Operating Expenses to rise more rapidly than the Borrower s ability to raise rents. Conversely, an extended period of deflation may cause the Project s rents to decrease more rapidly than any decrease in the Project s Operating Expenses. In addition, any underestimation by the Borrower of the current Operating Expenses of the Project may materially adversely affect sufficiency of the operating income of the Project. Property reserves are an important consideration for replacing such items as kitchen appliances, heating and air conditioning systems, roofs and other major capital items to maintain the quality of the Project over time. The adequacy of the Project s reserve funds will depend in part on the quality of workmanship performed during construction or rehabilitation and the longevity of mechanical equipment that was installed in the units. The deterioration and replacement of capital items is not predictable with certainty, and real estate properties such as the Project may encounter a periodic need for capital for replacement or repair of capital items in excess of property 39

45 reserves on hand. The Borrower has obtained a physical needs assessment for the Project and a portion of the proceeds of the Bonds will be used to pay the costs of the improvements recommended by the physical needs assessment. See THE BORROWER AND THE PROJECT Physical Needs Assessment herein. In the event that additional capital is needed for the replacement of capital items, since the Borrower has no other source of income other than the Project, it is likely that the Borrower will either have to seek additional debt financing from third-party lenders or pay for such capital replacement or improvement out of Surplus Cash from the Project. The Authority has no obligation with respect to any operating, reserve or capital expenses of the Project and no obligation to issue Additional Bonds with respect to the Project. To the extent there are any expenditures required to maintain the Project that are not foreseen by the Borrower, any uninsured losses are experienced, the only source of money to pay such expenses would be additional resources, if any, available to the Borrower. The Borrower may be unable or unwilling to pay for such additional expenditures. Substantial increases in Operating Expenses would affect future net operating income of the Project and the ability of the Project to generate rental revenue in amounts sufficient to satisfy the Borrower s obligations under the Loan Agreement and the Note. Any failure by the Borrower to satisfy their payment obligations under the Loan Agreement and the Note will have an adverse impact on the ability of the Trustee to pay, from the Trust Estate, debt service payments on the Bonds. Project s Risks Adequacy of the Project as Security. The security for the Bonds includes a lien on the Project, evidenced by the Mortgage which has been granted in favor of the Trustee. If the Borrower fails to make sufficient and timely payments required under the Loan Agreement, it may be necessary for the Authority and the Trustee to exercise their remedies under the Mortgage or the Indenture, including foreclosure. There can be no assurance that if and when the Trustee forecloses and obtains possession of the Project or realizes amounts from the sales thereof, that resulting proceeds or Project Revenues (if the Project is retained and operated by the Trustee), would be sufficient to pay debt service on the Bonds in full when due and operating expenses of the Project. The Trustee is not in the business of operating facilities such as the Project and any amounts which might be realized from operation of the Project are uncertain. Further, attempts to foreclose under the Mortgage or to obtain other remedies under such document, the Indenture, the Loan Agreement or any other documents relating to the Bonds may be met with protracted litigation and/or bankruptcy proceedings, which could cause delays, and a court may decide not to order specific performance of covenants contained in such documents. Thus, there can be no assurance that upon the occurrence of an event of default on the Bonds the Trustee will be able to obtain possession of the Project or generate proceeds of sale or revenues from the Project, or obtain other relief, in a timely fashion. Project is a Special Purpose Facility. The Project was constructed for multifamily residential rental housing purposes and is subject to physical restrictions that limit the alternative uses that can be made of such properties. The Land Use Restriction Agreement also imposes significant restrictions on the use of the Project which could remain in effect, even in the event of foreclosure of the Mortgage. See APPENDIX D SUMMARY OF THE LAND USE RESTRICTION AGREEMENT hereto. If the Borrower is unable to operate the Project successfully as a multifamily residential rental housing facility, the number of entities that would be interested in purchasing or leasing the Project from the Borrower for other purposes could be limited, and the ability of the Trustee to lease or sell the Project to third parties would be adversely affected. Therefore, there is no assurance that the Trustee could realize sufficient proceeds from the foreclosure of the Mortgage and the sale of the Project thereunder to pay the Bonds in their entirety. Rental Housing Requirements. The Project is subject to significant regulation which, among other things, affects the eligibility of tenants who may reside in the Project and the rents which may be charged to tenants. The Tax Agreement and the Land Use Restriction Agreement require that so long as a Borrower is the owner of a Project, 75% of the units of such Project be rented or held available to Moderate Income Tenants and that at least 40% of the units of such Project be rented or held available to Low Income Tenants. See INTRODUCTION and 40

46 THE BORROWER AND THE PROJECT Project Regulation herein. The restrictions are necessary to maintain the tax-exempt status of the Bonds. Pursuant to safe harbor rules relative to federal income tax treatment of the Sole Member, the Borrower must maintain a rental policy with respect to the portions of the Project that are leased to low and very low income tenants that follows government imposed rental restrictions or a rental policy that otherwise provides that the housing is affordable to those tenants. However, these restrictions may limit the ability of the Borrower to increase the rentals charged to the tenants of the Project to the extent required to compensate for increasing expenses. (See THE BORROWER AND THE PROJECT Project Regulation herein and APPENDIX D SUMMARY OF THE LAND USE RESTRICTION AGREEMENT hereto). The foregoing rental housing requirements may adversely affect the occupancy and revenues of the Project and may limit the Borrower s ability to refinance the Project. Other Government Regulation. The Project is and will continue to be subject to rules and regulations promulgated by various agencies and bodies of federal, state and local governments which have jurisdiction over such matters as employment, environment, safety, traffic and health. The impact of such rules and regulations on the Project is unknown and cannot be predicted. Future orders, pursuant to existing or subsequently enacted rules or regulations, may require the expenditure by the Borrower of substantial sums to effect compliance therewith. Insurance Risks The Loan Agreement requires the Borrower to carry certain insurance; however, there are certain types of losses (generally of a catastrophic nature) that are either uninsurable or not economically insurable. Such risks include, but may not be limited to, earthquakes, terrorism, war, and floods. Moreover, such insurance coverage is subject to certain upper limits, which may not be sufficient to pay the costs of remedying every event of casualty that may occur. In addition, the Borrower could mistakenly allow the insurance on the Project to lapse. If an uninsured loss occurs, a default in payment of the Bonds could result. Failure of an insurer to pay a claim could also result in a default on the Note. Substantial increases in general liability insurance premiums may occur at any time and, at times, the Borrower may experience difficulty in obtaining such insurance for the Project. Litigation may also arise from the corporate and business activities of the Borrower and from the status of the Borrower as an employer; many of these risks are covered by insurance, but some are not. While the Borrower is required by the Loan Agreement to have in effect at all times comprehensive general liability insurance providing insurance against liability for personal and bodily injury including death resulting therefrom, if a claim or judgment against any Borrower for an amount in excess of the limits of such insurance were to arise, it would likely have a material adverse effect on the financial results of the Project and the Borrower. Delinquent and Defaulting Tenants The Borrower only intends to rent to tenants that they judge to be creditworthy. Nevertheless, a portion of the tenants in the Project will be lower income persons who may not be able to make timely rental payments or will otherwise fail to make rental payments at all. To the extent possible, management intends to terminate rentals to such delinquent or defaulting tenants as soon as practicable after their default. Tenants who do not voluntarily vacate will require that the Borrower to recover possession through legal action. Legal action is costly, both in regard to legal fees and expenses and to lost revenues during the time necessary to remove the tenant. The existence of delinquent or defaulting tenants in the Project could adversely affect the ability of the Borrower to make timely payments, if at all, under the Loan Agreement and the Note. Any failure by the Borrower to satisfy their payment obligations under the Loan Agreement and the Note will have an adverse impact on the ability of the Trustee to pay debt service payments on the Bonds. Appraisal The Borrower secured an Appraisal for the Project in connection with the issuance of the Bonds. See APPRAISAL herein. The Appraisal is based on certain assumptions significant to the operation of the Project as described therein, and set forth information as of the date thereof. Some assumed events and circumstances 41

47 inevitably will not materialize, and unanticipated events and circumstances may occur subsequent to the date of the Appraisal. Accordingly, the assumptions and other information in the Appraisal should be carefully evaluated by a prospective investor in the light of the circumstances then prevailing. Appraisals, by their nature, are based on the judgment of the appraiser, represent only estimates of value, and should not be relied upon as a measure of realizable value. There can be no assurance that information set forth therein continues to be accurate in all respects as of the date hereof. In any event, the accuracy of the Appraisal is dependent upon the occurrence of specified assumptions and other future events which cannot be assured, and therefore, the actual results achieved will vary from the forecasts, and the variation may be material. Neither the Authority, the Underwriter, the Trustee nor any counsel rendering approving or other opinions with respect to the transactions described herein have examined or verified the assumptions and conclusions contained in the Appraisal. There can be no assurance that another party would not have arrived at different, and perhaps significantly different, results regarding the as is value included in the Appraisal as stated herein especially if such party elected to employ a different approach. If the Project was foreclosed and sold after an Event of Default, there can also be no assurance that the sale price would equal the appraised value of the Project. The Authority and the Underwriter make no representations as to the fair market value of the Project (or any of them). As described above, a summary of the Appraisal is set forth in this Official Statement. The summary does not purport to be complete or definitive and are qualified in their respective entireties by reference to the full Appraisal. During the initial offering period for the Bonds, the Appraisal will be provided to any prospective purchaser upon request to the Underwriter. See APPRAISAL herein. Physical Needs Assessment None of the Authority, the Borrower, the Underwriter or any other party makes any representation as to the physical condition of the Project. There exists the possibility that the Project will require repairs and improvements that were not discovered during the procedures performed by the independent engineers who prepared such assessments and consequently, such repairs and improvements have not been disclosed in the Physical Needs Assessment. Prospective purchasers of the Bonds may obtain copies of the Physical Needs Assessment upon request to the Underwriter during the initial offering period for the Bonds. See THE BORROWER AND THE PROJECT Physical Needs Assessment herein. Financial Projections The financial projections included in Appendix G present the Borrower s present estimate of future results of operations of the Project and are subject to certain assumptions used in preparing them as discussed therein. The Underwriter makes no representation or warranty as to the financial projections asserted therein. The passage of time and current economic conditions should be considered by investors when considering such projections. The financial projections included as Appendix G to this Official Statement were prepared on behalf of the Borrower and have not been examined by an independent certified public accountant and are not intended to and do not meet the requirements of the American Institute of Certified Public Accountants for prospective financial forecasts or projects. SOME ASSUMPTIONS UNDERLYING THE FINANCIAL PROJECTIONS MAY NOT MATERIALIZE AND UNANTICIPATED EVENTS AND CIRCUMSTANCES ARE LIKELY TO OCCUR. THEREFORE, THE ACTUAL RESULTS ATTAINED WILL IN ALL LIKELIHOOD VARY FROM THE PROJECTIONS CONTAINED IN THE PRO FORMA FINANCIAL PROJECTIONS. ACCORDINGLY, NO PERSON CAN MAKE REPRESENTATIONS OR WARRANTIES AS TO THE FUTURE RESULTS OF OPERATIONS OF THE PROJECTS OR ANY OF THEM. IN ADDITION, THE PROFORMA FINANCIAL PROJECTIONS INCLUDED IN APPENDIX G HEREIN HAVE NOT BEEN EXAMINED BY AN ACCOUNTANT. Acceleration of the Bonds; Limitation The Indenture provides that following an Event of Default thereunder, the maturity of the Bonds may be accelerated by the Trustee, subject to cure provisions of the Indenture, and upon written request of the holders of a 42

48 majority of the principal amount of a Series of Bonds, shall be accelerated. However, the acceleration rights of holders of the Subordinate Bonds are limited during the period while any Senior Bonds remain Outstanding. See APPENDIX B SUMMARY OF THE TRUST INDENTURE hereto. Risk of Early Redemption There are a number of circumstances in which all or a portion of the Bonds may be redeemed prior to their stated maturity, and redemption of the Subordinate Bonds is limited during the period while any Senior Bonds remain Outstanding. In addition, there are a number of circumstances where the Bonds may be redeemed at a price of the principal amount of Bonds then Outstanding plus accrued interest to the redemption date. One such circumstance in which all or a portion of the Bonds may be redeemed prior to their stated maturity is following the determination of a Management Consultant that the continued operation of the Project would have a material adverse effect on the ability of the Borrower to comply with the financial covenants contained in the Loan Agreement. For a description of the circumstances in which Bonds may be redeemed and the terms of redemption, see THE BONDS Mandatory Redemption of Bonds herein and APPENDIX B SUMMARY OF THE TRUST INDENTURE and APPENDIX C SUMMARY OF THE LOAN AGREEMENT hereto. Risk of Loss Upon Redemption The rights of Bondholders to receive interest will terminate on the date, if any, on which such Bonds are to be redeemed pursuant to a call for redemption, notice of which has been given under the terms of the Indenture and interest on such Bonds will no longer accrue on and after such date of redemption. There can be no assurance that the Borrower will be able or will be obligated to pay for any amounts not available under the Indenture. In addition, there can be no guarantee that present provisions of the Code or the rules and regulations thereunder will not be adversely amended or modified, thereby rendering the interest earned on the Tax-Exempt Bonds taxable for federal income tax purposes. Incurrence of Additional Indebtedness The Loan Agreement and the Indenture permit the Borrower to incur additional indebtedness, upon compliance with the provisions thereof. Such additional indebtedness, under certain circumstances, may be equally and ratably secured with the Bonds on a senior basis with respect to the Senior Bonds and on a subordinate basis with respect to the Subordinate Bonds, as applicable. See APPENDIX C SUMMARY OF THE LOAN AGREEMENT hereto. Debt Service Reserve Fund The Indenture creates a Debt Service Reserve Fund. In the event that the Borrower does not make timely payment under the Note, funds in the accounts of the Debt Service Reserve Fund will be used to make payments of principal of and interest on the Series of Bonds secured thereby as they become due. Although the Borrower believes such reserve to be reasonable, and anticipate that Project Revenues will be sufficient to cover the debt service on the Bonds, there is no assurance that funds reserved and future Project Revenues will be sufficient to cover debt service on the Bonds. In addition, the Debt Service Reserve Fund is only funded in an amount equal to approximately 50% of the Maximum Annual Debt Service of the Bonds. Although the Loan Agreement requires the Borrower to do so, there can be no assurance that the Borrower will repay into the Debt Service Reserve Fund money so advanced. Investments in the Debt Service Reserve Fund must be in Investment Securities (as described in the Indenture), but are subject to investment risks. There is no limitation on the maturity of investments in the Debt Service Reserve Fund; therefore, there can be no assurance that if the Debt Service Reserve Fund has to be liquidated that sale of investments therein will not result in a loss. Effect of Bankruptcy Bankruptcy and similar proceedings against the Borrower and usual equity principles may affect the enforcement of rights to first lien security for the Bonds. A court may invoke other equity principles to refuse to enforce specifically rights to such security. If such security is inadequate for payment in full of the Bonds, 43

49 bankruptcy proceedings and usual equity principles may also limit any attempt by the Trustee to seek payment from other property, if any, of the Borrower. If the Borrower was to file a petition for relief under the United States Bankruptcy Code, the filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the Borrower, and any interest it has in property. If the bankruptcy court so orders, the Borrower s property, including its accounts receivable and proceeds thereof, could be used, at least temporarily, for the benefit of the bankruptcy estate despite the claims of its creditors. Bankruptcy proceedings by or against the Borrower could adversely affect Beneficial Owners of the Bonds by reducing or delaying payments on the Bonds and may impede enforcement by the Trustee and such Beneficial Owners of their claims to the collateral assigned and pledged to secure the Bonds. Furthermore, judicial decisions concerning the status of debt service reserve funds held by an indenture trustee have concluded that such reserves are cash collateral of a debtor in bankruptcy and have cast doubt on the ability of the Trustee to use moneys in the Debt Service Reserve Fund to make payments on the Bonds in the event of a bankruptcy of the affected Borrower. The commencement of bankruptcy proceedings by or against the Borrower will result in an Event of Default under the Loan Agreement. Enforceability of Remedies; Prior Claims The Bonds are payable from the payments to be made under the Loan Agreement. Pursuant to the Indenture, the Bonds are secured by an assignment by the Authority to the Trustee of certain of its rights under the Loan Agreement (except as provided therein) and by the Mortgage on the Project and the security interests in the personal property and Project Revenues with priority for the Senior Bonds over the Subordinate Bonds. The practical realization of the value from this property upon any default will depend upon the exercise of various remedies specified by the Loan Agreement, the Note, the Mortgage and the Indenture. These and other remedies may require judicial actions, which are often subject to discretion and delay. Under existing law (including, without limitation, the United States Bankruptcy Code), the remedies specified by the Loan Agreement, the Mortgage, or the Indenture may not be readily available or may be limited. A court may decide not to order the specific performance of the covenants contained in the Loan Agreement, the Mortgage or the Indenture. The various opinions to be delivered concurrently with the delivery of the Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by state and federal laws, rulings and decisions affecting remedies, and by bankruptcy, reorganization or other laws affecting the enforcement of creditors rights generally. In addition, the various security interests established under the Indenture and the Mortgage will be subject to Permitted Encumbrances, and may be limited by or subject to other claims and interests. Examples of such claims and interests are: 1. statutory liens and assessments for improvements; 2. rights arising in favor of the United States of America or any agency thereof; 3. constructive trusts, equitable liens or other rights impressed or conferred by any state or federal court in the exercise of its equitable jurisdiction; 4. federal bankruptcy laws affecting amounts earned by a Borrower after institution of bankruptcy proceedings by or against such Borrower; and 5. the requirement that appropriate continuation statements be filed in accordance with the Uniform Commercial Code as from time to time in effect. 44

50 Secondary Market and Prices The Underwriter will not be obligated to repurchase any of the Bonds and no representation is made concerning the existence of any secondary market therefor, nor can any assurance be given that any secondary market will develop following the completion of the offering of the Bonds, and no assurance can be given that initial offering prices for the Bonds will continue for any period of time. Any prospective purchaser of the Bonds, therefore, should undertake an independent investigation through its own advisors regarding the desirability and practicality of the investment in the Bonds. Any prospective purchaser should be fully aware of the long-term nature of an investment in the Bonds and should assume that it will have to bear the economic risk of its investment indefinitely. Any prospective purchaser of the Bonds that does not intend or that is not able to hold the Bonds for a substantial period of time is advised against investing in the Bonds. Credit Ratings There is no assurance that the credit ratings assigned to any Series of the Bonds at the time of issuance or at a subsequent time will not be lowered or withdrawn, the effect of which could adversely affect the market price and the market for the Bonds of such Series. The Rating Agency may revise the criteria under which it rates the Bonds at any time, which revisions could result in significant changes to or withdrawal of the credit ratings assigned to the Bonds. In addition, in determining the initial credit ratings for the Bonds, and in conducting its annual rating surveillance, the Rating Agency may use assumptions regarding occupancy, revenues, expenses and values related to the Project that differ materially from those used by the Borrower. Such differences could result in a lowering or withdrawal of the ratings on the Bonds, if, for example, the Rating Agency s calculations resulted in a failure of the Project to meet the required Coverage Test for the Bonds. There is no covenant requiring the Borrower to maintain the credit rating assigned to the Bonds or to maintain any credit rating in the future. Environmental Matters The Borrower obtained the Environmental Assessment. The Environmental Assessment for the Project did not reveal evidence of recognized environmental conditions. The Borrower represents that it is not aware of any releases of pollutants or contaminants at the Project other than as disclosed in the Environmental Assessment that would give rise to enforcement actions under applicable state or federal environmental statutes. However, there could be other such releases not known to the Borrower as of the date of the issuance of the Bonds. The Borrower is not aware of any enforcement actions currently in process with respect to any releases of pollutants or contaminants at the real property relating to the Project. The Project will be subject to risks arising out of environmental law considerations generally associated with ownership of real estate. Such risks include, in general, a decline in property values in a Project resulting from possible violations of applicable federal or state environmental laws and regulations, including, but not limited to, the Comprehensive Environmental Compensation and Liability Act of 1980 (CERCLA), the Resource Conservation and Recovery Act of 1976 (RCRA). These risks may be associated with contamination of the Project from hazardous substances located in, on, around or in the vicinity of the Project. Please refer to THE BORROWER AND THE PROJECT Environmental Assessment herein. Forward-Looking Statements Certain statements in this Official Statement that relate to the Project and the Borrower including, but not limited to, statements under the captions THE BORROWER AND THE PROJECT, ESTIMATED SOURCES AND USES OF FUNDS and certain statements in Appendix G attached hereto, are forward-looking statements that are based on the beliefs of, and assumptions made by, the management of the Borrower. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of the Project and the Borrower to be materially different from any expected future results or performance. Such factors include, but are not limited to, items described in RISK FACTORS AND INVESTMENT CONSIDERATIONS. 45

51 Specific Tax Covenants of Borrower and Rental Restrictions As referenced in the Sections of this Official Statement captioned INTRODUCTION and THE BORROWER AND THE PROJECT Project Regulation, the Borrower has covenanted to comply with certain income limits and certain rent restrictions with respect to the Project. These restrictions, by their very nature, limit the revenues which the Project can generate in order to repay the Bonds. See RISK FACTORS AND INVESTMENT CONSIDERATIONS Project's Risks and APPENDIX D SUMMARY OF THE LAND USE RESTRICTION AGREEMENT hereto. Taxation of the Bonds The interest on the Tax-Exempt Bonds may be includable in gross income for purposes of federal income taxation retroactive to the date of issuance of the Bonds for a variety of reasons. The exclusion from gross income is dependent upon, among other things, compliance with certain restrictions regarding investment of the Tax-Exempt Bond proceeds and continuing compliance by the Borrower with the Land Use Restriction Agreement under which enforcement remedies available to the Authority and the Trustee are severely limited. In addition, the Borrower must be and remain an organization treated as part of the Sole Member, and the Sole Member must remain an organization eligible to be treated as a 501(c)(3) organization at all times while any Tax-Exempt Bonds remain Outstanding in order for the Tax-Exempt Bonds to retain their tax-exempt status. Failure of the Borrower to comply with the terms and conditions of the documents relating to the Tax-Exempt Bonds or the Loan Agreement, the Land Use Restriction Agreement and other documents as described herein or the loss by the Sole Member of eligibility to treated as a 501(c)(3) organization may result in the loss of the tax-exempt status of the interest on the Tax-Exempt Bonds retroactive to the date of issuance of the Bonds. See Project Risks Rental Housing Requirements under this heading and TAX MATTERS herein. Although a determination of taxability is not an express Event of Default, the Borrower has covenanted to take all action necessary to cause interest on the Tax-Exempt Bonds to remain tax-exempt; therefore, if interest on the Tax-Exempt Bonds becomes taxable, this could be an Event of Default. No assurance can be given that sufficient funds will be available in such a case to enable the Tax-Exempt Bonds to be redeemed at the applicable redemption price. If interest on the Tax-Exempt Bonds should become included in gross income for federal income tax purposes, the market for and value of the Tax-Exempt Bonds would be adversely affected. Moreover, there can be no assurance that the present advantageous provisions of the Code, or the rules and regulations thereunder, will not be retroactively adversely amended or modified, thereby resulting in the inclusion in gross income of the interest on the Tax-Exempt Bonds for federal income tax purposes or otherwise eliminating or reducing the benefits of the present advantageous tax treatment of the Tax-Exempt Bonds. There can be no assurance that Congress will not adopt legislation applicable to the Tax-Exempt Bonds, the Borrower or the Project or that the Borrower would be able to comply with any such future legislation in a manner necessary to maintain the tax-exempt status of the Tax-Exempt Bonds. The Borrower is required under the Loan Agreement to use their best efforts to comply with any other future federal income tax law requirements in order to maintain the tax-exempt status of the Tax-Exempt Bonds to the extent that any such other requirements are made applicable to the Borrower or the Project. There is no assurance, however, that the Borrower would be able to comply with any such other requirements. Federal Income Tax Matters and Securities Laws; 501(c)(3) Status Loss by the Sole Member of the benefits of certain provisions of the federal income tax law could jeopardize the tax-exempt status of the Bonds. The Internal Revenue Service (the IRS ) has determined in a determination letter that the Sole Member is an organization described in Section 501(c)(3) of the Code, and therefore is exempt from federal income taxation under Section 501(a) of the Code. Changes in the Code or Treasury Regulations or the judicial or administrative interpretation thereof or certain actions of the Sole Member or the Borrower could result in the revocation by the IRS of such determination and loss of the tax-exempt status of the Sole Member or the Borrower. Any failure by the Sole Member or the Borrower to remain qualified as tax-exempt under Section 501(c)(3) of the Code could affect the amount of funds of the Borrower which would be available to pay debt service on the 46

52 Bonds or could lead to a determination that the interest on the Tax-Exempt Bonds is taxable. The Borrower s or the Authority s failure to continuously comply with certain covenants contained in the Indenture, the Loan Agreement and the Land Use Restriction Agreement after delivery of the Tax-Exempt Bonds could result in the loss of the exclusion from gross income of interest on the Tax-Exempt Bonds by the owners thereof for federal income tax purposes. Possible Consequence of Tax Compliance Audit The IRS has established a general audit program to determine whether issues of tax-exempt obligations, such as the Tax-Exempt Bonds, are in compliance with requirements of the Code that must be satisfied in order for the interest of those obligations to be, and continue to be, excluded from gross income for federal income tax purposes. It cannot be predicted whether the IRS will commence an audit of the Tax-Exempt Bonds. Depending on all the facts and circumstances and the type of audit involved, it is possible that commencement of an audit of the Tax-Exempt Bonds could adversely affect the market value and liquidity of the Tax-Exempt Bonds until the audit is concluded, regardless of its ultimate outcome. Such an audit would result in the IRS declaring that interest on the Tax-Exempt Bonds should be included in gross income for federal income tax purposes. See TAX MATTERS herein. Other Possible Risk Factors The occurrence of any of the following events, or other unanticipated events, could adversely affect the operations of the Borrower and the Project: Summary 1. Reinstatement of or establishment of mandatory governmental wage, rent or price controls. 2. Inability to control increases in operating costs, including salaries, wages and fringe benefits, supplies and other expenses, without being able to obtain corresponding increases in Project Revenues from residents of the Project. 3. Unionization, employee strikes and other adverse labor actions which could result in a substantial increase in expenditures without a corresponding increase in Project Revenues. 4. Adoption of other federal, state or local legislation or regulations having an adverse effect on the future operating or financial performance of the Borrower and the Project. 5. The occurrence of any natural disasters or other disruptions that impact the operations of the Project. The foregoing is intended only as a summary of certain risk factors attendant to an investment in the Bonds. In order for potential investors to identify risk factors and make an informed investment decision, potential investors should be thoroughly familiar with this entire Official Statement and the appendices hereto so as to make a judgment as to whether the Bonds are an appropriate investment, and obtain such additional information as they deem advisable in connection with their evaluation of the suitability of the Bonds for investments. The Authority LITIGATION To the Authority s knowledge, as of the date of this Official Statement, there is not pending or threatened, any litigation restraining or enjoining the issuance or delivery of the Bonds or questioning or affecting the validity of the Bonds or the proceedings or authority under which they are to be issued or which in any manner questions the right of the Authority to enter into the Indenture, the Loan Agreement or the Tax Agreement or to secure the Bonds in the manner provided in the Indenture. From time to time the Authority receives inquiries and requests for 47

53 documents and information pertaining to unrelated bond issues from various regulatory agencies, including the Securities & Exchange Commission, and in connection with audits by the IRS. The Borrower At the time of the issuance and delivery of the Bonds, the Borrower will deliver a certificate to the effect that no litigation and no proceedings are pending or, to their knowledge, threatened against the Borrower, the Sole Member or otherwise with respect to the Project, or the acquisition and rehabilitation thereof, or the issuance of the Bonds or which would adversely affect the transactions contemplated by this Official Statement. APPROVAL OF LEGAL MATTERS Legal matters incident to the authorization, issuance, sale and delivery of the Bonds by the Authority are subject to the approving opinion of Butler Snow LLP, Atlanta, Georgia, Bond Counsel. Copies of the approving opinion of Bond Counsel will be available at the time of delivery of the Bonds in substantially the form set forth in Appendix F. Certain legal matters will be passed upon for the Authority by its counsel von Briesen & Roper, s.c., Milwaukee, Wisconsin; for the Borrower by its counsel Brennan Manna Diamond, Jacksonville, Florida, and by Clark Hill PLC, Las Vegas, Nevada, with respect to certain Nevada matters, and for Stifel, Nicolaus & Company, Incorporated by Eichner Norris & Neumann PLLC, Washington, D.C. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering those opinions on the legal issues explicitly addressed therein. By rendering the legal opinion, the opinion giver does not become an insurer or guarantor of an expression of professional judgment of the transaction opined upon or of the future performance of parties to such transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. General Matters TAX MATTERS In the opinion of Bond Counsel, based upon an analysis of existing laws, regulations, rulings and judicial decisions, interest on the Tax-Exempt Bonds will be excludible from gross income for federal income tax purposes. Bond Counsel is also of the opinion that interest on the Tax-Exempt Bonds will not be a specific item of tax preference under Section 57 of the Code for purposes of the federal individual and corporate alternative minimum taxes. Bond Counsel expresses no opinion with respect to the treatment of interest on the Bonds under the laws of any state. A copy of the opinion of Bond Counsel is set forth in Appendix F attached hereto. Notwithstanding Bond Counsel s opinion that interest on the Tax-Exempt Bonds is not a specific preference item for purposes of the federal alternative minimum tax, such interest will be included in adjusted current earnings of certain corporations, and such corporations are required to include in the calculation of alternative minimum taxable income 75% of the excess of such corporation s adjusted current earnings over its alternative minimum taxable income (determined without regard to such adjustment and prior to deduction for certain net operating losses). The Code imposes various restrictions, conditions, and requirements relating to the qualification of Bonds as so-called tax-exempt bonds. The Authority, the Borrower and the Sole Member have covenanted to comply with certain restrictions designed to ensure that interest on the Tax-Exempt Bonds will not be includable in gross income for federal income tax purposes. Failure to comply with these covenants could result in the Tax-Exempt Bonds not qualifying as tax-exempt bonds, and thus interest on the Tax-Exempt Bonds being includable in the gross income of the holders thereof for federal income tax purposes. Such failure to qualify and the resulting inclusion of interest could be required retroactively to the date of issuance of the Bonds. The opinion of Bond Counsel assumes compliance with these covenants. However, Bond Counsel has not undertaken to determine (or to 48

54 inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the federal tax status of the Tax-Exempt Bonds. The opinion of Bond Counsel also relies on the opinion of Brennan Manna Diamond, that the Sole Member is an organization described in Section 501(c)(3) of the Code and that the Project will not be used in an unrelated trade or business within the meaning of Section 513 of the Code. Bond Counsel has not undertaken to confirm the validity of such opinion. Certain requirements and procedures contained, or referred to, in the Indenture, the Tax Agreement, the Land Use Restriction Agreement and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to the Bonds or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of bond counsel other than Butler Snow LLP. Although Bond Counsel is of the opinion that interest on the Tax-Exempt Bonds will be excludible from gross income for federal income tax purposes, as described above, the ownership or disposition of, or the accrual or receipt of interest on, the Tax-Exempt Bonds may otherwise affect a holder s federal, state or local tax liabilities. The nature and extent of these other tax consequences may depend upon the particular tax status of the holder or the holder s other items of income or deduction. Bond Counsel expresses no opinions regarding any tax consequences other than what is set forth in its opinion and each holder of the Bonds or potential holder is urged to consult with its tax counsel or advisor with respect to the effects of purchasing, holding or disposing the Bonds on the tax liabilities of the individual or entity. Receipt of tax-exempt interest, ownership or disposition of the Bonds may result in other collateral federal, state or local tax consequences for certain taxpayers. Such effects may include, without limitation, increasing the federal tax liability of certain foreign corporations subject to the branch profits tax imposed by Section 884 of the Code, increasing the federal tax liability of certain insurance companies under Section 832 of the Code, increasing the federal tax liability and affecting the status of certain S Corporations subject to Sections 1362 and 1375 of the Code, increasing the federal tax liability of certain individual recipients of Social Security or the Railroad Retirement benefits under Section 86 of the Code and limiting the amount of the Earned Income Credit under Section 32 of the Code that might otherwise be available. Ownership of any of the Bonds may also result in the limitation of interest and certain other deductions for financial institutions and certain other taxpayers pursuant to Section 265 of the Code. Backup Withholding As a result of the enactment of the Tax Increase Prevention and Reconciliation Act of 2005, interest on taxexempt obligations such as the Tax-Exempt Bonds is subject to information reporting in a manner similar to interest paid on taxable obligations. Backup withholding may be imposed on payments made after March 31, 2007 to any bondholder who fails to provide certain required information including an accurate taxpayer identification number to any person required to collect such information pursuant to Section 6049 of the Code. This reporting requirement does not in and of itself affect or alter the excludability of interest on the Tax-Exempt Bonds from gross income for federal income tax purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations. Original Issue Discount The Bonds having a yield that is higher than the interest rate (as shown as shown on the maturity schedule on the inside cover page hereof) are being offered and sold to the public at an original issue discount ( OID ) from the amounts payable at maturity thereon (the Discount Bonds ). OID is the excess of the stated redemption price of an obligation at maturity (the face amount) over the issue price of such bond. The issue price is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of obligations of the same maturity are sold pursuant to that initial offering. For federal income tax purposes, OID on each obligation will accrue over the term of the obligation, and for the Discount Bonds, the amount of accretion will be based on a single rate of interest, compounded semiannually (the yield to maturity ). The amount of OID that accrues during each semi-annual period will do so ratably over that period on a daily basis. With respect to an initial purchaser of a Discount Bond at its issue price, the portion of 49

55 OID that accrues during the period that such purchaser owns the Discount Bond is added to such purchaser s tax basis for purposes of determining gain or loss at the maturity, redemption, sale or other disposition of that Discount Bond and thus, in practical effect, is treated as stated interest, which is excludable from gross income for federal income tax purposes. Holders of any Bonds, including any Discount Bonds should consult their own tax advisors as to the treatment of OID and the tax consequences of the purchase of such Discount Bonds other than at the issue price during the initial public offering and as to the treatment of OID for state tax purposes. Changes in Federal and State Tax Law From time to time, there are legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to above or adversely affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value of the Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Bonds or the market value thereof would be impacted thereby. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending legislation, regulatory initiatives or litigation. RATINGS S&P Global Ratings, a Standard & Poor s Financial Services LLC business (the Rating Agency ), has assigned the ratings set forth on the cover page hereof to the Bonds. An explanation of the significance of such ratings may be obtained from the Rating Agency. The ratings of the Bonds reflect only the views of the Rating Agency at the time such ratings were given, and none of the Authority, the Borrower or the Underwriter makes any representation as to the appropriateness of the ratings. There is no assurance that such ratings will continue for any given period of time or that it will not be revised downward or withdrawn entirely by the Rating Agency, if in its judgment, circumstances (including the financial status of any investment agreement provider) so warrant. Any such downward revision or withdrawal of the ratings (or either of them) may have an adverse effect on the market price of the Bonds. UNDERWRITING Pursuant to a Bond Purchase Agreement among the Authority, the Borrower, and the Underwriter, the Underwriter has agreed to purchase the Bonds at the purchase prices set forth on the inside front cover. For its services, the Underwriter shall be paid by the Borrower an Underwriter fee equal to $172,875.00, which fee is net of certain of its expenses. The Bond Purchase Agreement provides that the Underwriter shall purchase all of the Bonds if any are purchased, and that such obligation to purchase the Bonds is subject to certain terms and conditions set forth in such Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. The initial offering prices set forth on the inside cover page hereof may be changed from time to time by the Underwriter, the Underwriter may join with dealers and other underwriters in offering the Bonds, and the Underwriter may offer and sell Bonds to certain dealers (including dealer banks and dealers depositing Bonds in investment trusts) and others at prices lower than the public offering prices stated on the inside cover of this Official Statement. Such initial public offering prices may be changed from time to time by the Underwriter. The Borrower has agreed, pursuant to the Bond Purchase Agreement, to indemnify the Underwriter and the Authority against certain liabilities relating to this Official Statement. 50

56 The Underwriter does not guarantee a secondary market for the Bonds and is not obligated to make any such market for the Bonds. No assurance can be made that such a market will develop or continue. Consequently, investors may not be able to resell Bonds should they need or wish to do so for emergency or other purposes. CONTINUING DISCLOSURE In accordance with the Securities and Exchange Commission Rule 15c2-12 (the Rule ) the Borrower has agreed pursuant to a Continuing Disclosure Agreement dated as of September 1, 2017 with Digital Assurance Certification LLC, as dissemination agent (the Dissemination Agent ), to be delivered on the date of delivery of the Bonds, to cause certain financial and operating information to be provided through the Dissemination Agent to the Municipal Securities Rulemaking Board (the MSRB ) via the Electronic Municipal Marketing Access ( EMMA ) System. The Borrower has not previously been subject to the Rule. The Authority has determined that no financial or operating data concerning the Authority is material to an evaluation of the offering of the Bonds or to any decision to purchase, hold or sell the Bonds and the Authority will not provide any such information. The Borrower has undertaken all responsibilities for any continuing disclosure to holders of the Bonds as described above, and the Authority shall have no liability to the holders of the Bonds or any other person with respect to the Rule. See FORM OF CONTINUING DISCLOSURE AGREEMENT in Appendix H hereto. RELATIONSHIP AMONG PARTIES Bond Counsel has previously represented, and is currently representing, the Underwriter with respect to other financings and has acted or is acting as bond counsel with respect to other bonds underwritten by the Underwriter and may do so in the future. Counsel to the Underwriter has previously acted, and is currently acting, as bond counsel with respect to other bonds issued by the Authority as well as other bonds underwritten by the Underwriter and may continue to do so in the future. Brennan Manna Diamond serves as counsel to and represents the Sole Member and Borrower. Christopher A. Walker, Esq., a partner with the law firm of Brennan Manna Diamond serves as a member of the Board of Directors of the Sole Member, and intends to continuing serving as a member of the Board of Directors in the future. MISCELLANEOUS Any statements made in this Official Statement involving matters of opinion or estimates, 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 will be realized. The references herein to the Act, the Statute, the Indenture, the Loan Agreement, the Note, the Mortgage, the Land Use Restriction Agreement, and other documents are brief outlines of certain provisions thereof. Such outlines do not purport to be complete or comprehensive and for a full and complete statement of the provisions thereof, reference is made to the Act and the Statute, and such documents, copies of which documents will be on file at the designated office of the Trustee following delivery of the Bonds or the Underwriter as noted herein during the initial offering of the Bonds. The agreement of the Authority with the Holders of the Bonds is fully set forth in the Indenture, and this Official Statement is not to be construed as constituting any agreement with the purchasers of the Bonds. Insofar as any statements are made in this Official Statement involving matters of opinion, whether or not expressly so stated, they are intended merely as such, and not as representations of fact. The attached Appendices are integral parts of this Official Statement and must be read together with all of the foregoing statements. The Borrower has reviewed the information contained herein which relates to them, the Sole Member and the Project and has approved all such information for use within this Official Statement. 51

57 The Authority has not participated in the preparation of this Official Statement and has not verified the accuracy of the information contained herein, other than the information respecting the Authority contained under THE AUTHORITY and LITIGATION The Authority. The Authority s approval of this Official Statement does not constitute approval of the information contained herein, other than that information relating to the Authority, or a representation of the Authority as to the completeness or accuracy of the information contained herein. [Remainder of page intentionally left blank] 52

58 The execution, delivery and distribution of this Official Statement have been duly authorized by the Borrower IAVF RUBIX LLC, a Florida limited liability company By: Invest in America s Veterans Foundation, Inc., a Florida not for profit corporation, its Sole Member By: /s/ Ralph A. Santillo Name: Ralph A. Santillo Title: President 53

59 APPENDIX A DEFINITIONS OF CERTAIN TERMS Capitalized items used in this Official Statement, and not otherwise defined, are used with the meanings assigned to such terms in the Indenture. The following definitions of such capitalized terms are summaries of the definitions applicable in the Indenture with such modifications as may be appropriate for use in this Official Statement. The following are definitions set forth in the Indenture and used in this Official Statement: Account or Accounts means any one or more, as the case may be, of the named and unnamed accounts established within any Fund. Acquisition Consultant means Iorn Born Asset Management LLC, a Texas corporation. Acquisition Services Agreement means the Acquisition Services Agreement dated on or about September 1, 2017, among the Sole Member, the Borrower and the Acquisition Consultant, or any substitute agreement providing for services in connection with the acquisition and financing of the Project. Act means Sections , and of the Wisconsin Statutes, as amended. Additional Bonds means the additional parity Bonds authorized to be issued by the Authority pursuant to the terms and conditions of the Indenture. Additional Loan Payments means that portion of the Loan Payments described in the Loan Agreement. Administration Expenses means (a) the Ordinary Trustee s Fees and Expenses and the Additional Loan Payments described in the Loan Agreement, (b) the Dissemination Agent Fee, (c) the Rebate Analyst Fee, (d) the Rating Agency Fee, and (e) the Authority s Fees and Expenses. Administration Fund means the trust fund by that name established pursuant to the Indenture. Advanced Funds has the meaning provided in the Indenture. Affiliate means any Person (a) directly or indirectly controlling, controlled by, or under common control with the Borrower; or (b) a majority of the members of the Directing Body of which are members of the Directing Body of the Borrower. For purposes of this definition, control means with respect to: (i) a corporation having stock, the ownership, directly or indirectly, of more than 50% of the securities (as defined in Section 2(1) of the Securities Act of 1933, as amended) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the directors of such corporation; (ii) a not for profit corporation not having stock, having the power to elect or appoint, directly or indirectly, a majority of the members of the Directing Body of such corporation; or (iii) any other entity, the power to direct the management of such entity through the ownership of at least a majority of its voting securities or the right to designate or elect at least a majority of the members of its Directing Body, by contract or otherwise. For the purposes of this definition, Directing Body means with respect to: (A) a corporation having stock, such corporation s board of directors and owners, directly or indirectly, of more than 50% of the securities (as defined in Section 2(1) of the Securities Act of 1933, as amended) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the directors of such corporation (both of which groups will be considered a Directing Body); (B) a not for profit corporation not having stock, such corporation s members if the members have complete discretion to elect the corporation s directors, or the corporation s directors if the corporation s members do not have such discretion; or (C) any other entity, its governing body or board. For the purposes of this definition, all references to directors and members will be deemed to include all entities performing the function of directors or members however denominated. A-1

60 Annual Debt Service means, for any period of a calendar year, the amount of the scheduled principal and interest payment required with respect to all Outstanding Bonds, or all Outstanding Bonds of one or more Series, or Parity Indebtedness, as applicable, for such period. Annual Evaluation Date means each December 31, commencing December 31, Architect means any architect that provided design, architecture or other service to the Borrower. Audited Financial Statements means the financial statements prepared for each Fiscal Year for the Project prepared in accordance with generally accepted accounting principles and examined by a Certified Public Accountant. Authority means the Public Finance Authority, its successors and assigns. Authority Annual Fee means the Authority s annual administration fee determined and payable in the amounts and at the times specified in the Loan Agreement. Authority Indemnified Person means, collectively, (i) the Sponsors, (ii) the Members and (iii) each and all of the Authority s, the Sponsors and the Members respective past, present and future directors, board members, governing members, trustees, commissioners, elected or appointed officials, officers, employees, Authority Representatives, attorneys, contractors, subcontractors, agents and advisers (including counsel and financial advisors) and each of their respective heirs, successors and assigns. Authority Representative means any officer, director or other person designated by resolution of the Board of Directors of the Authority (whether such resolution is adopted in connection with the issuance of the Bonds or otherwise) or by the Authority s Bylaws as an Authorized Signatory empowered to, among other things, execute and deliver on behalf of the Authority the Indenture, the Bond Documents and the Bonds. Authority s Fees and Expenses means the fees and expenses, if any, payable to or incurred by the Authority under any of the Bond Documents, and including but not limited to, the Authority Annual Fee, any fees and expenses of counsel to the Authority, the Liabilities described in the Loan Agreement and the Additional Loan Payments described in the Loan Agreement. Authorized Denominations means, with respect to the Senior Bonds and the Subordinate Bonds, $5,000 principal amount and any integral multiple in excess thereof. Available Money means: (a) money held by the Trustee under the Indenture for a period of at least 123 days and not commingled with any money so held for less than said period and during which period no petition in bankruptcy was filed by or against, and no receivership, insolvency, assignment for the benefit of creditors or other similar proceedings has been commenced by or against, the Authority or the Borrower, unless such petition or proceeding was dismissed and all applicable appeal periods have expired without an appeal having been filed, (b) (c) (d) Project Revenues held by the Trustee, investment income derived from the investment of money described in clauses (a) and (b), proceeds of obligations issued to refund the Bonds, or (e) any money with respect to which an opinion of Bond Counsel or nationally recognized bankruptcy counsel has been received by the Trustee to the effect that payments by the Trustee in respect of the Bonds, as provided in the Indenture, derived from such money should not constitute transfers avoidable under 11 U.S.C. 547(b) and recoverable from the Holders under 11 U.S.C. 550(a) should the Authority or the Borrower be the debtor in a case under Title 11 of the United States Code, as amended. A-2

61 Basic Loan Payments means that portion of the Loan Payments described in the Loan Agreement. Beneficial Owner means a Person owning a Beneficial Ownership Interest in the Bonds, as evidenced to the satisfaction of the Trustee. Beneficial Ownership Interest means the right to receive payments and notices with respect to the Bonds held in a book-entry system. Bond Counsel means (a) Butler Snow LLP or (b) any Independent Counsel of nationally recognized standing in matters pertaining to the validity of, and exclusion from gross income for federal income tax purposes of interest on, obligations issued by states and political subdivisions, familiar with the transactions contemplated under the Indenture appointed by the Borrower and reasonably acceptable to the Authority. Bond Documents means the Indenture and the Borrower s Documents. Bond Fund means the trust fund by that name created pursuant to the Indenture. Bond Obligation means the then outstanding principal amount of the Bonds. Bond Payment Date means any Interest Payment Date, any Principal Payment Date and any other date on which the principal of, premium, if any, or interest on the Bonds is to be paid to the Holders thereof, whether upon redemption, at maturity or upon acceleration of maturity of the Bonds. Bonds means collectively the Series 2017 Bonds and any Additional Bonds. Borrower means 2017 IAVF Rubix LLC, a Florida limited liability company and its authorized successors and assigns. Borrower s Documents means, collectively, the Loan Agreement, the Mortgage, the Note, the Land Use Restriction Agreement, the Continuing Disclosure Agreement, the Acquisition Services Agreement, the Management Agreement, the Collateral Assignment of Management Agreement, and the Tax Agreement, together with all other documents or instruments executed by the Borrower evidencing or securing the Borrower s obligations under the Loan Agreement, in each case as originally executed or as it may thereafter be amended or supplemented in accordance with its respective terms. Borrower s Representative means each person at the time designated to act on behalf of the Borrower, collectively, by written certificate furnished to the Authority and the Trustee on behalf of the Borrower, collectively, containing the specimen signature of such person and any designated alternates. Budget means the budget described in the Loan Agreement. Business Day means any day other than a (a) Saturday, (b) Sunday, (c) day on which banking institutions in (i) any city in which the designated corporate trust or principal operations offices of the Trustee (such city being initially Dallas, Texas) are located, (ii) the State or (iii) the City of New York, New York, are authorized or obligated by law or executive order to be closed, or (d) day on which the New York Stock Exchange is closed. Certified Public Accountant means any Person who is Independent, appointed by the Borrower, actively engaged in the business of public accounting and duly licensed as a certified public accountant under the applicable laws of the relevant state. City means the City of Las Vegas, Nevada and its successors and assigns. Clearing Agency means any clearing agency under federal law operating and maintaining, with its participants or otherwise, a book-entry system to record Beneficial Ownership Interests in the Bonds, and to effect transfers of book-entry interests of the Bonds in book-entry form, which initially shall be The Depository Trust Company. A-3

62 Closing Date means the date of initial issuance and delivery of the Series 2017 Bonds. Code means the Internal Revenue Code of 1986, the applicable regulations (whether proposed, temporary or final) under that Code or the statutory predecessor of that Code, and any amendments of, or successor provisions to, the foregoing and any official rulings, announcements, notices and procedures regarding any of the foregoing. Unless otherwise indicated, reference to a Section of the Code means that Section of the Code, including such applicable regulations, rulings, announcements, notices and procedures. Collateral Assignment of Management Agreement means the Collateral Assignment of Management Agreement dated its date of execution, between the Borrower and the Trustee and consented to by the Manager for the Project and as it may thereafter be amended or supplemented from time to time in accordance with its terms. Compliance Certificate means a certificate of a Borrower s Representative stating that, as of the date of such certificate, the Borrower is in compliance with all requirements of the Borrower s Documents. Condemnation Award means the total condemnation proceeds paid by the condemner as a result of condemnation or eminent domain proceedings with respect to all or any part of the Project or of any settlement or compromise of such proceedings. Confirmation of Rating means a written confirmation, obtained prior to the event or action under scrutiny, from the Rating Agency then rating any Outstanding Bonds to the effect that, following the proposed action or event under scrutiny at the time such confirmation is sought, the rating or ratings of the Rating Agency with respect to all Bonds then Outstanding and then rated by the Rating Agency will not be downgraded, suspended, qualified or withdrawn as a result of such action or event. Continuing Disclosure Agreement means the Continuing Disclosure Agreement dated as of September 1, 2017 between the Borrower and the Dissemination Agent, as in effect on the Closing Date and as it may thereafter be amended or supplemented from time to time in accordance with its terms. Controlled Group means a group of entities directly or indirectly controlled by the same entity or group of entities. An entity or group of entities (the controlling entity ) directly controls another entity (the controlled entity ), in general, if it possesses either of the following rights or powers and the rights or powers are discretionary and non-ministerial: (a) the right or power both to approve and to remove without cause a controlling portion of the governing body of the controlled entity; or (b) the right or power to require the use of funds or assets of the controlled entity for any purpose of the controlling entity. A controlling entity indirectly controls all entities controlled, directly or indirectly, by an entity controlled by such controlling entity. Controlling Holders means, as of any date, in the case of consent or direction to be given under the Indenture, the Holders of the majority in aggregate principal amount of the then Outstanding Senior Bonds, or, if no Senior Bonds are Outstanding, the Holders of the majority in aggregate principal amount of the then Outstanding Subordinate Bonds. Costs of Issuance means all fees, costs and expenses payable or reimbursable directly or indirectly by the Issuer or the Borrower and related to the authorization, issuance and sale of the Bonds. Costs of Issuance Account means the account by that name in the Project Fund created pursuant to the Indenture. Costs of the Project means those costs and expenses in connection with the acquisition, rehabilitation, furnishing, and equipping of the Project permitted by the Act to be paid or reimbursed from Bond proceeds including, but not limited to, the following: (a) payment of (i) the cost of the preparation of plans and specifications (including any preliminary study or planning of the Project, the renovations to the Project or any aspect thereof), (ii) the cost of acquisition, construction and rehabilitation of the Project and all acquisition, construction, rehabilitation and installation expenses required to provide utility services or other facilities and all real or personal properties deemed necessary in connection with the Project (including development, architectural, engineering, and supervisory services with A-4

63 respect to any of the foregoing and premium on any surety bond), and (iii) interest on the Bonds during the rehabilitation of the Project, and (iv) any other costs and expenses relating to the Project; (b) payment of the purchase price of the Project, improvements thereon, and the Equipment, and any fixtures to be incorporated into the Project, including all costs incident thereto, payment of consulting and development fees payable to the Borrower or others, and payment for the miscellaneous expenses incidental to any of the foregoing items; (c) payment to the Trustee, as such payments become due, of the reasonable fees and expenses of the Trustee, including attorneys fees, other than its initial fee (as Trustee, bond registrar, and paying agent) and of any paying agent properly incurred under the Indenture that may become due during the rehabilitation and equipping of the Project; (d) to such extent as they are not paid by a contractor for construction or installation with respect to any part of the Project, payment of the premiums on all insurance required to be taken out and maintained during the period of rehabilitation and equipping of the Project; (e) payment of the taxes, assessments, and other charges, if any, that may become payable during the period of construction or rehabilitation of the Project; (f) payment of expenses incurred in seeking to enforce any remedy against any contractor or subcontractor in respect of any default under a contract relating to the Project; (g) payment of the fees or out-of-pocket expenses of the Borrower, if any, including, but not limited to, architectural, engineering, and supervisory services with respect to the Project; (h) payment of the fees or out-of-pocket expenses, if any, of those providing services with respect to the Project, including, but not limited to, architectural, engineering, and supervisory services; (i) payment to the Borrower of such amounts, if any, as are necessary to reimburse the Borrower in full for all advances and payments made by it for any of the items set forth in (a) through (h) above; and (j) payment of any other costs and expenses relating to the Project that would constitute a cost or expense permitted to be paid by the Authority under the Act. Counsel means an attorney or firm of attorneys duly admitted to practice law before the highest court of any state and not unsatisfactory to the Authority. Coverage Test means that the Debt Service Coverage Ratio for the relevant period was equal to or greater than 1.25 to 1 on all Outstanding Senior Bonds and all Senior Parity Indebtedness and 1.10 to 1 on all Outstanding Senior Bonds and Subordinate Bonds and all Senior Parity Indebtedness and Subordinate Parity Indebtedness. Dated Date means the date of issuance and delivery of the Bonds. Debt Service means the principal and redemption price of and interest due on the Bonds on any given Interest Payment Date. Debt Service Coverage Ratio means, for any period, the ratio obtained by dividing Net Income Available for Debt Service for such period by the Annual Debt Service for such period, expressed as a percentage or a ratio, in each case, as calculated by the Borrower and certified to the Trustee in writing and supported by the Audited Financial Statements described in the Loan Agreement. Debt Service Requirements means for a specified period: (a) amounts needed to pay scheduled payments of principal of the Bonds during such period, including payments for mandatory sinking fund redemption pursuant to the Indenture; (b) amounts needed to pay interest on the Bonds payable during such period; and (c) to the extent A-5

64 not duplicative of (a) or (b) above, amounts paid during such period to restore the amounts on deposit in the Debt Service Reserve Fund to the Debt Service Reserve Requirement. Debt Service Reserve Account means, as applicable, (i) the trust account by that name for the Senior Bonds in the Debt Service Reserve Fund created pursuant to the Indenture or (ii) the trust account for the Subordinate Bonds by that name in the Debt Service Reserve Fund created pursuant to the Indenture. Debt Service Reserve Fund means the trust fund of that name created with respect to the Series 2017 Bonds pursuant to the Indenture. Debt Service Reserve Requirement means, with respect to the Senior Bonds, the amount set forth in the Indenture, and, with respect to the Subordinate Bonds, the amount set forth in the Indenture; provided, however, that the foregoing amount shall be reduced, at the written direction of the Borrower, on a pro-rata basis to the extent of any reduction in Annual Debt Service on the aggregate principal amount of the Senior Bonds Outstanding and Subordinate Bonds Outstanding, as applicable, if any Series 2017 Bonds are redeemed other than pursuant to mandatory sinking fund redemption. Default under the Loan Agreement means any of the events described in the Loan Agreement. Default Rate with respect to the Loan and Bonds means the interest rate on the applicable Loan or the applicable Series of Bonds plus 2% per annum, and with respect to any other amounts due means 10% per annum, but in no case in excess of the Maximum Rate. Designated Office means, when referring to the Trustee or any Paying Agent, means the office where the Trustee or Paying Agent, as applicable, maintains its designated corporate trust department, which as of the date of the Indenture, shall be the address provided in the Indenture. Dissemination Agent means Digital Assurance Certification LLC, or any successor thereto, acting as Dissemination Agent under the Continuing Disclosure Agreement. Dissemination Agent Fee means the fee payable to the Dissemination Agent in an annual amount set forth in the then current Budget payable semi-annually in advance on the Closing Date (pro-rated to the initial Interest Payment Date) and on each Interest Payment Date thereafter; provided such fee shall not exceed $1,000 annually as compensation for its services and expenses in performing its obligations under the Continuing Disclosure Agreement. Environmental Laws means Comprehensive Environmental Response, Compensation and Liability Act of 1980 ( CERCLA ), Public Law No , 94 Stat. 1613; the Resource Conservation and Recovery Act ( RCRA ), the National Environmental Policy Act of 1969, as amended (42 U.S.C et seq.); the Solid Waste Disposal Act (42 U.S.C et seq.); the Hazardous Material Transportation Act, as amended (49 U.S.C et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. 136 et seq.); RCRA; the Toxic Substance Control Act, as amended (15 U.S.C et seq.); the Clean Water Act; the Clean Air Act, as amended (42 U.S.C et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C et seq.); the Federal Coastal Zone Management Act, as amended (16 U.S.C et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C. 651 et seq.); the Safe Drinking Water Act, as amended (42 U.S.C. 300(f) et seq.); and any other federal, state, or local law, statute, ordinance, and regulation, now or hereafter in effect, and in each case as amended or supplemented from time to time, and any applicable judicial or administrative interpretation thereof, including, without limitation, any applicable judicial or administrative order, consent decree, or judgment applicable to the Project relating to the regulation and protection of human health and safety and/or the environment and natural resources (including, without limitation, ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species, and/or vegetation), including all amendments to such Acts, and any and all regulations promulgated thereunder, and all analogous local or state counterparts or equivalents, and any transfer of ownership notification or approval statutes, and any federal, state or local statute, law, ordinance, code, rule, regulation, order or decree, regulating, relating to or imposing liability or standards of conduct concerning any petroleum, petroleum byproduct (including but not limited to, crude oil, diesel oil, fuel oil, gasoline, lubrication oil, oil refuse, oil mixed with other waste, oil sludge, and all other liquid hydrocarbons, regardless of specific gravity) natural or synthetic gas, products and/or hazardous substance or A-6

65 material, toxic or dangerous waste, substance or material, pollutant or contaminant, as may now or at any time hereafter be in effect. Event of Default means any occurrence or event specified in the Indenture. Extraordinary Trustee s Fees and Expenses means the fees, expenses and disbursements payable to the Trustee and Paying Agent pursuant to the Indenture during any Fiscal Year in excess of Ordinary Trustee s Fees and Expenses, including but not limited to, reasonable counsel fees and expenses, reasonable fees of other third party professionals, and any costs of sending notices pursuant to the terms and conditions of the Bond Documents, including but not limited to, the Indenture. Fiscal Year means a period of 12 consecutive months ending on December 31, except that the first Fiscal Year shall begin on the Closing Date and end on December 31, Force Majeure means (a) the following: acts of nature; strikes or other industrial disturbances; acts of public enemies; orders or restraints of any kind of the government of the United States of America or of the Project Jurisdiction where the Project is located or of any of their subdivisions, departments, agencies or officials, or of any civil or military authority; insurrections; riots; landslides; earthquakes; fires; floods; explosions, but only to the extent that any such cause or event is not within the control of the Borrower; and (b) any other cause or event not reasonably within the control of the Borrower. Fund or Funds means any one or more, as the case may be, of the separate trust funds created and established in the Indenture. GAAP means generally accepted accounting principles consistently applied. Governing Body means (a), with respect to the Authority, the Board of Directors of the Authority, or any governing body that succeeds to the functions of the Board of Directors of the Authority, and (b) with respect to a Borrower, the Board of Directors of the Sole Member. Government Obligations means direct obligations of, and obligations the principal of and interest on which are unconditionally guaranteed as to timely payment by, the United States of America. Hazardous Substances means any petroleum or petroleum products and their by-products, flammable explosives, radioactive materials, toxic chemicals and substances, radon, asbestos in any form that is or could become friable, urea formaldehyde foam insulation and polychlorinated biphenyls (PCB), asbestos-containing materials (ACMs), lead-containing or lead-based paint (LBP), radon, medical waste and other bio-hazardous materials and any chemicals, pollutants, materials or substances defined as or included in the definition of hazardous substances as defined pursuant to the federal Comprehensive Environmental Response, Compensation and Liability Act, regulated substances within the meaning of subtitle I of the federal Resource Conservation and Recovery Act and words of similar import under applicable Environmental Laws. Holder or Bondholder means the Person or Persons in whose name any Bond is registered on the registration records for the Bonds maintained by the Trustee as registrar. Indebtedness means (a) all indebtedness, whether or not represented by bonds, debentures, notes or other securities, for the repayment of money borrowed, (b) all deferred indebtedness for the payment of the purchase price of properties or assets purchased, (c) all guaranties, endorsements (other than endorsements in the ordinary course of business), assumptions, and other contingent obligations in respect of, or to purchase or to otherwise acquire, indebtedness of others, (d) all indebtedness secured by a mortgage, or secured by a pledge, security interest, or lien existing on property owned which is subject to a mortgage, pledge, security interest, or lien, whether or not the indebtedness secured thereby has been assumed, (e) all capitalized lease obligations, (f) all unfunded amounts under a loan agreement, letter of credit, or other credit facility for which such Person would be liable, if such amounts were advanced under the credit facility, (g) all amounts required to be paid by the Borrower as a guaranteed payment to partners or members or a preferred or special dividend, including any mandatory redemption of shares or interests, (h) all unfunded pension funds, or welfare or pension benefit plans or liabilities, and (i) all obligations (calculated on a net basis) of the Borrower under derivatives in the form of interest rate swaps, credit default swaps, A-7

66 total rate of return swaps, caps, floors, collars and other interest hedge agreements, in each case whether the Borrower are liable contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations the Borrower otherwise assure a creditor against loss; provided, however, that for the purpose of computing Indebtedness, there will be excluded any particular Indebtedness if, upon or prior to the maturity thereof, there has been deposited with the proper depository in trust the necessary funds (or Government Obligations not callable or pre-payable by the Authority thereof) for the payment, redemption, or satisfaction of such Indebtedness, and thereafter such funds and such Government Obligations so deposited will not be included in any computation of the assets of the Borrower and the income derived from such funds and such direct obligations of the United States of America so deposited will not be included in any computation of the income of the Borrower. Indenture means the Trust Indenture, dated as of September 1, 2017, as in effect on the Closing Date and as it may thereafter be amended or supplemented from time to time. Independent means, with respect to Counsel or any Consultant, a person who is not a member of the Governing Body of the Authority or the Borrower and is not an officer or employee of the Authority or the Borrower and which is not a partnership, corporation or association having a partner, director, officer, member or substantial stockholder who is a member of the Governing Body of the Authority or the Borrower or who is an officer or employee of the Authority or the Borrower; provided, however, that the fact that such person is retained regularly by or transacts business with the Authority shall not make such person an employee within the meaning of this definition. Insurance and Tax Escrow Fund means the trust fund by that name established pursuant to the Indenture. Insurance Consultant means a Consultant having the skill and expertise necessary to evaluate the insurance needs of affordable multifamily rental housing and which may be a broker or agent with which the Borrower or the Authority transacts business. Insurance Proceeds means the total proceeds of insurance paid by an insurance company under the policies of property insurance required to be procured by the Borrower pursuant to the Loan Agreement. Interest Account means, as applicable, (i) the trust account by that name for the Senior Bonds in the Bond Fund created with respect to the Bonds pursuant to the Indenture or (ii) the trust account by that name for the Subordinate Bonds in the Bond Fund created pursuant to the Indenture. Interest Payment Date means each June 1 and December 1, commencing December 1, 2017, until the final Principal Payment Date of the Bonds. Interest Period for any Bonds means initially the period from the Dated Date to but not including the first Interest Payment Date and thereafter the period from and including each Interest Payment Date to but not including the next Interest Payment Date or other date on which interest is required to be paid on such Bonds. Interest Requirement for any Bonds means an amount equal to the interest that would be due and payable on such Bonds on the Interest Payment Date next succeeding the date of determination (assuming that no principal of such Bonds is paid or redeemed between such date and the next succeeding Interest Payment Date) multiplied by a fraction the numerator of which is one and the denominator of which is the number of whole calendar months in the Interest Period in which such date occurs. Investment Securities means any of the following obligations or securities, to the extent permitted by applicable law: (a) Government Obligations; (b) An interest in any trust or fund that invests solely in Government Obligations or repurchase agreements with respect to Government Obligations; (c) Commercial paper having, at the time of investment or contractual commitment to invest therein, a rating from the Rating Agency, from which a rating is available in the highest investment category granted thereby; A-8

67 (d) Repurchase and reverse repurchase agreements with a provider whose long-term rating is at least A by the Rating Agency at the time any such agreement is entered into, which agreement is collateralized with Government Obligations, including those of the Trustee or any of its affiliates; (e) Investment in money market mutual funds having a rating in the highest investment category granted thereby from the Rating Agency, including, without limitation any mutual fund for which the Trustee or an affiliate of the Trustee serves as investment manager, administrator, shareholder servicing agent, and/or custodian or sub-custodian, notwithstanding that (A) the Trustee or an affiliate of the Trustee receives fees from funds for services rendered, (B) the Trustee collects fees for services rendered pursuant to the Indenture, which fees are separate from the fees received from such funds, and (C) services performed for such funds and pursuant to the Indenture may at times duplicate those provided to such funds by the Trustee or an affiliate of the Trustee; and (f) Demand deposits, including interest bearing money market accounts, time deposits, trust funds, trust accounts, overnight bank deposits, interest-bearing deposits, and certificates of deposit or bankers acceptances of depository institutions, including the Trustee or any of its affiliates which are either (a) rated in the AA longterm ratings category or higher by the Rating Agency or (b) are fully insured (and within the limits of insurance provided by) the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation. Joint Exercise Agreement means the Amended and Restated Joint Exercise of Powers Agreement Relating to the Public Finance Authority, dated September 28, 2010 by and among Adams County, Wisconsin, Bayfield County, Wisconsin, Marathon County, Wisconsin, Waupaca County, Wisconsin and the City of Lancaster, Wisconsin, as such agreement may be amended from time to time. Land Use Restriction Agreement means the Land Use Restriction Agreement, dated the Closing Date, among the Authority, the Borrower and the Trustee, as in effect on the Closing Date and as it may thereafter be amended and supplemented from time to time in accordance with its terms. Liquidity Requirement means an amount of monies in the Repair and Replacement Fund, the Surplus Fund and the Operations and Maintenance Reserve Fund, collectively, equal to not less than sixty (60) days of Operating Expenses. Loan means the loan evidenced by the Note from the Borrower to the Trustee, financed by the Authority with proceeds of the Series 2017 Bonds in the aggregate principal amount of $13,830,000. Loan Agreement means the Loan Agreement dated as of September 1, 2017 among the Authority and the Borrower, as in effect on the Closing Date and as it may thereafter be amended and supplemented from time to time in accordance with its terms. Loan Payments means, collectively, the Basic Loan Payments and the Additional Loan Payments. Long-Term Indebtedness means any Indebtedness other than Short-Term Indebtedness. Management Agreement means the management agreement, dated on or about September 26, 2017, between the Borrower and the Manager, pursuant to which the Manager shall manage, maintain and operate the Project, or any substitute agreement providing for the management, maintenance and operation of the Project, in each case as it may be amended or supplemented from time to time. Management Consultant means a Consultant possessing significant management consulting experience in matters pertaining to owning and operating affordable multifamily residential rental housing facilities similar to the Project. Management Fee means any and all compensation payable to the Manager under and pursuant to the Management Agreement. Manager means, initially, The Lynd Company, a Texas corporation, as manager of the Project pursuant to the Management Agreement, and any successor property manager which satisfies the requirements of the Loan Agreement. A-9

68 Mandatory Sinking Fund Requirements means (i) with respect to Series 2017A Bonds, the amounts required to be deposited in the Bond Fund for the purpose of redeeming the Series 2017A Bonds pursuant to the Indenture, (ii) with respect to Series 2017B Bonds, the amounts required to be deposited in the Bond Fund for the purpose of redeeming the Series 2017B Bonds pursuant to the Indenture and (iii) with respect to Series 2017C Bonds, the amounts required to be deposited in the Bond Fund for the purpose of redeeming the Series 2017C Bonds pursuant to the Indenture. Material Adverse Effect means (a) a material adverse change in the financial condition of the Borrower or the Project; or (b) any event or occurrence of whatever nature which would materially and adversely change (i) the Borrower s ability to perform their obligations under the Loan Agreement or any other Borrower s Documents; or (ii) the Holders or the Trustee s security interests in the security pledged under the Indenture or any other Borrower Document. Maximum Annual Debt Service means as of any date of calculation the highest principal and interest requirements with respect to all Outstanding Bonds of the applicable Series for any succeeding Fiscal Year, but excluding the period ending on the final Principal Payment Date of the Bonds. Maximum Rate means the lesser of (i) 12% per annum and (ii) the maximum non-usurious interest rate permitted by applicable law. Member means the parties to the Joint Exercise Agreement and any political subdivision that has been designated in the past, or from time to time in the future is designated, as a member of the Authority pursuant to the Joint Exercise Agreement. Modifications means modifications, repairs, renewals, improvements, replacements, alterations, additions, enlargements, or expansions in, on, or to the Project (other than routine repair or maintenance), including any and all machinery, furnishings, and equipment therefor. Moody s means Moody s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns. Mortgage means the Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of September 1, 2017 from the Borrower in favor of the Trustee securing the repayment of the Loan and the Note and certain additional amounts due and owing under the Loan Agreement, as in effect on the Closing Date and as it may thereafter be amended and supplemented from time to time in accordance with its terms. Mortgaged Property means the real property and all improvements thereon on which the Project is located which is subject to the lien of the Mortgage and the Indenture, as more specifically described in an exhibit to the Mortgage. Net Income Available for Debt Service means, for any period of determination thereof, Project Revenues for such period, plus all interest earnings on money held in Funds and Accounts which are transferred to the Revenue Fund pursuant to Article VI hereof, plus Unrestricted Contributions minus (a) total Operating Expenses incurred on a GAAP basis by the Borrower for such period, (b) all required deposits to the Insurance and Tax Escrow Fund and the Repair and Replacement Fund for such period, (c) any profits or losses which would be regarded as extraordinary items under generally accepted accounting principles, (d) gain or loss on the extinguishment of Indebtedness, (e) contributions, (f) proceeds of Additional Bonds and any other Permitted Indebtedness, (g) Net Proceeds of any Insurance Proceeds or Condemnation Award, (h) the proceeds of any sale, transfer or other disposition of all or any portion of the Project by the Borrower and (i) with respect to Net Income Available for Debt Service as it relates to the Subordinate Bonds, the Debt Service Reserve Requirement for the Senior Bonds and debt service due on any Senior Parity Indebtedness for such period. Net Proceeds, when used with respect to any Insurance Proceeds or Condemnation Award, means the gross proceeds from such Insurance Proceeds or Condemnation Award, less all expenses (including reasonable attorneys fees of the Borrower or the Trustee and any extraordinary fees and expenses of the Trustee) incurred in the realization thereof. A-10

69 Note means the note executed by the Borrower in favor of the Authority on behalf of the Holders evidencing the Loan of the proceeds of the Series 2017 Bonds and endorsed to the Trustee. Notes means the Note and any promissory note issued in connection with Additional Bonds. Operating Expenses means, for any period, cash expenses paid or accrued in connection with the operation, maintenance and current repair of the Project (determined on a cash basis) during such period including without limitation, (i) the costs of any utilities necessary to operate the Project, (ii) advertising and promotion costs, (iii) payroll expenses, (iv) insurance premiums, (v) lease payments, (vi) deposits to the Insurance and Tax Escrow Fund, (vii) deposits to the Repair and Replacement Fund in the amount of the Repair and Replacement Reserve Requirement, (viii) any Rebate Amount to the extent that it is not paid from the Rebate Fund, (ix) the Management Fee, (x) administrative and legal expenses of the Borrower relating to the Project, (xi) labor, (xii) executive compensation, (xiii) the cost of materials and supplies used for current operations of the Project, (xiv) taxes and charges for accumulation of appropriate reserves for current expenses not annually recurrent but which are such as may reasonably be expected to be incurred in connection with the Project and in accordance with sound accounting practice. Operating Expenses does not include (a) Debt Service Requirements, (b) any loss or expense resulting from or related to any extraordinary and nonrecurring items, (c) any losses or expenses related to the sale of assets, the proceeds of which sale are not included in Project Revenues pursuant to clause (b) of the definition thereof, (d) expenses paid from operational reserves, (e) the Administration Expenses (f) Extraordinary Trustee s Fees and Expenses, (g) any Rebate Amount to the extent that it is paid from the Rebate Fund, (h) any allowance for depreciation or replacements of capital assets of the Project or amortization of financing costs or (i) disbursements from the Surplus Fund. Operating Fund means the trust fund by that name created pursuant to the Indenture. Operating Requirement means all Operating Expenses, exclusive of amounts to be deposited to or payable from the Administration Fund, the Insurance and Tax Escrow Fund, the Operations and Maintenance Reserve Fund or the Repair and Replacement Fund, projected to be payable in such month in accordance with the Budget. Operations and Maintenance Reserve Fund means the trust fund by that name created pursuant to the Indenture. Ordinary Trustee s Fees and Expenses means those fees, expenses and disbursements for the services normally rendered by, and the expenses incurred in the ordinary course of business of, the Trustee and Paying Agent incurred in connection with their duties under the Indenture and the other Borrower s Documents payable annually in advance on the Closing Date and on each June 1. Organizational Documents means the documents under which the Borrower and the Sole Member, as applicable, is organized and governed, including its Articles of Organization, Operating Agreement or Bylaws, respectively, as such documents are in effect on the Closing Date and as they may be thereafter amended or supplemented from time to time in accordance with their terms. Outstanding or outstanding with respect to Bonds means, as of any given date, all Bonds which have been authenticated and delivered by the Trustee under the Indenture, except: (a) Bonds cancelled at or prior to such date or delivered to or acquired by the Trustee or Paying Agent on or prior to such date for cancellation; (b) Bonds deemed to be paid in accordance with the Indenture; and (c) Bonds in lieu of which other Bonds have been authenticated under the Indenture. Parity Indebtedness means the Indebtedness permitted to be secured by the Borrower pursuant to the Loan Agreement. Paying Agent means the Trustee or any successor or additional Paying Agent appointed under the Indenture that satisfies the requirements of the Indenture. Permitted Encumbrances means, with respect to the Project, the Mortgage and (a) the lien of current real property taxes (if any), ground rents, water charges, sewer rents and assessments not yet due and payable, (b) A-11

70 covenants, conditions and restrictions, rights of way, easements and other matters of public record, none of which, individually or in the aggregate, materially interferes with the current use of the Project or the security intended to be provided by the Mortgage, or with the Borrower s ability to pay their obligations when they become due or materially and adversely affects the value of the Project, (c) the Land Use Restriction Agreement, and (d) the exceptions (general and specific) set forth in the Title Policy or appearing of record, none of which, individually or in the aggregate, materially interferes with the current use of the Project or the security intended to be provided by the Mortgage or with the Borrower s ability to pay their obligations when they become due or materially and adversely affects the value of the Project. Permitted Indebtedness means (a) payment and other liabilities payable under the Loan Agreement or the Note, (b) liabilities of the Borrower under the Mortgage, and (c) Indebtedness of the Borrower allowed pursuant to the Loan Agreement. Person or person means an individual, a corporation, a partnership, an association, a joint stock company, a trust, any unincorporated organization, a governmental body, any other political subdivision, municipality or authority or any other group or entity. Potential Default means any event which with the passage of time or the giving of notice, or both, would constitute an Event of Default under the Indenture or a Default under the Loan Agreement. Principal Account means, as applicable, (i) the trust account by that name for the Senior Bonds within the Bond Fund created with respect to the Senior Bonds pursuant to the Indenture or (ii) the trust account by that name for the Subordinate Bonds within the Bond Fund for the Subordinate Bonds pursuant to the Indenture. Principal Payment Date means each maturity date of the Bonds and any date for mandatory sinking fund redemption of the Bonds pursuant to the Indenture. Principal Requirement for any Bonds means an amount equal to the regularly scheduled principal that is due and payable on such Bonds on the Bond Payment Date next succeeding the date of determination, whether by maturity or by mandatory sinking fund redemption pursuant to the Indenture, multiplied by a fraction the numerator of which is one and the denominator of which is the number of whole calendar months in the period commencing on the last date of payment of regularly scheduled principal (or the date of issuance of such Bonds, if no principal has been paid) and ending on the next Bond Payment Date for payment of regularly scheduled principal. Project means the Site, together with the improvements constructed thereon, consisting of a residential rental facility and related support facilities, including all buildings, structures and improvements now or hereafter constructed thereon, and all fixtures, machinery, equipment, furniture, furnishings and other personal property hereafter attached to, located in, or used in connection with any such structures, buildings or improvements, and all additions, substitutions and replacements thereto, whether now owned or hereafter acquired. The term Project does not include property owned by Persons other than the Borrower, including the Manager, the Development Consultant, the Sole Member or residents of the Project. Project Fund means the trust fund by that name created pursuant to the Indenture. Property Operating Account means, any demand deposit bank accounts maintained by the Borrower pursuant to the Loan Agreement on which the Borrower or its authorized agent writes checks to pay Operating Expenses. Project Revenues means for any period, all cash operating and nonoperating revenues of the Project, including rental payments and Unrestricted Contributions, less (a) any extraordinary and nonrecurring items (including any real property tax refunds), (b) income derived from the sale of assets not in the ordinary course of business which is permitted under the Bond Documents, (c) security, cleaning or similar deposits of tenants until applied or forfeited, (d) Net Proceeds of Insurance Proceeds or Condemnation Awards and (e) any amount disbursed to the Borrower from the Surplus Fund, but including as Project Revenues (i) any such Net Proceeds resulting from business interruption insurance or other insurance or condemnation proceeds retained by the Borrower and (ii) amounts received by the Borrower or the Trustee pursuant to any payment guaranty, operating guaranty or similar agreement with respect to the Project. A-12

71 Qualified Insurer has the meaning provided in the Loan Agreement. Rating Agency means S&P, Moody s or Fitch, or any other nationally recognized rating agency if such agency currently has a rating in effect with respect to any Series of the Bonds. The initial Rating Agency shall be S&P. Rating Agency Fee means any fee required to be paid to a Rating Agency to maintain a rating on the Bonds, and initially means the annual surveillance fee of $5,000 payable by the Borrower to the initial Rating Agency. Rebate Analyst means a Certified Public Accountant, financial analyst, law firm or Bond Counsel, or any firm of the foregoing, or a financial institution (which may include the Trustee) experienced in making the arbitrage and rebate calculations required pursuant to Section 148 of the Code and retained by the Borrower to make the computations and give the directions required pursuant to the Tax Agreement. Rebate Analyst Fee means a fee paid for each rebate calculation (which are to be made every fifth year, if required). Rebate Fund means the trust fund by that name created pursuant to Section 5.01 hereof. Record Date means the fifteenth day (whether or not a Business Day) of the calendar month preceding any applicable Interest Payment Date. Related Person means any member of the same Controlled Group as the Authority or the Borrower. hereof. Repair and Replacement Fund means the trust fund by that name established pursuant to Section 5.01 Replacement Reserve Requirement means an amount equal to the amount set forth in the Indenture per unit in the Project per year, as increased pursuant to any Needs Assessment Analysis required by the Loan Agreement. Responsible Officer, when used with respect to the Trustee, means any corporate trust officer or assistant corporate trust officer or any other officer of the Trustee within its corporate trust department customarily performing functions similar to those performed by any of the above designated officers, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such person s knowledge of and familiarity with the particular subject. Revenue Fund means the trust fund by that name created pursuant to the Indenture. S&P means S&P Global Ratings, its successors and assigns. Senior Bonds means the Series 2017A Bonds, the Series 2017B Bonds and any Additional Bonds issued on a parity therewith. Senior Parity Indebtedness means any Parity Indebtedness properly incurred on parity with the Senior Bonds as provided for in the Loan Agreement. Series means any series of Bonds issued pursuant to the Indenture. Series 2017 Bonds means the Series 2017A Bonds, the Series 2017B Bonds and the Series 2017C Bonds. Series 2017A Bonds means $11,820,000 aggregate principal amount of the Authority s Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Series 2017A, which Bonds are (i) equal in lien and priority to the Series 2017B Bonds and (ii) senior in lien and priority to the Series 2017C Bonds. A-13

72 Series 2017B Bonds means $215,000 aggregate principal amount of the Authority s Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Taxable Series 2017B, which are (i) equal in lien and priority to the Series 2017A Bonds and (ii) senior in lien and priority to the Series 2017C Bonds. Series 2017C Bonds means $1,795,000 aggregate principal amount of the Authority s Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Subordinate Series 2017C, which Bonds are junior in lien and priority to the Series 2017A Bonds and the Series 2017B Bonds. Short-Term Indebtedness means any Indebtedness maturing not more than 365 days after it is incurred or which is payable on demand, except for any such Indebtedness which is renewable or extendable at the sole option of the debtor to a date more than 365 days after it is incurred, or any such Indebtedness which, although payable within 365 days, constitutes payments required to be made on account of Indebtedness expressed to mature more than 365 days after it was incurred. Site means the real property on which the Project is located. Sole Member means means Invest in America s Veterans Foundation, Inc., a Florida nonprofit corporation described in Section 501(c)(3) of the Code and exempt from federal income taxation under Section 501(a) of the Code, as Sole Member of the Borrower, and its successors and assigns. Special Redemption Account means each trust account by that name within the Bond Fund created with respect to a Series of Bonds pursuant to the Indenture. Sponsor means the National League of Cities, the National Association of Counties, the Wisconsin Counties Association, the League of Wisconsin Municipalities, and any other Person that holds itself out, or is identified by the Authority, as an organization sponsoring the Authority. State means the State of Wisconsin. Subordinate Bonds means the Series 2017C Bonds and any Additional Bonds issued on parity therewith. Subordinate Parity Indebtedness means any Parity Indebtedness properly incurred on parity with the Subordinate Bonds as provided in the Loan Agreement. Supplemental Indenture means any Amendment to the Indenture entered into in accordance with the Indenture. Surplus Cash means the amount on deposit in the Surplus Fund that may be distributed to the Borrower pursuant to the Indenture. Surplus Fund means the trust fund by that name created pursuant to the Indenture. Tax Agreement means the Tax Regulatory Agreement and No-Arbitrage Certificate dated as of September 1, 2017, executed by the Authority, the Trustee, the Borrower and the Sole Member, as in effect on the Closing Date and as the same may be supplemented or amended from time to time in accordance with its terms. Tax-Exempt Bonds means the Series 2017A Bonds and the Series 2017C Bonds and any Additional Bonds that as originally issued were the subject of an opinion of Bond Counsel to the effect that the interest thereon is excluded from the gross income of the Holders thereof for federal income tax purposes. Title Policies means title insurance in the form of an ALTA mortgagee s title policies issued by a title insurance company acceptable to the Underwriter in the face amount of at least the principal amount of the Series 2017 Bonds insuring that the Trustee has a first priority valid lien in the Mortgage Property subject only to Permitted Encumbrances. Test Period means the Fiscal Year ending on an Annual Evaluation Date. A-14

73 Trust Estate means the property conveyed to the Trustee under the Indenture, including all of the Authority s right, title and interest in and to the property described in the granting clauses of the Indenture. Trustee means Wilmington Trust, National Association or any successors or assigns under the Indenture. Unassigned Rights means the rights of the Authority under the Indenture and the Loan Agreement and, to the extent not expressly provided in the Indenture or Loan Agreement, the Authority s rights under the Indenture and the Loan Agreement to (i) inspect books and records; (ii) give or receive notices, approvals, consents, requests, and other communications; (iii) receive payment or reimbursement for expenses, including without limitation Additional Loan Payments and the Authority s Fees and Expenses; (iv) immunity from and limitation of liability; (v) indemnification by the Borrower; and (vi) to enforce, in its own name and on its own behalf, those provisions of the Indenture and the Loan Agreement and any other document, instrument or agreement entered into with respect to the Bonds that provides generally for the foregoing enumerated rights or any similar rights of the Authority or any Authority Indemnified Person. For avoidance of doubt, the Unassigned Rights referenced in clauses (iv), (v) and (vi) above shall be interpreted broadly to encompass (but not be limited to) the rights of the Authority Indemnified Persons to immunity from and limitation of liability and indemnification by the Borrower as provided in the Loan Agreement and the right of any such Authority Indemnified Person to enforce such rights in his, her or its own name. Underwriter means Stifel, Nicolaus & Company, Incorporated, and its successors and assigns. Unrestricted Contributions means contributions that are not restricted in any way that would prevent their application to the payment of Debt Service on Indebtedness of the Borrower. A-15

74 APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF THE TRUST INDENTURE The following is a summary of certain provisions of the Trust Indenture. This summary does not purport to be complete and is subject in all respects to the provisions of, and are qualified in their entirety by reference to, the complete text of such document. Copies of the Trust Indenture are available from the Trustee. Creation of Funds and Accounts The following Funds and Accounts are created and established by the Indenture to be held by the Trustee: (a) A Bond Fund and therein (i) a Principal Account, an Interest Account and a Special Redemption Account with respect to the Senior Bonds and (ii) a Principal Account, an Interest Account and a Special Redemption Account with respect to the Subordinate Bonds; (b) A Debt Service Reserve Fund, and therein (i) a Debt Service Reserve Account with respect to the Senior Bonds and (ii) a Debt Service Reserve Account with respect to the Subordinate Bonds; (c) (d) (e) (f) (g) (h) (i) (j) (k) A Project Fund and therein a Costs of Issuance Account; A Revenue Fund; A Rebate Fund; An Operating Fund; An Operations and Maintenance Reserve Fund; An Insurance and Tax Escrow Fund and, therein, an insurance premium account; A Repair and Replacement Fund; An Administration Fund; and A Surplus Fund. Disbursements from the Project Fund The Trustee shall disburse money in the Costs of Issuance Account in the Project Fund to pay the Costs of Issuance upon receipt of a written requisition of the Borrower or a closing memorandum prepared by the Underwriter and signed by the Borrower or a closing statement to the Trustee which states (i) that such amount is to be paid to persons, firms or corporations identified therein, and (ii) that such amount is properly payable as a Cost of Issuance under the Indenture. On the six month anniversary of the Closing Date, the Trustee shall pay any remaining balance in the Costs of Issuance Account to the Project Fund. Amounts on deposit in the Project Fund shall be applied to payment of Costs of the Project by disbursement thereof in accordance with one or more requisitions of the Borrower to the Trustee within 30 days of receipt of such requisition substantially in the form set forth as an exhibit to the Loan Agreement or a closing memorandum prepared by the Underwriter and signed by the Borrower. For purposes of complying with the requirements of this, the Trustee may conclusively rely and shall be protected in acting or refraining upon the form of requisition of the Borrower, which may be submitted by facsimile or (pdf format). The Trustee shall not be bound to make an investigation into the facts or matters stated in any form of requisition of the Borrower. The Trustee shall not be responsible for determining whether the funds on hand in the Project Fund are sufficient to complete the Costs of the Project. The Trustee shall not be responsible for collecting lien waivers. B 1

75 Net Proceeds of any Insurance Proceeds or Condemnation Awards deposited in the Project Fund pursuant to the Loan Agreement shall be applied as provided in the Loan Agreement. Any amounts remaining in the Project Fund on the date that is three (3) years from the Closing Date (in the case of original and investment proceeds of the Series 2017 Bonds, or the date of deposit of such amounts into the Project Fund, in the case of other amounts) shall be deposited in the Interest Account of the Bond Fund with respect to the Senior Bonds unless otherwise required by the Tax Agreement. Revenue Fund (a) There shall be deposited in the Revenue Fund (i) all Loan Payments and other amounts paid to the Trustee under the Loan Agreement (other than prepayments required to redeem Bonds pursuant to the Indenture, which shall be deposited in the related Special Redemption Account), (ii) all other amounts required to be so deposited pursuant to the terms of the Indenture or of the Tax Agreement, including investment earnings to the extent provided in the Indenture, (iii) any amounts derived from the Loan Agreement or the Mortgage to be applied to payment of amounts intended to be paid from the Revenue Fund, (iv) all Project Revenues, and (v) such other money as is delivered to the Trustee by or on behalf of the Authority or the Borrower with written directions for deposit of such money in the Revenue Fund. (b) Money on deposit in the Revenue Fund shall be disbursed on the 15th day of each month in the following order of priority: (1) To the Interest Account for the Senior Bonds, the applicable Interest Requirement for the Senior Bonds for that calendar month, together with an amount equal to any unfunded Interest Requirement for the Senior Bonds for any prior month and, at the written direction of a Borrower s Representative, to the holder of any Senior Parity Indebtedness an amount, as certified by a Borrower s Representative, equal to the interest due in such month, together with an amount, as certified by a Borrower s Representative, equal to any unfunded interest for any prior month; (2) To the Principal Account for the Senior Bonds, an amount equal to the Principal Requirement for the Senior Bonds for that calendar month, together with an amount equal to any unfunded Principal Requirement for the Senior Bonds from any prior month and, at the written direction of a Borrower s Representative, to the holder of any Senior Parity Indebtedness an amount, as certified by a Borrower s Representative, equal to the principal due in such month, together with an amount equal to any unfunded principal for any prior month; (3) To the Debt Service Reserve Account for the Senior Bonds, the amount, if any, required to be paid into the Debt Service Reserve Account for the Senior Bonds pursuant to the Loan Agreement to restore the amount on deposit therein to the Debt Service Reserve Requirement; (4) To the Interest Account for the Subordinate Bonds, an amount equal to the Interest Requirement for the Subordinate Bonds, together with an amount equal to any unfunded Interest Requirement for the Subordinate Bonds for any prior month and, to the holder of any Subordinate Parity Indebtedness, an amount equal to the interest due in such month, together with an amount equal to any unfunded interest for any prior month; (5) To the Principal Account for the Subordinate Bonds, an amount equal to the Principal Requirement for the Subordinate Bonds, together with an amount equal to any unfunded Principal Requirement for the Subordinate Bonds for any prior month and, to the holder of any Subordinate Parity Indebtedness, an amount equal to the principal due in such month, together with an amount equal to any unfunded principal for any prior month; (6) To the Debt Service Reserve Account for the Subordinate Bonds, the amount, if any, required to be paid into such Debt Service Reserve Account pursuant to the Loan Agreement to restore the amounts on deposit therein to the Debt Service Reserve Requirement for the Subordinate Bonds; B 2

76 (7) Subject to the Indenture, for transfer to the Insurance and Tax Escrow Fund, an amount equal to one-twelfth of the amount budgeted by the Borrower for the current year for (i) annual premiums for insurance required to be maintained pursuant to the Loan Agreement to the Insurance Premium Account and (ii) for charges for governmental services for the current year (if any), as provided in the Budget, provided that distribution by the Trustee to the Insurance and Tax Escrow Fund in respect of the first date or dates on which premiums for insurance and taxes or other payments described above are payable will be made in amounts equal to the respective quotients obtained by dividing the sum of (i) the amount of such premiums and (ii) the amount of such charges, by the respective number of months, including the month of computation, to and including the month prior to the month in which such premiums or taxes are payable; (8) To the Operating Fund, an amount equal to such month s Operating Requirement, as provided in the Budget, together with such additional Operating Expenses requested in writing by a Borrower s Representative pursuant to and after satisfaction of the conditions specified in the Loan Agreement; (9) Subject to the provisions of the Indenture, for transfer to the Repair and Replacement Fund, commencing with the month of October 2017, an amount equal to the one-twelfth of the Replacement Reserve Requirement until the Replacement Reserve Requirement is met; (10) Subject to the provisions of the Indenture, for transfer to the Administration Fund, an amount equal to one-twelfth (1/12) of the Administration Expenses scheduled to be due and payable on or before the next succeeding Principal Payment Date; (11) To the Rebate Fund, to the extent of any deposit required to be made thereto pursuant to the Tax Agreement; and (12) To the Surplus Fund, all remaining amounts. In the event that, for any month, there are insufficient funds in the Revenue Fund to fund any one or more of the uses set forth in clauses (1) through (11) above, the amount not funded in such month due to such insufficiency of revenues shall be added to the amount to be funded in subsequent months under the same clause until such amount has been in fact funded. If funds in the Revenue Fund are insufficient to fund the uses in clause (10) above, then the Borrower shall pay any shortfalls in the payment of Administration Expenses as they become due. Failure to deposit sufficient Project Revenues to make the deposits described above shall not, in itself, constitute an Event of Default under the Indenture. Bond Fund There shall be deposited into the respective Principal Accounts of the Bond Fund (i) money transferred to such Principal Account from the Revenue Fund pursuant to the Indenture; (ii) money transferred from the Surplus Fund, the Operations and Maintenance Reserve Fund, the Repair and Replacement Fund, the Debt Service Reserve Fund and the Operating Fund pursuant to the Indenture in respect of principal payable on the Senior Bonds and Subordinate Bonds, and (iii) any other amounts deposited with the Trustee with written directions from the Borrower Representative to deposit the same in the applicable Principal Account of the Bond Fund. (b) There shall be deposited into the respective Interest Accounts of the Bond Fund (i) all accrued interest, if any, on the sale and delivery of the Bonds; (ii) money transferred to such Interest Account from the Revenue Fund pursuant to the Indenture; (iii) money transferred from the Surplus Fund, the Operations and Maintenance Reserve Fund, the Repair and Replacement Fund, the applicable Debt Service Reserve Account of the Debt Service Reserve Fund and the Operating Fund pursuant to the Indenture in respect of interest payable on the Bonds; and (iv) any other amounts deposited with the Trustee with written directions from the Borrower Representative to deposit the same in the applicable Interest Account of the Bond Fund. (c) There shall be deposited in the applicable Special Redemption Account of the Bond Fund (i) any Net Proceeds of Insurance Proceeds or Condemnation Award to be transferred to a Special Redemption Account B 3

77 pursuant to the Indenture; and (ii) all other payments made by or on behalf of the Authority with respect to the redemption of Bonds pursuant to the Indenture. Amounts on deposit in each Special Redemption Account shall be used to pay the redemption price of Bonds of the related Series being redeemed. (d) Except as otherwise provided in the Indenture, money in the Principal Accounts shall be used for the payment of principal of the Bonds of the applicable Series as the same shall become due and payable on any Principal Payment Date, including a Principal Payment Date resulting from the redemption of the Bonds pursuant to the Indenture. (e) Except as otherwise provided the Indenture, money in the Interest Accounts shall be used for the payment of interest on the Bonds as the same becomes due and payable on any Bond Payment Date. (f) If on any Interest Payment Date, the amount on deposit in the Interest Account or a Principal Account is insufficient to make the payments or deposits described in (a) or (b) above, the Trustee shall make up any such shortfall by transferring amounts first, to the Principal Account and the Interest Account for the Senior Bonds and their subaccounts (first, to the Interest accounts and then to the principal account) and second, to the Principal Account and the Interest Account for the Subordinate Bonds (first to the Interest Account and second, to the Principal Account) from the following Funds in the following order: (1) the Surplus Fund; (2) the Repair and Replacement Fund; (3) the Operations and Maintenance Reserve Fund; (4) the respective Debt Service Reserve Account, provided, however, that amounts may be transferred from the Debt Service Reserve Account for the Senior Bonds only in connection with shortfalls on the Senior Bonds and amounts may be transferred from the Debt Service Reserve Account for the Subordinate Bonds only in connection with shortfalls on the Subordinate Bonds; and (5) the Operating Fund. (g) Any balance in the Principal Account and the Interest Account of the Bond Fund on each Interest Payment Date after making the transfers required above in this section shall be transferred to the Revenue Fund. Debt Service Reserve Fund (a) There shall be deposited in the Debt Service Reserve Fund (i) all money transferred to such Debt Service Reserve Fund pursuant to the Indenture, (ii) money transferred from the Revenue Fund pursuant to the Indenture, and (iii) any other money received by the Trustee with directions from such party to deposit the same in the Debt Service Reserve Fund. (b) Amounts on deposit in the applicable accounts within the Debt Service Reserve Fund shall be used to make the payments required pursuant to the Indenture, as applicable for a Series, after the transfer of any amounts from the Surplus Fund and the Repair and Replacement Fund pursuant to the Indenture, if the amounts on deposit in the Revenue Fund are insufficient therefor. (c) Amounts on deposit in the applicable Debt Service Reserve Accounts shall be transferred to the applicable Principal Accounts of the Bond Fund at the written direction of the Borrower s Representative for the purpose of paying the last maturing principal of the Senior Bonds or Subordinate Bonds, as applicable, on a Principal Payment Date or, if all of a series of the Bonds are being redeemed, to the applicable Special Redemption Accounts of the Bond Fund for redemption of Bonds; provided, however, that amounts may be transferred from the Debt Service Reserve Account for the Senior Bonds only in connection with final payments on the Senior Bonds and amounts may be transferred from the Debt Service Reserve Account for the Subordinate Bonds only in connection with final payments on the Subordinate Bonds. B 4

78 (d) If the Debt Service Reserve Requirement for the Senior Bonds or the Subordinate Bonds is reduced or eliminated in accordance with the definition thereof, the amounts on deposit in the applicable Debt Service Reserve Account in excess of the applicable Debt Service Reserve Requirement shall, at the written direction of a Borrower s Representative delivered to the Trustee, be either (i) transferred to the applicable Special Redemption Account to be used to redeem Bonds pursuant to the Indenture, (ii) transferred to the related Principal or Interest Account to pay the principal of and/or interest on the Bonds as it becomes due, or (iii) if no Bonds remain outstanding, either transferred to the Revenue Fund and applied as provided in the Indenture, or used for any other purpose directed in writing by a Borrower s Representative, which, in the opinion of a Favorable Opinion of Bond Counsel delivered to the Authority and the Trustee, complies with the Act and will not adversely affect the exclusion from gross income of the recipients thereof of the interest on the Tax-Exempt Bonds for federal income tax purposes. (e) All interest income derived from the investment of amounts on deposit in the applicable Debt Service Reserve Accounts shall be retained in the applicable Debt Service Reserve Accounts until the amount on deposit therein shall be equal to the Debt Service Reserve Fund Requirement for the Senior Bonds or the Subordinate Bonds, respectively, and thereafter shall be deposited into the Revenue Fund Operating Fund The Trustee shall deposit in the Operating Fund (i) money transferred from the Revenue Fund in the amounts and on the dates described in the Indenture, (ii) any other monies received by the Trustee for deposit in the Operating Fund and (iii) any other amounts required to be deposited into the Operating Fund under the Indenture or the Loan Agreement or the Mortgage and delivered to the Trustee with written instructions to deposit the same therein. Money on deposit in the Operating Fund shall be disbursed by the Trustee to the Borrower or the Manager, as applicable and as instructed by the Borrower, to pay, or as reimbursement for the Operating Expenses with respect to the Project. If an Event of Default under the Indenture has occurred and is continuing, the Trustee shall, if so directed in writing by the Controlling Holders in accordance with the Indenture, (i) the Borrower will not be entitled to request withdrawals from funds on deposit in the Operating Fund, and (ii) the Trustee, upon written direction of the Controlling Holders, shall pay Operating Expenses of the Project directly, without receipt of direction from the Borrower s Representative and in such event is to rely on the annual Budget prepared by the Borrower in connection with the Project. Insurance and Tax Escrow Fund (a) The Trustee shall deposit in the accounts within the Insurance and Tax Escrow Fund (i) money transferred from the Revenue Fund in the amounts and on the dates described in the Indenture and (ii) any other amounts required to be deposited into the Insurance and Tax Escrow Fund hereunder or under the Loan Agreement or the Mortgage and delivered to the Trustee with instructions to deposit the same therein. (b) Amounts in the Insurance Premium Account of the Insurance and Tax Escrow Fund shall be disbursed by the Trustee to pay insurance premiums with respect to the Project upon delivery by a Borrower s Representative to the Trustee of a requisition, substantially in the form attached as an exhibit to the Loan Agreement. (c) Excess amounts in the Insurance and Tax Escrow Fund may be disbursed by the Trustee to the Revenue Fund if, on or after any Annual Evaluation Date, the Trustee receives a certificate signed by the Borrower s Representative stating that actual costs taxes, assessments and insurance premiums with respect to the Project are below the amounts set forth in the Budget previously provided by the Borrower to the Trustee. (d) Upon presentation to the Trustee by a Borrower s Representative of a requisition described above accompanied by copies of bills or statements for the payment of such charges and insurance premiums with respect to the Project, when due, the Trustee will, not more frequently than once a month, pay to the Borrower to provide for the payment of, or as reimbursement for the payment of, such charges and premiums with respect to the Project, B 5

79 from money then on deposit in the Insurance and Tax Escrow Fund. If the total amount on deposit in the Insurance and Tax Escrow Fund shall not be sufficient to pay to or to pay or reimburse the Borrower in full for the payment of such charges and premiums, then the Borrower shall pay the excess amount of such charges and premiums directly. Repair and Replacement Fund (a) The Trustee shall deposit into the Repair and Replacement Fund (i) money transferred from the Revenue Fund in the amounts and on the dates described in the Indenture and (ii) any other amounts required to be deposited into the Repair and Replacement Fund hereunder or under the Loan Agreement or the Mortgage and delivered to the Trustee with instructions to deposit the same therein. Amounts in the Repair and Replacement Fund shall be disbursed by the Trustee as provided in the Indenture, upon delivery by a Borrower s Representative to the Trustee of a requisition substantially in the form attached as an exhibit to the Loan Agreement. The Trustee shall apply money on deposit in the Repair and Replacement Fund upon written request of a Borrower s Representative, but no more frequently than once a month, to pay to or to reimburse the Borrower for paying the cost of replacements or items of extraordinary maintenance or repair which may be required to keep a respective Project in sound condition, including but not limited to, replacement of appliances, major floor covering replacement, replacement or repair of any roof or other structural component of the Project, maintenance (including painting) to exterior surfaces and major repairs to or replacements of heating, air conditioning, plumbing and electrical systems, landscaping, storm water drainage, repairs to common area amenities and any other extraordinary costs required for the repair or replacement of a Project not properly payable from the Revenue Fund but in any case only if there are no funds available in the Project Fund for such purpose. (b) Upon presentation to the Trustee by a Borrower s Representative of a requisition described in subsection (a) above accompanied by a summary of the amount for which payment or reimbursement is sought and, for requests for a particular line item of disbursement in excess of $25,000, copies of bills or statements for the payment of the costs of such repair and replacement (provided that the Trustee shall have no duty or obligation to review or approve such bills or statements), the Trustee will pay to the Borrower the amount of such repair and replacement costs from money then on deposit in the Repair and Replacement Fund, provided no Event of Default shall then exist under the Indenture. If the total amount on deposit in the Repair and Replacement Fund shall not be sufficient to pay all of such repair and replacement costs when they shall become due, then funds in the Operations and Maintenance Reserve Fund may be disbursed until exhausted, and then the Borrower shall pay the excess amount of such costs directly (which Borrower s monies may be reimbursed from monies available in the Repair and Replacement Fund at a later date when they become available). (c) The monies in the Repair and Replacement Fund will also be used to remedy any deficiency in the Bond Fund on any Interest Payment Date after exhaustion of the Operations and Maintenance Reserve Fund, without any prior consents, as provided in the Indenture. Administration Fund The Trustee shall deposit in the Administration Fund (i) money transferred from the Revenue Fund pursuant to Section 5.04 hereof, and (ii) any other amounts required to be deposited in the Administration Fund hereunder or under the Loan Agreement or the Mortgage with written instructions to deposit the same therein. The Trustee shall disburse amounts in the Administration Fund necessary for payment of Administration Expenses then due automatically to the parties due such payment upon presentation of an invoice for payment from such requesting party without any approval of the Borrower. The Trustee shall disburse amounts in the Administration Fund necessary for payment of Extraordinary Trustee s Fees and Expenses upon presentation of an invoice for payment from the Trustee approved by the Borrower, which approval shall not be unreasonably withheld and which shall not be required in the event an Event of Default under the Indenture has occurred and is then continuing. Surplus Fund (a) The Trustee shall deposit, into the Surplus Fund, amounts provided the Indenture and any other amounts delivered to it with written instructions to deposit the same in the Surplus Fund. Money in the Surplus Fund shall be applied each month, when needed, for the following purposes and in the following manner: B 6

80 (i) transferred to the Interest Account for the Senior Bonds to pay interest on the Senior Bonds to the extent amounts on deposit in such Interest Account are insufficient therefor; (ii) transferred to a Principal Account for the Senior Bonds to pay principal on the Senior Bonds to the extent amounts on deposit in such Principal Account are insufficient therefor; (iii) transferred to the Interest Account for the Subordinate Bonds to pay interest on the Subordinate Bonds to the extent amounts on deposit in such Interest Account are insufficient therefor; (iv) transferred to the Principal Account for the Subordinate Bonds to pay principal on the Subordinate Bonds to the extent amounts on deposit in such Principal Account are insufficient therefor; (v) transferred to the Revenue Fund to the extent of any deficiency in the amounts needed to fully make all transfers from the Revenue Fund pursuant to the Indenture (other than to the Surplus Fund); (vi) transferred to or upon the direction of the Borrower s Representative for deposit into the Operating Fund for the payment of Operating Expenses when the Borrower s Representative certifies to the Trustee that there is not sufficient money in the Operating Fund to pay Operating Expenses; and (vii) pay any unpaid and due Administrative Expenses. (b) If on or after any Annual Evaluation Date, the Trustee receives a certificate signed by the Borrower s Representative in the form of Exhibit C to the Loan Agreement stating that (i) the Borrower has satisfied the Coverage Test for the Fiscal Year ending on such Annual Evaluation Date, upon which the Trustee may conclusively rely, (ii) no Event of Default, or event which with the passage of time or the giving of notice or both would constitute an Event of Default, has occurred and is continuing, (iii) the Debt Service Reserve Requirement and the Replacement Reserve Requirement have been fully funded, (iv) the Borrower is in compliance with the Liquidity Requirement and (v) the Borrower has delivered to the Trustee the financial reports and certificates required under the Loan Agreement, then within two Business Days after written request by the Borrower s Representative to the Trustee, the Trustee shall disburse all remaining cash in the Surplus Fund (less any amount to be retained to the comply with the Liquidity Requirement) to the Borrower. Bonds Not Presented for Payment In the event any Bonds shall not be presented for payment when the principal thereof becomes due on any Bond Payment Date, if money sufficient to pay such Bonds are held by the Trustee, the Trustee shall segregate and hold such money in trust, without liability for interest thereon, for the benefit of Holders of such Bonds who shall, except as provided in the following paragraph, thereafter be restricted exclusively to such funds for the satisfaction of any claim of whatever nature on their part under the Indenture or relating to said Bonds. Payment to the Borrower After the right, title and interest of the Trustee in and to the Trust Estate and all covenants, agreements and other obligations of the Authority to the Holders shall have ceased, terminated and become void and shall have been satisfied and discharged in accordance with the Indenture, and after payment in full of all Administration Expenses and all fees, expenses and other amounts payable to the Trustee and the Authority pursuant to any provision hereof shall have been paid in full, any money remaining in the Funds and Accounts hereunder shall be paid or transferred to the Borrower upon the written request of a Borrower s Representative; provided that amounts on deposit in the Rebate Fund shall be retained therein to the extent required by the Tax Agreement. Deposit of Extraordinary Revenues (a) Any money representing Net Proceeds of Insurance Proceeds or Condemnation Awards upon damage to, destruction of or governmental taking of the Project and deposited with the Trustee pursuant to the Loan Agreement shall be deposited by the Trustee in the Project Fund. B 7

81 (b) At the direction of the Borrower s Representative, the Trustee shall disburse such money in the Project Fund as provided in the Loan Agreement to enable a Borrower to undertake a restoration of a Project if such restoration is permitted by law; provided that, if a Borrower exercises or is deemed to exercise its option to apply such money to the payment of the Note or the conditions of the Loan Agreement are not satisfied, or an excess of such money exists after restoration of a Project, such money shall be transferred by the Trustee to the applicable Special Redemption Account of the Bond Fund and applied to redeem or prepay the Bonds pursuant to the Indenture, in a principal amount equal to the amount so transferred or the next lowest Authorized Denomination of the Bonds. (c) Title insurance proceeds shall be used to remedy any title defect resulting in the payment thereof or deposited in the Bond Fund for use in redeeming Bonds pursuant to the Indenture. (d) The proceeds of any rental loss, use and occupancy or business interruption insurance shall be deposited in the Revenue Fund. Subordination of Subordinate Bonds Deposits made to the Accounts in the Bond Fund for the Subordinate Bonds and payment of Debt Service on the Subordinate Bonds shall be subordinate in priority to the deposits to be made to the Accounts in the Bond Fund for the Senior Bonds hereunder and subordinate to the payment when due of Debt Service on the Senior Bonds. Investments Money in all Funds and Accounts established under the Indenture shall, at the written direction of the Borrower s Representative at least two Business Days before the making of such investment (any oral direction to be promptly confirmed in writing), be invested and reinvested by the Trustee in Investment Securities. Subject to the further provisions of this Article, such investments shall be made by the Trustee as directed and designated by the Borrower s Representative in a certificate of, or telephonic advice promptly confirmed by a certificate of a Borrower s Representative. As long as no Event of Default shall have occurred and be continuing, the Borrower s Representative shall have the right to designate the investments to be sold and otherwise to direct the Trustee in the sale or conversion to cash of the investments made with the money in any Fund or Account. The Borrower will not direct that any investment be made of any funds which would violate the covenants set forth in the Indenture. Unless otherwise confirmed in writing, an account statement delivered by the Trustee to the Borrower s Representative shall be deemed written confirmation by the Borrower that the investment transactions identified therein accurately reflect the investment directions given to the Trustee by the Borrower, unless the Borrower s Representative notifies the Trustee in writing to the contrary within 30 days after the date of such statement. Moneys held as part of any fund or account for which no written direction for investment has been given to the Trustee shall remain uninvested. Money in any Fund or Account shall be invested in Investment Securities with respect to which payments of principal thereof and interest thereon are scheduled to be paid or are otherwise payable (including Investment Securities payable at the option of the holder) not later than the earlier of (a) the date on which it is estimated that such money will be required by the Trustee, or (b) six (6) months after the date of acquisition thereof by the Trustee. The Trustee may make any and all such investments through its own banking, trust or investment department or through any affiliate. All income attributable to money deposited in any Fund or Account created hereunder shall be credited to the Revenue Fund, except that income on money (a) in the Project Fund shall be credited to the Project Fund, (b) in the Rebate Fund shall be credited to the Rebate Fund and (c) in the Debt Service Reserve Fund shall be credited to the Debt Service Reserve Fund to the extent provided in the Indenture. Any net loss realized and resulting from any such investment shall be charged to the particular fund or account for whose account such investment was made. The Trustee is authorized and directed to sell and reduce to cash funds a sufficient amount of such investments whenever the cash balance in any fund or account is insufficient to make any withdrawal therefrom as required under the Indenture. The Trustee shall not be liable for any depreciation of the value of any investment made pursuant to this section or for any loss resulting from any such investment on the redemption, sale and maturity thereof. B 8

82 Investment Securities held in the Debt Service Reserve Fund shall be valued at cost on each Interest Payment Date. The Trustee shall at all times maintain accurate records of deposits into each Fund and Account and the sources of such deposits and such records shall be made available to the Borrower upon reasonable written request. Defeasance If the Authority shall pay or cause to be paid to the Holder of any Bond the principal of, premium, if any, and interest due and payable, and thereafter to become due and payable, upon such Bond, or any portion of such Bond in any Authorized Denomination thereof, such Bond or portion thereof shall cease to be entitled to any lien, benefit or security under the Indenture. If the Authority shall pay or cause to be paid the principal of, premium, if any, and interest due and payable on all Outstanding Bonds, and thereafter to become due and payable thereon, and shall pay or cause to be paid all other sums payable hereunder by the Authority, including all fees, compensation and expenses of the Trustee and receipt by the Trustee of an opinion of Counsel that all conditions precedent have been complied with, then the right, title and interest of the Trustee in and to the Trust Estate shall thereupon cease, terminate and become void and the Trustee shall release or cause to be released the Trust Estate, the Mortgage and any other documents securing the Bonds or execute such documents so as to permit the Trust Estate, the Mortgage and such other documents to be released. Any Bond shall be deemed to be paid within the meaning of this Article and for all purposes of the Indenture when (a) payment of the principal of and premium, if any, on such Bond, plus interest thereon to the due date thereof (whether such due date is by reason of maturity or upon redemption as provided in the Indenture) either (i) shall have been made or caused to be made in accordance with the terms thereof or (ii) shall have been provided for by any irrevocable deposit with the Trustee in trust and irrevocably set aside exclusively for such payment of, (A) funds sufficient to make such payment and/or (B) Government Obligations maturing as to principal and interest in such amounts and at such times as will insure the availability of sufficient money to make such payment, and (b) all fees, compensation and expenses of the Trustee pertaining to the Bond with respect to which such deposit is made accrued and to accrue until final payment of the Bonds, whether at maturity or upon redemption, shall have been paid or the payment thereof provided for to the satisfaction of the Trustee. At such times as a Bond shall be deemed to be paid hereunder, as aforesaid, such Bond shall no longer be secured by or entitled to the benefits of the Indenture, except for the purposes of any such payment from such funds or Government Obligations. Notwithstanding the foregoing paragraph, no deposit under clause (a)(ii) of the immediately preceding paragraph shall be deemed a payment of such Bond as aforesaid until the Authority or the Borrower s Representative, on behalf of the Authority, shall have given the Trustee, in form satisfactory to the Trustee, irrevocable written instructions to notify, as soon as practicable, the Holders in accordance with the Indenture, that the deposit required by (a)(ii) above has been made with the Trustee and that said Bond is deemed to have been paid in accordance with this section and stating the maturity or redemption date upon which money is to be available for the payment of the redemption price of said Bond, plus interest thereon to the due date thereof; or (b) the maturity of such Bond. In addition to the foregoing, no deposit described in clause (a)(ii) of the immediately preceding paragraph shall be deemed a payment of said Bond until the Borrower has delivered to the Trustee (i) a report of an Independent Certified Public Accountant verifying the sufficiency of the amounts, if any, described in (a)(ii) above to insure payment of such Bond, and (ii) a Favorable Opinion of Bond Counsel addressed to the Authority and the Trustee to the effect that such deposit will not adversely affect the exclusion of interest on the Tax-Exempt Bonds from the gross income of the recipients thereof for federal income tax purposes. Defaults and Remedies Events of Default Bonds: Each of the following events shall constitute an Event of Default under the Indenture with respect to the (a) While any Senior Bonds are Outstanding: B 9

83 (1) a failure to pay the principal of or premium, if any, on any of the Senior Bonds when the same shall become due and payable at maturity or upon redemption; (2) a failure to pay an installment of interest on any of the Senior Bonds when the same shall become due and payable; (b) If no Senior Bonds are Outstanding: (1) a failure to pay the principal of or premium, if any, on any of the Subordinate Bonds when the same shall become due and payable at maturity or upon redemption; (2) a failure to pay an installment of interest on any of the Subordinate Bonds when the same shall become due and payable; (c) a failure by the Authority to observe and perform any other covenant, condition, agreement or provision (other than as specified in subparagraphs (a) and (b) of this section) contained in the Bonds or in the Indenture on the part of the Authority to be observed or performed with respect to the Bonds, which failure shall continue for a period of thirty (30) days after written notice is provided by the Trustee specifying such failure and requesting that it be remedied, shall have been given to the Authority by the Trustee, which may give such notice in its discretion and shall give such notice at the written request of the Controlling Holders, unless the Trustee, or the Trustee and Holders which requested such notice, as the case may be, shall agree in writing to an extension of such period prior to its expiration; provided, however, that the Trustee, or the Trustee and the Holders of such Bonds, as the case may be, shall be deemed to have agreed to an extension of such period if corrective action is initiated by the Authority within such period and is being diligently pursued; provided, further that in no event shall such period be extended for more than 180 days after the date of giving of notice of such failure without the consent of the Controlling Holders; or (d) Mortgage. the occurrence of a Default under the Loan Agreement or an Event of Default under the Acceleration; Other Remedies Upon the occurrence and continuance of an Event of Default, the Trustee, subject to the provisions of the Indenture, may, and at the written request of the Controlling Holders shall, by written notice to the Authority and the Borrower, declare the Bonds to be immediately due and payable, whereupon such Bonds shall, without further action, become and be immediately due and payable, anything in the Indenture or in the Bonds to the contrary notwithstanding, and the Trustee shall give notice thereof to the Authority and the Rating Agency, and shall give notice thereof by mail to Holders the Bonds. Notwithstanding any other provision of the Indenture to the contrary, (i) if an Event of Default with respect to the payment of the principal of or interest on the Subordinate Bonds occurs (but an Event of Default does not exist with regard to the Senior Bonds) while any Senior Bonds remain Outstanding, then the Trustee shall not accelerate the Bonds and shall not exercise any of the other remedies available pursuant to the Indenture or applicable law without the consent of the Holders of all of the Senior Bonds. (a) The provisions of the preceding paragraph are subject to the condition that if, after the principal of the Bonds shall have been so declared to be due and payable, and before any judgment or decree for the payment of the money due shall have been obtained or entered as provided in the Indenture, (i) the Authority shall, but only from any payment received from the Borrower for such purpose, deposit with the Trustee a sum sufficient to pay all matured installments of interest on all Bonds and the principal of any and all Bonds which shall have become due otherwise than by reason of such declaration (with interest on such principal on the Default Rate) and such amount as shall be sufficient to pay Extraordinary Trustee s Fees and Expenses, and (ii) all Events of Default under the Indenture with respect to the Bonds other than nonpayment of the principal of such Bonds which shall have become due by said declaration shall have been remedied, then, in every such case, upon the written consent of the Controlling Holders provided to the Trustee, such Event of Default shall be deemed waived and such declaration and its consequences rescinded and annulled, and the Trustee shall promptly give written notice of such waiver, rescission or annulment to the Authority and the Rating Agency, and shall give notice thereof by Mail to all Holders B 10

84 of Bonds; but no such waiver, rescission and annulment shall extend to or affect any subsequent Event of Default or impair any right or remedy consequent thereon. (b) Upon the occurrence and continuance of any Event of Default, then and in every such case the Trustee in its discretion may, and upon the written direction of the Controlling Holders and receipt of indemnity to its satisfaction shall, in its own name and as the Trustee of an express trust, perform any or all of the following: (i) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Holders under the Indenture or the applicable Bonds, including without limitation requiring the Authority or the Borrower to carry out any agreements with or for the benefit of the Holders and to perform its or their duties under the Act, the Loan Agreement, the Mortgage, the Land Use Restriction Agreement and the Indenture, provided that any such remedy may be taken only to the extent permitted under the applicable provisions of the Loan Agreement, the Mortgage, the Land Use Restriction Agreement or the Indenture, as the case may be; (ii) bring suit upon the Bonds; (iii) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Holders of Bonds; (iv) foreclose the Mortgage; (v) file proofs of claim in any bankruptcy or insolvency proceedings related to the Authority, the Borrower or the Project, necessary or appropriate to protect the interests of the Trustee or the Holders of the Bonds; (vi) exercise any rights and remedies with respect to the Trust Estate as may be available to a secured party under the Uniform Commercial Code in effect in the applicable state. (c) Notwithstanding anything in the Indenture to the contrary, neither the Holders of the Bonds nor the Trustee acting on behalf of the Holders of the Bonds shall have any right, and hereby waive any right, to institute a proceeding under the Bankruptcy Code seeking to adjudge the Authority or the Borrower insolvent or a bankrupt or seeking a reorganization of the Authority or the Borrower. Upon instituting any such proceeding, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Project and other assets pledged under the Indenture or the Mortgage, pending resolution of such proceeding. The Trustee shall have the right to decline to follow any direction of any Bondholder that in the sole discretion of the Trustee would be unjustly prejudicial to the Trustee, that would expose the Trustee to unreasonable liability or financial exposure or that is not in accordance with law or the provisions of the Indenture. The Trustee shall be entitled to rely without further investigation or inquiry upon any written direction given by the Controlling Holders, and shall not be responsible for the propriety of or be liable for the consequences of following any such direction. Notwithstanding anything to the contrary contained in the Indenture, the Trustee shall not be required to foreclose the Mortgage or bid on behalf of the Holders at any foreclosure sale (a) if, in the Trustee s sole discretion, such action would subject the Trustee to personal liability for the cost of investigation, removal and/or remedial activity with respect to Hazardous Substances, (b) if the presence of any Hazardous Substances on the property subject to the Mortgage results in such property having no or nominal value or (c) if as a result of any such action, the Trustee would be considered to hold title to or to be a mortgagee-in-possession, owner or operator of the Project within the meaning of the Comprehensive Environmental Responsibility Cleanup and Liability Act of 1980, as amended, unless the Trustee has previously determined, based on a report prepared by an environmental audit consultant acceptable to the Trustee, that (i) the Project is in compliance with applicable environment laws and (ii) there are not circumstances present at the Project relating to the use, management or disposal of any Hazardous Substances for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any federal, state or local law or regulation. It is acknowledged and agreed that the Trustee has no authority to manage, own or operate the Project, or any portion thereof, except as necessary to exercise remedies upon an Event of Default. B 11

85 No Remedy Exclusive No remedy in the Indenture conferred upon or reserved to the Trustee or to Holders is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given under the Indenture, or now or hereafter existing at law or in equity or by statute; provided, however, that any conditions set forth in the Indenture to the taking of any remedy to enforce the provisions of the Indenture or the Bonds shall also be conditions to seeking any remedies under any of the foregoing pursuant to this Section. Application of Money (a) If an Event of Default occurs with respect to the Bonds, any money held in any Fund or Account hereunder (excluding the Rebate Fund) or received by any receiver or by the Trustee, by any receiver or by any Holder pursuant to any right given or action taken under the provisions of the Indenture, after payment of (i) the fees, expenses, liabilities or advances payable to or incurred or made by the Trustee, the Trustee Indemnified Persons, the Authority, the Authority Indemnified Persons (including without limitation, indemnification and all other payments due to the Authority and any Authority Indemnified Person in respect of Unassigned Rights) or any Holder; provided, that payment of amounts due to the Authority or the Authority Indemnified Persons under this section shall not absolve the Borrower from liability therefore except to the extent of the amounts received from the Trustee, (ii) the costs and expenses of the proceedings resulting in the collection of such money, and (iii) Operating Expenses of the Project as determined to be appropriate by the Trustee (and the Trustee may, in its discretion, rely on the direction of the Controlling Holders or the Budget to make such determination), shall be deposited in the Revenue Fund; and all money so deposited in the Revenue Fund during the continuance of an Event of Default (other than money for the payment of Bonds which have matured or otherwise become payable prior to such Event of Default or for the payment of interest due prior to such Event of Default) shall be applied (except as otherwise provided in the Indenture with respect to money deposited in a Bond Fund Account for the benefit of the Holders of the Bonds) as follows: (i) Unless the principal of all the Bonds shall have been declared due and payable, all such money shall be applied (A) first, together with any amounts on deposit in the Debt Service Reserve Account relating to the Senior Bonds, to the payment to the persons entitled thereto of all installments of interest then due on the Senior Bonds and any Senior Parity Indebtedness, with interest on overdue installments, if lawful, at the Default Rate, in the order of maturity of the installments of such interest and, if the amount available shall not be sufficient to pay in full any particular installment of interest, then to the payment ratably, according to the amounts due on such installment of interest on the Senior Bonds and any Senior Parity Indebtedness on a parity and pro rata basis, (B) second, together with any amounts on deposit in the Debt Service Reserve Accounts relating to the Senior Bonds, to the payment to the persons entitled thereto of the unpaid principal of any of the Senior Bonds and any Senior Parity Indebtedness which shall have become due (other than Senior Bonds called for redemption for the payment of which money is held pursuant to the provisions of the Indenture) with interest on such Senior Bonds and any Senior Parity Indebtedness at the Default Rate from the respective dates upon which they became due and, if the amount available shall not be sufficient to pay in full Senior Bonds and any Senior Parity Indebtedness due on any particular date, together with such interest, then to the payment ratably, according to the amount of principal and interest due on such date, in each case to the persons entitled thereto, without any discrimination or privilege, (C) third, together with any amounts on deposit in the Debt Service Reserve Account relating to the Subordinate Bonds, to the payment to the persons entitled thereto of all installments of interest then due on the Subordinate Bonds and any Subordinate Parity Indebtedness with interest on overdue installments, if lawful, at the Default Rate, in the order of maturity of the installments of such interest and, if the amount available shall not be sufficient to pay in full any particular installment of interest, then to the payment ratably, according to the amounts due on such installment of interest on the Subordinate Bonds and any Subordinate Parity Indebtedness on a parity and pro rata basis; and (D) fourth, together with any amounts on deposit in the Debt Service Reserve Account relating to the Subordinate Bonds, to the payment to the persons entitled thereto of the unpaid principal of any of the Subordinate Bonds and any Subordinate Parity Indebtedness which shall have become due (other than the Subordinate Bonds called for redemption the payment of which money is held pursuant to the provisions of the Indenture) with interest on such Subordinate Bonds and any Subordinate Parity Indebtedness at the Default B 12

86 Rate from the respective dates upon which they became due and, if the amount available shall not be sufficient to pay in full the Subordinate Bonds and any Subordinate Parity Indebtedness due on any particular date, together with such interest, then to the payment ratably, according to the amount of principal and interest due on such date, in each case to the persons entitled thereto, without any discrimination or privilege. (ii) If the principal of all the Bonds shall have been declared due and payable, all such moneys shall be applied: (A) first, to the payment of the principal and interest then due and unpaid upon the Senior Bonds and any Senior Parity Indebtedness, with interest on overdue interest and principal, as aforesaid at the Default Rate, if lawful, without preference or priority of principal over interest or interest over principal, or of any installment of interest over any other installment of interest, or of any Senior Bond or any Senior Parity Indebtedness over any other Senior Bond or Senior Parity Indebtedness ratably, according to the amounts due respectively for principal and interest, to the persons entitled thereto without any discrimination or privilege and (B) second, to the payment of the principal and interest then due and unpaid upon the Subordinate Bonds and any Subordinate Parity Indebtedness, with interest on overdue interest and principal, as aforesaid at the Default Rate, if lawful, without preference or priority of principal over interest or interest over principal, or of any installment of interest over any other installment of interest, or of any Subordinate Bond or any Subordinate Parity Indebtedness over any other Subordinate Bond or Subordinate Parity Indebtedness, ratably, according to the amounts due respectively for principal and interest, to the persons entitled thereto without any discrimination or privilege. (iii) If the principal of all the Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject to the provisions of clause (ii) of this paragraph (a) which shall be applicable in the event that the principal of all the Bonds shall later become due and payable, the money shall be applied in accordance with the provisions of clause (i) of this paragraph (a). (b) Whenever money is to be applied pursuant to the provisions of this section, such money shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of such money available for application and the likelihood of additional money becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts of principal and interest to be paid on such date shall cease to accrue. The Trustee shall give notice of the deposit with it of any such money and of the fixing of any such date by Mail to all Holders of the Bonds and shall not be required to make payment to any Holder of a Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Supplemental Indentures without Holder Consent The Authority and the Trustee may, from time to time and at any time, without the consent of any Holder, but with prompt notice to the Rating Agency, enter into Supplemental Indentures as follows: (a) to cure any formal defect, omission, inconsistency or ambiguity in the Indenture; (b) to add to the covenants and agreements of the Authority in the Indenture other covenants and agreements, or to surrender any right or power reserved or conferred upon the Authority if such surrender shall not, in the judgment of the Trustee, materially adversely affect the interests of the Holders, the Trustee being authorized to rely on an opinion of Counsel with respect thereto; (c) to confirm, as further assurance, any pledge of or lien on the Loan Agreement or of any other money, securities or funds subject to the lien of the Indenture; (d) amended; to comply with the requirements of the Trust Indenture Act of 1939, as from time to time B 13

87 (e) to preserve the exclusion of interest on the Tax-Exempt Bonds from gross income for federal income tax purposes, as set forth in a Favorable Opinion of Bond Counsel; (f) (g) Indenture; (h) to make changes to obtain, maintain or restore the rating on the Bonds from the Rating Agency; to provide for any amendment specifically authorized or required by any provision of the in connection with any Additional Bonds or Parity Indebtedness; or (i) with respect to any other Amendment which does not have a material adverse effect on the Holders of the Bonds. Supplemental Indentures Requiring Beneficial Owners Consent Except for any Supplemental Indenture entered into pursuant to the heading Supplemental Indentures without Holder Consent above, subject to the terms and provisions contained in this Section and not otherwise, Beneficial Owners of not less than a majority of the Bond Obligation shall have the right from time to time to consent to and approve the execution and delivery by the Authority and the Trustee of any Supplemental Indenture deemed necessary or desirable by the Authority for the purposes of modifying, altering, amending, supplementing or rescinding, any of the terms or provisions contained in the Indenture; provided, however, that, unless approved in writing by all Beneficial Owners of Bonds, nothing contained in the Indenture shall permit, or be construed as permitting, (i) a change in the times, amounts or currency of payment of the principal of or interest on any Outstanding Bond or a reduction in the principal amount or redemption price of any Outstanding Bond or the rate of interest borne thereon (ii) the creation of a claim or lien upon, or a pledge of, the Trust Estate ranking prior to or on a parity with the claim, lien or pledge created by the Indenture, (iii) a reduction in the aggregate amount of the Bond Obligation or (iv) any change to the Indenture relating to the subordination of the Subordinate Bonds. Unless approved in writing by a majority of the Beneficial Owners of the Bond Obligation for the Subordinate Bonds, nothing contained in the Indenture shall permit, or be construed as permitting a Supplemental Indenture which further subordinates the priority of the Holders of the Subordinate Bonds to the payment of the Senior Bonds. If, at any time, the Authority and the Trustee propose to enter into any such Supplemental Indenture for any of the purposes specified in this section, the Trustee shall, subject to the Indenture and upon being satisfactorily indemnified with respect to expenses by the Borrower, cause notice of the proposed execution of such Supplemental Indenture to be mailed, postage prepaid, to all Beneficial Owners affected thereby. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that copies thereof are on file at the Designated Trust Office of the Trustee for inspection by all Beneficial Owners affected thereby. If, within 60 days or such longer period as shall be prescribed by the Trustee following the mailing of such notice, the consent described in the first paragraph of this section shall have been received, no Holder of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Authority from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such Supplemental Indenture as in this Section is permitted and provided, the Indenture shall be deemed to be and shall be modified and amended in accordance therewith. The Trustee and the Authority may rely upon an opinion of Bond Counsel as conclusive evidence that the execution and delivery of a Supplemental Indenture has been effected in compliance with the provisions of this Article. Anything in the Indenture to the contrary notwithstanding, so long as no Default under the Loan Agreement with respect to the Borrower has occurred and is continuing, a Supplemental Indenture under this Article shall not become effective unless and until the Borrower shall have consented to the execution and delivery of such Supplemental Indenture. In this regard, the Trustee shall cause notice of the proposed execution and delivery of any such Supplemental Indenture to be mailed by certified or registered mail to the Borrower at least 20 days prior to the proposed date of execution and delivery of any Supplemental Indenture. B 14

88 Amendment of Borrower s Documents Without Holder Consent Without the consent of but with notice to the Holders, the Trustee may consent to any Amendment of any Borrower s Document from time to time as follows: (a) to cure any formal defect, omission, inconsistency or ambiguity in such Borrower s Document; (b) to add to the covenants and agreements of the Authority or the Borrower in such document other covenants and agreements, or to surrender any right or power reserved or conferred upon the Authority or the Borrower, if such surrender shall not, in the judgment of the Trustee, materially adversely affect the interests of the Holders, the Trustee being authorized to rely on an opinion of Counsel with respect thereto; (c) to confirm, as further assurance, any lien on or pledge of the Project or the revenues therefrom or of any other property, money, securities or funds subject to the Mortgage or any other security for the Loan Agreement; (d) to preserve the exclusion of interest on the Tax-Exempt Bonds from gross income for federal income tax purposes, as set forth in an opinion of Bond Counsel; (e) to make changes required to obtain or maintain the rating on the Bonds from the Rating Agency; (f) to provide for any amendment specifically authorized or required by any provision of any Borrower s Document; (g) in connection with any Additional Bonds or Parity Indebtedness; or (h) with respect to any other Amendment which does not have a material adverse effect on the Holders of the Bonds. Amendment of Borrower s Documents Requiring Holders Consent Except in the case of Amendments referred to in the heading Amendment of Borrower s Documents Without Holder Consent above, the Authority and the Trustee shall not enter into, and shall not consent to, any amendment of the Borrower s Documents without the written approval or consent of the Beneficial Owners of the Bonds then Outstanding, given and procured as provided in the heading Supplemental Indentures Requiring Beneficial Owners Consent above; provided that the foregoing will not permit or be construed as permitting any change referred to clause (i) of the heading Supplemental Indentures Requiring Beneficial Owners Consent above (substituting for such purpose the word Note for the word Bond ) without the consent of all Beneficial Owners given and obtained in the manner set forth in the heading Supplemental Indentures Requiring Beneficial Owners Consent above. If at any time the Authority requests the consent of the Trustee to any such proposed modification, alteration, amendment or supplement, the Trustee will, at the sole expense of the Borrower, cause notice thereof to be given in the same manner as provided by the Indenture with respect to Supplemental Indentures. Such notice will briefly set forth the nature of such proposed modification, alteration, amendment or supplement and will state that copies of the instrument embodying the same are on file at the Designated Office of the Trustee for inspection by all Beneficial Owner. The Authority and the Trustee may enter into, or may consent to, any such proposed modification, alteration, amendment or supplement subject to the same conditions and with the same effect as provided in the heading Supplemental Indentures Requiring Beneficial Owners Consent above with respect to Supplemental Indentures. B 15

89 APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE LOAN AGREEMENT The following is a summary of certain provisions of the Loan Agreement. This summary does not purport to be complete and is subject in all respects to the provisions of, and are qualified in their entirety by reference to, the complete text of such document. Copies of the Loan Agreement are available from the Trustee. Reorganization or Reconstitution; Substitution of Sole Member The Borrower may reorganize or reconstitute by substituting its Sole Member with another organization described in Section 501(c)(3) of the Code at any time without the consent of the Holders of the Bonds so long as no Event of Default shall have occurred and then be existing or result from any such substitution. Prior to such reorganization or reconstitution, the Borrower shall comply or cause compliance with the following conditions and deliver evidence of satisfaction of such conditions to the Trustee: (i) the resulting entity shall assume all of the obligations of the Borrower under the Bond Documents and counsel to such Borrower shall deliver to the Authority and the Trustee enforceability opinions as to such documents against such resulting Borrower in form and substance substantially similar to the enforceability opinions delivered on the Closing Date, (ii) such Borrower shall secure a Confirmation of Rating, (iii) such Borrower shall cause the Title Policy applicable to its Project to be amended or endorsed in the name of the new entity, if applicable, (iv) such Borrower shall cause the applicable Mortgage, Land Use Restriction Agreement, UCC Financing Statement and other security documents that have been recorded in the applicable jurisdiction to be amended and re-recorded to reflect the change in corporate organization in the same or similar manner as the applicable Mortgage, Land Use Restriction Agreement and UCC Financing Statements and other security documents, (v) such Borrower shall cause the substituting sole member to provide evidence of all corporate approvals necessary to effect the reorganization, (vi) such Borrower shall secure an opinion of Bond Counsel that such reorganization does not adversely affect the tax-exempt status of the Tax-Exempt Bonds, (vii) such Borrower shall file or cause the Dissemination Agent to file a notice of such reorganization or reconstitution with EMMA (as such term as defined in the Continuing Disclosure Agreement) and (viii) such Borrower shall file with the Trustee and the Authority a certificate certifying that (A) the substituting sole member has received a determination from the Internal Revenue Service to the effect that it is described in Section 501(c)(3) of the Code, (B) that such determination has not been modified, limited or revoked, that the substituting sole member was and is in compliance with all terms, conditions, and limitations, if any, contained in such determination material applicable to it, (C) that the facts and circumstances which form the basis of such determination as represented to the Internal Revenue Service continue substantially to exist, including, specifically, with regard to financing the acquisition, rehabilitation, equipping and financing additional renovations of the relevant Project, and (D) that the substituting sole member is exempt from federal income taxation under Section 501(a) because it is an organization described in Section 501(c)(3) of the Code. In addition, the Borrower shall pay or cause to be paid all of the costs, fees and expenses of the Authority and the Trustee associated with the reorganization or reconstitution, including but not limited to, the costs associated with the matters described in this section. The Loan; Basic Loan Payments; and Additional Payments (a) The Loan. The Authority agrees, upon the terms and conditions in the Loan Agreement, to lend to the Borrower the proceeds received by the Authority from the sale of the Series 2017 Bonds by causing such proceeds to be deposited with the Trustee for disposition as provided in the Indenture. The obligation of the Authority to make the Loan shall be deemed fully discharged upon the deposit of the proceeds of the Series 2017 Bonds with the Trustee. The Loan shall be evidenced by the Note. (b) Deposit of Project Revenues; Loan Payments; Basic Loan Payments; and Additional Loan Payments. The Borrower shall cause all Project Revenues to be deposited with the Trustee upon receipt by the Borrower or the Manager. The Project Revenues shall be used to pay the Basic Loan Payments and the Additional Loan Payments, as provided in this paragraph (b), in such lawful money of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. (i) Basic Loan Payments. The Project Revenues shall be used to pay, as Basic Loan Payments, the following amounts: C 1

90 (1) on or before the 12th day of each month, commencing October, 2017, until such time as the principal of and the premium, if any, and interest on, the Bonds shall have been paid in full, or provisions made for such full payment in accordance with the provisions of the Indenture, to the Trustee for deposit in the Interest Account in the Bond Fund provided for in the Indenture, a sum equal to the Interest Requirement on then Outstanding Bonds for such month; and (2) on or before the 12th day of each month, commencing October, 2017, to the Trustee for deposit in the Principal Account in the Bond Fund, a sum equal to the Principal Requirement on then Outstanding Bonds for such month. The monthly installments of Basic Loan Payments described in (1) and (2) above payable by the Borrower under the Loan Agreement shall in any event be equal in the aggregate to an amount that, with other funds in the respective Accounts in the Bond Fund then available for the payment of principal and interest on the Bonds, shall be sufficient to provide for the payment in full of the interest on, premium, if any, and principal on the Bonds as they become due and payable. Except as otherwise provided in the Indenture, the Project Revenues shall also be used to pay, as Basic Loan Payments, to the Trustee for deposit in the Bond Fund, such amounts as shall, together with any other money available therefor, be sufficient to pay all amounts, if any, required to redeem each Series of Bonds pursuant to the provisions of the Indenture as and when they become subject to redemption pursuant thereto, together with any related redemption premium associated therewith, with all such payments to be made by the Borrower to the Trustee, for deposit into the Bond Fund Accounts on or before the date such money is required by said provisions of the Indenture. (ii) Additional Loan Payments. In addition to the Basic Loan Payments, the Borrower shall cause the Project Revenues to be remitted (or the Borrower shall otherwise pay) to the Authority or the Trustee, as the case may be, from time to time in amounts fully sufficient to timely pay the following costs and expenses (to the extent such costs and expenses are not paid from the proceeds of the sale of the Bonds), which are the Additional Loan Payments: (1) the Ordinary Trustee s Fees and Expenses and Extraordinary Trustee s Fees and Expenses, and all other fees and other costs of the Trustee, including without limitation, reasonable fees and expenses of counsel to the Trustee, payable to the Trustee for services or indemnity under the Indenture and the Borrower s Documents (including services in connection with the administration and enforcement thereof and compliance therewith); (2) the reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Authority or the Trustee to prepare audits, financial statements, reports, opinions or provide such other services required under the Loan Agreement, the Borrower s Documents or the Indenture, including, but not limited to, any audit or inquiry by the Internal Revenue Service or any other governmental body; (3) the Authority Annual Fee and the reasonable fees and expenses of the Authority or any agent or attorney selected by the Authority to act on its behalf in connection with the Loan Agreement, the Borrower s Documents, the Bonds or the Indenture, including, without limitation, any and all reasonable expenses incurred in connection with the authorization, issuance, sale and delivery of any such Bonds or in connection with any litigation, investigation, inquiry or other proceeding which may at any time be instituted involving the Loan Agreement, the Borrower s Documents, the Bonds or the Indenture or any of the other documents contemplated thereby, or in connection with the reasonable supervision or inspection of the Borrower, its properties, assets or operations or otherwise in connection with the administration of the Loan Agreement and the Borrower s Documents; (4) all taxes and assessments of any type or character charged to the Authority or to the Trustee affecting the amount available to the Authority or the Trustee from payments to be received hereunder or in any way arising due to the transactions contemplated by the Loan C 2

91 Agreement (including taxes and assessments assessed or levied by any public agency or governmental authority of whatsoever character having power to levy taxes or assessments); provided, however, that the Borrower shall have the right to protest any such taxes or assessments and to require the Authority or the Trustee, at the Borrower s expense, to protest and contest any such taxes or assessments levied upon them and that the Borrower shall have the right to withhold payment of any such taxes or assessments pending disposition of any such protest or contest unless such withholding, protest or contest would adversely affect the rights or interests of the Authority or the Trustee; (5) all amounts advanced by the Authority or the Trustee under authority of the Indenture or any of the Borrower s Documents that the Borrower is obligated to repay; (6) any amounts required to be deposited in the Debt Service Reserve Fund in order to satisfy the applicable Debt Service Reserve Requirement pursuant to the Indenture; and should funds be withdrawn from a Debt Service Reserve Requirement, the Borrower shall restore the difference between the amount on deposit in the Debt Service Reserve Fund and the related Debt Service Reserve Requirement from the next available deposits of Project Revenues and other deposits to the Revenue Fund made in accordance with the Indenture; (7) amounts sufficient to maintain balances in the Repair and Replacement Fund and the Insurance and Tax Escrow Fund, equal to the amounts required pursuant to the Indenture; (8) all fees and expenses of the Rebate Analyst to provide the rebate calculations required under the Tax Agreement, and if a deposit is required to be made to the Rebate Fund as a result of any calculation made pursuant to the Tax Agreement, the Borrower shall cause to be paid from Project Revenues the amount of such deposit in accordance with the terms of the Indenture; (9) amounts required to be deposited in the Operating Fund sufficient to pay the Operating Expenses of the Project, as provided for in the budget and in the Indenture; (10) the Dissemination Agent Fee payable in accordance with and as provided under the Indenture and Continuing Disclosure Agreement; (11) the Rating Agency Fee; and (12) the costs and expenses associated with any audit of the Tax-Exempt Bonds by the Internal Revenue Service. Such Additional Loan Payments listed in (2) through (4) above shall be billed to the Borrower by the Authority or the Trustee from time to time, together with a statement certifying that the amount billed has been incurred or paid by the Authority or the Trustee for one or more of the above items. After such demand, amounts so billed shall be paid by the Borrower within thirty (30) days after receipt of the bill by the Borrower. Notwithstanding the foregoing, the Authority may, but shall not be required to, submit a bill to the Borrower for payment of the Authority Annual Fee. Such Authority Annual Fee shall be paid in semiannual installments on the six (6)-month anniversary of the Closing Date and subsequently on the same day every sixth (6th) month thereafter. The amount of each semiannual payment shall be determined by multiplying (i) the principal amount of the Bonds Outstanding as of the last day of the calendar month preceding the installment payment due date by (ii) 0.03% (3 basis points) by (iii) one-half (1/2). (iii) Revenue Fund. As security for its obligations to make the payments required in subsections (i) and (ii) above, the Borrower shall pay (or cause the Manager to pay) all Project Revenues from the Project to the Trustee for deposit in the Revenue Fund in accordance with the first paragraph of this paragraph (b). C 3

92 All Additional Loan Payments shall be made by the Borrower to the Trustee for deposit by the Trustee into the Revenue Fund, to be used by the Trustee for payment to the Person or Persons entitled to such payments and in the order specified in the Indenture. (iv) Miscellaneous. In the event the Borrower shall fail to pay, or fail to cause to be paid, any Loan Payments as required by paragraph (b) of this section (except to the extent amounts due under by paragraph (b) of this section) are paid from amounts on deposit in the Debt Service Reserve Fund, the Repair and Replacement Fund or the Surplus Fund), the payment not paid shall continue as an obligation hereunder of the Borrower until the unpaid amount shall have been fully paid, and the Borrower shall pay, or cause to be paid, the same with interest thereon from the date of non-payment until the date so paid at the Default Rate. The requirement that interest be paid at the Default Rate shall be in addition to and not in lieu of any other remedy that may exist for the failure of the Borrower to make the payments required in this section. The Borrower shall pay, or cause to be paid, in accordance with the terms of this section, the Loan Payments without any further notice thereof. The Borrower shall be permitted to distribute, free and clear of any and all liens or encumbrances on, or right to recovery of, such funds under the Loan Agreement, to the Sole Member or any other Person any funds properly disbursed to the Borrower from the Surplus Fund subject to the terms and provisions of the Indenture. In addition to and without in any way limiting the Borrower s obligations to pay and indemnify the Authority and the Authority Indemnified Persons against fees, costs and charges arising out of or in connection with the Loan Agreement, the Borrower s Documents, the Bonds or the Indenture, the Borrower shall pay, upon the closing of the issuance of the Bonds and as a condition thereto: (i) to the Authority, the Authority s issuance fee in the amount of (A) $40,000 plus (B) 0.05% of the amount (if any) by which the amount of the Bonds issued pursuant to the Indenture exceeds $20,000,000 less, if applicable, any application fee heretofore paid by the Borrower to the Authority; and (ii) attorney s fees incurred by the Authority in connection with the issuance of the Bonds. Obligations Unconditional; Limited Recourse The obligations of the Borrower to make the payments required in the heading The Loan; Basic Loan Payments; and Additional Payments above and other sections of the Loan Agreement and to perform and observe the other agreements contained in the Loan Agreement shall be absolute and unconditional and shall not be subject to any defense or any right of setoff, counterclaim or recoupment arising out of any breach by the Authority or the Trustee of any obligation to the Borrower whether under the Loan Agreement or otherwise, or out of any Indebtedness or liability at any time owing to the Borrower by the Authority or the Trustee. Until such time as the principal of, premium, if any, and interest on the Bonds, and any costs incidental thereto, shall have been fully paid or provision for the payment thereof shall have been made in accordance with the Indenture, the Borrower (a) will not suspend or discontinue any payments provided for in the heading The Loan; Basic Loan Payments; and Additional Payments above, (b) will perform and observe all other agreements contained in the Loan Agreement, and (c) except as provided in the Loan Agreement, will not terminate the Loan Agreement for any cause, including, without limiting the generality of the foregoing, failure of the Borrower to complete the acquisition, renovation, furnishing and equipping of the Project, the occurrence of any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project, the taking by eminent domain of title to or temporary use of any or all of the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State or any political subdivision of either or any failure of the Authority or the Trustee to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with the Loan Agreement or otherwise. Nothing contained in this section shall be construed to release the Authority from the performance of any of the agreements on its part contained in the Loan Agreement, and in the event the Authority or the Trustee fails to perform any such agreement on its part, the Borrower may institute such action against the Authority or the Trustee as the Borrower may deem necessary to compel performance so long as such action does not abrogate the obligations of the Borrower contained in the first sentence of this Section. The Borrower may, at its own cost and expense and in its name with proper notice to the Authority, prosecute or defend any action or proceeding or take C 4

93 any other action involving third persons which the Borrower deem reasonably necessary in order to secure or protect the Borrower s right of possession, occupancy and use of the Project, and in such event the Authority agrees to cooperate fully with the Borrower, at the Borrower s sole cost and expense. Notwithstanding the foregoing or any other provision or obligation to the contrary contained in the Loan Agreement or any other Bond Document, with the exception of any and all indemnities provided in the Bond Documents (including, without limitation, the Borrower s obligation to indemnify the Trustee, the Trustee Indemnified Persons, Authority and the other Authority Indemnified Persons, including pursuant to the Loan Agreement), which such indemnities shall be a general obligation of the Borrower, (a) the liability of the Borrower under the Loan Agreement and the other Bond Documents to any person or entity, including, but not limited to, the Trustee or the Authority and their successors and assigns, is limited to the Borrower s interest in the Project, the Project Revenues and the amounts held in the Funds and Accounts created under the Indenture or other Bond Documents or any rights of the Borrower under any guarantees relating to the Project, and such persons and entities shall look exclusively thereto, to such other security as may from time to time be given for the payment of obligations arising out of the Loan Agreement or any other agreement securing the obligations of the Borrower under the Loan Agreement; and (b) from and after the date of the Loan Agreement, no deficiency or other personal judgment, nor any order or decree of specific performance (other than pertaining to the Loan Agreement, any agreement pertaining to the Project or any other agreement securing the Borrower s obligations under the Loan Agreement), shall be rendered against the Borrower nor any member of the Borrower, the assets of the Borrower (other than the Borrower s interest in the Project, the Loan Agreement, amounts held in the Funds and Accounts created under the Indenture, any rights of the Borrower under the Bond Documents, its officers, directors or members (including specifically the Sole Member) or its heirs, personal representatives, successors, transferees assigns, as the case may be, in any action or proceeding arising out of the Loan Agreement and the Indenture or any agreement securing the obligations of the Borrower under the Loan Agreement, or any judgment, order or decree rendered pursuant to any such action or proceeding. Assignment of Authority s Rights As security for the payment of the Bonds, the Authority in the Indenture assigns to the Trustee certain of the Authority s rights under the Loan Agreement, including the right to receive payments under the Loan Agreement (except for any deposits to the Rebate Fund and the Unassigned Rights), and the Borrower assents to such assignment and agree to make payments directly to the Trustee, without defense or set off by reason of any dispute between the Borrower and the Authority or the Trustee. By virtue of such assignment and certain obligations of the Borrower to the Trustee, the Authority shall have no obligation to, and instead the Trustee shall have the right without further direction from the Authority, to enforce the obligations of the Borrower under the Loan Agreement (except for the Unassigned Rights), subject to the limitations of the Loan Agreement. Disbursement of Project Fund Amounts in the Project Fund shall be disbursed by the Trustee as provided in the Indenture, upon delivery by a Borrower to the Trustee of a requisition, substantially in the form attached as an exhibit to the Loan Agreement, executed by a Borrower s Representative setting forth the nature of the amounts to be paid and the name of the payee and certifying that the amounts being paid are Costs of the Project. The execution of each requisition submitted for disbursements by the Borrower shall constitute the certification, warranty, and agreement of the Borrower as follows: (a) the Project is free and clear of all liens and encumbrances except Permitted Encumbrances; (b) all evidence, statements, and other writings required to be furnished under the terms of the Loan Agreement and the Indenture are true and omit no material fact, the omission of which may make them misleading; (c) all monies previously disbursed from the Project Fund with respect to the Project have been used solely to pay for Costs of the Project, and the Borrower has written evidence to support this item of warranty; C 5

94 (d) none of the items for which payment is requested have formed the basis for any payment previously made from the Project Fund; and (e) all bills for labor, materials, and fixtures used, or on hand and to be used, in the rehabilitation or equipping of the Project has been paid. Other Indebtedness The Borrower shall not incur any Indebtedness with respect to the Project, other than the Loan and other debts permitted or anticipated in the Loan Agreement, or incurred in the ordinary course of business which do not give rise to a lien or encumbrance on the Project, except for Permitted Encumbrances. In addition, the Borrower is permitted to incur the following: (a) Indebtedness incurred as a result of the issuance of Additional Bonds; (b) such Short-Term Indebtedness as the Borrower, in its judgment, deems expedient; provided that the aggregate amount of Short-Term Indebtedness outstanding at any time does not exceed ten percent (10%) of the total Operating Expenses of the Borrower for the preceding Fiscal Year; and Any Short-Term Indebtedness which is incurred for the purpose of providing working capital may be secured by a security interest on the Project Revenues on a parity with the security interest created under the Mortgage with respect to the Bonds, and if so secured, the agreement for the repayment of such Short-Term Indebtedness and instruments evidencing or securing the same shall provide that: (i) any Default shall be an event of default thereunder; and (ii) if any event of default shall have occurred with respect to such Short-Term Indebtedness, the holder thereof shall be entitled only to such rights to exercise, consent to or direct the exercise of remedies (other than remedies relating to any funds established under the Indenture) as are available to the Trustee, and that all such remedies are, except as otherwise provided in the Loan Agreement, to be exercised solely by the Trustee for the equal and ratable benefit of all holders of Bonds and all holders of Short-Term Indebtedness so secured, subject to the priorities provided in the Indenture with respect to (i) the Senior Bonds and any Senior Parity Indebtedness and (ii) the Subordinate Bonds and any Subordinate Parity Indebtedness. Any agreement for the repayment of such Short-Term Indebtedness and instruments evidencing or securing the same shall provide for notices to be given to the Trustee regarding defaults by the Borrower, and shall specify the rights of the Trustee to pursue remedies upon the receipt of such notice, and the sharing of the rights of the Trustee to control the exercise of remedies with the holder of such Short-Term Indebtedness. Short-Term Indebtedness which is incurred for the purpose of providing working capital may also be secured by a security interest in Project Revenues which is subordinate to the security interest therein created under the Mortgage. (c) such Long-Term Indebtedness as the Borrower, in its judgment, deems expedient; provided that prior to incurring, assuming, or guaranteeing any Long-Term Indebtedness, the Borrower must furnish to the Authority and the Trustee (i) a Certificate setting forth the terms of such Long-Term Indebtedness and stating that the incurrence of such Long-Term Indebtedness will not cause the Debt Service Coverage Ratio to fall below the required Coverage Test for any Series of Bonds and (ii) the Confirmation of Rating stating that the incurrence of such Long-Term Indebtedness will not result in a qualification, downgrade or withdrawal of the then current ratings on the Outstanding Bonds. (i) The Borrower may secure Indebtedness incurred or assumed pursuant to (c) above by a lien on and security interests in all or any portion of the Project and the Project Revenues, secured on an equal and ratable basis with then Outstanding Senior Bonds or Subordinate Bonds, as applicable; provided, however, the following conditions are satisfied: (a) The Indebtedness is being incurred or assumed for any of the same purposes for which Additional Bonds may be issued under the Indenture, or for the purpose of refunding or refinancing any Outstanding Bonds or other Indebtedness; C 6

95 (b) The Indebtedness (other than Additional Bonds) will not be secured by the money and investments held in any fund established under the Indenture; (c) All Modifications, if any, to be financed will become part of the Project; (d) Any agreement for the repayment of such Indebtedness and instruments evidencing or securing the same must provide -- (1) that any Default will be an event of Default thereunder, (2) that, if any event of default has occurred in respect of such Indebtedness, the holder thereof will be entitled only to such rights to exercise, consent to or direct the exercise of remedies (other than remedies relating to any funds established under the Indenture) as are available to the Trustee, and that all such remedies are, except as otherwise provided in the Loan Agreement, to be exercised solely by the Trustee for the equal and ratable benefit of all Bondholders and all holders of Indebtedness so secured, but subject to the priorities provided in the Indenture with respect to Senior Bonds and Senior Parity Indebtedness and the Subordinate Bonds and Subordinate Parity Indebtedness; (ii) If the proposed Indebtedness is further secured by liens on properties and revenues other than the Project and/or the Project Revenues, a lien of equal rank and priority will be granted upon the same properties and revenues to secure the Bonds; and (iii) For the purpose only of being entitled to remedies under the Loan Agreement and of consenting to or directing actions to be taken in respect to such remedies, the Holders of any such Indebtedness will be treated as Bondholders and the Indebtedness held by such persons will be treated as Additional Bonds. (d) The Trustee shall be authorized to enter into appropriate intercreditor agreements in order to implement the provisions of the Loan Agreement and shall be fully protected in relying upon an opinion of counsel that any such intercreditor agreements are authorized and permitted by the terms of the Loan Agreement. Release of Certain Land and Subordination; Granting of Easements The parties hereto reserve the right at any time and from time to time to (a) effect the release and removal from the Mortgage of any part (or interest in such part) of the Mortgaged Property with respect to which the Borrower propose to convey fee title to a public utility or public body in order that utility services or public services may be provided to the Project, or to effect the subordination of the lien of the Mortgage to rights granted to a public utility or public body in order that utility services or public services may be provided to the Project, (b) grant easements, licenses, rights of way (including the dedication of public highways), and other rights or privileges in the nature of easements with respect to any property included in the Project, free from the lien of the Mortgage, or (c) release existing easements, licenses, rights of way, and other rights or privileges with or without consideration; provided, that if at the time any such release, removal, or grant is made any of the Bonds are Outstanding and unpaid, the Borrower must deposit with the Trustee the following: (a) a copy of the such amendment as executed, (b) a resolution or action of the Governing Body of the Borrower (i) giving an adequate legal description of that portion of the Mortgaged Property to be released or subordinated, (ii) stating the purpose for which the Borrower desires the release or subordination, (iii) requesting such release or subordination, and (iv) approving an appropriate amendment to the Mortgage, (c) a certificate of the Borrower to the effect that the Borrower is not in default under any of the provisions of the Loan Agreement and that neither any building nor any other improvement constituting part of the C 7

96 Project is located on a portion of the Mortgaged Property with respect to which the release or subordination is to be granted, accompanied by a plat of survey of the Mortgaged Property certified by a registered surveyor depicting (i) the boundaries of the portion of the Mortgaged Property with respect to which the release or subordination is to be granted, (ii) all improvements located on the property surveyed and the relation of the improvements by distances to the boundaries of the portion of such property with respect to which the release or subordination is to be granted, and (iii) all easements and rights of way with recording data and instruments establishing the same, (d) a copy of the instrument conveying the title to or subordinating the lien of the Mortgage in favor of a public utility or public body, and (e) a certificate of an architect, dated not more than 60 days prior to the date of the release or subordination and stating that, in the opinion of the person signing such certificate, (i) the portion of the Mortgaged Property so proposed to be released or with respect to which the subordination is proposed or with respect to which an easement, license or right of way is proposed to be granted is necessary or desirable in order to obtain utility services or public services to benefit the Project and (ii) the release or subordination so proposed to be made will not impair the usefulness of the Project as multifamily housing facilities and will not destroy the means of ingress thereto and egress therefrom. If such release or subordination relates to a part of the Mortgaged Property on which transportation or utility facilities are located, the Borrower will retain an easement to use such transportation or utility facilities to the extent necessary for the efficient operation of the Project as multifamily housing facilities. Any money consideration received in connection with the release of any portion of the Mortgaged Property or the subordination of the lien of the Mortgage pursuant to this section will be deposited in a Special Redemption Account of the Bond Fund and used, upon the written direction of the Borrower, to redeem Bonds pursuant to the Indenture on the earliest date Bonds can be redeemed at par. If all of the conditions of this section are met, the Trustee is authorized to release any such property from the lien of the Mortgage or subordinate such lien or execute and deliver any instrument necessary or appropriate to confirm and grant or release any such easement, license, right of way, or other right or privilege. No release or conveyance effected under the provisions of this section will entitle the Borrower to any abatement or diminution of the Loan Payments payable under the Loan Agreement. Defaults and Remedies Defaults Each of the following shall constitute a Default under the Loan Agreement: (a) Failure by the Borrower to pay any Basic Loan Payments, provided that failure to make a Basic Loan Payment shall not constitute a Default to the extent that the amounts on deposit in the Surplus Fund, the Bond Fund, the Repair and Replacement Fund, the Operating Fund and the Debt Service Reserve Fund are sufficient and available to pay principal, premium (if any) and interest due on the related Series of Bonds on the next Bond Payment Date; and provided further that failure to pay the portion of the Loan related to the Subordinate Bonds shall not constitute a Default hereunder while any Senior Bonds are Outstanding. (b) Failure by the Borrower to make, or cause to be made, any Additional Loan Payment or amounts required to be paid under the Loan Agreement on or before the date due. (c) Failure by the Borrower to meet the Coverage Test covenant if (a) the Borrower fails to engage a Management Consultant or (b) to the extent that the Rating Agency, if any agrees with such recommendations, the Borrower fail to implement any of the Management Consultant s reasonable recommendations to the extent possible, and to the extent consistent with the charitable mission of the Sole Member, as provided in the Loan Agreement. C 8

97 (d) Failure by the Borrower to perform or observe any of its covenants or agreements contained in the Loan Agreement, the Tax Agreement, or the Land Use Restriction Agreement other than as specified in paragraphs (a) through (c) of this section, and such failure shall continue for the period and after the notice specified in the heading Notice of Default; Opportunity to Cure below. (e) The dissolution or liquidation of the Borrower or the filing by the Borrower of a voluntary petition in bankruptcy, or adjudication of the Borrower as a bankrupt, or assignment by the Borrower for the benefit of its creditors or the entry by the Borrower into an agreement of composition with its creditors, or the approval by a court of competent jurisdiction of a petition applicable to the Borrower in any proceeding instituted under the provisions of State law or the federal bankruptcy statute, as amended, or under any similar act which may hereafter be enacted. The term dissolution or liquidation of the Borrower, as used in this paragraph (e) above, shall not be construed to include the cessation of the existence of the Borrower resulting either from a merger or consolidation of the Borrower into or with another entity or a dissolution or liquidation of the Borrower following a transfer of all or substantially all of its assets as an entirety, under the conditions permitting such actions contained in the Loan Agreement. (f) The occurrence or continuance of a default, a Default, an event of Default or Event of Default under the Mortgage, the Land Use Restriction Agreement or the Indenture. The provisions of paragraph (d) of this section are subject to the following limitation: if by reason of Force Majeure, the Borrower is unable in whole or in part to carry out any of its agreements contained in the Loan Agreement (other than its obligations contained therein), the Borrower shall not be deemed in Default during the continuance of such inability, if, but only if such default is cured as provided in heading Notice of Default; Opportunity to Cure below. The Borrower agrees, however, to remedy with all reasonable dispatch the cause or causes preventing the Borrower from carrying out its agreements, provided that, subject to the preceding sentence, the settlement of strikes and other industrial disturbances shall be entirely within the discretion of the Borrower and the Borrower shall not be required to make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of the opposing party or parties when such course is in the judgment of the Borrower unfavorable to the Borrower. The Trustee shall not be deemed to have knowledge of any Default under the Loan Agreement other than a Default under paragraph (a) or (b) of this section, unless a Responsible Officer of the Trustee shall have been specifically notified in writing of such Default by the Authority, the Borrower or by the Holders of at least 25% of the Bond Obligation. Notice of Default: Opportunity to Cure Except as provided below, no default under paragraph (d) of the heading Defaults above shall constitute a Default under the Indenture until: (a) the same; and The Trustee or the Authority, by Mail, shall give notice to the Borrower of such default specifying (b) The Borrower shall have had 30 days after receipt of such notice to correct the Default and shall not have corrected it or, if such Default cannot be corrected within 30 days, shall have failed to initiate and diligently pursue appropriate corrective action, provided, that in any event such Default must be remedied within 120 days after the date of occurrence thereof. Remedies Whenever any Default under the Loan Agreement shall have happened and be continuing, any or all of the following remedial steps shall be available: (a) The Trustee may, and at the written request of the Controlling Holders of the Bonds shall, declare the outstanding principal balance and interest accrued on the Loan and all payments required to be made by the C 9

98 Borrower under the Loan Agreement with respect to the Bonds for the remainder of the term of the Loan Agreement to be immediately due and payable, whereupon the same shall become immediately due and payable. Upon any such acceleration of the Loan, the Bonds shall be subject to mandatory redemption as provided in the Indenture or default and acceleration under the Indenture as directed by the Controlling Holders. (b) The Trustee, for and on behalf of the Authority, may, and with the consent of the Controlling Holders of the Bonds shall, take whatever action at law or in equity may appear necessary or desirable to collect the payments required to be made by the Borrower under the Loan Agreement then due and thereafter to become due, including, without limitation, pursuing remedies under the Mortgage and the remedies under the Indenture. (c) The Authority or the Trustee may take whatever action at law or in equity as may be necessary or desirable to enforce performance and observance of any obligation, agreement or covenant of the Borrower under the Loan Agreement. The provisions of clause (a) of the preceding paragraph, however, are subject to the condition that if, at any time after the Loan shall have been so declared due and payable, and before any judgment or decree for the payment of the money due shall have been obtained or entered, there shall have been deposited with the Trustee a sum sufficient to pay all the principal of the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue installments of principal as provided in the Loan Agreement, and the reasonable expenses of the Trustee, and any and all other Defaults known to the Trustee (other than in the payment of principal of and interest on the Loan due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Controlling Holders of the Bonds by written notice to the Authority and to the Trustee, may, on behalf of the Holders of all the Bonds, rescind and annul such declaration and its consequences and waive such default; provided that no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. In case the Trustee or the Authority shall have proceeded to enforce its rights under the Loan Agreement and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Authority, then, and in every such case, the Borrower, the Trustee and the Authority shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Borrower, the Trustee and the Authority shall continue as though no such action had been taken, subject to the results of any such proceedings or any settlement thereof. The Borrower covenants that, in case a Default shall occur with respect to the payment of the Loan payable under paragraph (b) of the heading The Loan; Basic Loan Payments; and Additional Payments above, then, upon demand of the Trustee, the Borrower will pay to the Trustee the whole amount that then shall have become due and payable under said Section, with interest, to the extent permitted by law, on the amount then overdue at the Default Rate until such amount has been paid. In case the Borrower shall fail forthwith to pay such amounts upon such demand, the Trustee shall be entitled and empowered to institute any action or proceeding at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Borrower and collect in the manner provided by law the money adjudged or decreed to be payable. In case proceedings shall be pending for the bankruptcy or for the reorganization of the Borrower under the federal bankruptcy laws or any other applicable law, or in case a receiver or trustee shall have been appointed for the property of the Borrower or in the case of any other similar judicial proceedings relative to the Borrower, or the creditors or property of the Borrower, then the Trustee shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount owing and unpaid pursuant to the Loan Agreement and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee allowed in such judicial proceedings relative to the Borrower, its creditors or its property, and to collect and receive any money or other property payable or deliverable on any such claims, and to distribute such amounts as provided in the Indenture after the deduction of its charges and expenses. Any receiver, assignee or trustee in bankruptcy or reorganization is authorized by the Loan C 10

99 Agreement to make such payments to the Trustee, and to pay to the Trustee any amount due it for compensation and expenses, including expenses and fees of counsel incurred by it up to the date of such distribution. Grant of Option to Terminate The Borrower shall have, and is granted by the Loan Agreement, the option to terminate the Loan Agreement as a whole at any time the Borrower declares it will cease to use the Project by reason of: (a) the damage or destruction of all or a significant portion of the Project (with property damage equal to at least $100,000) to such extent that, in the reasonable opinion of the Borrower, the Restoration thereof would not be economical; (b) the condemnation of all or part of the Project or the taking by condemnation of such part, use or control of the Project (with the value of the property so taken or condemned equaling at least $100,000) as to render it unsatisfactory to the Borrower for its intended use, provided that any temporary taking by condemnation shall not give rise to the option unless, in the Borrower s reasonable opinion, such temporary taking shall render the Project unsatisfactory to the Borrower for its intended use for a period of at least six months; (c) any changes in the Constitution of the State of Nevada or the State of Wisconsin or the Constitution of the United States or of legislative or administrative action (whether state, federal, or local), by which the Loan Agreement shall become void or unenforceable or impossible of performance in accordance with the intent and purposes hereof; (d) the determination that the continued operation of the Project would have a material adverse effect on the ability of the Borrower to meet the financial covenants set forth in the Loan Agreement, as established by a report of a Management Consultant; or (e) the Borrower may also prepay the Loan in whole and terminate the Loan Agreement if the Loan is prepaid in whole and in amounts necessary to redeem the Bonds pursuant to the Indenture upon delivery of written notice by the Borrower s Representative to the Trustee delivered not less than 45 days prior the prepayment date. Notwithstanding prepayment of the Loan or termination of the Loan Agreement, the Borrower shall not be relieved of any obligation under the Loan Agreement or under any Bond Document in respect of indemnification under the Loan Agreement (or any similar indemnification provision under any Bond Document) that by its terms survives payment or defeasance of the Bonds, as provided for in the Loan Agreement. Exercise of Option to Terminate (a) To exercise such options, the Borrower shall, within 90 days following the event authorizing such termination, if any, give written notice to the Authority and the Trustee, and shall specify therein the date of termination, which date shall be not less than 50 days nor more than 90 days from the date such notice is mailed, and shall make arrangements for the giving of the required notice of redemption of all of the Bonds. In order to exercise such option, the Borrower shall pay, or cause to be paid, on or prior to the applicable redemption date, to the Trustee, an amount equal to the sum of the following: (i) An amount of money which, when added to the amounts then on deposit under the Indenture and available for such purpose will be sufficient to retire and redeem all the Outstanding Bonds on the earliest possible redemption date after notice as provided in the Indenture, including, without limitation, the principal amount thereof, all interest to accrue to said redemption date; plus (ii) An amount of money equal to the Ordinary Trustee s Fees and Expenses and Extraordinary Trustee s Fees and Expenses under the Indenture accrued and to accrue until such final payment and redemption of the Bonds, including fees and expenses related to such redemption; plus C 11

100 (iii) An amount of money equal to the Authority s Fees and Expenses under the Loan Agreement accrued and to accrue until such final payment and redemption of the Bonds. (b) Any prepayment is conditioned upon: (1) deposit with the Trustee of Available Moneys in an amount equal to the principal, premium, if any, and interest on the Bonds to be redeemed; (2) the opinion of nationally recognized counsel experienced in bankruptcy matters to the effect that such prepayment will not constitute a voidable preference in the event of the filing of a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) by or against the Borrower or the Issuer or any affiliate of either under any applicable bankruptcy, insolvency, reorganization or similar law; (3) on the redemption date a certificate of the Borrower to the effect that there has not occurred at any time during or after the preceding 123-day period any filing by or against the Borrower under any bankruptcy act or similar law for the relief of debtors; (4) confirmation by the Rating Agency that any then-existing rating on any of the Bonds will not be terminated, downgraded or modified as a result of any partial prepayment; and (5) a verification opinion or report by an accountant or nationally recognized law firm (which may be counsel to the Borrower) to the effect that the amounts paid by the Borrowers are sufficient on the required date to pay amounts described in (i)-(iii) above. [Remainder of page intentionally left blank] C 12

101 APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE LAND USE RESTRICTION AGREEMENT The following is a summary of certain provisions of the Land Use Restriction Agreement. This summary does not purport to be complete and is subject in all respects to the provisions of, and are qualified in their entirety by reference to, the complete text of such document. Copies of the Land Use Restriction Agreement are available from the Trustee. All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Indenture and the Land Use Restriction Agreement. Qualified Residential Rental Project The Borrower represents, warrants and covenants that the Project shall, throughout the Qualified Project Period, unless the Land Use Restriction Agreement is earlier terminated pursuant to the Land Use Restriction Agreement, satisfy the following terms and conditions, limitations and restrictions: (a) Satisfaction of Applicable Legal Requirements. The Project is being acquired, renovated, equipped and installed for the purpose of providing multifamily Residential Rental Units, and the Project shall be owned, managed and operated as multifamily Residential Rental Property, all in accordance with the qualified residential rental project requirements of Section 142(d) of the Code and the applicable residential rental project provisions of Section (b) of the Regulations and the administrative guidance issued thereunder; (b) Similarly Constructed Residential Rental Units. All of the Residential Rental Units in the Project shall be similarly constructed; (c) Transient Use. During the term of the Land Use Restriction Agreement, (i) none of the Residential Rental Units in the Project shall at any time be utilized on a transient basis, (ii) none of the Residential Rental Units in the Project shall ever be leased or rented for a period of less than thirty (30) days and (iii) neither the Project nor any portion thereof shall ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, hospital, sanitarium, nursing home, rest home, trailer court or park or for any other use on a transient basis; (d) General Public Availability. During the term of the Land Use Restriction Agreement, (i) the Residential Rental Units in the Project shall be leased and rented or made available for rental on a continuous basis to members of the general public except as otherwise permitted by federal, state or local law, and (ii) the Borrower shall not give preference in renting Residential Rental Units in the Project to any particular class or group of persons, other than Qualified Tenants as provided in the Land Use Restriction Agreement; provided, however, that Residential Rental Units in the Project may be occupied by maintenance, security or managerial employees of the Borrower or its property manager who are reasonably required to maintain residences in the Project, but only to the extent such occupation does not cause the Project to cease to be a qualified residential rental project under Section 142(d) of the Code; (e) Use of Related Facilities by Tenants. Any functionally related and subordinate facilities (e.g., parking areas, laundry facilities, tenant offices, physical therapy rooms, dining rooms, meeting rooms, common areas, swimming pools, tennis courts, etc.) (the Related Facilities ) for the Project will be made available to all tenants of the Project on an equal basis. Fees charged to residential tenants for use of the Related Facilities will be commensurate with fees charged for similar facilities at similar residential rental properties in the surrounding area and, in no event will any such fees charged to tenants of the Project be discriminatory or exclusionary as to the Low and Moderate Income tenants of the Project. No Related Facilities will be made available to persons other than tenants or their guests. Parking, if available, will be made available to all tenants on a first come, first served basis; (f) No Continual or Frequent Nursing, Medical or Psychiatric Services. No continual or frequent nursing, medical or psychiatric services will be provided to the residents of the Project at any time or in any manner; D 1

102 (g) Ownership, Structure and Financing. The Project will consist of one or more buildings or structures, all of which will be (i) owned by the same person for federal tax purposes, (ii) located on a single tract of land, consisting of any parcel of land or two or more parcels of land that are contiguous except for being separated only by a road, street, stream or similar property (parcels are contiguous if their boundaries meet at one or more points) and (iii) financed with proceeds of the Bonds or otherwise pursuant to a common plan of financing. Each such building or structure is a discrete edifice or other man-made construction consisting of an independent foundation, outer walls and roof and containing five or more similarly constructed units; (h) Condominium Ownership. During the term of the Land Use Restriction Agreement, the Borrower will not convert the Project to condominium ownership; (i) Borrower Rentals. During the term of the Land Use Restriction Agreement, no Residential Rental Unit in the Project shall be occupied by the Borrower (or a Related Person) at any time unless the Borrower (or a Related Person) resides in a Residential Rental Unit in a building or structure that contains at least five Residential Rental Units and unless the resident of such Residential Rental Unit is a resident manager or other necessary employee (e.g., maintenance and security personnel); (j) Certificate of Project Commencement and 50% Occupancy. Within 30 days after the later of the issue date of the Bonds or the date on which 10% of the Residential Rental Units in the Project are first occupied following the construction thereof, the Borrower shall file with the Authority and the Trustee a certificate identifying such date. Within 30 days after the later of the issue date of the Bonds or the date on which 50% of the Residential Rental Units in the Project are occupied, the Borrower shall file with the Authority and the Trustee a certificate identifying such date and the beginning date and earliest ending date of the Qualified Project Period; (k) No Discrimination. During the term of the Land Use Restriction Agreement, the Borrower shall not discriminate on the basis of age, race, color, creed, national origin, religion, sex or marital status in the lease, use or occupancy of the Project except as otherwise permitted by federal, state or local law or in connection with the employment or application for employment of persons for the operation and management of the Project; and the Borrower specifically agrees that the Borrower will not refuse to lease units or deny occupancy in the Project to persons whose family includes minor dependents who will occupy such unit, unless such refusal is based upon factors not related to the presence of such minors in the family; (l) Payment of Expenses. During the term of the Land Use Restriction Agreement, the Borrower shall make timely payment of the fees and expenses, if any, of the Trustee in accordance with the provisions of the Land Use Restriction Agreement, the Indenture and the Loan Agreement, including any expenses incurred by the Trustee in the performance of its duties and obligations under the Land Use Restriction Agreement; (m) Certification of Income. As a condition of occupancy, each Qualified Tenant shall be required to sign and deliver to the Borrower a Certification of Income, in a form designed to establish compliance with the applicable provisions of the Code and the Treasury Regulations, or as otherwise required by the Internal Revenue Service. Such Qualified Tenant shall also be required to provide whatever other information, documents or certifications are deemed necessary by the Borrower to substantiate the Certification. All Certifications of Income with respect to each Qualified Tenant who resides in a Residential Rental Unit in the Project or resided in a Residential Rental Unit during the immediately preceding calendar year shall be maintained on file at the main business office of the Project and shall be available for inspection by the Authority and/or the Trustee; (n) Annual Determinations. The determination of whether a resident of the Project is a Qualified Tenant shall be made at least annually on the basis of the current income of all the residents of the Residential Rental Unit. Each lease to a Qualified Tenant entered into after the date of the Land Use Restriction Agreement shall require the tenant to sign the Certification of Income annually, attesting to the combined income of all the occupants of each Residential Rental Unit and at any other time as the Borrower may reasonably request; (o) Subsequent Changes to Income. If a tenant is a Qualified Tenant upon commencement of occupancy of a Residential Rental Unit, the income of such tenant shall be treated as Low or Moderate Income. The preceding sentence shall cease to apply to any tenant whose income as of the most recent annual determination under paragraph (n) of this section exceeds 140% of Low and Moderate Income if, after such determination, but D 2

103 before the next annual determination, any Residential Rental Unit of comparable or smaller size in (i) the same building (within the meaning of Section 42 of the Code), provided that the Project is eligible for low-income housing tax credits under Section 42 of the Code or (ii) the Project, if the Project is not eligible for low-income housing tax credits under Section 42 of the Code, is occupied by a new tenant who does not qualify as a Qualified Tenant; (p) Form of Lease. Any lease used in renting any Residential Rental Unit in the Project to a Qualified Tenant shall provide for termination of the lease and consent by such tenant to immediate eviction, subject to applicable provisions of Nevada law, for failure to qualify as a Qualified Tenant as a result of any material misrepresentation made by such person with respect to any Certification of Income. Each Qualified Tenant occupying a Residential Rental Unit shall be required to execute a written lease that shall be effective for a term of at least six (6) months. No meals or other services will be provided to tenants of the Project; (q) Owner s Certification. On the first day of each month after any Residential Rental Unit in the Project is available for occupancy, the Borrower shall prepare a record of the percentage of Residential Rental Units of the Project occupied (and treated as occupied) by Qualified Tenants during the preceding month. Such record shall be maintained on file at the main business office of the Project, shall be available for inspection by the Authority and the Trustee and shall contain such other information and be in the form required by the Authority and/or the Trustee, as applicable; (r) Occupancy Standards. The Project shall satisfy the Occupancy Standards; and (s) Records Maintenance and Inspection. During the term of the Land Use Restriction Agreement, the Borrower shall (i) maintain complete and accurate records pertaining to the Residential Rental Units occupied or to be occupied by Qualified Tenants, and (ii) permit any duly authorized representative of the Trustee, the Authority, the Department of the Treasury or the Internal Revenue Service to inspect the books and records of the Borrower pertaining to the income of and Certificate of Income of Qualified Tenants residing in the Project upon reasonable notice and at reasonable times. Transfer Restrictions (a) For the Qualified Project Period, except with respect to events such as foreclosure, deed in lieu of foreclosure, involuntary loss or other events described in Section (b)(6)(iii)(a) of the Regulations and not otherwise described in paragraph (b) thereof, provided that proceeds received as a consequence of such events are used as provided in Section (b)(6)(iii)(a) of the Regulations, the Borrower shall not Transfer the Project or any interest therein, in whole or in part, except in accordance with the terms of the Indenture and Loan Agreement (or either of them), and this section. Any Transfer of the Project or any interest therein, in whole or in part, shall only be permitted if: (1) the Borrower shall not be in default under the Land Use Restriction Agreement; (2) the purchaser or assignee shall assume in writing in a form acceptable to the Trustee, all duties and obligations of the Borrower under the Land Use Restriction Agreement, including this section, and execute any necessary or appropriate document with respect to assuming its obligations under the Land Use Restriction Agreement and the Financing Agreements in the form of an Assumption Agreement, which document shall be recorded in the Clerk s office of Clark County, Nevada; (3) the Trustee shall have received an opinion of Bond Counsel to the effect that such transfer will not adversely affect the exclusion of the interest on the Tax-Exempt Bonds from gross income of the holders thereof for federal income tax purposes; (4) [omitted]; (5) the Borrower shall deliver to the Trustee an opinion of counsel to the transferee that the transferee has duly assumed the obligations of the Borrower under the Land Use Restriction Agreement and that such obligations and the Land Use Restriction Agreement are binding on the transferee; and (6) such other conditions are met as are set forth in or referred to in the Financing Agreements (i) to protect the exclusion of the interest on the Bonds from gross income of the holders thereof for federal income tax purposes, (ii) to ensure that the Project is not acquired by a person that has pending against it, or that has a history of, building code violations, as identified by municipal, county, state or federal regulatory agencies, and (iii) to provide, to the satisfaction of the Authority and the Trustee, in their sole discretion, that indemnification of the Authority and the Trustee under the Land Use Restriction Agreement and elsewhere is assumed by the purchaser or assignee. The Borrower shall deliver the Assumption Agreement and the items specified in clauses (3), (4) and (5) above to the Trustee, with copies to the Authority, at least ten (10) business days prior to a proposed Transfer. D 3

104 (b) The restrictions contained in paragraph (a) above shall not apply to (i) any transfer of limited partnership interests or limited membership interests in the Borrower or its sole member or (ii) the removal of the Borrower s general partner or managing member by a limited partner or limited member of the Borrower or its sole member and the replacement of such general partner with a limited partner of the Borrower; provided, however, that in the case of any proposed transfer of interests in the Borrower or its sole member described in clauses (i) or (ii) and that is (y) proposed to occur within five (5) years of the issue date (as defined in Regulation (b)) of the Bonds (the Issue Date ), and (z) where such interests are proposed to be transferred to any person or entity that (A) has or had an ownership interest (directly or indirectly) in the seller of the Project or the Project at any time during the five (5) year period immediately preceding the Issue Date of the Bonds, or (B) is a substantial user (as defined in Regulation ) of the Project at any time during the five (5) year period immediately following the Issue Date of the Bonds, the Borrower provides to the Authority and the Trustee, as a condition precedent to any such transfer of interests in the Borrower, an opinion of Bond Counsel to the effect that any such proposed transfer of interests in the Borrower will not adversely affect the exclusion of interest on the Tax-Exempt Bonds from the gross income of the holders thereof for federal income tax purposes. Termination The Authority, the Borrower and the Trustee each agrees that the Land Use Restriction Agreement shall terminate: (a) Completion. Upon the termination of the Qualified Project Period; (b) Involuntary Non-Compliance. In the event of an involuntary non-compliance caused by unforeseen events, such as fire, seizure, requisition, change in a federal law or an action of a federal agency after the date of issuance of the Bonds that prevents the Authority or the Trustee from enforcing the provisions of the Land Use Restriction Agreement or condemnation or similar event, provided that: (i) the Bonds are retired at their first applicable available call date; or (ii) any insurance proceeds or condemnation award or other amounts received as a result of such loss or destruction are used to provide a project that meets the requirements of Section 142(d) of the Code and Regulation (b) as amended, or any successor law or regulation; (c) Certain Transfers. In the event of foreclosure, transfer of title by deed in lieu of foreclosure, or similar event, following which and within a reasonable period of time the Bonds are redeemed or the amounts received as a consequence of such event are used to provide a qualified residential rental project meeting the applicable requirements of the Code and the Regulations, unless, at any time subsequent to such event and during the Qualified Project Period, the Borrower or any direct successor in interest, or any transferee from the Borrower or its successor subject to an Assumption Agreement, or any Related Person to such persons, or any other person who was, prior to the event of foreclosure or other such event, an obligor on any Purpose Investment issued in connection with any financing for the Project, obtains an ownership interest in the Project for tax purposes; (d) Opinion of Bond Counsel. Upon the delivery of an opinion of Bond Counsel acceptable to the Authority and the Trustee that continued compliance with the requirements of the Land Use Restriction Agreement is not required in order for interest on the Tax-Exempt Bonds to be and continue to be excludable from gross income of the holders of the Tax-Exempt Bonds for federal income tax purposes. Covenants to Run with the Land; Successors Bound The Borrower subjects the Real Estate to the covenants, reservations and restrictions set forth in the Land Use Restriction Agreement. The Authority, the Trustee and the Borrower declare their express intent that the covenants, reservations and restrictions set forth in the Land Use Restriction Agreement shall be deemed covenants, reservations and restrictions running with the land to the extent permitted by law and shall pass to and be binding upon the Borrower s successors in title to the Real Estate throughout the term of the Land Use Restriction Agreement. Each and every contract, deed, mortgage, or other instrument hereafter executed covering or conveying D 4

105 the Real Estate or any portion thereof or interest therein shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed, mortgage or other instrument. [Remainder of page intentionally left blank] D 5

106 APPENDIX E SUMMARY OF CERTAIN PROVISIONS OF THE MORTGAGE The following is a summary of certain provisions of the Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (the Mortgage ). This summary does not purport to be complete and is subject in all respects to the provisions of, and are qualified in their entirety by reference to, the complete text of such document. Copies of the Mortgage are available from the Trustee. All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Indenture and the Mortgage. Property Conveyed The Borrower irrevocably grants, bargains, sells, pledges, assigns, warrants, transfers and conveys to the Trustee and its successors and assigns, in trust, with Power of Sale for the benefit of Bond Trustee as beneficiary in trust, the following property, rights, interests and estates now owned, or hereafter acquired by the Borrower (collectively, the Property ): (a) (the Land ); Land. The real property described in the exhibit attached to the Mortgage and made a part thereof (b) Additional Land. All additional lands, estates and development rights hereafter acquired by Borrower for use in connection with the Land and the development of the Land and all additional lands and estates therein which may, from time to time, by supplemental mortgage or otherwise be expressly made subject to the lien of the Mortgage; (c) Improvements. The buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land (collectively, the Improvements ); (d) Easements. All easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land and the Improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Land and the Improvements and every part and parcel thereof, with the appurtenances thereto; (e) Equipment. All equipment, as such term is defined in Article 9 of the Uniform Commercial Code (as hereinafter defined), now owned or hereafter acquired by Borrower, which is used at or in connection with the Improvements or the Land or is located thereon or therein (including, but not limited to, all machinery, equipment, furnishings, and electronic data-processing and other office equipment now owned or hereafter acquired by Borrower and any and all additions, substitutions and replacements of any of the foregoing), together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto (collectively, the Equipment ). Notwithstanding the foregoing, Equipment shall not include any property belonging to Tenants under Leases except to the extent that Borrower shall have any right or interest therein; (f) Fixtures. All Equipment now owned, or the ownership of which is hereafter acquired, by Borrower which is so related to the Land and Improvements forming part of the Property that it is deemed fixtures or real property under the law of the particular state in which the Equipment is located, including, without limitation, all building or construction materials intended for construction, reconstruction, alteration or repair of or installation on the Property, construction equipment, appliances, machinery, plant equipment, fittings, apparatuses, fixtures and E 1

107 other items now or hereafter attached to, installed in or used in connection with (temporarily or permanently) any of the Improvements or the Land, including, but not limited to, engines, devices for the operation of pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire extinguishing apparatuses and equipment, heating, ventilating, plumbing, laundry, incinerating, electrical, air conditioning and air cooling equipment and systems, gas and electric machinery, appurtenances and equipment, pollution control equipment, security systems, disposals, dishwashers, refrigerators and ranges, recreational equipment and facilities of all kinds, and water, gas, electrical, storm and sanitary sewer facilities, utility lines and equipment (whether owned individually or jointly with others, and, if owned jointly, to the extent of Borrower s interest therein) and all other utilities whether or not situated in easements, all water tanks, water supply, water power sites, fuel stations, fuel tanks, fuel supply, and all other structures, together with all accessions, appurtenances, additions, replacements, betterments and substitutions for any of the foregoing and the proceeds thereof (collectively, the Fixtures ). Notwithstanding the foregoing, Fixtures shall not include any property which Tenants are entitled to remove pursuant to Leases except to the extent that Borrower shall have any right or interest therein; (g) Personal Property. All furniture, furnishings, objects of art, machinery, goods, tools, supplies, appliances, general intangibles, contract rights, accounts, accounts receivable, franchises, licenses, certificates and permits, and all other personal property of any kind or character whatsoever (as defined in and subject to the provisions of the Uniform Commercial Code as hereinafter defined), whether tangible or intangible, other than Fixtures, which are now or hereafter owned by Borrower and which are located within or about the Land and the Improvements, together with all accessories, replacements and substitutions thereto or therefor and the proceeds thereof (collectively, the Personal Property ), and the right, title and interest of Borrower in and to any of the Personal Property which may be subject to any security interests, as defined in the Uniform Commercial Code, as adopted and enacted by the state or states where any of the Property is located (the Uniform Commercial Code ), superior in lien to the lien of the Mortgage and all proceeds and products of the above; (h) Leases and Rents. All leases and other agreements affecting the use, enjoyment or occupancy of the Land and the Improvements heretofore or hereafter entered into, whether before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. 101 et seq., as the same may be amended from time to time (the Bankruptcy Code ) (collectively, the Leases ) and all right, title and interest of Borrower, its successors and assigns therein and thereunder, including, without limitation, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, revenues, issues and profits (including all oil and gas or other mineral royalties and bonuses) from the Land and the Improvements whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code (collectively, the Rents ) and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment and performance of the Obligations including the payment of the Debt; (i) Condemnation Awards. All awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Property, whether from the exercise of the right of eminent domain (including but not limited to any transfer made in lieu of or in anticipation of the exercise of such right), or for a change of grade, or for any other injury to or decrease in the value of the Property; (j) Insurance Proceeds. All proceeds in respect of the Property under any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property; (k) Tax Certiorari. All refunds, rebates or credits in connection with any reduction in real estate taxes and assessments charged against the Property as a result of tax certiorari proceedings or any other applications or proceedings for reduction of same, in each case, irrespective of the time period to which they relate; (l) Rights. The right, in the name and on behalf of Borrower, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Bond Trustee in the Property; (m) Agreements. All agreements, contracts, certificates, instruments, franchises, permits, licenses, plans, specifications and other documents, now or hereafter entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Land and any part E 2

108 thereof and any Improvements or respecting any business or activity conducted on the Land and any part thereof and all right, title and interest of Borrower therein and thereunder, including, without limitation, the right, upon the happening of any default hereunder, to receive and collect any sums payable to Borrower thereunder; (n) Trademarks. All tradenames, trademarks, servicemarks, logos, copyrights, goodwill, books and records and all other general intangibles relating to or used in connection with the operation of the Property; (o) Accounts. All reserves, escrows and deposit accounts maintained by Borrower with respect to the Property, including, without limitation, all accounts established or maintained pursuant to the Indenture, the Loan Agreement, or any other Bond Document, together with all deposits or wire transfers made to such accounts, and all cash, checks, drafts, certificates, securities, investment property, financial assets, instruments and other property held therein from time to time, and all proceeds, products, distributions, dividends and/or substitutions thereon and thereof; (p) Uniform Commercial Code Property. All documents, instruments, chattel paper and intangibles, as the foregoing terms are defined in the Uniform Commercial Code, and general intangibles relating to the Property; (q) Proceeds. All proceeds of any of the foregoing, including, without limitation, proceeds of insurance and condemnation awards, whether in cash, or in liquidation or other claims or otherwise; and (r) Other Rights. Any and all other rights of Borrower in and to the items set forth in subsections (a) through (q) above. AND without limiting any of the other provisions of the Mortgage, to the extent permitted by applicable law, Borrower expressly grants to Bond Trustee, as secured party, a security interest in the portion of the Property which is or may be subject to the provisions of the Uniform Commercial Code which are applicable to secured transactions; it being understood and agreed that the Improvements and Fixtures are part and parcel of the Land (the Land, the Improvements and the Fixtures collectively referred to as the Real Property ) appropriated to the use thereof and, whether affixed or annexed to the Real Property or not, shall for the purposes of the Mortgage be deemed conclusively to be real estate and conveyed hereby. Assignment of Rents The Borrower absolutely and unconditionally assigns to the Trustee all of the Borrower s right, title and interest in and to all current and future Leases and Rents; it being intended by the Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Nevertheless, subject to the terms of the Assignment of Leases and the Mortgage, the Bond Trustee and the Trustee grant to the Borrower a revocable license (the License ) to collect, receive, use and enjoy the Rents so long as no Event of Default shall exist and be continuing. If an Event of Default has occurred and is continuing, the Bond Trustee and the Trustee shall have the right, which it may choose to exercise in its sole discretion, to terminate the License without notice or demand upon the Borrower, and without regard to the adequacy of the security for the Obligations. Other Obligations The Mortgage and the grants, assignments and transfers made therein are also given for the purpose of securing the following (the Other Obligations ): (a) the performance of all other obligations of Borrower contained in the Mortgage; (b) the performance of each obligation of Borrower contained in the Indenture, the Loan Agreement and any other Bond Document; and E 3

109 (c) the performance of each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of the Note, the Loan Agreement or any other Bond Document. No Transfer The Borrower shall not permit or suffer any Transfer to occur unless expressly permitted pursuant to the terms and provisions of the Loan Agreement or unless Bond Trustee shall consent thereto in writing, which consent shall not be unreasonably withheld, delayed or conditioned. Remedies Upon the occurrence and during the continuance of any Event of Default, Borrower agrees that Bond Trustee or Trustee, or both, may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Bond Trustee or Trustee may determine, in their sole discretion, without impairing or otherwise affecting the other rights and remedies of Bond Trustee or Trustee: (a) Subject to Nevada Revised Statutes, as amended from time to time ( NRS ) Section , declare the entire unpaid Debt to be immediately due and payable; (b) institute proceedings, judicial or otherwise, for the complete foreclosure of the Mortgage under any applicable law, in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner; (c) with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of the Mortgage for the portion of the Debt then due and payable, subject to the continuing lien and security interest of the Mortgage for the balance of the Debt not then due, unimpaired and without loss of priority; (d) sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one or more sales, as an entirety or in parcels, at such time and place, upon such terms and after such notice thereof, as may be required or permitted by law: (i) In connection with any sale or sales hereunder, Bond Trustee or the Trustee shall be entitled to elect to treat any of the Property which consists of (x) a right in action or (y) property that can be severed from the Real Property covered hereby or any improvements without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of Real Property. Where the Property consists of Real Property, Personal Property, Equipment or Fixtures, whether or not such Personal Property or Equipment is located on or within the Real Property, Bond Trustee and/or the Trustee shall be entitled to elect to exercise its rights and remedies against any or all of the Real Property, Personal Property, Equipment and Fixtures in such order and manner as is now or hereafter permitted by applicable law; (ii) Bond Trustee and/or the Trustee shall be entitled to elect to proceed against any or all of the Real Property, Personal Property, Equipment and Fixtures in any manner permitted under applicable law; and if Bond Trustee and/or the Trustee so elects pursuant to applicable law, the power of sale granted in the Mortgage shall be exercisable with respect to all or any of the Real Property, Personal Property, Equipment and Fixtures covered hereby, as designated by Bond Trustee and/or the Trustee and Trustee is hereby authorized and empowered to conduct any such sale of any Real Property, Personal Property, Equipment and Fixtures in accordance with the procedures applicable to Real Property; E 4

110 (iii) Should Bond Trustee and/or the Trustee elect to sell any portion of the Property which is Real Property or which is Personal Property, Equipment or Fixtures that the Bond Trustee and/or the Trustee has elected under applicable law to sell together with Real Property in accordance with the laws governing a sale of the Real Property, Bond Trustee and/or the Trustee shall give such notice of the occurrence of an Event of Default, if any, and election to sell such Property, each as may then be required by law. Thereafter, upon the expiration of such time and the giving of such notice of sale as may then be required by law, subject to the terms hereof and of the other Bond Documents, and without the necessity of any demand on Borrower, Bond Trustee and/or the Trustee at the time and place specified in the notice of sale, shall sell such Real Property or part thereof at public auction to the highest bidder for cash in lawful money of the United States. Bond Trustee or the Trustee may from time to time postpone any sale hereunder by public announcement thereof at the time and place noticed for any such sale; and (iv) If the Property consists of several lots, parcels or items of property, Bond Trustee or the Trustee shall, subject to applicable law, (A) designate the order in which such lots, parcels or items shall be offered for sale or sold, or (B) elect to sell such lots, parcels or items through a single sale, or through two or more successive sales, or in any other manner Bond Trustee or the Trustee designates. Any Person, other than the Trustee, including Borrower or Bond Trustee, may purchase at any sale hereunder. Should Bond Trustee or the Trustee desire that more than one sale or other disposition of the Property be conducted, Bond Trustee or the Trustee shall, subject to applicable law, cause such sales or dispositions to be conducted simultaneously, or successively, on the same day, or at such different days or times and in such order as Bond Trustee or the Trustee may designate, and no such sale shall terminate or otherwise affect the Lien of the Mortgage on any part of the Property not sold until all the Obligations have been satisfied in full. In the event Bond Trustee or the Trustee elects to dispose of the Property through more than one sale, except as otherwise provided by applicable law, Borrower agrees to pay the costs and expenses of each such sale and of any judicial proceedings wherein such sale may be made; (e) institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained in the Mortgage, the Note, the Loan Agreement or in the other Bond Documents; (f) recover judgment on the Note either before, during or after any proceedings for the enforcement of the Mortgage or the other Bond Documents; (g) apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, which appointment is hereby authorized and consented to by Borrower, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of Borrower, any guarantor, indemnitor with respect to the Loan or any Person liable for the payment of the Debt or any part thereof; (h) the license granted to the Borrower under the Mortgage shall automatically be revoked and Bond Trustee may enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and servants therefrom, without liability for trespass, damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of all books, records and accounts relating thereto and Borrower agrees to surrender possession of the Property and of such books, records and accounts to Bond Trustee upon demand, and thereupon Bond Trustee may (i) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (ii) complete any construction on the Property in such manner and form as Bond Trustee deems advisable; (iii) make alterations, additions, renewals, replacements and improvements to or on the Property; (iv) exercise all rights and powers of Borrower with respect to the Property, whether in the name of Borrower or otherwise, including, without limitation, the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents of the Property and every part thereof; (v) require Borrower to pay monthly in advance to Bond Trustee, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Property as may be occupied by Borrower; (vi) require Borrower to vacate and surrender possession of the Property to Bond Trustee or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise; and (vii) apply the receipts from the Property to the payment and performance of the Obligations (including, without limitation, of the Debt, in such order, priority and proportions as Bond Trustee shall deem appropriate in its sole discretion after deducting therefrom all expenses (including reasonable attorneys fees) incurred in connection with the aforesaid operations and all amounts necessary to pay the E 5

111 taxes, other charges, insurance and other expenses in connection with the Property, as well as just and reasonable compensation for the services of Bond Trustee, its counsel, agents and employees; (i) exercise any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing: (i) the right to take possession of the Fixtures, the Equipment and the Personal Property, or any part thereof, and to take such other measures as Bond Trustee may deem necessary for the care, protection and preservation of the Fixtures, the Equipment and the Personal Property, and (ii) request Borrower at its expense to assemble the Fixtures, the Equipment and the Personal Property and make it available to Bond Trustee at a convenient place acceptable to Bond Trustee. Any notice of sale, disposition or other intended action by Bond Trustee with respect to the Fixtures, the Equipment and/or the Personal Property sent to Borrower in accordance with the provisions hereof at least five (5) days prior to such action, shall constitute commercially reasonable notice to Borrower; (j) apply any sums then deposited or held in escrow or otherwise by or on behalf of Bond Trustee in accordance with the terms of the Loan Agreement, the Mortgage or any other Bond Document to the payment of the following items in any order in its sole discretion: (i) (ii) (iii) (iv) Taxes and Other Charges; Insurance Premiums; Interest on the unpaid principal balance of the Note; Amortization of the unpaid principal balance of the Note; (v) All other sums payable pursuant to the Note, the Loan Agreement, the Mortgage and the other Bond Documents, including without limitation, any prepayment fees, if applicable, and advances made by Bond Trustee pursuant to the terms of the Mortgage; and/or (k) pursue such other remedies as Bond Trustee may have under applicable law. In the event of a sale, by foreclosure, power of sale or otherwise, of less than all of Property, the Mortgage shall continue as a Lien and security interest on the remaining portion of the Property unimpaired and without loss of priority. Right to Release any Portion of the Property The Trustee may release any portion of the Property for such consideration as the Trustee may require without, as to the remainder of the Property, in any way impairing or affecting the lien or priority of the Mortgage, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the Debt shall have been reduced by the actual monetary consideration, if any, received by the Trustee for such release, and may accept by assignment, pledge or otherwise any other property in place thereof as the Trustee may require without being accountable for so doing to any other lienholder. The Mortgage shall continue as a lien and security interest in the remaining portion of the Property. Survival The indemnifications made pursuant to the Mortgage and the representations and warranties, covenants, indemnities, and other obligations arising under the Environmental Indemnity, shall continue indefinitely in full force and effect and shall survive and shall in no way be impaired by: any satisfaction, release or other termination of the Mortgage, or any other Bond Document, any assignment or other transfer of all or any portion of the Mortgage, or any other Bond Document or Bond Trustee s interest in the Property (but, in such case, shall benefit both Indemnified Parties and any assignee or transferee), any exercise of Bond Trustee s rights and remedies pursuant hereto including but not limited to foreclosure or acceptance of a deed in lieu of foreclosure, any exercise of any rights and remedies pursuant to the Loan Agreement, the Note or any of the other Bond Documents, any E 6

112 transfer of all or any portion of the Property (whether by Borrower or by Bond Trustee following foreclosure or acceptance of a deed in lieu of foreclosure or at any other time), any amendment to the Mortgage, the Loan Agreement, the Note or the other Bond Documents, and any act or omission that might otherwise be construed as a release or discharge of Borrower from the Obligations or any portion thereof. [Remainder of page intentionally left blank] E 7

113 APPENDIX F FORM OF BOND COUNSEL OPINION The form of the approving legal opinion of Butler Snow LLP, bond counsel, is set forth below. The actual opinion will be delivered on the date of delivery of the bonds referred to therein and may vary from the form set forth to reflect circumstances both factual and legal at the time of such delivery. Recirculation of the Official Statement shall create no implication that Butler Snow LLP, has reviewed any of the matters set forth in such opinion subsequent to the date of such opinion. Public Finance Authority Madison, Wisconsin September 26, 2017 RE: $11,820,000 Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Series 2017A (the Series 2017A Bonds ) $215,000 Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Taxable Series 2017B (the Series 2017B Bonds ) $1,795,000 Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Subordinate Series 2017C (the Series 2017C Bonds ) Ladies and Gentlemen: We are acting as bond counsel (the Bond Counsel ) in connection with the issuance of the above captioned Bonds. In such capacity, we have examined such law, certified proceedings, and other documents as we have deemed necessary to render this opinion. The Bonds are issued pursuant to Sections , and of the Wisconsin Statutes, as amended (the Act ), and a resolution (the Bond Resolution ) duly adopted by the board of directors of the Public Finance Authority (the Issuer ) on September 13, The Bonds are being issued under a Trust Indenture, dated as of September 1, 2017 (the Indenture ) between the Issuer and Wilmington Trust, National Association, as trustee (the Trustee ). The Issuer and 2017 IAVF Rubix LLC, a Florida limited liability company (together with its successors and assigns, the Borrower ), have entered into a Loan Agreement dated as of September 1, 2017 (the Loan Agreement ), pursuant to which the Borrower has agreed to pay to the Issuer such loan payments as will be sufficient to pay the principal of, premium, if any, and interest on the Bonds as the same become due. The Bonds are payable solely from the Trust Estate (as such term is defined in the Indenture). The sole member of the Borrower is Invest in America s Veterans Foundation, Inc., a Florida nonprofit corporation (the Sole Member ), and its successors and assigns. Reference is hereby made to, and we have relied on, an opinion of Brennan Manna Diamond, Jacksonville, Florida, dated the date hereof, relating, among other matters, to the status of the Sole Member as an exempt organization described in Section 501(c)(3) of the of the Internal Revenue Code of 1986, as amended (the Code ), and exempt from federal income taxation under Section 501(a) of the Code and the status of the Borrower as a disregarded entity for federal income tax purposes. As to questions of fact material to our opinion, we have relied upon (a) certified representations of the Issuer, the Sole Member and the Borrower, (b) certified proceedings and other certifications of the Issuer and other public officials furnished to us, and (c) certifications furnished to us by or on behalf of the Borrower (including certifications made in the Tax Regulatory Agreement and No-Arbitrage Certificate (the Tax Agreement ) among the Issuer, the Sole Member and the Borrower and acknowledged and agreed to by the Trustee, dated September 1, 2017, which are material to Paragraph 4 below), without undertaking to verify the same by independent F 1

114 investigation. In all such examinations, we have assumed the genuineness of all signatures, the authenticity of all documents presented to us as originals, and the conformity to original documents of all copies submitted to us as certified, conformed, or photographic copies. As to certificates, we have assumed the same to be properly given and to be accurate. With respect to matters of fact relevant to this opinion, we have relied, without independent verification of the accuracy or completeness of the matters set forth therein, on the representations and warranties of the parties thereto set forth in the documents and instruments pursuant to which the Bonds are being issued and secured, as well as in certificates of officers of the Issuer, the Sole Member and the Borrower delivered in connection with the issuance of the Bonds. In our capacity as Bond Counsel, we have not been engaged or undertaken to express and we do not express any opinion (other than as may be expressly set forth herein) with respect to (a) the legal existence or the due authorization, execution, or delivery by or enforcement against the Borrower of any instrument or agreement in connection with the project financed or refinanced with the proceeds of the Bonds (the Project ), (b) title to the Project or compliance with zoning, land use, and related laws, (c) the status of any lien or matter of record or security interest purported to be created in connection with the foregoing, (d) the accuracy, completeness, or sufficiency of the official statement relating to the Bonds dated September 21, 2017 (the Official Statement ) (except to the extent stated in our supplemental opinion dated the date hereof) or any other offering material relating to the Bonds or (e) the financial condition or capabilities of the Issuer or the Borrower. Based upon the foregoing and subject to the qualifications that follow, we are of the opinion, as of the date hereof and under existing statutes, regulations, rulings, and court decisions, that: 1. The Issuer has the power and authority to issue, sell, and deliver the Bonds and to enter into and perform its obligations under the Loan Agreement and the Indenture, and create the assignment, pledge, and security interest under the Indenture in the Trust Estate in favor of the owners of the Bonds. 2. The Indenture and Loan Agreement constitute valid and binding obligations of the Issuer enforceable upon the Issuer. 3. The Bonds (a) have been duly authorized, executed, and issued by the Issuer and delivered to the Trustee for authentication and (b) are valid and binding special limited obligations of the Issuer payable solely from the Trust Estate. 4. Under the laws, regulations, rulings and judicial decisions in effect as of the date hereof, interest on the Tax-Exempt Bonds is excludible from gross income for federal income tax purposes. Furthermore, interest on the Tax-Exempt Bonds will not be treated as a specific item of tax preference under Section 57(a)(5) of the Internal Revenue Code of 1986, as amended (the Code ), in computing the alternative minimum tax for individuals and corporations. In rendering the opinions in this paragraph, we have assumed continuing compliance with certain covenants in the Tax Agreement and the Loan Agreement designed to meet the requirements of the Code. Failure to comply with such covenants may cause interest on the Tax-Exempt Bonds to be includable in gross income retroactively to the date of the issuance of the Tax-Exempt Bonds. In rendering the foregoing opinion, we have relied upon the opinion of Brennan Manna Diamond, counsel to the Borrower, regarding the status of the Sole Member as an organization described in Section 501(c)(3) of the Code and the characterization of the Borrower as a disregarded entity for federal income tax purposes. We do not express any opinion with respect to the exemption, for Wisconsin income tax purposes, of the interest on the Bonds or with respect to any other federal or Wisconsin tax matters related to the Bonds. With respect to matters in (1) and (2) above, we are relying on the legal opinion of von Briesen & Roper, s.c., as counsel to the Issuer, as to the due authorization, execution and delivery by and enforceability against the Issuer of the Bonds, the Indenture and the Loan Agreement. Except as expressly stated above, we express no opinion as to any other federal or any other state income tax consequences of acquiring, carrying, owning, or disposing of the Bonds. Owners of the Bonds should consult their tax advisors as to the applicability of any collateral tax consequences of ownership of the Bonds, which may F 2

115 include purchase at a market discount or at a premium, taxation upon sale, redemption, or other disposition, and various withholding requirements. It is to be understood that the rights of the owners of the Bonds and the enforceability of the Bonds, the Indenture, and the Loan Agreement may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors rights generally and by equitable principles, whether considered at law or in equity. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. This opinion is given solely for the use and benefit of the addressee hereof, and only in connection with the issuance and delivery of the Bonds and may not be used or relied upon by any other person or in connection with any other transaction, except with express consent of this firm. Very truly yours, F 3

116 APPENDIX G COMPILATION OF HISTORICAL FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL PROJECTIONS G 1

117 Public Finance Authority The Rubix Apartments Project APPENDIX G Unaudited Historical Financial Results Twelve Months Post Closing Annualized 12/31/ /31/ /31/2016 (06/30/2017) Proforma Revenue Gross Potential Rent (1) 1,985,931 2,005,260 2,110,800 2,110,800 2,110,800 Less: Vacancy Loss (1,147,633) (314,445) (379,161) (392,908) (298,822) Net Rental Income 838,298 1,690,815 1,731,639 1,717,892 1,811,978 Other Income: Collection Income / Cancellation Fees 6,778 13,412 13,677 18,070 15,053 Late Fees 10,628 19,204 19,983 25,254 21,480 Application Fees 4,409 8,041 8,279 6,104 7,475 Miscellaneous Income 21,422 60,541 61,777 43,406 55,241 Reserve Fund Earnings Total Other Income 43, , ,716 92,834 99,249 Effective Gross Income 881,535 1,792,013 1,835,355 1,810,726 1,911,227 Operating Expenses Management Fee (2) 30,355 56,160 56,160 56,160 76,449 Advertisement / Marketing 11,808 30,767 32,389 38,703 29,700 Administrative 21,234 42,320 44,601 60,489 49,711 Payroll 54, , , , ,560 Utilities 112, , , , ,274 Operating and Maintenance 115, , , , ,043 Real Estate Taxes (3) 52, , ,793 79,040 80,621 Property and Liability Insurance (4) 35,522 30,268 30,361 33,144 30,735 Repair and Replacement Reserves - 86,120 82,610-70,800 Total 433, , , , ,892 Net Operating Income 447, , , ,612 1,010,335 Notes: (1) Reflects current rent roll as of September 1, 2017 (2) Reflects 4% of Effective Gross Income (3) Reflects 2016 tax bill x 2% growth (4) Reflects current insurance quote from insurance carrier

118 APPENDIX H FORM OF CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT, dated as of September 1, 2017 (this Disclosure Agreement ), is executed and delivered by 2017 IAVF Rubix LLC (the Obligated Party ) and Digital Assurance Certification LLC, as Dissemination Agent (the Dissemination Agent ), in connection with the issuance by the Public Finance Authority (the Authority ) of its Multifamily Housing Revenue Bonds (The Rubix Apartments Project), Series 2017A, Taxable Series 2017B and Subordinate Series 2017C (collectively, Bonds ). W I T N E S S E T H : WHEREAS, in connection with the issuance of the Bonds, the Obligated Party has agreed to enter into this Disclosure Agreement to provide certain financial and operating information, as well as notice of the occurrence of certain events, during the life of the Bonds, all in accordance with section (b)(5) of the Rule (as hereinafter defined); and WHEREAS, the Obligated Party desires to appoint Digital Assurance Certification LLC as Dissemination Agent to assist the Obligated Party with carrying out its obligations under this Disclosure Agreement, and Digital Assurance Certification LLC is willing to accept such appointment in accordance with the terms hereof. NOW, THEREFORE, IN CONSIDERATION OF THE COVENANTS AND PROMISES HEREIN CONTAINED, the Obligated Party and the Dissemination Agent agree as follows: Section 1. Purpose of this Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Obligated Party and the Dissemination Agent for the benefit of the Beneficial Owners of the Bonds and to assist the Participating Underwriter (as defined herein) in complying with the Rule. The Obligated Party represents that it is the only Obligated Person (as defined in the Rule) with respect to the Bonds and that no other person is expected to become an Obligated Person at any time after the issuance of the Bonds. Section 2. Definitions. In addition to the definitions set forth in the Authorizing Instrument (as defined herein), which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined herein, the following capitalized terms shall have the following meanings: Annual Financial Information means the financial information and operating data described in Section 4 and in EXHIBIT A hereto. Annual Report means the Annual Financial Information and the Audited Financial Statements for any Fiscal Year, as more fully described in Section 4 hereof. Annual Reporting Certificate means the certificate of the Obligated Party with respect to its Annual Report, the form of which is attached hereto as Exhibit B. Annual Report Date means June 30 of each year. Annual Report Disclosure means the dissemination of the Annual Report as set forth in Section 4 hereof. Audited Financial Statements means the audited financial statements of the Project, prepared pursuant to the standards and as described in Section 4 hereof. Authorizing Instrument means the Trust Indenture dated as of September 1, 2017 by and between Wilmington Trust, National Association, and Authority, which sets forth the terms of the Bonds.

119 Beneficial Owner means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, the Bonds (including persons holding such Bonds through nominees, depositories or other such intermediaries). Business Day means any day other than a Saturday, Sunday, legal holiday or a day on which the Dissemination Agent or banking institutions in New York, New York are authorized or required by law to close. Commission means the Securities and Exchange Commission. EMMA means the MSRB s Electronic Municipal Market Access system for municipal securities disclosure, currently located at Until otherwise designated by the MSRB or the Commission, filings with the MSRB are to be made through the EMMA website. Exchange Act means the Securities Exchange Act of 1934, as amended. Listed Events means any of the events with respect to the Bonds described in Section 5(a) hereof. Listed Events Disclosure means dissemination of a notice of the occurrence of a Listed Event as set forth in Section 5 hereof. Material with respect to information, means information as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the offering document related to the Bonds, information disclosed hereunder, or information generally available to the public. Notwithstanding the foregoing, Material information includes information that would be deemed material for purposes of the purchase or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the information. MSRB means the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Commission to receive reports pursuant to the Rule. Participating Underwriter means Stifel, Nicolaus & Company, Incorporated and each other broker, dealer or municipal securities dealer acting as an underwriter in any primary offering of the Bonds. Prescribed Form means, with regard to the filing of the Annual Report, each notice of the occurrence of a Listed Event and other notices described herein with the MSRB, such electronic format, accompanied by such identifying information, as shall have been prescribed by the MSRB and which shall be in effect on the date of filing of such information. Project means collectively, The Rubix Apartments, the acquisition of which was financed with the issuance of the Bonds. Rule means Rule 15c2-12 adopted by the Commission under the Exchange Act, as the same may be amended from time to time. State means the State of Florida. Section 3. CUSIP Number/Final Official Statement. The CUSIP Numbers of the final maturity of the Bonds are 74441XEM7, 74441XEN5, 74441XEP0, 74441XEQ8, and 74441XER6. The final Official Statement relating to the Bonds is dated on or about September 21, 2017 (the Final Official Statement ). H 2

120 Section 4. Annual Report Disclosure. (a) Provision of Annual Report. (i) On or before each Annual Report Date, the Obligated Party shall provide, or shall cause the Dissemination Agent to provide, to the MSRB, the Annual Report. The Annual Report shall be submitted in Prescribed Form, and it may cross-reference other information as provided in Section 4(b) below. The Audited Financial Statements may be submitted separately from the balance of the Annual Report if not available by the Annual Report Date. The Annual Financial Information need not be separately provided if included in the Audited Financial Statements. The Annual Report shall identify the Bonds by name and CUSIP number. (ii) Not later than forty-five (45) days prior to each Annual Report Date, the Dissemination Agent shall submit to the Obligated Party the form of Annual Reporting Certificate attached hereto as Exhibit B and shall request that the Obligated Party return the completed certificate along with the Annual Report prior to the date set forth in subsection 4(a)(iii) below. (iii) Not later than fifteen (15) days prior to the Annual Report Date, the Obligated Party shall provide the Annual Report and the completed Annual Reporting Certificate to the Dissemination Agent. Promptly upon its receipt of the Annual Report, but no later than the Annual Report Date, the Dissemination Agent shall send the Annual Report to the MSRB in Prescribed Form. The Dissemination Agent shall notify the Obligated Party in writing of the date the Dissemination Agent provided the Annual Report to the MSRB. (iv) If the Dissemination Agent has not received a copy of the Annual Report by the date set forth in subsection (a)(iii) above, the Dissemination Agent shall contact the Obligated Party to determine if the Obligated Party has submitted the Annual Report as required by subsection (a)(i) above. If the Dissemination Agent is unable to verify that the Annual Report has been provided to the MSRB by the Annual Report Date, the Dissemination Agent shall send a notice in a timely manner to the MSRB and the Obligated Party in substantially the form attached as Exhibit C not later than ten (10) days after the Annual Report Date. (b) Contents of Annual Report. (i) The Annual Report prepared at the direction of the Obligated Party shall contain (or incorporate by reference as described below) the following: (A) the Audited Financial Statements of the Project for the previous Fiscal Year, prepared in accordance with generally accepted accounting principles; provided that if the Audited Financial Statements of the Project are not available prior to the Annual Report Date, then (I) the Obligated Party shall file, or shall cause the Dissemination Agent to file, unaudited financial statements, if prepared, and (II) the Audited Financial Statements shall be provided to the MSRB when they become available, and (B) the Annual Financial Information specified on EXHIBIT A hereto for the previous Fiscal Year; provided, however, that to the extent all or portions of the Annual Financial Information are included in the Audited Financial Statements, such information need not be separately provided, but the Obligated Person shall file, or shall cause the Dissemination Agent to file, a notice to such effect to accompany the Audited Financial Statements. (ii) Any or all of the items listed above may be included by specific reference to other documents, including official statements or prospectuses of debt issues of the Obligated Party or related public entities, which have been previously provided to the MSRB or the Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Obligated Party shall clearly identify in the Annual Report each such other document so included by reference. H 3

121 (iii) If any part of the Annual Report can no longer be generated because the operations to which they are related have been materially changed or discontinued, the Obligated Party will provide notice of the same to the MSRB in Prescribed Form for the year in which such event first occurs. Section 5. Disclosure of Listed Events. (a) Upon the occurrence of any of the following Listed Events, the Obligated Party (or the Dissemination Agent on behalf of the Obligated Party) shall give notice of the occurrence of such event to the MSRB in accordance with this Section 5: (i) (ii) (iii) (iv) (v) principal and interest payment delinquencies; nonpayment related defaults, if Material; unscheduled draws on debt service reserves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (vii) (viii) (ix) (x) Material; (xi) modifications to rights of Bondholders, if Material; Bond calls, if Material, and tender offers; defeasances; release, substitution, or sale of property securing repayment of the Bonds, if rating changes; (xii) bankruptcy, insolvency, receivership or similar event of the Obligated Party * ; (xiii) the consummation of a merger, consolidation, or acquisition involving the Obligated Party or the sale of all or substantially all of the assets of the Obligated Party, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if Material; (xiv) appointment of a successor or additional Trustee/Paying Agent or the change of name of a Trustee/Paying Agent, if Material; and * For the purposes of the event identified in clause (xii) above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Obligated Party in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or government authority has assumed jurisdiction over substantially all of the assets or business of the Obligated Party, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Obligated Party. H 4

122 (xv) Any Regulatory Agreement with respect to the Project is in default. (b) Within one (1) Business Day of obtaining actual knowledge of the occurrence of a Listed Event, the Dissemination Agent shall contact the Obligated Party, inform such person of the occurrence of such event, and request that the Obligated Party promptly notify the Dissemination Agent in writing whether to report the occurrence of the Listed Event pursuant to subsection 5(f). (c) When the Obligated Party obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Dissemination Agent pursuant to subsection 5(b) or otherwise, the Obligated Party shall promptly determine whether notice of such occurrence is required to be disclosed pursuant to the Rule. (d) If the Obligated Party determines that the occurrence of a Listed Event is required to be disclosed pursuant to the Rule, the Obligated Party shall promptly instruct the Dissemination Agent in writing to report the occurrence pursuant to subsection 5(f). (e) If, in response to a request from the Dissemination Agent pursuant to subsection 5(b), the Obligated Party determines that the occurrence of a Listed Event is not required to be disclosed pursuant to the Rule, the Obligated Party shall promptly direct the Dissemination Agent in writing not to report the occurrence pursuant to subsection (f). (f) If the Obligated Party has instructed the Dissemination Agent to report the occurrence of a Listed Event, the Dissemination Agent shall promptly file a notice of such occurrence with the MSRB in Prescribed Form not later than ten (10) Business Days after the occurrence of the Listed Event; provided, however, that the Dissemination Agent shall be allowed a minimum of one (1) Business Day to prepare and file a notice of a Listed Event, which time frame shall be in addition to any time that the Dissemination Agent is waiting on the Obligated Party to provide the Dissemination Agent with the information necessary to fully prepare and complete such notice of a Listed Event. (g) If the Obligated Party provides the Dissemination Agent with additional information in accordance with Section 9 hereof and directs the Dissemination Agent to deliver such information to the MSRB, the Dissemination Agent shall deliver such information in a timely manner to the MSRB in Prescribed Form. Section 6. Termination of Reporting Obligation. The Obligated Party s obligations under this Disclosure Agreement shall terminate when the Obligated Party shall have no legal liability for any obligation on or relating to the repayment of the Bonds, including a legal defeasance of the Bonds. Section 7. Dissemination Agent. The Obligated Party has appointed Digital Assurance Certification LLC as Dissemination Agent to assist the Obligated Party with carrying out its obligations under this Disclosure Agreement and Digital Assurance Certification LLC has accepted its appointment as Dissemination Agent. The Obligated Party may discharge the Dissemination Agent upon 30 days written notice to the Dissemination Agent, with or without appointing a successor. The Obligated Party may appoint additional Dissemination Agents without the consent of any existing Dissemination Agent. The Dissemination Agent may resign hereunder upon 30 days written notice to the Obligated Party. If at any time during the term of this Disclosure Agreement the Obligated Party has not appointed a Dissemination Agent, then the Obligated Party shall be deemed to be the Dissemination Agent and shall be solely responsible for all obligations hereunder. The Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the Obligated Party, the Authority, the Holders of the Bonds or any other party. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Obligated Party pursuant to this Disclosure Agreement. The Obligated Party agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, H 5

123 including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent s negligence or willful misconduct. The obligations of the Obligated Party under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Section 8. Amendment or Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Obligated Party and the Dissemination Agent may amend this Disclosure Agreement (and, to the extent that any such amendment does not materially change or increase its obligations hereunder, the Dissemination Agent shall agree to any amendment so requested by the Obligated Party), and any provision of this Disclosure Agreement may be waived, if (a) permitted by the Rule or (b): (i) The amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the Obligated Party or the type of business conducted; (ii) This Disclosure Agreement, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (iii) The amendment or waiver either (A) is approved by the Bondholders in the same manner as provided in the Authorizing Instrument for amendments thereto with the consent of Bondholders, or (B) does not, in the opinion of the Dissemination Agent or nationally recognized bond counsel, materially impair the interests of the Bondholders. Following any amendment or waiver of a provision of this Disclosure Agreement, the Obligated Party shall give notice in the same manner as for the occurrence of a Listed Event under subsection 5(f) and shall include, as applicable, an explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Obligated Party in the Annual Report. Section 9. Dissemination of Additional Information. The Obligated Party may disseminate, or may cause the Dissemination Agent to disseminate, additional information with the Annual Report, notice of the occurrence of an event other than a Listed Event, or any other information in addition to that which is required by this Disclosure Agreement by means of dissemination set forth in this Disclosure Agreement or any other means of communication. Such information shall be provided in Prescribed Form. The Obligated Party shall have no obligation under this Disclosure Agreement or the Rule to update such additional information, to include it with any future Annual Report or to provide notice of any future occurrence of such event. Section 10. Default. If the Obligated Party or the Dissemination Agent fails to comply with any provision of this Disclosure Agreement, any Bondholder may seek specific performance by court order to cause the Obligated Party or the Dissemination Agent, as applicable, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Authorizing Instrument, and the sole remedy under this Disclosure Agreement upon any failure of the Obligated Party or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. Section 11. Transmission of Information and Notices. Notwithstanding anything in this Disclosure Agreement to the contrary, unless otherwise required by law, all notices, documents and information provided to the MSRB shall be provided in Prescribed Form. The Dissemination Agent shall determine each year prior to the Annual Report Date whether a change has occurred in the MSRB s address or filing procedures and requirements under the Rule or with respect to EMMA. Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Obligated Party, the Dissemination Agent, each Participating Underwriter and the Beneficial Owners of the Bonds, and shall create no rights in any other person or entity. H 6

124 Section 13. Recordkeeping. The Obligated Party and the Dissemination Agent shall maintain records of all Annual Report Disclosures and Listed Event Disclosures, including the content of such disclosures, the names of the entities with whom such disclosure was filed and the date of filing such disclosure. Such records shall be kept for at least five years after the respective dates of such filings. Section 14. Assignment. The Obligated Party shall not transfer its obligations under this Disclosure Agreement unless the transferee agrees to assume all obligations of the Obligated Party under this Disclosure Agreement or to execute a continuing disclosure undertaking under the Rule. Any corporation or association (a) into which the Dissemination Agent is merged or with which it is consolidated, (b) resulting from any merger or consolidation to which the Dissemination Agent is a party, or (c) succeeding to all or substantially all of the corporate trust business of the Dissemination Agent shall be the successor Dissemination Agent without the execution or filing of any document or the taking of any further action. Section 15. Compensation. The Dissemination Agent shall receive the annual Dissemination Agent Fee (as defined and set forth in the Authorizing Instrument); provided, however, that if the Obligated Party has the Dissemination Agent file more than one notice of a Listed Event under Section 5 hereof within a given calendar year or if the Obligated Party has the Dissemination Agent file any additional information under Section 9 hereof in filings that are filed separately from the scheduled filing of the Annual Report or from the notice of a Listed Event, then the Dissemination Agent shall be separately compensated for such additional filings in such amount(s) as the Obligated Party and the Dissemination Agent shall agree. Section 16. Notices. All notices, requests, demands or other communications to or upon the respective parties hereto shall be deemed to have been duly given or made when delivered personally or by mail (including electronic mail) to the party to which such notice, request, demand or other communication is required or permitted to be given or made under this Disclosure Agreement and addressed as set forth below or telecopied to the telecopier number of the recipient, with confirmation of transmission, indicated below: If to the Obligated Party, at: 2017 IAV Rubix LLC c/o Invest in America s Veterans Foundation, Inc Leonard Street Cape Coral, FL Attention: Ralph Santillo Telephone: (239) Invest in America s Veterans Foundation, Inc Leonard Street Cape Coral, FL Attention: Ralph Santillo Telephone: (239) cawalker@bmdpl.com Brennan Manna Diamond 800 West Monroe Street Jacksonville, Florida Attention: Christopher A. Walker H 7

125 If to Dissemination Agent, at: Digital Assurance Certification LLC 315 E. Robinson Street Suite 300 Orlando, FL Telephone: (407) Attention: Diana O Brien Section 17. Governing Law. The provisions of this Disclosure Agreement shall be governed by the laws of the State. Section 18. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. H 8

126 EXECUTED AND DATED on behalf of the Obligated Party and the Dissemination Agent by their duly authorized representatives as of the date first written above IAVF RUBIX LLC, a Florida limited liability company By: Invest in America s Veterans Foundation, Inc., a Florida not for profit corporation, its Sole Member By: Name: Ralph A. Santillo Title: President [Borrower Signature Page to The Rubix Apartments Project Continuing Disclosure Agreement] H-9

127 [Dissemination Agent Signature Page to The Rubix Apartments Project Continuing Disclosure Agreement] DIGITIAL ASSURANCE CERTIFICATION LLC, as Dissemination Agent By: Authorized Officer H-10

128 EXHIBIT A CONTENTS OF ANNUAL FINANCIAL INFORMATION Annual Financial Information means updates of the following tabular information contained in the body of the Official Statement, to the extent not otherwise included in the Audited Financial Statements: THE BORROWER AND THE PROJECT The Project Gross Potential Rent table THE BORROWER AND THE PROJECT Occupancy The Rubix Apartments Historical Occupancy Trends To the extent all or portions of the Annual Financial Information are included in the Audited Financial Statements, such information need not be separately provided, but the Obligated Party shall file, or shall cause the Dissemination Agent to file, a notice to such effect to accompany the Audited Financial Statements. H-11

129 EXHIBIT B FORM OF ANNUAL REPORTING CERTIFICATE DATE: Digital Assurance Certification LLC Orlando, Florida Re: Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments Project) Pursuant to the Continuing Disclosure Agreement, dated as of September 1, 2017 (the Disclosure Agreement ), between 2017 IAVF Rubix LLC (the Obligated Party ) and Digital Assurance Certification LLC (the Dissemination Agent ), the Obligated Party has agreed to provide the Annual Report. Attached hereto is the Annual Report for the fiscal year ended December 31, 20 which includes the Audited Financial Statements of the Project and the financial information and operating data set forth in Appendix A to the Disclosure Agreement, as set forth below: Attached Included in Audit THE BORROWER AND THE PROJECT The Project Gross Rent Potential Rent Table THE BORROWER AND THE PROJECT Occupancy The Rubix Apartments Historical Occupancy Trends [Signature Page to Follow] H-12

130 2017 IAVF RUBIX LLC, a Florida limited liability company By: Invest in America s Veterans Foundation, Inc., a Florida not for profit corporation, its Sole Member By: Name: Ralph A. Santillo Title: President [Signature Page to Annual Reporting Certificate] H-13

131 EXHIBIT C NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Obligated Party: 2017 IAVF Rubix LLC Name of Bond Issue: Public Finance Authority Multifamily Housing Revenue Bonds (The Rubix Apartments Project), Series 2017 Date of Issuance: September, 2017 BASE CUSIP: NOTICE IS HEREBY GIVEN that the Obligated Party has not provided the Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement relating to such Bonds, between the Obligated Party and the Dissemination Agent, and Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. The Obligated Party anticipates that the Annual Report will be filed by. Dated: Digital Assurance Certification LLC, on behalf of the Obligated Party By: Its: cc: [Obligated Party] H-14

132 APPENDIX I APPRAISAL [Attached hereto] I-9

133 MARKET VALUATION OF: THE RUBIX RESEARCH BLVD BUILDING C, SUITE 400 AUSTIN, TEXAS (512) FAX (512) NOVOCO.COM

134 A MARKET VALUATION OF: THE RUBIX 5300 EAST CRAIG ROAD LAS VEGAS, CLARK COUNTY, NEVADA, Effective Date: June 15, 2017 Report Date: June 29, 2017 Prepared For: Mr. Lewis Borsellino Vice President Lynd Opportunity Partners 800 IH 10 West #1200 San Antonio, TX Client Code: LYN601V-002 Prepared By Novogradac and Company LLP Research Blvd., Ste. 400, Bldg. C Austin, TX,

135 June 29, 2017 Mr. Lewis Borsellino Vice President Lynd Opportunity Partners 800 IH 10 West #1200 San Antonio, TX Re: Appraisal of The Rubix 5300 East Craig Road Las Vegas, Clark County, Nevada Dear Mr. Borsellino: We are pleased to present our findings with respect to the value of the above-referenced property, The Rubix ( Subject ). The Subject is an existing 236-unit market rate multifamily property. As requested and summarized in the attached engagement letter, we are providing a written appraisal report that includes the following value estimate, which is described and defined below. This letter serves as an introduction to the attached appraisal. Thus, the value opinions expressed in this introduction letter must be taken in context with the full appraisal report. Market value as is unrestricted of the fee simple interest in the property. Please refer to the assumptions and limiting conditions regarding the valuation and hypothetical value conclusions. Our valuation report is for use by the client their successors and assigns for submittal to Standard and Poor s to provide bond ratings for potential non-profit tax exempt bonds. Neither this report nor any portion thereof may be used for any other purpose or distributed to third parties without the express written consent of Novogradac and Company LLP ( Novogradac ). This valuation engagement was conducted in accordance with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, which standards incorporate the Uniform Standards of Professional Appraisal Practice (USPAP). In accordance with these standards, we have reported our findings herein in an appraisal report, as defined by USPAP. For the purposes of this assignment, market value is defined as: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated; 2. Both parties are well informed or well advised and acting in what they consider their best interest; 3. A reasonable time is allowed for exposure in the open market;

136 June 29, 2017 Page 3 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and, 5. The price represents normal considerations for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. 1 This report complies with the current edition of the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Standards Board of the Appraisal Foundation and FIRREA Title XI, 12 CFR Part 323(FDIC), and 12 CFR Part 34 (RTC), and the Code of Ethics & of Professional Practice of the Appraisal Institute. It also complies with Appraisal Institute and Standard and Poor s (S&P) guidelines. As a result of our analysis of the Subject s as is scenario, the fee simple market value As Is as of June 15, 2017: FIFTEEN MILLION THREE HUNDRED THOUSAND DOLLARS ($15,700,000) As a result of our analysis of the Subject s as is scenario, the investment value As Is Assuming Non-Profit Ownership as of June 15, 2017: SEVENTEEN MILLION THREE HUNDRED THOUSAND DOLLARS ($17,300,000) Please refer to the assumptions and limiting conditions regarding the valuation and hypothetical value conclusions. If appropriate, the scope of our work includes an analysis of current and historical operating information provided by management. This unaudited data was not reviewed or compiled in accordance with the American Institute of Certificate Public Accountants (AICPA), and we assume no responsibility for such unaudited statements. We also used certain forecasted data in our valuation and applied generally accepted valuation procedures based upon economic and market factors to such data and assumptions. We did not examine the forecasted data or the assumptions underlying such data in accordance with the standards prescribed by the AICPA and, accordingly, do not express an opinion or any other form of assurance on the forecasted data and related assumptions. The financial analyses contained in this report are used in the sense contemplated by the USPAP. Furthermore, there will usually be differences between forecasted and actual results because events and circumstances frequently do not occur as expected, and these differences may be material. Our value conclusion was based on general economic conditions as they existed on the date of the analysis and did not include an estimate of the potential impact of any sudden or sharp rise or decline in general economic conditions from that date to the effective date of our report. Events or transactions that may have occurred subsequent to the effective date of our opinion were not considered. We are not responsible for updating or revising this report based on such subsequent events, although we would be pleased to discuss with you the need for revisions that may be occasioned as a result of changes that occur after the valuation date C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24, SUPERIOR AVENUE EAST, STE. 900, CLEVELAND, OH

137 June 29, 2017 Page 4 We appreciate this opportunity to be of service. Please contact us if you have any comments or questions. Respectfully submitted, Brad E. Weinberg, MAI, CVA, CRE Partner Certified General Real Estate Appraiser Nevada License #ATMP CG 1100 SUPERIOR AVENUE EAST, STE. 900, CLEVELAND, OH

138 TABLE OF CONTENTS I. Executive Summary... 2 II. Factual Description... 6 III. Regional and Local Area Analysis... 9 Regional Map Economic Analysis Demographic Analysis Neighborhood Analysis IV. Analysis of the Subject Description of the Site Description of the Improvements Assessment Value and Taxes Zoning V. Competitive Rental Analysis General Market Information Survey of Comparable Projects Property Characteristics Market Characteristics VI. Highest and Best Use Highest and Best Use As If Vacant Conclusion VII. Appraisal methodology Appraisal Methodology VIII. Cost Approach IX. Income Capitalization Approach Income Analysis Explanation of Expenses Direct Capitalization X. Sales Comparison Approach XI. Reconciliation ADDENDA

139 I. EXECUTIVE SUMMARY

140 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL EXECUTIVE SUMMARY Property Appraised: Recent Operation: Tax Map ID: The Rubix, the Subject, is a 236-unit market rate multifamily development consisting solely of studio units, located in northern Las Vegas, Nevada. The property was originally constructed as a hotel in 2009, was converted to multifamily apartments in 2015, and consists of one four-story lowrise-style building. The Subject property is currently operating as a market rate multifamily apartment community. According to the historical financials, the Subject operated with a collection and vacancy loss of 12.2 percent in 2015 and 13.8 percent in Based on a rent roll dated April 30, 2017, the Subject is currently 91.9 percent occupied. The Subject property is identified by parcel identification number Land Area: The size of the Subject site is approximately 7.75 acres, or 337,590 square feet, according to developer-provided information and Clark County assessor. Legal Interest Appraised: The property interest appraised is leased fee estate, subject to any and all encumbrances, if applicable. Current Rents and Unit Mix: The following tables detail the current rents and unit mix at the Subject. The Subject is currently operating as a market rate property. Unit Type Current Asking Rent Unit Type Unit Size (SF) CURRENT RENTS Number of Units Asking Rent HUD Fair Market Rents Market Rate Studio $700 $630 Studio $800 $630 Total 236 Minimum Rent Roll Rent RENT ROLL ANALYSIS Maximum Rent Roll Rent Average Rent Roll Rent Recently Signed Leases 1 Difference 2 Studio (245 SF) $700 $595 $885 $707 $732 $7 Studio (300 SF) $800 $625 $885 $732 $778 ($68) 1 For move-ins from February 1, 2017 to present 2 Difference between average rent roll rent and current asking rent 1

141 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL As illustrated, the Subject s current asking rents are generally similar to or sligthly above the average rent roll rents. However, the recently signed leases for each unit type are above the average rent roll rents indicating an upward trend in achievable rents. Ownership History of the Subject: Highest and Best Use As If Vacant : Highest and Best Use As Improved : Effective Date: Capitalization Rate Reconciliation: According to the Clark County Assessor s Office, the Subject property is currently owned by Nellis Apartments Las Vegas, LLC. According to a purchase and sale agreement dated September 22, 2015, the property was purchased by Nellis Apartments Las Vegas, LLC from Nevada Hugh Black Return, LLC for $7,700,000 as part of a foreclosure transaction. Since the most recent sale, the current owner has converted the property from a hotel use to multifamily. According to a purchase and sale agreement dated May 8, 2017, Lynd Opportunity Partners intends to purchase the Subject from Nellis Apartments Las Vegas, LLC for $12,500,000. According to the Sale Agreement, the purchase appears to have been negotiated at arm s length. Overall, the purchase price in the current contract is well below our reconciled as is value of $15,700,000 indicating a significant buyer s advantage. However, this appears reasonable given the expected increased operating savings in the security and real estate taxes line items. The Subject s highest and best use as if vacant is to hold for future development when market rents rise to the level of cost feasibility. Alternatively, a multifamily rental property would be feasible with gap financing such as tax exempt bonds and tax credits. The Subject property currently operates as a market rate multifamily property in good condition. The property currently generates positive cash flow and it is not deemed feasible to tear it down for an alternative use. Therefore, the highest and best use of the site, as improved, would be to continue to operate as a market rate multifamily housing development The Subject was inspected on June 15, 2017, which will serve as the effective date for this report. After reviewing the appropriate methods for developing an overall rate, the following ranges of overall capitalization rates are indicated: CAPITALIZATION RATE SELECTION SUMMARY Method Indicated Rate Market Extraction 6.50% The PwC Investor Survey 6.50% Debt Coverage Ratio 6.08% Band of Investment 6.86% 2

142 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL The various approaches indicate a range from 5.84 to 6.26 percent. We reconciled to a 6.50 percent capitalization rate based primarily upon the market-extracted rate. Operating Expense Reconciliation: Operating expenses were estimated based upon the historical expenses and comparable expenses. In the following tables, we compared historical operating expenses, comparables operating expenses, and concluded expenses per unit. We have also illustrated the expenses less taxes, utilities, and reservers. TOTAL EXPENSES PER UNIT Subject Expenses Subject 2015 $3,880 Subject 2014 $3,937 Comparable Properties Comp 1 $4,352 Comp 2 $4,590 Comp 3 $4,319 Subject Conclusions As Is $4,063 TOTAL EXPENSES PER UNIT LESS TUR Subject Expenses Subject 2016 $2,291 Subject 2015 $2,323 Comparable Properties Comp 1 $2,683 Comp 2 $3,342 Comp 3 $2,976 Subject Conclusions As Is $2,479 Strengths and Weaknesses: Third Party Reports: Based upon our market research and analysis, we believe the Subject property is well positioned in a market that is improving. Strengths of the Subject include proximity to local services and transportation, furnished units, and recently built condition among the comparables. Weaknesses of the Subject include its small unit sizes relative the properties in the area. According to documentation provided by the client, a PCA report has been requested; however, we have not been provided with a copy of the finished report. We were not provided with a Phase I Environmental Site Assessment. However, during our site inspection, we walked the Subject s grounds, including the rear of the buildings and parking lots, and did not observe any obvious environmental contamination. Based on our review of the environmental report, we do not believe there will be an impact on value. However, Novogradac does not offer expertise in this field and cannot opine 3

143 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL as to the adequacy of the soil conditions, drainage, or existence of adverse environmental conditions. Indications of Value: DIRECT CAPITALIZATION ANALYSIS Scenario Cap Rate Net Operating Income Indicated Value (Rounded) As Is 6.5% $1,020,617 $15,700,000 As Is -Assuming Non-Profit Ownership 6.5% $1,122,909 $17,300,000 SALES COMPARISON APPROACH Number of Indicated Value Scenario Price Per Unit Units (Rounded) As Is 236 $65,000 $15,300,000 Exposure Period: Nine to 12 months. 4

144 II. FACTUAL DESCRIPTION

145 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Factual Description Appraisal Assignment and Valuation Approach As requested, the appraisers provided the value estimate described and defined below: Market value as is unrestricted of the fee simple interest in the property. In determining the value estimates, the appraisers employed the sales comparison and income capitalization approaches to value. The property is a market rate multifamily community. The as is value was estimated via sales comparison approach of similar properties at similar life-cycle stage. Given the Subject s restricted nature, age, and investment type, the cost approach is not considered a reliable method of valuation. It is generally not used by participants in the marketplace. The income capitalization approach involves an analysis of the investment characteristics of the property under valuation. The earnings' potential of the property is carefully estimated and converted into an estimate of the property's market value. The sales comparison approach involves a comparison of the appraised property with similar properties that have sold recently. When properties are not directly comparable, sale prices may be broken down into units of comparison, which are then applied to the Subject for an indication of its likely selling price. Property Identification The Subject property is located at 5300 East Craig Road in Las Vegas, Clark County, Nevada The Subject is identified by the Clark County Assessor s Office as parcel PIN number Intended Use and Intended User Lynd Opportunity Partners is the client in this engagement. We understand that they will use this document for submittal to Standard and Poor s to provide bond ratings for potential non-profit tax exempt bonds. Intended users include Standard and Poor s and those transaction participants who are interested parties and have knowledge of the transaction. These could include local housing authorities, state allocating agencies, state lending authorities, construction and permanent lenders, and syndicators. As our client, Lynd Opportunity Partners owns this report and permission must be granted from them before another third party can use this document. We assume that by reading this report another third party has accepted the terms of the original engagement letter including scope of work and limitations of liability. We are prepared to modify this document to meet any specific needs of the potential uses under a separate agreement. Property Interest Appraised The property interest appraised is leased fee estate, subject to any and all encumbrances. Date of Inspection and Effective Date of Appraisal The Subject was inspected by Novogradac on June 15, 2017, which will serve as the effective date for this report. Scope of the Appraisal For the purposes of this appraisal, Novogradac visually inspected the Subject and comparable data. Individuals from a variety of city agencies as well as the Subject s development team were consulted (in person or by phone). Various publications, both governmental (i.e. zoning ordinances) and private (i.e. Multiple List Services publications) were consulted and considered in the course of completing this appraisal. The scope of this appraisal is limited to the gathering, verification, analysis and reporting of the available 6

146 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL pertinent market data. All opinions are unbiased and objective with regard to value. The appraiser made a reasonable effort to collect, screen and process the best available information relevant to the valuation assignment and has not knowingly and/or intentionally withheld pertinent data from comparative analysis. Due to data source limitations and legal constraints (disclosure laws), however, the appraiser does not certify that all data was taken into consideration. We believe the scope of work is appropriate for the problem stated. For the purposes of this appraisal, we have utilized the sales comparison and income approach to complete this assignment based on the scope of work required. In lieu of a cost approach, we provided an insurable value only based on the scope of work. Extraordinary Assumptions (EA) and Hypothetical Conditions (HC) We requested a copy of a Physical Condition Assessment report and Phase I Environmental report. The status of these reports is still pending. Thus, it is an extraordinary assumption that there are no necessary critical repairs or environmental concerns that will significantly impact the value of the Subject. No other hypothetical conditions or extraordinary assumptions were necessary to complete the valuation for the Subject. We have included a more in depth summary of any limiting conditions in the addenda of this report. Market Value Definition For the purposes of this assignment market value is defined as: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated; 2. Both parties are well informed or well advised and acting in what they consider their best interest; 3. A reasonable time is allowed for exposure in the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and, 5. The price represents normal considerations for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. 2 Compliance and Competency Provision The appraiser is aware of the compliance and competency provisions of USPAP, and within our understanding of those provisions, this report complies with all mandatory requirements, and the authors of this report possess the education, knowledge, technical skills, and practical experience to complete this assignment competently, in conformance with the stated regulations. Unavailability of Information In general, all information necessary to develop an estimate of value of the Subject property was available to the appraisers. Furniture, Fixtures, and Equipment Removable fixtures such as kitchen appliances and hot water heaters are considered to be real estate fixtures that are essential to the use and operation of the complex. Supplemental income typically obtained in the operation of an apartment complex is included, and may include minor elements of personal and business property. As immaterial components, no attempt is made to segregate these items C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24,

147 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Ownership and History of Subject According to the Clark County Assessor s Office, the Subject property is currently owned by Nellis Apartments Las Vegas, LLC. According to a purchase and sale agreement dated September 22, 2015, the property was purchased by Nellis Apartments Las Vegas, LLC from Nevada Hugh Black Return, LLC for $7,700,000 as part of a foreclosure transaction. Since the most recent sale, the current owner has converted the property from a hotel use to multifamily. According to a purchase and sale agreement dated May 8, 2017, Lynd Opportunity Partners intends to purchase the Subject from Nellis Apartments Las Vegas, LLC for $12,500,000. According to the Sale Agreement, the purchase appears to have been negotiated at arm s length. Overall, the purchase price in the current contract is well below our reconciled as is value of $15,700,000 indicating a significant buyer s advantage. However, this appears reasonable given the expected increased operating savings in the security and real estate taxes line items. 8

148 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL III. REGIONAL AND LOCAL AREA ANALYSIS 9

149 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL REGIONAL MAP The Subject is located in Las Vegas, Clark County, Nevada. As of the 2010 census, the city of Las Vegas had a population of 583,756 and a land area of square miles. The Subject is located in the Las Vegas- Henderson-Paradise, NV metropolitan statistical area (MSA). 10

150 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL ECONOMIC ANALYSIS Major Employers The following table details the major employers in Las Vegas, NV. MAJOR EMPLOYERS - LAS VEGAS, NV Employer Industry Number of Employees MGM Resorts International Hospitality 56,000+ Clark County School District K-12 Education 35,000+ Caesars Entertainment Hospitality 26,600+ Nellis & Creech AFB National Security 14,000+ Wynn Resorts Hospitality 11,000+ Stations Casinos Hospitality 10,000+ Las Vegas Sands Corporation Hospitality 8,800+ Clark County Municipal Government 8,500+ Boyd Gaming Corporation Hospitality 7,300+ University of Nevada Las Vegas Higher Education 5,000+ Valley Health System Health Care 4,500+ Las Vegas Metropolitan Police Department Police Protection 4,500+ Sunrise Health System Health Care 4,100+ Blackstone Group, LP Hospitality 4,100+ American Casino & Entertainment Properties Hospitality 3,700+ Source: Las Vegas Global Economic Alliance, June 2017 As indicated in the previous table, the largest employers in Las Vegas are heavily concentrated in the hospitality/gaming industry. This includes both resort operations along the Las Vegas Strip and surrounding area, as well as the headquarters of hospitality/gaming firms such as MGM Resorts International, Caesars Entertainment Corp., Station Casinos LLC, Wynn Resorts, Boyd Gaming and Las Vegas Sands Corp. Employment Expansion/Contractions The following list outlines the recently announced employment expansions in the Las Vegas region. Faraday Future, an electric car company hoping to rival Tesla Motors, has been developing a $1 billion manufacturing facility in North Las Vegas throughout However, construction on the facility was halted in November. The company claims that a work stop was issued so financing could temporarily focus on a car prototype. The Lucky Dragon, an Asian-themed, nine-story boutique hotel with 200 rooms, opened in November According to an article in the Las Vegas Review Journal, the Lucky Dragon features 37 table games and 300 slot machines. This project required $115 million in capital and created over 2,000 new jobs. In April 2016, Steve Wynn announced plans to expand the Wynn Resorts by adding a 1,000-room tower to the existing hotel on the Las Vegas strip. The project has an estimated cost of $1.5 billion. The project is expected to begin construction in 2017, and open for business in In the summer of 2015, the announcement to open Eclipse Theatres was made. The Eclipse Theatres will be 72,000 square feet and requires a $20 million investment that will create approximately 85 permanent jobs within Las Vegas. The project was completed in November

151 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL The construction of a 26,100 square foot courthouse complex is expected to be completed in early 2017 at the intersection of Clark Avenue and Fourth Street. This courthouse construction required a $13 million investment and is expected to create 35 new jobs upon completion. The CIM Group is developing 85,000 square feet of retail space and 15,000 square feet of meeting space that will be located at 300 North Casino Center Boulevard and 350 Stewart Avenue. The total investment required is $30 million and is expected to create a number of new jobs within the city. Corner Stone Renovation will be a new 11,000 square foot commercial space located on Main Street and California Street. The total investment for this project is $1.4 million and is projected to be completed in early It should be noted that the state of Nevada has strict confidentiality laws that restrict the availability of mass layoff and business closure information. Worker Adjustment and Retraining Notification (WARN) Act filings, which large employers are required to provide 60 calendar days in advance of plant closings and mass layoffs, are not available to the public in the state of Nevada. We attempted to call the Las Vegas Chamber of Commerce; however, our calls were not returned by the date of this report. Employment and Unemployment Trends The table below illustrates the employment and unemployment rate for the MSA from 2002 to 2017 (year to date). EMPLOYMENT & UNEMPLOYMENT TRENDS (NOT SEASONALLY ADJUSTED) Las Vegas-Henderson-Paradise, NV MSA USA Year Total % Change Unemployment Total Change % Change Unemployment Change Employment Rate Employment Rate , % - 136,485, % , % 5.2% -0.6% 137,736, % 6.0% 0.2% , % 4.3% -0.9% 139,252, % 5.5% -0.5% , % 4.1% -0.3% 141,730, % 5.1% -0.5% , % 4.0% -0.1% 144,427, % 4.6% -0.5% , % 4.5% 0.5% 146,047, % 4.6% 0.0% , % 6.6% 2.2% 145,363, % 5.8% 1.2% , % 11.5% 4.9% 139,878, % 9.3% 3.5% , % 13.8% 2.2% 139,064, % 9.6% 0.3% , % 13.2% -0.5% 139,869, % 9.0% -0.7% , % 11.3% -2.0% 142,469, % 8.1% -0.9% , % 9.7% -1.6% 143,929, % 7.4% -0.7% , % 8.0% -1.7% 146,305, % 6.2% -1.2% , % 6.9% -1.1% 148,833, % 5.3% -0.9% , % 5.8% -1.1% 151,436, % 4.9% -0.4% 2017 YTD Average* 1,004, % 5.0% -0.8% 151,583, % 4.9% 0.0% Mar , % - 151,075, % - Mar ,000, % 4.8% -1.3% 152,628, % 4.6% -0.5% Source: U.S. Bureau of Labor Statistics June 2017 *2017 data is through March Between 2003 and 2008, total employment in the MSA exhibited strong positive growth, well above that the nation and peaking in The MSA maintained positive employment growth through 2008, even as the nation tipped into the most recent national recession. The effects of the most recent national recession became evident in 2009, when local employment levels declined by more than six percent. The MSA employment levels rebounded in 2011, and employment growth in the MSA surpassed national growth from 2014 through As of March 2017, total employment in the MSA was 7.9 percent above its pre- 12

152 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL recession peak, while national employment was 3.7 percent above its pre-recession peak. The most recent data indicates that the local economy experienced significant growth of 2.4 percent in the last 12 months, approximately 1.1 percent higher than the national growth over the same period. Prior to 2008, the MSA generally reported a lower unemployment rate than the nation; however, the unemployment rate in the MSA increased at a faster rate and peaked at a significantly higher rate than the nation in Since reaching its peak, the unemployment rate in the MSA declined each year through March As of March 2017, the unemployment rate in the MSA was 4.8 percent, 20 basis points above the national unemployment rate at the same period. Overall, recent employment growth and a declining unemployment rate indicate that the MSA is in an expansionary phase. The tables below illustrate employment and unemployment rate trends in the MSA. 13

153 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Employment by Industry The following table illustrates employment by industry for the PMA and the nation as of EMPLOYMENT BY INDUSTRY PMA USA Industry Number Percent Number Percent Employed Employed Employed Employed Accommodation/Food Services 18, % 11,574, % Retail Trade 10, % 17,169, % Construction 8, % 9,342, % Admin/Support/Waste Mgmt Srvcs 8, % 6,511, % Arts/Entertainment/Recreation 6, % 3,416, % Other Services (excl Publ Adm) 5, % 7,463, % Healthcare/Social Assistance 4, % 21,304, % Manufacturing 3, % 15,499, % Transportation/Warehousing 3, % 6,128, % Educational Services 2, % 14,359, % Public Administration 1, % 7,093, % Prof/Scientific/Tech Services 1, % 10,269, % Real Estate/Rental/Leasing 1, % 2,946, % Finance/Insurance 1, % 6,942, % Wholesale Trade 1, % 4,066, % Information % 2,862, % Agric/Forestry/Fishing/Hunting % 2,253, % Utilities % 1,344, % Mining % 749, % Mgmt of Companies/Enterprises 2 0.0% 89, % Total Employment 80, % 151,387, % Source: Esri Demographics 2016, Novogradac & Company LLP, June 2017 As illustrated in the table above, the majority of workers in the PMA are employed in the accommodation/ food services, retail trade, construction, and administration/support/waste management services sectors. The accommodation/food services, retail trade, construction, administration/support/waste management services, arts/entertainment/recreation, and other services (excluding public administration) industries represent a significantly larger percentage of the total employment in the PMA than in the nation. By contrast, the PMA employs a significantly lower percentage of workers in the healthcare/social assistance, manufacturing, educational services, public administration, professional/scientific/technical services, finance/insurance, wholesale trade, and agriculture/forestry/hunting/fishing sectors than the nation. The top industries in the PMA, accommodation/ food services and retail trade, are considered more susceptible to volatility during times of economic downturn. Conclusion The majority of workers in the PMA are employed in the accommodation/ food services, retail trade, construction, and administration/support/waste management services sectors. As of March 2017, the unemployment rate in the MSA was 4.8 percent, 20 basis points above the national unemployment rate at the same period. Employment growth in the MSA surpassed national growth from 2014 through As of March 2017, total employment in the MSA was 9.3 percent above its pre-recession peak, while national employment was 4.5 percent above its pre-recession peak. The most recent data indicates that the local economy experienced significant growth of 2.4 percent in the last 12 months, approximately twice national growth during the same period. Overall, recent employment growth and a declining unemployment rate indicate that the MSA is in an expansionary phase. 14

154 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL DEMOGRAPHIC ANALYSIS The following sections will provide an analysis of the demographic characteristics within the market area. Data such as population, households and growth patterns will be studied, to determine if the MSA and the Primary Market Area (PMA) are areas of growth or contraction. Primary Market Area (PMA) For the purposes of this demographic analysis it is necessary to define a PMA, or the area from which we expect most of the Subject s potential tenants to originate. The general boundaries that define the Subject s primary market area (PMA) are Interstate 15 to the north and west, Interstate 515 and Stewart Avenue to the south, and North Hollywood Boulevard to the east. The PMA boundaries are supported by interviews with local property managers and the average drive time of individuals in the PMA. The Secondary Market Area (SMA) for the Subject is the Las Vegas-Henderson-Paradise, NV MSA. Primary Market Area Map 15

155 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Population and Households The tables below illustrate the population and household trends in the PMA, MSA, and nation from 2000 through POPULATION Year PMA Las Vegas-Henderson-Paradise, NV MSA USA Number Annual Change Number Annual Change Number Annual Change ,965-1,375, ,421, , % 1,951, % 308,745, % , % 2,128, % 323,580, % , % 2,301, % 337,326, % Source: Esri Demographics 2016, Novogradac & Company LLP, June 2017 HOUSEHOLDS Year PMA Las Vegas-Henderson-Paradise, NV MSA USA Number Annual Change Number Annual Change Number Annual Change , , ,480, , % 715, % 116,716, % , % 768, % 121,786, % , % 824, % 126,694, % Source: Esri Demographics 2016, Novogradac & Company LLP, June 2017 As illustrated above, the population and household growth in the PMA is anticipated to continue to grow through 2021 at a slightly slower rate than the MSA, but faster than the nation. The increasing number of households in the PMA is a positive indication of future demand for all types of housing. Household Income The table below illustrates Median Household Income in the PMA, MSA, and nation from 2000 through MEDIAN HOUSEHOLD INCOME Year PMA Las Vegas-Henderson-Paradise, NV MSA USA Amount Annual Change Amount Annual Change Amount Annual Change 2000 $34,776 - $44,650 - $42, $37, % $52, % $54, % 2021 $37, % $58, % $59, % Source: Esri Demographics 2016, Novogradac & Company LLP, June 2017 The median household income of the PMA is lower than that of the MSA and the nation as of The growth rate of median household income in the PMA is anticipated to be much slower compared to the MSA and nation through Conclusion Both the PMA and MSA have experienced population and household growth since However, median household income for the MSA is much higher than that of the PMA and just below that of the nation. Through 2021, population and household growth in the PMA are projected to increase at a greater rate than the nation as a whole. The increasing households in the PMA, as well as increasing median household incomes, are a positive indication of future demand for all types of housing. 16

156 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL NEIGHBORHOOD ANALYSIS The neighborhood surrounding an apartment property often impacts the property's status, image, class, and style of operation, and sometimes its ability to attract and properly serve a particular market segment. This section investigates the property's neighborhood and evaluates any pertinent location factors that could affect its rent, its occupancy, and overall profitability. Surrounding Land Uses The Subject is located in a mixed-use neighborhood consisting of multifamily residential uses and commercial/retail uses. Immediately north of the subject is a multifamily development called Eagle Trace Apartments, which is excluded from our analysis as it does not offer studio units. Directly to the east of the Subject is a hotel called the Aviation Inn, beyond which are additional units of the Eagle Trace Apartments development. South of the Subject, across Craig Road, are commercial uses, including restaurants and a convenience store. Commercial uses in the immediate area are in generally average condition. Immediately west of the Subject are commercial uses, including a restaurant and a storage unit facility, beyond which lies a hotel and a single-family home development. The Subject is located approximately four miles east of Interstate 15, which provides access to downtown Las Vegas. During our inspection, we estimated that the commercial occupancy was approximately 85 percent. Overall, uses in the Subject s neighborhood are generally in average condition. The Subject s current use appears to be compatible with the neighborhood. Proximity to Local Services The Subject is close to most important local services, as shown in the table below. LOCATIONAL AMENITIES Map # Service Amenity Miles from Subject 1 Gas Station/Convenience Store 7-Eleven Public Transportation Bus stop Bank Armed Forces Bank Post Office US Post Office Hospital Mike O Callaghan Federal Medical Center Police Las Vegas Metropolitan Police Department Pharmacy Walgreens Fire Vegas Fire Department Grocery Store Smith's 4.8 As the previous table illustrates, most amenities are within five miles of the Subject site. 17

157 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Public Transportation The Regional Transportation Commission of Southern Nevada (RTC) provides bus transportation throughout the Las Vegas metro region. RTC offers 39 weekly routes. Daily fares are $5 for adults and $2.50 for seniors and disabled persons for the residential routes, and $8 for adults and $4 for seniors and disabled persons for the Strip and Downtown Express passes. The nearest bus stop is located directly across the street from the Subject site on East Craig Road. Conclusion The Subject s neighborhood appears to be a good location for an existing multifamily development. Most desirable locational amenities are located within five miles of the Subject property, including public transportation and retail and commercial uses. The Subject is located in a mixed-use neighborhood and is a compatible use within the existing neighborhood. 18

158 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL IV. ANALYSIS OF THE SUBJECT 19

159 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL DESCRIPTION OF THE SITE The location of a multifamily property can have a substantial negative or positive impact upon the performance, safety and appeal of the project. The site description will discuss the physical features of the site, as well as layout, access issues, and traffic flow. An aerial map of the Subject is provided below. Source: GoogleEarth, retrieved 6/2017 Size: According to information provided by the Clark County Assessor s Office, the Subject site is approximately 7.75 acres, or 337,590 square feet. 20

160 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Shape: Frontage: Topography Utilities: Surrounding Visibility/Views: Access and Traffic Flow: Environmental, Soil and Subsoil Conditions and Drainage: Flood Plain: LURA: Detrimental Influences: Conclusion: The Subject site is irregular in shape. The Subject site has frontage along the north side of East Craig Road and the east side of Aviation Street. The site is generally level. All utilities are available to the site. The Subject is located in a mixed-use neighborhood consisting of multifamily residential uses, hotels, and commercial uses. Views from the Subject include a multifamily development that we have excluded from our analysis, a hotel, and commercial and retail uses, including restaurants and a convenience store. Overall, views and visibility are considered average. The Subject is accessible from Aviation Street, which is an interior access road that extends from East Craig Road. East Craig Road is a moderately-trafficked four-lane arterial that traverses east to west. Overall, access and traffic flow are considered good. We requested, but were not provided with a Phase I environmental report for the Subject. During our site inspection, we walked the Subject s grounds, including the rear of the building and the parking lot, and did not observe any obvious indicators of environmental contaminiation or adverse property condition issues. However, Novogradac & Company LLP does not offer expertise in this field and cannot opine as to the adequacy of the soil conditions, drainage, or existence of adverse environmental conditions. According to Community Panel Number 32003C2185F, dated November 16, 2011, the Subject is located in Zone X500L, which is defined as Areas protected from the one percent annual chance flood by levees. No Base Flood Elevations or depths are shown within this zone. Further analysis is beyond the scope of this report. We are unaware of any land use restrictions in connection with the Subject site. At the time of the site inspection, we did not observe any detrimental influences that would adversely impact the marketability of the Subject. The Subject site is considered to be in a good location for multifamily use and is physically capable of supporting a variety of legally permissible uses. 21

161 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL DESCRIPTION OF THE IMPROVEMENTS Property Improvements: Year Built or Date of Construction: Property Layout and Curb Appeal: Current Rents and Unit Mix: The Rubix, the Subject, is a 236-unit market rate multifamily development consisting entirely of furnished, studio/efficiency units located in Northern Las Vegas, Clark County, Nevada. The kitchens in all of the units are functional, with full size refrigerators and two-burner cooktop stoves. The Subject was originally constructed as a hotel in 2009, and was converted/renovated into a multifamily use in Based on an inspection of the Subject by the appraiser, the property offers a functional property layout and has average curb appeal. The following tables detail the current rents and unit mix at the Subject. Unit Type Unit Size (SF) CURRENT RENTS Number of Units Asking Rent HUD Fair Market Rents Market Rate Studio $700 $630 Studio $800 $630 Total 236 Parking: Unit Layout: The Subject offers approximately 145 uncovered, off-street parking spaces, which equates to a parking ratio of approximately 0.6 spaces per unit. The amount of parking appears adequate based on the current tenancy and the unit mix. Based on our physical inspection of representative units, the floor plans appear adequate relative to their intended use and they offer good functional utility. The appraiser inspected the following units on June 15, UNITS INSPECTED Unit Number Unit Type Occupied/Vacant Condition SF Model Good SF Model Good SF Vacant Good SF Vacant Good Utility Structure: The landlord is responsible for all utility expenses. Comparable properties have slightly differing utility structures when compared to the Subject and received appropriate utility adjustments. These adjustments are based on the utility allowance schedule provided by the Southern Nevada Regional Housing Authority, which includes Clark County and Henderson County, effective March 1, 2017, which are displayed in the table below. The Subject does not 22

162 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL currently have a utility allowance based on its market rate operation. UTILITY AND SOURCE Paid By Studio Heating - Electric Landlord $7 Cooking - Electric Landlord $4 Other Electric Landlord $19 Air Conditioning Landlord $8 Water Heating - Gas Landlord $6 Water Landlord $37 Sewer Landlord $20 Trash Landlord $15 TOTAL - Paid By Subject $116 TOTAL - Paid By Tenant $0 Source: Southern Nevada Regional Housing Authority; effective 3/1/2017 Americans With Disabilities Act of 1990: PCA: Remaining Economic Life: Quality of Construction: Functional Utility: Conclusion: We assume the property does not have any violations of the Americans With Disabilities Act of We requested, but were not provided with, a physical condition assessment report for the Subject. During our site inspection, we inspected a representative number of units as well as common areas, and did not observe any obvious or significant critical repairs. It is an extraordinary assumption that there are no critical repairs. It should be noted that any significant critical repairs could have a material impact on our value conclusions. The Subject s actual age is eight years based on the original construction date of However, based on a typical economic life of 60 years and the Subject s current good condition, we have estimated the effective age to be five years. Thus, the remaining economic life is approximately 55 years. At the time of the inspection, the Subject was in good condition overall. The Subject appears to have been completed in a manner consistent with the information provided, using average-quality materials in a professional manner. Based on our site inspection, the Subject does not appear to suffer from functional obsolescence. The Subject is an average-quality market rate multifamily property converted to furnished studio units from a hotel. Based on our site inspection, the Subject does not appear to suffer from functional obsolescence and it provides good utility for its intended use. 23

163 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL The Rubix Location 5300 East Craig Road Las Vegas, NV Clark County Units 236 Vacant Units 19 Vacancy Rate 8.10% Type Lowrise (4 stories) Year Built / Renovated 2009 / 2015 Utilities A/C included -- wall Other Electric included Cooking included Water included Water Heat included Sewer included Heat included Trash Collection included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession (monthly) Restriction Waiting List Vacant Vacancy Rate Max rent? 0 1 Lowrise $700 $0 Market n/a % N/A (4 stories) 0 1 Lowrise (4 stories) $800 $0 Market n/a % N/A Amenities In-Unit Cable/Satellite/Internet Carpeting Furnishing Microwave Oven Refrigerator Wall A/C Property Clubhouse/Meeting Room/Community Room Elevators Exercise Facility Security none Premium none Services none Other Game room, pet park, RV/boat Comments Two of the vacant 300 square foot units are "down", and not currently available for lease. 24

164 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL ASSESSMENT VALUE AND TAXES The following real estate tax estimate is based upon our interviews with local assessment officials, either in person or via telephone. We do not warrant its accuracy. It is our best understanding of the current system as reported by local authorities. We cannot issue a legal opinion as to how the taxing authority will assess the Subject. We advise the client to obtain legal counsel to provide advice as to the most likely outcome of a possible reassessment. The Subject site is located within the Clark County real estate taxing jurisdiction. According to the Clark County Assessor s Office, real estate taxes for a property located in Clark County are based upon a property s assessed valuation. Assessed value is 35 percent of the taxable value (market value). The tax rate for the Subject is $ per $100 of assessed value. The assessor relies on cost, income, and sales approaches to value. The following table illustrates the current assessment and tax burden at the Subject, alongside that of the previous year. CURRENT AND HISTORICAL ASSESSMENT AND TAX BURDEN Year Land Value Improvements Total Assessed Assessed Value Total Taxable Taxable Value Total Taxes Per Value Value Per Unit Value Per Unit Taxes Unit $286,213 $2,707,223 $2,993,436 $12,684 $8,552,674 $36,240 $87,791 $ $268,647 $2,426,353 $2,695,000 $11,419 $7,700,000 $32,627 $79,041 $335 Provided below is a summary of tax comparables in the area, several of which are also included as rent comparables in the Supply Analysis presented later. COMPARABLE TAX ASSESSMENTS ( ) Tax Data Subject Property Name The Rubix Aviator Suites Cloudbreak Las Pinnacle Sunset Terrace Apartments Village Square City Las Vegas Las Vegas Las Vegas Las Vegas Las Vegas Las Vegas Program Market Market Market Market Market Market Year Built / Renovated 2009 / / / Number of Units Assessed Value $2,993,436 $808,076 $1,294,930 $471,391 $1,668,958 $3,555,186 Assessed Value Per Unit $12,684 $4,321 $8,633 $7,857 $7,586 $8,692 Reasonable Assessment and Taxes The Subject s assessed value for tax year is $12,684 per unit, which is above the range of the comparables but appears reasonable given the Subject's condition. Therefore, we have assumed an estimated market value per unit of $12,684 per unit in the as is scenario, which is equal to the current assessment for the property and appears reasonable given the Subject s superior condition compared to the majority of the comparables. The following table illustrates the tax burden for the Subject. TAX CALCULATION - AS IS UNRESTRICTED SCENARIO Assesed Value Total Assessed Millage Estimated Tax Estimated Tax Property Per Unit Value Rate Burded Burden Per Unit Subject $12,684 $2,993, % $87,791 $372 It should be noted that our estimated unrestricted assessed value for tax purposes is below our market value presented later in this report. However, this appears reasonable based on other sales in the area, which had an assessed value for tax purposes of approximately 24 to 27 percent of its sale price. Thus, our market value conclusion for tax purposes, which is approximately 16 percent of our final market value, appears reasonable. 25

165 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Additionally, the client has indicated that they will be receiving full tax abatement on the Subject prior to closing. As a result, we have presented two market values in this report, one assuming full taxes and one assuming a full abatement. ZONING Current Zoning The Subject is located within the city of Las Vegas. Thus, it must comply with the Clark County zoning regulations. According to the Clark County Zoning Ordinance, the Subject is located in the C-2 (General Commercial) zoning district, which permits multifamily properties. The C-2 district permits multifamily dwellings with a maximum allowable density of 18 units per acre. Multifamily uses in C-2 districts are subject to MUD-4 (Mixed Use Development Least Intense Suburban Form) restrictions as well. In MUD-4 districts, lowrise multifamily buildings are permitted up to 35 feet, although additionally height up to 55 feet may be allowed with a special use permit. Further, density bonuses may be granted based on distance to retail, transit, open space, and other urban uses, to a maximum of 32 units per acre. Additionally, multifamily dwellings with single-room occupancy or one-bedroom units require parking of 1.25 spaces per unit. The Subject contains 236 units on 7.75 for a density of 30.5 units per acre. Additionally, the Subject offers a total of 145 parking spaces. The Subject s unit mix requires a minimum of 295 spaces. Thus, the Subject appears to be a legal, non-conforming use. Additionally, the Subject s density and parking ratio appears consistent with comparable properties in the neighborhood. According to the Clark County Zoning Ordinance Chapter , A nonconforming use may not continue if the structure is removed or destroyed to the extent of 50 percent of the replacement cost at the time of destruction. Potential Zoning Changes We are not aware of any proposed zoning changes at this time. 26

166 V. COMPETITIVE RENTAL ANALYSIS

167 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL GENERAL MARKET INFORMATION We consulted a REIS Submarket Trend Futures report for the Northeast Las Vegas submarket in the Las Vegas, NV metro area, which encompass the Subject, to gather information on the local apartment rental market. According to the report, asking rent growth in the Northeast Las Vegas submarket increased from 0.2 percent in the fourth quarter of 2016 to 1.4 percent in the first quarter of Comparatively, asking rent growth in the Las Vegas metro decreased from one percent to 0.7 percent during this time period, and from 0.4 to 0.3 percent in the West. During the same time period, the vacancy rate in the Northeast Las Vegas submarket remained constant at 3.8 percent, while the Las Vegas metro experienced a slight increase from 3.2 to 3.3 percent. The vacancy rate for the West also remained constant during this time, while the vacancy rate for the nation increased from 4.2 to 4.3 percent. These data points indicate that the multifamily rental markets in the Northeast Las Vegas submarket and the Las Vegas metro appear to be stable, with the Northeast submarket experiencing increasing rent growth and a constant vacancy rate. New Supply In order to estimate the supply, we consulted a REIS report from the first quarter 2017 which details planned, proposed, under construction, and new residential developments. This list is presented in the following table and map. PLANNED DEVELOPMENTS IN THE PMA Property Name Program Tenancy Location Distance from Subject Total Units Hollywood Boulevard Condominiums Market Family North Hollywood Boulevard and Alto Avenue 2.9 miles 273 Sunrise Manor Apartments Market Family Owens Walnut Road 4.0 miles 96 Donna Louise Apartments Market Family Donna Street at East Azure Avenue 4.7 miles 96 As illustrated in the previous table, there are three developments that are currently planned, proposed, or under construction in the PMA. Sunrise Manor Apartments and the Hollywood Boulevard Condominiums are currently in the planning stages, while the Donna Louise Apartments are under construction. Because the Hollywood Boulevard development is comprised of condominiums, we do not anticipate that it will compete with the Subject. However, it is likely that Sunrise Manor and Donna Louise Apartments may directly compete with the Subject, should they offer studio units. Local Housing Authority Discussion We attempted to contact representatives from the Southern Nevada Regional Housing Authority (SNRHA) in order to inquire information regarding the Section 8 Housing Choice Voucher Program; however, our calls were not returned in time for this report. According to the SNRHA website, the housing authority helps provide housing for approximately 38,000 people under this program by administering 10,149 Housing Choice Vouchers. The payment standard for studio units is $675. The payment standards are below the Subject s rents, indicating that voucher-holding tenants would have to pay additional rent out of pocket. 28

168 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL SURVEY OF COMPARABLE PROJECTS Comparable properties are examined on the basis of physical characteristics, e.g., building type, building age/quality, the level of common amenities, absorption rates, and similarity in rent structure. We attempted to compare the Subject to properties from the competing market, in order to provide a picture of the general economic health and available supply in the market. Description of Property Types Surveyed/Determination of Number of Units To evaluate the competitive position of the Subject, 1,026 units in five rental properties were surveyed in depth. We also visited and surveyed other properties that were excluded from the market survey because they are not considered comparable, or they would not participate in the survey. Property managers were interviewed for information on unit mix, size, absorption, unit features and project amenities; tenant profiles; and market trends in general. Our competitive survey includes five market rate comparable properties. The availability of market data is considered good. The comparables are located within 6.4 miles of the Subject, and four of the comparables are located within 2.8 miles of the Subject. Overall, the rental data gathered from the market is considered sufficient to support the conclusions. The following table lists excluded multifamily properties in the PMA, which include, but are not limited to: EXCLUDED PROPERTIES Property Name Program Tenancy Reason Excluded Cohiba Courts Market Family No studio units Villa Corona Apartments Market Family No studio units Nellis Family Housing Market Family No studio units Nellis Gardens Apartments Market Family No studio units Terravita Apartments Market Family No studio units Ravello Market Family No studio units Diamond Vista Market Family No studio units Liberty Village Apartments Homes Market Family No studio units Eagle Trace Apartments Market Family No studio units Siegel Suites Craig Market Family Rents units by the week Sorrento Villas Apartments Market Family No studio units Cheyenne Trails Apartments Market Family No studio units Parkwood Apartments Market Family No studio units Thunderbird Townhomes Market Family No studio units Villa Verde Market Family No studio units Cheyenne Pointe Apartments LIHTC Family Affordable Walnut Gardens Section 8 Family Subsidized The following table and map are of the comparable properties used in the supply analysis. 29

169 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL COMPARABLE PROPERTIES # Property Name City Type Distance 1 Aviator Suites Las Vegas Market 0.3 miles 2 Cloudbreak Las Vegas Las Vegas Market 6.4 miles 3 Pinnacle Apartments Las Vegas Market 0.2 miles 4 Sunset Terrace Apartments Las Vegas Market 2.8 miles 5 Village Square Las Vegas Market 1.4 miles 30

170 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Comp # Project Distance Type / Built / Renovated Market / Subsidy SUMMARY MATRIX Units # % Restriction Rent (Adj.) Size Max Wait (SF) Rent? List? Subject The Rubix n/a Lowrise Market Studio / 1BA % Market $ n/a 9 8.0% 5300 East Craig Road (4 stories) Studio / 1BA % Market $ n/a % Las Vegas, NV / 2015 Clark County % % 1 Aviator Suites 0.3 mile Garden Market Studio / 1BA N/A N/A Market $ n/a No 2 N/A 4244 N Las Vegas Blvd (2 stories) Studio / 1BA N/A N/A Market $ n/a No 1 N/A Las Vegas, NV / n/a Clark County % 3 1.6% 2 Cloudbreak Las Vegas 6.4 miles Midrise Market Studio / 1BA % Market $ n/a No 2 1.3% 525 E. Bonanza Road (4 stories) Las Vegas, NV / 2002 Clark County % 2 1.3% 3 Pinnacle Apartments 0.2 miles Lowrise Market Studio / 1BA % Market $ n/a No 1 7.1% 4330 Las Vegas Blvd N (2 stories) 1BR / 1BA % Market $ n/a No 2 7.1% Las Vegas, NV / n/a 2BR / 1BA % Market $942 1,000 n/a None 1 5.6% Clark County % 4 6.7% 4 Sunset Terrace Apartments 2.8 miles Garden Market Studio / 1BA % Market $ n/a No 0 0.0% 2855 N Walnut Road (2 stories) 1BR / 1BA % Market $ n/a No 0 0.0% Las Vegas, NV / BR / 1.5BA % Market $896 1,000 n/a No 0 0.0% Clark County 3BR / 2.5BA % Market #### 1,100 n/a No 0 0.0% Units Vacant Vacancy Rate % 0 0.0% 5 Village Square 1.4 miles Garden Market Studio / 1BA % Market $ n/a No % 5025 Nellis Oasis Lane (2 stories) Las Vegas, NV / n/a Clark County % % 31

171 Effective Rent Date 6/06/2017 PROPERTY PROFILE REPORT Aviator Suites Location 4244 N Las Vegas Blvd Las Vegas, NV Clark County Distance Units 187 Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 0.3 miles 3 1.6% Garden (2 stories) 1992 / N/A N/A N/A N/A N/A N/A Stephanie (702) Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Market N/A N/A 0% N/A Increased None Utilities A/C Cooking Water Heat Heat Other Electric Water Sewer Trash Collection included -- central included -- electric included -- gas included -- gas included included included included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Garden (2 stories) N/A 379 $650 $0 Market No 2 N/A N/A None 0 1 Garden (2 stories) N/A 379 $719 $0 Market No 1 N/A N/A None Unit Mix Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Studio / 1BA $650 - $719 $0 $650 - $719 $0 $650 - $719 Amenities In-Unit Blinds Central A/C Oven Carpeting Ceiling Fan Refrigerator Security None Services None Property Exercise Facility Off-Street Parking Swimming Pool Central Laundry On-Site Management Premium None Other None Novogradac & Company LLP 2017 All Rights Reserved.

172 Aviator Suites, continued Comments This is a short-stay property where tenants can pay by the week or by the month. The monthly rates are reflected in the grid, and the weekly rates are $199 for the units with kitchens and $179 for the units without. The units renting for $650 do not include kitchens, and the units renting for $719 include kitchens. The contact reported that they typically stay full and do not usually have more than 4 or 5 vacancies at any given time. The contact stated that rents have increased over the past year but was unable to estimate by how much. Novogradac & Company LLP 2017 All Rights Reserved.

173 Aviator Suites, continued Photos Novogradac & Company LLP 2017 All Rights Reserved.

174 Effective Rent Date 6/08/2017 PROPERTY PROFILE REPORT Cloudbreak Las Vegas Location 525 E. Bonanza Road Las Vegas, NV Clark County Distance Units 150 Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 6.4 miles 2 1.3% Midrise (4 stories) 1980 / 2002 N/A N/A N/A N/A Formerly Homeless Veterans Andy Taylor (702) Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Market 24% N/A 100% One week N/A None Utilities A/C Cooking Water Heat Heat Other Electric Water Sewer Trash Collection included -- wall included -- electric included -- electric included -- electric included included included included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Midrise (4 stories) $600 $0 Market No 2 1.3% N/A None Unit Mix Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Studio / 1BA $600 $0 $600 $0 $600 Amenities In-Unit Blinds Furnishing Refrigerator Carpeting Oven Security Patrol Video Surveillance Services None Property Clubhouse/Meeting Room/Community Central Laundry On-Site Management Elevators Off-Street Parking Premium None Other None Comments Cloudbreak Las Vegas consists of a 150-unit development that was the conversion of a hotel into studio units targeted toward formerly homeless military veterans. Management estimated the reported turnover rate, as many tenants live under month to month leases, which causes turnover to fluctuate greatly. All tenants utilize VASH Vouchers, which allow them to contribute only 30 percent of income towards rent. None of the current tenants contribute the full asking rent. Novogradac & Company LLP 2017 All Rights Reserved.

175 Cloudbreak Las Vegas, continued Trend Report Vacancy Rates 2Q05 2Q06 6.7% 2.7% 2Q15 7.3% 2Q17 1.3% Trend: Market Studio / 1BA Year QT Vac. Face Rent Conc. Concd. Rent Adj. Rent % $430 $0 $430 $ % $430 $0 $430 $ % $515 $0 $515 $ % $600 $0 $600 $600 Trend: Comments 2Q05 (4/1/05) From March 2004 to April 2005, the vacancy rate at this property has increased from two percent to 6.6 percent. The property manager commented that a vacancy rate near six percent is normal for the property. The rental rate has remained stable over the past 13 months. (3/25/04) This is a former hotel that was converted into housing for veterans who are homeless or on the verge of being homeless. There are no maximum income guidelines at this property. Rent is $430 for single occupancy and $490 for double occupancy. The Veterans Administration offers assistance to tenants at this property. It is operated as transitional housing where residents are encouraged to find more permanent housing after a year or two. All units are furnished with all utilities paid. The property is located on the northern edge of downtown Las Vegas. 2Q06 2Q15 2Q17 The management reported the rent has remained stable since our last interview in April 05?. The vacancy has dropped 6.6 percent to 2.6 percent. Turnover has remained at 24%. Cloudbreak Las Vegas consists of a 150-unit development that was the conversion of a hotel into studio units targeted toward formerly homeless military veterans. Management estimated the reported turnover rate, as many tenants live under month to month leases, which causes turnover to fluctuate greatly. Additionally, management stated that the elevated vacancy rate is due to the fact that full kitchens are being installed in each unit upon turnover, which has slowed leasing of vacant units. Finally, all tenants utilize VASH Vouchers, which allow them to contribute only 30 percent of income towards rent. None of the current tenants contribute the full asking rent. Cloudbreak Las Vegas consists of a 150-unit development that was the conversion of a hotel into studio units targeted toward formerly homeless military veterans. Management estimated the reported turnover rate, as many tenants live under month to month leases, which causes turnover to fluctuate greatly. All tenants utilize VASH Vouchers, which allow them to contribute only 30 percent of income towards rent. None of the current tenants contribute the full asking rent. Novogradac & Company LLP 2017 All Rights Reserved.

176 Cloudbreak Las Vegas, continued Photos Novogradac & Company LLP 2017 All Rights Reserved.

177 Effective Rent Date 6/08/2017 PROPERTY PROFILE REPORT Pinnacle Apartments Location 4330 Las Vegas Blvd N Las Vegas, NV Clark County Distance Units 60 Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 0.2 miles 4 6.7% Lowrise (2 stories) 1984 / N/A N/A N/A N/A N/A N/A Megan (702) Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Market N/A N/A N/A N/A N/A None Utilities A/C Cooking Water Heat Heat Other Electric Water Sewer Trash Collection not included -- central not included -- electric not included -- electric not included -- electric included included included included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Lowrise (2 stories) $700 $0 Market No 1 7.1% N/A None 1 1 Lowrise (2 stories) 2 1 Lowrise (2 stories) $800 $0 Market No 2 7.1% N/A None 18 1,000 $900 $0 Market None 1 5.6% N/A None Unit Mix Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Studio / 1BA $700 $0 $700 $25 $725 1BR / 1BA $800 $0 $800 $31 $831 2BR / 1BA $900 $0 $900 $42 $942 Amenities In-Unit Blinds Carpeting Oven Cable/Satellite/Internet Central A/C Refrigerator Security None Services None Property Courtyard Off-Street Parking Picnic Area Central Laundry On-Site Management Swimming Pool Premium None Other None Novogradac & Company LLP 2017 All Rights Reserved.

178 Pinnacle Apartments, continued Comments The property accepts housing choice vouchers, but the contact was unable to estimate the percentage of tenants using them or a turnover rate. Cable is included in rent. Novogradac & Company LLP 2017 All Rights Reserved.

179 Pinnacle Apartments, continued Photos Novogradac & Company LLP 2017 All Rights Reserved.

180 Effective Rent Date 6/06/2017 PROPERTY PROFILE REPORT Sunset Terrace Apartments Location 2855 N Walnut Road Las Vegas, NV Clark County Distance Units 220 Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 2.8 miles 0 0.0% Garden (2 stories) 1990 / 2013 N/A N/A N/A N/A N/A Erica (702) Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Market N/A N/A 0% N/A N/A None Utilities A/C Cooking Water Heat Heat Other Electric Water Sewer Trash Collection not included -- central not included -- electric not included -- electric not included -- electric not included not included not included not included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Garden (2 stories) $519 $0 Market No 0 0.0% N/A None 1 1 Garden (2 stories) Garden (2 stories) Garden (2 stories) $619 $0 Market No 0 0.0% N/A None 48 1,000 $749 $0 Market No 0 0.0% N/A None 12 1,100 $849 $0 Market No 0 0.0% N/A None Unit Mix Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Studio / 1BA $519 $0 $519 $116 $635 1BR / 1BA $619 $0 $619 $126 $745 2BR / 1.5BA $749 $0 $749 $147 $896 3BR / 2.5BA $849 $0 $849 $168 $1,017 Novogradac & Company LLP 2017 All Rights Reserved.

181 Sunset Terrace Apartments, continued Amenities In-Unit Blinds Central A/C Exterior Storage Garbage Disposal Refrigerator Carpeting Dishwasher Ceiling Fan Oven Walk-In Closet Security None Services None Property Business Center/Computer Lab Exercise Facility On-Site Management Playground Clubhouse/Meeting Room/Community Off-Street Parking Picnic Area Swimming Pool Premium None Other None Comments The contact was unable to provide a turnover rate. This property does not accept housing choice vouchers. Novogradac & Company LLP 2017 All Rights Reserved.

182 Sunset Terrace Apartments, continued Photos Novogradac & Company LLP 2017 All Rights Reserved.

183 Effective Rent Date 6/06/2017 PROPERTY PROFILE REPORT Village Square Location 5025 Nellis Oasis Lane Las Vegas, NV Clark County Distance Units 409 Vacant Units Vacancy Rate Type Year Built/Renovated Marketing Began Leasing Began Last Unit Leased Major Competitors Tenant Characteristics Contact Name Phone 1.4 miles % Garden (2 stories) 1986 / N/A N/A N/A N/A N/A N/A Wendy (702) Market Information Program Annual Turnover Rate Units/Month Absorbed HCV Tenants Leasing Pace Annual Chg. in Rent Concession Market N/A N/A 0% N/A N/A See comments Utilities A/C Cooking Water Heat Heat Other Electric Water Sewer Trash Collection not included -- central not included -- electric not included -- electric not included -- electric included included not included included Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Garden (2 stories) $614 $16 Market No % N/A None Unit Mix Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Studio / 1BA $614 $16 $598 $45 $643 Amenities In-Unit Blinds Central A/C Garbage Disposal Oven Walk-In Closet Carpeting Exterior Storage Microwave Refrigerator Security Patrol Services None Property Basketball Court Off-Street Parking Picnic Area Swimming Pool Central Laundry On-Site Management Playground Volleyball Court Premium None Other None Comments The contact was unable to provide an estimated turnover rate. The property is offering a concession of $199 for the first month's rent. The contact stated that the vacancy rate is higher than usual but did not know why. Novogradac & Company LLP 2017 All Rights Reserved.

184 Village Square, continued Photos Novogradac & Company LLP 2017 All Rights Reserved.

185 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL PROPERTY CHARACTERISTICS Following are relevant characteristics of the comparable properties surveyed: Location The Subject is located in a mixed-use neighborhood in northeastern Las Vegas. All of the comparables are located within 6.4 miles of the Subject. The following table illustrates the Subject and comparable property median rents and household incomes based on the properties zip codes. It should be noted that four of the five comparables are located in the same zip code as the Subject. LOCATION Property Name Zip Code Median Rent Median HH Income Overall Neighborhood SUBJECT $824 $34,056 Average Aviator Suites $824 $34,056 Average Cloudbreak Las Vegas $655 $22,392 Fair Pinnacle Apartments $824 $34,056 Average Sunset Terrace Apartments $824 $34,056 Average Village Square $824 $34,056 Average Overall, the majority of the comparables offer a generally similar location relative to the Subject in terms of both median rents and median household incomes, with the exception of Cloudbreak Las Vegas, which is located in an area with a lower median rent and median household income. However, it should be noted that this property is located closer to downtown Las Vegas, and therefore has greater access to a number of locational amenities. Age and Condition The Subject was constructed as hotel in 2009, was converted to multifamily in 2015, and is currently in good condition overall. The comparables were constructed or renovated between 1986 and 2013, and range from average to good condition. Aviator Suites, Pinnacle Apartments, and Village Square were all constructed prior to 1992 and have not been renovated. Cloudbreak Las Vegas was built in 1980 and renovated in All four of these properties exhibit generally average condition, slightly inferior to the Subject. Sunset Terrace Apartments was built in 1990 and renovated in 2013, and exhibits good condition, generally similar to the Subject. In terms of design, the Subject offers units with a lowrise-style design. All of the comparables offer lowrise, midrise, or garden-style design, generally similar to the Subject. Unit Size The following table summarizes unit sizes in the market area, and provides a comparison of the Subject s unit size and the surveyed average unit sizes in the market. UNIT SIZE COMPARISON Unit Type Subject Surveyed Min Surveyed Max Surveyed Average Advantage/ Disadvantage Studio % to -27.9% The Subject s units are below the average of studio units available at the comparables. Additionally, the Subject s studio units are the smallest in the market and are below the range illustrated by the comparables. 46

186 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Based on a rent roll dated April 30, 2017, the Subject is currently 91.9 percent occupied. We have considered the Subject s inferior unit sizes in determining our achievable market rents. Amenities A detailed description of amenities included in both the Subject and the comparable properties can be found in the amenity matrix. The matrix has been color coded. Those properties that offer an amenity that the Subject does not offer are shaded in pink, while those properties that do not offer an amenity that the Subject does offer are shaded in blue. Thus, the inferior properties can be identified by the blue and the superior properties can be identified by the pink. It should be noted that the Subject offers all furnished units. Overall, the Subject is considered similar to slightly superior to the majority of the comprables in term of unit amenities, but is inferior to the comparables in terms of property amenities. Security Features The Subject does not offer any security features. Only two of the comparables offers security features; Cloudbreak Las Vegas offers courtesty patrol and video surveillance and Village Square offers security patrol. Based on our site observations and discussions with property managers, crime does not appear to be an issue in the Subject s neighborhood. Overall, the Subject is considered similar to a majority of the comaprables in terms of security features and slightly inferior to Cloudbreak Las Vegas and Village Square. Utility Structure All utilities are included in the rent at the Subject. Comparable properties have slightly differing utility structures when compared to the Subject and received appropriate utility adjustments. These adjustments are based on the utility allowance schedule provided by the Southern Nevada Regional Housing Authority, which covers Clark and Henderson Counties, including Las Vegas and North Las Vegas, effective March 1, Parking The Subject offers off-street, uncovered surface parking spaces, similar to all of the comparable properties. As a result, the Subject is competitive in terms of parking compared to the majority of the comparable properties. 47

187 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL MARKET CHARACTERISTICS Following are relevant market characteristics for the comparable properties surveyed. Absorption None of the comparable properties were able to provide absorption data. However, we were able to obtain information from five properties built in Las Vegas over the past 10 years. ABSORPTION Number of Units Units Absorbed / Month Property Name Type Tenancy Year Built Acapella Apartments LIHTC, Market Senior Inspirado Apartments Market Family The Venue Market Family Cabrillo Apartments Market Family Tivoli Market Family As shown, we found four market-rate and one mixed-income property able to report absorption information. These properties reported absorption rates between 16 and 36 units per month. Based information obtained from area properties, if the Subject was hypothetically 100 percent vacant and had to re-lease its units, we would estimate an absorption rate of approximately 20 units per month, for an absorption period of approximately 12 months. It should be noted that this absorption analysis is hypothetical because the Subject is currently operating at a stabilized occupancy. Turnover The following table illustrates reported turnover for the comparable properties. It should be noted that only property management at Cloudbreak Las Vegas was able to provide annual turnover rates, as illustrated below. TURNOVER Property Name Rent Structure Turnover Aviator Suites Market N/A Cloudbreak Las Vegas Market 24% Pinnacle Apartments Market N/A Sunset Terrace Apartments Market N/A Village Square Market N/A Average Turnover 24% As illustrated in the table above, the annual turnover rate at Cloudbreak Las Vegas was estimated to be 24 percent. Management at the Subject estimated turnover to be approximately 120 units per year, or 50.8 percent. We anticipate the Subject will maintain a turnover rate of approximately 50 percent, in line with current operations. 48

188 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Vacancy Levels The following table summarizes overall weighted vacancy trends at the surveyed properties. OVERALL VACANCY Property Name Rent Structure Total Units Vacant Units Vacancy Rate Aviator Suites Market % Cloudbreak Las Vegas Market % Pinnacle Apartments Market % Sunset Terrace Apartments Market % Village Square Market % Total 1, % The comparables reported vacancy rates ranging from zero to 11.7 percent, with an overall weighted average of 5.6 percent. Based on a rent roll dated April 30, 2017, the Subject is currently 91.9 percent occupied, with 11 of 19 units pre-leased for early May move-ins. Based on financial statements supplied by the client, the Subject s vacancy and collection loss in 2015 was reportedly 13.8 percent, and decreased to 12.2 percent in It should be noted that 2015 was the first year the Subject operated as multifamily property. Currently, the vacancy rate at the Subject is 8.1 percent, which is about typical according to the property manager. Based on the current market conditions, and the downward trend at the Subject property, we believe the Subject will likely perform in line with the comparable properties. Thus, based on the Subject s current performance as well as the vacancy rates at the comparables in the market, we anticipate the Subject will maintain a stabilized vacancy loss of seven percent. Concessions Only one of the comparable properties reported offering concessions at this time. Village Square reported offering $199 off first month s rent, or approximately $16 off per month for a year. It should be noted that Village Square has the highest vacancy rate of the comparable, over 11 percent, as illustrated in the previous table. We do not believe the Subject is currently offering any concessions. The limited concessions in the market among the comparable properties indicate that the Subject likely will not need to offer concessions to remain competitive. Reasonability of Rents The following table compares the Subject s current rents to comparable developments. Rents have been adjusted for differences in utility structure and concessions. The following table illustrates the current rents and unit mix for the Subject property. The following table is a comparison of the Subject s current rents and the rents at the comparable properties. For the purposes of this analysis, Base Rents are the actual rents quoted to the tenant, and are most frequently those rents that potential renters consider when making a housing decision. Net rents are rents adjusted for the cost of utilities (adjusted to the Subject s convention) and are used to compensate for the differing utility structures of the Subject and the comparable properties. Net rents represent the actual costs of residing at a property, and help to provide an apples-to-apples comparison of rents. Additionally, it is important to note that we compared to concessed rent levels at the comparable properties, when applicable. 49

189 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL CURRENT RENTS Unit Type Unit Size Number of Asking HUD Fair (SF) Units Rent Market Market Rate Studio $700 $630 Studio $800 $630 Total 236 RENT ROLL ANALYSIS Unit Type Current Asking Rent Minium Rent Roll Rent Maximum Rent Roll Rent Average Rent Roll Rent Recently Signed Leases 1 Difference 2 Studio (245 SF) $700 $595 $885 $707 $732 $7 Studio (300 SF) $800 $625 $885 $732 $778 ($68) 1 For move-ins from February 1, 2017 to present 2 Difference between average rent roll rent and current asking rent Achievable Market Rents As Is Provided below is an analysis of the Subject s market rents in comparison with the comparable units. Additionally, the comparable market rate properties have been adjusted to the Subject s utility convention and any concessions. SUBJECT COMPARISON TO MARKET RENTS Unit Type Subject Surveyed Min Surveyed Max Surveyed Average Achievable Market Rents Subject Rent Advantage Studio (245 SF) $700 $600 $725 $664 $700 0% Studio (300 SF) $800 $600 $725 $664 $800 0% The Subject s current asking rents are within the range of the comparables for its smaller studio units, but above the range of the comparables for its larger studio units. The Subject offers a similar to superior location and generally similar design relative to the comparables. The Subject generally offers a similar to slightly superior in-unit amenity package, inferior common area amenities and inferior unit sizes relative to the comparables. However, the Subject is the most recently built and renovated property, and includes all utilities in the monthly rent, as well cable and internet. Additionally, the Subject offers furnished units. The Subject is similar to Aviator Suites and Pinnacle Apartments, which are both located within 0.3 miles of the Subject, in the same neighborhood. Aviator Suites was built in 1992 and offers only studio apartments, both with and without kitchens. We have not considered the rental rates for studio apartments without kitchens as they are not directly comparable to the Subject. Further, Aviator Suites offers slightly inferior inunit amenities but slightly superior common area amenities, including on-site management and a swimming pool. Aviator Suites offers units slightly superior in size to the larger unit type at the Subject. Pinnacle Apartments was built in 1984 and offers studio, one, and two-bedroom apartments. Pinnacle Apartments offers generally similar in-unit amenities and similar, but different, common area amenities, given the property offers on-site management and a swimming pool, but does not offer a community room or an exercise facility, which are offered at the Subject. Additionally, Pinnacle Apartments offers units slightly superior in size to those at the Subject. We consider these properties to be amongst the most similar comparables. Overall, we would anticipate that the Subject would achieve rents above the rents currently being achieved at both properties, given its superior condition and the fact that it offers furnished units inclusive of cable and internet. The following table illustrates a comparison between the Subject and the most similar comparables. 50

190 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Subject Comparison with Aviator Suites Unit Type Subject's Achievable Rent Square Feet Aviator Suites Rent Square Feet Subject Rent Advantage Studio (245 SF) $ $ % Studio (300 SF) $ $ % Subject Comparison with Pinnacle Apartments Unit Type Subject's Achievable Rent Square Feet Pinnacle Apartments Rent Square Feet Subject Rent Advantage Studio (245 SF) $ $ % Studio (300 SF) $ $ % Our conclusions for the Subject s smaller studio units are below the rents for studio units at both Aviator Suites and Pinnacle Apartments; while our conclusion for the Subject s larger studio units are slightly above the rents at both properties. It should be noted that our conclusions are similar to slightly below the current asking rents. Additionally, our conclusions are also supported by the most recent rent roll rents. Overall, these rent conclusions appear achievable and will be utilized in our unrestricted valuation. 51

191 VI. HIGHEST AND BEST USE

192 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL HIGHEST AND BEST USE Highest and Best Use is defined as: "The reasonably probable and legal use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. 3 Investors continually attempt to maximize profits on invested capital. The observations of investor activities in the area are an indication of that use which can be expected to produce the highest value. The principle of conformity holds, in part, that conformity in use is usually a highly desirable adjunct of real property, since it generally helps create and/or maintains maximum value. It is to be recognized that in cases where a site has existing improvements on it, the highest and best use may be determined to be different from the existing use. The existing use will continue, however, unless and until land value in its highest and best use exceeds the total value of the property in its existing use. Implied in this definition is that the determination of highest and best use takes into account the contribution of a specific use to the community and community development goals as well as the benefits of that use to individual property owners. The principle of Highest and Best Use may be applied to the site if vacant and to the site as it is improved. The Highest and Best Use determination is a function of neighborhood land use trends, property size, shape, zoning, and other physical factors, as well as the market environment in which the property must compete. Four tests are typically used to determine the highest and best use of a particular property. Thus, the following areas are addressed. 1. Physically Possible: The uses to which it is physically possible to put on the site in question. 2. Legally Permissible: The uses that are permitted by zoning and deed restrictions on the site in question. 3. Feasible Use: The possible and permissible uses that will produce any net return to the owner of the site. 4. Maximally Productive: Among the feasible uses, the use that will produce the highest net return or the highest present worth. 3 Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 6 th ed. (Chicago: Appraisal Institute, 2015). 53

193 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL HIGHEST AND BEST USE AS IF VACANT Physically Possible The size of the Subject site is approximately 7.75 acres, or 337,590 square feet, according to the information provided by the developer and the Clark County Assessor s Office. The site is generally level and irregular in shape. Further, it has good accessibility and visibility, and is not located within a flood plain. The site is considered adequate for a variety of legally permissible uses. Legally Permissible According to the Clark County Zoning Ordinance, the Subject is located in the C-2 (General Commercial) zoning district, which permits multifamily properties. The C-2 district permits multifamily dwellings with a maximum allowable density of 18 units per acre. Multifamily uses in C-2 districts are subject to MUD-4 (Mixed Use Development Least Intense Suburban Form) restrictions as well. Density bonuses may be granted based on distance to retail, transit, open space, and other urban uses, to a maximum of 32 units per acre. Financially Feasible The cost of the land limits those uses that are financially feasible for the site. Any uses of the Subject site that provide a financial return to the land in excess of the cost of the land are those uses that are financially feasible. The Subject s feasible uses are restricted to those that are allowed by zoning classifications, and are physically possible. As noted in the zoning section, the Subject site could support multifamily development. Based on the Subject s surrounding land uses and the site s physical attributes, multifamily residential development is most likely. Maximally Productive Anecdotal evidence indicates market rate development is feasible in the current market. Market rents appear to support feasible construction without additional gap subsidy. Therefore, if available, the maximally productive use of this site as if vacant would be to construct a multifamily rental property with or without tax credit equity, favorable financing, or other gap subsidies. Based upon our analysis, the maximally productive use of this site as if vacant would be to construct a multifamily development. CONCLUSION Highest and Best Use As If Vacant The Subject s highest and best use as if vacant is to hold for future development when market rents rise to the level of cost feasibility. Alternatively, a multifamily rental property would be feasible with gap financing such as tax exempt bonds and tax credits. Highest and Best Use As Improved The Subject property currently operates as a market rate multifamily property in good condition. The property currently generates positive cash flow and it is not deemed feasible to tear it down for an alternative use. Therefore, the highest and best use of the site, as improved, would be to continue to operate as a market rate multifamily housing development. 54

194 VII. APPRAISAL METHODOLOGY

195 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL APPRAISAL METHODOLOGY Contemporary appraisers usually gather and process data according to the discipline of the three approaches to value. The cost approach consists of a summation of land value and the cost to reproduce or replace the improvements, less appropriate deductions for depreciation. Reproduction cost is the cost to construct a replica of the Subject improvements. Replacement cost is the cost to construct improvements having equal utility. The sales comparison approach involves a comparison of the appraised property with similar properties that have sold recently. When properties are not directly comparable, sale prices may be broken down into units of comparison, which are then applied to the Subject for an indication of its likely selling price. The income capitalization approach involves an analysis of the investment characteristics of the property under valuation. The earnings' potential of the property is carefully estimated and converted into an estimate of the property's market value. Applicability to the Subject Property The cost approach consists of a summation of land value (as though vacant) and the cost to reproduce or replace the improvements, less appropriate deductions for depreciation. Reproduction cost is the cost to construct a replica of the Subject improvements. Replacement cost is the cost to construct improvements having equal utility. Given the restricted nature of the Subject property and lack of financial feasibility, this valuation technique was not undertaken since we do not believe the approach would yield a reliable indication of value for the Subject property. In the sales comparison approach, we estimate the value of a property by comparing it with similar, recently sold properties in surrounding or competing areas. Inherent in this approach is the principle of substitution, which holds that when a property is replaceable in the market, its value tends to be set at the cost of acquiring an equally desirable substitute property, assuming that no costly delay is encountered in making the substitution. There is adequate information to use the sales comparison approach and a sales price per unit analysis in valuing the Subject property. The income capitalization approach requires estimation of the anticipated economic benefits of ownership, gross and net incomes, and capitalization of these estimates into an indication of value using investor yield or return requirements. Yield requirements reflect the expectations of investors in terms of property performance, risk and alternative investment possibilities. The Subject will be an income producing property and this is considered to be the best method of valuation. 56

196 VIII. COST APPROACH

197 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL COST APPROACH The employment of the Cost Approach in the valuation process is based on the principle of substitution. As discussed, this valuation technique was not undertaken since we do not believe the approach would yield a reliable indication of value for the Subject property. This is primarily attributable to the age and condition of the improvements, and the fact that the market data does not support a credible indication of depreciation. Additionally, the financial infeasibility of the Subject is an additional factor for eliminating this approach. Moreover, apartment purchasers in the local market do not typically use cost principles in pricing for older properties like the Subject. For these reasons, the Cost Approach has not been presented in this report. 58

198 IX. INCOME CAPITALIZATION APPROACH

199 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL INCOME CAPITALIZATION APPROACH Introduction We were asked to provide the following value estimate: Market value as is unrestricted of the fee simple interest in the property. As discussed, we were asked to provide an estimate of the Subject s value under the current market rate operation. The Income Capitalization Approach to value is based upon the premise that the value of an incomeproducing property is largely determined by the ability of the property to produce future economic benefits. The value of such a property to the prudent investor lies in anticipated annual cash flows and an eventual sale of the property. An estimate of the property s market value is derived via the capitalization of these future income streams. The Subject s as is value was performed via the income capitalization approach. INCOME ANALYSIS Potential Gross Income In our search for properties comparable to the Subject, we concentrated on obtaining information on those projects considered similar to the Subject improvements on the basis of location, size, age, condition, design, quality of construction and overall appeal. In our market analysis we provided the results of our research regarding properties considered generally comparable or similar to the Subject. The potential gross income of the Subject is the total annual income capable of being generated by all sources, including rental revenue and other income sources. The Subject s potential rental income assuming the current achievable market rents is derived in the Supply Section of this report and are calculated as follows. POTENTIAL GROSS RENTAL INCOME Unit Type Number of Unit Size Achievable Monthly Annual Gross Units (SF) Rent Gross Rent Rent Studio (245 SF) $700 $79,100 $949,200 Studio (300 SF) $775 $95,325 $1,143,900 Total 236 $174,425 $2,093,100 Other Income Miscellaneous income includes fees for pets, cancellation and termination fees, late fees, storage fees, cleaning/damage fees, laundry and vending income, and other miscellaneous fees. Data from comparable properties ranges from $203 to $841 per unit. The Subject s historical other income ranges from $429 to $439 per unit, with a slight upward trend. We have placed the most significant weight on the Subject s historical financial data, and concluded to total other income of $450 per unit, which appears reasonable given the slight upward trend over the previous two years. Vacancy and Collection Loss Based on a rent roll dated April 30, 2017, the Subject is currently 91.9 percent occupied. Based on financial statements supplied by the client, the Subject s vacancy has ranged from 8.1 to 9.7 percent over the past two year, or 12.2 to 13.8 percent when including collection loss. It should be noted that vacancy and 60

200 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL collection costs are trending downwards since the recent acquisition of the property in Thus, based on the Subject s current performance as well as the generally low vacancy rates in the market, we anticipate the Subject will maintain a stabilized vacancy loss of seven percent or less. We have estimated collection losses of three percent. EXPLANATION OF EXPENSES Typical deductions from the calculated Effective Gross Income fall into three categories on real property: fixed, variable, and non-operating expenses. Historical operating expenses of comparable properties were relied upon in estimating the Subject s operating expenses. The comparable data can be found on the following pages. It is important to note that the projections of income and expenses are based on the basic assumption that the apartment complex will be managed and staffed by competent personnel and that the property will be professionally advertised and aggressively promoted. Comparable operating expense data was collected from a combination of market rate properties in the area. The following table provides additional information on each of the comparable expense properties. COMPARABLE EXPENSES Comp Comp Comp Year Built / 2017 Structure Garden Garden Garden Tenancy Family Senior Family Rent Restrictions Market Market Market The comparable data was compared to the 2015 and 2016 historical data for the Subject based on information supplied by the client. 61

201 Subject Estimates As Is SUBJECT SUBJECT Property ID Statement Type Proforma T-12 T Month Period Ending City State Metro Area Year Built Number of Units Las Vegas, NV Las Vegas-Henderson-Paradise, NV 2009 / /2016 Las Vegas, NV Las Vegas-Henderson-Paradise, NV 2009 / /2015 Las Vegas, NV Las Vegas-Henderson-Paradise, NV 2009 / /31/2014 Las Vegas, NV Las Vegas-Henderson-Paradise, NV /31/2014 Las Vegas, NV Las Vegas-Henderson-Paradise, NV /31/2014 Las Vegas, NV Las Vegas-Henderson-Paradise, NV 1997 / INCOME CATEGORY Total Per Unit Total Per Unit Total Per Unit Total Per Unit Total Per Unit Total Per Unit Rental Income $2,093,100 $8,869 $1,983,468 $8,405 $1,971,238 $8,353 $1,937,770 $9,055 $1,439,460 $7,997 $1,622,976 $8,453 Other Income $106,200 $450 $103,716 $439 $101,198 $429 $179,974 $841 $36,540 $203 $79,872 $416 Vacancy Loss ($219,930) ($932) ($168,864) ($716) ($200,526) ($850) ($96,942) ($453) ($105,480) ($586) ($200,832) ($1,046) 10% 8% 10% -5% -7% -12% SUBTOTAL $1,979,370 $8,387 $1,918,320 $8,128 $1,871,910 $7,932 $2,020,802 $9,443 $1,370,520 $7,614 $1,502,016 $7,823 EXPENSE CATEGORY ADMINISTRATION Professional Fees $11,800 $50 $8,590 $36 $6,394 $27 $0 $0 $0 $0 $0 $0 Other Administrative $35,400 $150 $36,010 $153 $35,928 $152 $0 $0 $0 $0 $0 $0 Advertising/Marketing $47,200 $200 $32,389 $137 $30,767 $130 $0 $0 $0 $0 $0 $0 SUBTOTAL $94,400 $400 $76,989 $326 $73,089 $310 $107,856 $504 $123,120 $684 $102,912 $536 OPERATING, REPAIRS & MAINTENANCE Elevator $11,800 $50 $11,940 $51 $11,940 $51 $0 $0 $0 $0 $0 $0 HVAC $1,180 $5 $522 $2 $282 $1 $0 $0 $0 $0 $0 $0 Electrical & Plumbing $1,180 $5 $1,131 $5 $1,258 $5 $0 $0 $0 $0 $0 $0 Structural & Roof $1,180 $5 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Pest Control $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Repairs & Maintenance $23,600 $100 $15,439 $65 $22,699 $96 $0 $0 $0 $0 $0 $0 Painting & Decorating $3,540 $15 $1,557 $7 $1,639 $7 $0 $0 $0 $0 $0 $0 Trash Removal $23,600 $100 $23,099 $98 $22,761 $96 $0 $0 $0 $0 $0 $0 Security $0 $0 $69,036 $293 $65,503 $278 $0 $0 $0 $0 $0 $0 Pool and Grounds $23,600 $100 $13,923 $59 $13,780 $58 $0 $0 $0 $0 $0 $0 Other Operating Expenses $28,320 $120 $23,582 $100 $17,461 $74 $0 $0 $0 $0 $0 $0 SUBTOTAL $118,000 $500 $160,229 $679 $157,323 $667 $94,588 $442 $90,360 $502 $85,824 $447 UTILITIES Heating & Fuel $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Electricity $74,340 $315 $78,341 $332 $74,239 $315 $0 $0 $0 $0 $0 $0 Gas $8,260 $35 $8,562 $36 $8,991 $38 $0 $0 $0 $0 $0 $0 Water & Sewer $76,700 $325 $75,072 $318 $69,647 $295 $0 $0 $0 $0 $0 $0 Other Utilities $53,100 $225 $51,089 $216 $51,297 $217 $0 $0 $0 $0 $0 $0 SUBTOTAL $212,400 $900 $213,064 $903 $204,174 $865 $183,184 $856 $107,280 $596 $159,360 $830 PAYROLL Repair & Maintenance Payroll $105,000 $445 $76,346 $324 $74,304 $315 $0 $0 $0 $0 $0 $0 Management Payroll $95,000 $403 $94,791 $402 $96,251 $408 $0 $0 $0 $0 $0 $0 Management/Leasing Professional Fees $30,000 $127 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Leasing Expenses/Staff Unit $0 $0 $13,584 $58 $13,531 $57 $0 $0 $0 $0 $0 $0 Benefits/Taxes $52,600 $223 $39,790 $169 $39,762 $168 $0 $0 $0 $0 $0 $0 SUBTOTAL $282,600 $1,197 $224,511 $951 $223,848 $949 $282,480 $1,320 $280,620 $1,559 $280,128 $1,459 TAXES AND INSURANCE Real Estate Taxes $87,791 $372 $94,884 $402 $98,954 $419 $120,482 $563 $72,360 $402 $50,496 $263 Other Taxes/Direct Assessments $14,500 $61 $13,909 $59 $12,976 $55 $0 $0 $0 $0 $0 $0 Insurance $30,680 $130 $30,361 $129 $30,268 $128 $28,676 $134 $38,880 $216 $57,408 $299 SUBTOTAL $132,971 $563 $139,154 $590 $142,198 $603 $149,158 $697 $111,240 $618 $107,904 $562 MANAGEMENT FEE $59,381 $252 $56,160 $238 $56,160 $238 $60,562 $283 $68,580 $381 $45,120 $ % 2.9% 3.0% 3.0% 5.0% 3.0% REPLACEMENT RESERVES $59,000 $250 $59,000 $250 $59,000 $250 $53,500 $250 $45,000 $250 $48,000 $250 Total All Expenses $958,753 $4,063 $929,107 $3,937 $915,792 $3,880 $931,328 $4,352 $826,200 $4,590 $829,248 $4,319 Total Expenses less TUR $585,061 $2,479 $548,250 $2,323 $540,688 $2,291 $574,162 $2,683 $601,560 $3,342 $571,392 $2,976

202 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL General Administrative and Marketing This category includes all professional fees for items such as legal, accounting, marketing, and office. The multifamily comparables indicate an overall administrative and marketing expense ranging from $504 to $684 per unit. The Subject s historical expenses indicate an administrative and marketing expense of $310 and $326 per unit. We have concluded to a total administration and marketing expense of $400 per unit, which is above the Subject s historical expenses, but below the range of the comparables. Operating, Repairs & Maintenance Included in this expense are normal items of repair including roof, HVAC, electrical repairs and maintenance of public areas, and pest control costs, as well as painting, decorating, cleaning contracts, grounds expenses, trash removal and security costs. The comparables indicate an operating and maintenance expense ranging from $442 to $502 per unit, a tight range. The Subject s historical expenses range from $667 to $679 per unit. The Subject s historical operating, repairs and maintenance expenses are above the range of the comparables. It should be noted that the buyer will no longer offer security once the Subject is purchased and therefore, we have not assumed a security expense. We have concluded to a total operating, repairs, and maintenance expense of $500 per unit, which is slightly below the historical due to deducting the security expense. The concluded operating, repairs, and maintenance expense appears reasonable given the tenancy, unit mix, and current condition. Utilities The landlord is responsible for all expenses at the Subject property. Comparable operating results indicate a range of $596 to $856 per unit. The historical data indicates utility expenses ranging between $865 and $903 per unit. Due to the fact that properties often vary in terms of utility responsibilities, comparisons are difficult. Therefore, we have placed the slightly more weight on the historical expenses and have concluded to a utility expense of $900 per unit. Payroll Payroll expenses are directly connected to the administration of the complex, including office, maintenance and management salaries. In addition, employee benefits and employment related taxes are included in the category. The multifamily comparables indicate a range of $1,320 to $1,559 per unit. The historical data indicates a tight range of $949 to $951 per unit. Overall, we typically find that properties the size of the Subject operate with a staff of one full-time manager, one full-time assistant manager, one full-time leasing agent, one full-time maintenance supervisor, and two full-time maintenance technicians. Benefits for the Subject s employees are estimated at $5,000 per full-time employee and payroll taxes equal to 12 percent of the sum of the salaries. Overall, we have concluded to a payroll expense of $1,197 per unit, which is below the comparable range and above the historical figures. ESTIMATED PAYROLL Manager $50,000 Assistant Manager $45,000 Leasing Agent $30,000 Maintenance Supervisor $45,000 Maintenane Technician x2 $60,000 Subtotal $230,000 Payroll taxes at 12% $27,600 Benefits $25,000 Total Payroll $282,600 Total Per Unit $1,197 63

203 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Taxes Please refer to the real estate tax section of this report for further discussion and analysis. Insurance Comparable data illustrates a range from $128 to $216 per unit. Historically, the Subject s insurance expense ranged from $128 to $129 per unit. Overall, we have concluded to insurance costs of $130 per unit, which is similar to the historical data and within the comparable range. Replacement Reserves The reserve for replacement allowance is often considered a hidden expense of ownership not normally seen on an expense statement. Reserves must be set aside for future replacement of items such as the roof, HVAC systems, parking area, appliances and other capital items. It is difficult to ascertain market information for replacement reserves, as it is not a common practice in the marketplace for properties of the Subject s size and investment status. Underwriting requirements for replacement reserve for existing properties typically ranges from $250 to $350 per unit per year. New properties typically charge $200 to $250 for reserves. We have used an expense of $250 per unit based on the unit mix, tenancy, and condition of the Subject property. Management Fees Historically, the Subject reported a management fee between 2.9 percent and 3.0 percent of EGI, or $238 per unit in both 2015 and The multifamily comparables illustrate a range of $235 to $381 per unit, or 3.0 to 5.0 percent of EGI. We have utilized 3.0 percent for our analysis, which is within the comparable range on a per unit basis. Summary Operating expenses were estimated based upon the comparable expenses, with consideration given to the Subject s historical expenses. In the following table, we compared the historic total operating expenses per unit at the Subject with the total expenses reported by comparable properties utilized in our operating expense analysis. TOTAL EXPENSES PER UNIT Subject Expenses Subject 2015 $3,880 Subject 2014 $3,937 Comparable Properties Comp 1 $4,352 Comp 2 $4,590 Comp 3 $4,319 Subject Conclusions As Is $4,063 64

204 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL TOTAL EXPENSES PER UNIT LESS TUR Subject Expenses Subject 2016 $2,291 Subject 2015 $2,323 Comparable Properties Comp 1 $2,683 Comp 2 $3,342 Comp 3 $2,976 Subject Conclusions As Is Unrestricted $2,479 After excluding taxes and utilities, our expense estimates are slightly below the range of the comparable data, but slightly above the historical data. Overall, our estimates appear reasonable and will be utilized in our analysis. 65

205 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL DIRECT CAPITALIZATION We have provided an estimate of the Subject s as is value. Please see the assumptions and limiting conditions regarding hypothetical conditions. To quantify the income potential of the Subject, a direct capitalization of a stabilized cash flow is employed. In this analytical method, we estimate the present values of future cash flow expectations by applying the appropriate overall capitalization rate to the forecast net operating income. Overall Capitalization Rate In order to estimate the appropriate capitalization rate, we relied upon several methods, discussed below. Market Extraction The table below summarizes the recent improved sales of the most comparable properties that were used in our market extraction analysis: IMPROVED SALES COMPARISON No. Property Name Sale Date Sale Price Number of Units Year Built Price / Unit EGIM Cap Rate 1 Sedona at Lone Mountain 03/2017 $34,668, $108, % 2 Newport Village Apartments 02/2017 $31,510, $93, % 3 Tribecca North Luxury Apartment Homes 09/2016 $35,350, $113, % 4 Azure Villas II 06/2016 $21,000, $112, % We have selected comparable sales from the Subject s area. The sales illustrate a range of overall rates from 5.25 to 6.50 percent, with an average of 5.81 percent. All of the sales represent typical market transactions for multifamily market rate properties in the area. We believe the improved sales we have chosen for our analysis represent the typical multifamily market in the Subject s area. Therefore, we have utilized four conventional market rate developments in our sales approach. The primary factors that influence the selection of an overall rate is the Subject s condition, size, location, and market conditions. The Subject is considered generally similar to slightly superior to the sales in terms of condition; however, the Subject is inferior to slightly inferior to all of the sales in terms of location. We have also considered that the Subject offers only studio units, while Sale 2 offers one and two-bedroom units, and Sales 1, 3, and 4 offer one, two, and three-bedroom units. Additionally, the Subject is slightly inferior to Sales 1, 2, and 3 in terms of size, and slightly superior to Sale 4. The sales comparables transferred between June 2016 and March 2017, during relatively similar market condition. According to Ms. Angela Powers-Armstrong, a broker with Berkadia, capitalization rates in the area range from 5.8 to 6.2 percent for Class B multifamily apartments, while new Class A product generally trades for cap rates in the low fives. We have concluded to a capitalization rate of 6.5 percent based on market extraction for the Subject, which appears reasonable given the Subject offers solely studio units. The PwC Real Estate Investor Survey The PwC Real Estate Investor Survey tracks capitalization rates utilized by national investors in commercial and multifamily real estate. The following summarizes the information for the national multifamily housing market: 66

206 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL PwC REAL ESTATE INVESTOR SURVEY National Apartment Market Overall Capitalization Rate - Institutional Grade Investments Range: 3.50% % Average: 5.33% Non-Institutional Grade Investments Range: 3.75% % Average: 7.08% Source: PwC Real Estate Investor Survey, Q The PwC Real Estate Investor Survey defines Institutional Grade real estate as real property investments that are sought out by institutional buyers and have the capacity to meet generally prevalent institutional investment criteria 4. Typical Institutional Grade apartment properties are newly constructed, well amenitized, market-rate properties in urban or suburban locations. Rarely could subsidized properties, either new construction or acquisition/rehabilitation, be considered institutional grade real estate. Therefore, for our purpose, the Non-Institutional Grade capitalization rate is most relevant; this is currently 171 basis points higher than the Institutional Grade rate on average. However, local market conditions have significant weight when viewing capitalization rates. 4 PwC Real Estate Investor Survey 67

207 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL As the graph indicates, the downward trend through early 2007 is clear. The average capitalization rate decreased 225 basis points over a four-year period from 2003 to However, capitalization rates stabilized in 2007 and began a steep increase in late They appear to have peaked in the fourth quarter of 2009 and have generally decreased through the first quarter of Capitalization rates as of the first quarter of 2017 have exhibited a slight decrease over capitalization rates from the first quarter of Overall, we have estimated a capitalization rate of 6.5 percent, which is within the range of the Non- Institutional Grade capitalization rates. Debt Coverage Ratio The debt coverage ratio (DCR) is frequently used as a measure of risk by lenders wishing to measure the margin of safety and by purchasers analyzing leveraged property. It can be applied to test the reasonableness of a project in relation to lender loan specifications. Lenders typically use the debt coverage ratio as a quick test to determine project feasibility. The debt coverage ratio has two basic components: the properties net operating income and its annual debt service (represented by the mortgage constant). The ratio used is: PwC Real Estate Investor Survey - National Apartment Market Overall Capitalization Rate - Institutional Grade Investments Quarter Cap Rate Change (bps) Quarter Cap Rate Change (bps) 1Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: PwC Real Estate Investor Survey, Q Net Operating Income/ Annual Debt Service = Debt Coverage Ratio 68

208 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL One procedure by which the debt coverage ratio can be used to estimate the overall capitalization rate is by multiplying the debt coverage ratio by the mortgage constant and the lender required loan-to-value ratio. The indicated formula is: Where: RO = Overall Capitalization Rate D.C.R = Debt Coverage Ratio RM = Mortgage Constant M = Loan-to-Value Ratio RO = D.C.R x RM x M Band of Investment This method involves deriving the property s equity dividend rate from the improved comparable sales and applying it, at current mortgage rate and terms, to estimate the value of the income stream. The formula is: Where: RO = Overall Capitalization Rate M = Loan-to-Value Ratio RM = Mortgage Constant RE = Equity Dividend RO = M x RM + (1-M) x RE The Mortgage Constant (RM) is based upon the calculated interest rate from the ten year treasury. We have utilized 6.0 percent as our estimate of equity return. The following table summarizes calculations for the two previously discussed methods of capitalization rate derivation. We will utilize a market oriented interest rate of 4.5 percent. Based on our work files, the typical amortization period is 25 to 30 years and the loan to value ratio is 70 to 80 percent with interest rates between 4.50 and 6.00 percent. Therefore, we believe a 4.5 percent interest rate with a 30 year amortization period and a loan to value of 80 percent is reasonable. The following table illustrates the band of investment for the Subject property. The equity dividend rate (RE) also known as the cash on cash return rate, is the rate of return that an equity investor expects on an annual basis. It is a component of the overall return requirement. The equity dividend rate is impacted by the returns on other similar investments as well as the risk profile of the investment market and finally the expectation for future value growth. The equity dividend rate is lower in cases where the market is strong and there is a perception of lower risk related to the return of the investment. Further, the dividend rate is lower in markets that have greater expectation for capital appreciation. In some cases we have seen dividend rates that are zero or even negative, suggesting that buyers are willing to forego an annual return because of a larger expectation of capital appreciation. Of course the converse is also true. Generally we see equity dividend rates ranging from two to 10 percent. In this case, the Subject is located within a secondary apartment market with moderate growth. While capital appreciation is expected, given the Subject consists solely of studio units, the growth may be somewhat muted from broader market expectations. As a result, an equity dividend estimate of 10.0 percent is considered reasonable in this analysis. 69

209 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL CAPITALIZATION RATE DERIVATION Inputs and Assumptions Interest Rate Calculations DCR 1.25 Treasury Bond Basis* Rm Year T Bond Rate (1/2015) 2.14% Interest (per annum)* 4.50% Interest rate spread 236 Amortization (years) 30 Interest Rate (per annum) 4.50% M 0.8 Re 10.00% Debt Coverage Ratio Band of Investment Ro = DCR X Rm X M 6.08% = 1.25 X X 80% Ro = (M X Rm) + ((1-M) X Re) 6.86% 80% X % X 10.00% Conclusion of Overall Rate Selection CAPITALIZATION RATE SELECTION SUMMARY Method Indicated Rate Market Extraction 6.50% The PwC Investor Survey 6.50% Debt Coverage Ratio 6.08% Band of Investment 6.86% The following issues impact the determination of a capitalization rate for the Subject: Current market health Existing competition Subject s construction type, tenancy and physical appeal Local market overall rates The various approaches indicate a range from 6.08 to 6.86 percent. We reconciled to a 6.50 percent capitalization rate based primarily upon the market-extracted rate. A summary of the direct capitalization analysis is provided below. 70

210 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Apartment Rentals Market Unit Mix DIRECT CAPITALIZATION ANALYSIS Operating Revenues As Is Average Rent (Monthly) Total Revenue As Is -Assuming Non-Profit Ownership Average Rent (Monthly) Total Revenue Total Potential Rental Income 236 $739 $2,093,100 $739 $2,093,100 Other Income Miscellaneous $450 $106,200 $450 $106,200 Total Potential Revenues $9,319 $2,199,300 $9,319 $2,199,300 Vacancy Loss ($932) ($219,930) ($932) ($219,930) Vacancy Percentage -10% -10% Effective Gross Income $8,387 $1,979,370 $8,387 $1,979,370 Operating Expenses Operating Expenses As Is As Is -Assuming Non-Profit Ownership Administration $400 $94,400 $400 $94,400 Operating, Repairs &Maintenance $500 $118,000 $500 $118,000 Utilities $900 $212,400 $900 $212,400 Payroll $1,197 $282,600 $1,197 $282,600 Taxes $372 $87,791 $0 $0 Other Taxes/Direct Assessments $0 $0 $0 $0 Insurance $130 $30,680 $130 $30,680 Management Fee $252 $59,381 $252 $59,381 Replacement Reserves $250 $59,000 $250 $59,000 Total Operating Expenses $4,063 $958,753 $3,629 $856,461 Expenses as a ratio of EGI 48.4% 43.3% Valuation As Is As Is -Assuming Non-Profit Ownership Net Operating Income $4,325 $1,020,617 $4,758 $1,122,909 Capitalization Rate 6.50% 6.50% Indicated Value "rounded" $66,525 $15,700,000 $73,305 $17,300,000 71

211 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Conclusion The following table summarizes the findings of the previously conducted direct capitalization analysis. DIRECT CAPITALIZATION ANALYSIS Scenario Cap Rate Net Operating Income Indicated Value (Rounded) As Is 6.5% $1,020,617 $15,700,000 As Is -Assuming Non-Profit Ownership 6.5% $1,122,909 $17,300,000 As a result of our analysis of the Subject s as is scenario, the fee simple market value As Is as of June 15, 2017: FIFTENN MILLION SEVEN HUNDRED THOUSAND DOLLARS ($15,700,000) As a result of our analysis of the Subject s as is scenario, the investment value As Is Assuming Non-Profit Ownership as of June 15, 2017: SEVENTEEN MILLION THREE HUNDRED THOUSAND DOLLARS ($17,300,000) 72

212 X. SALES COMPARISON APPROACH

213 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Sales Comparison Approach The sales comparison approach to value is a process of comparing market data; that is, the price paid for similar properties, prices asked by owners, and offers made by hypothetical purchasers willing to buy or lease. It should be noted, the sales utilized represent the best sales available. Market data is good evidence of value because it represents the actions of users and investors. The sales comparison approach is based on the principle of substitution, which states that a prudent investor would not pay more to buy or rent a property than it will cost them to buy or rent a comparable substitute. The sales comparison approach recognizes that the typical buyer will compare asking prices and work through the most advantageous deal available. In the sales comparison approach, the appraisers are observers of the buyer s actions. The buyer is comparing those properties that constitute the market for a given type and class. All of the sales represent typical market transactions for multifamily market rate properties in the area. We believe the improved sales we have chosen for our analysis represent the typical multifamily market in the Subject s area. Therefore, we have utilized five conventional market rate developments in our sales approach. The following pages supply the analyzed sale data and will conclude with a value estimate considered reasonable. 74

214 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Improved Sales Map 75

215 Improved Sale No 1 Sedona at Lone Mountain Transaction Property ID Date of Sale 03/01/2017 Name Sedona at Lone Mountain Adjusted Sale Price $ Address 770 West Lone Mountain Road Price Per Unit $108,000 City North Las Vegas Sale Status Closed State Nevada Sale Conditions Seller Faof Sedona LLC Financing Buyer MG Sedona at Lone Mountain Apartments Confirmed With Site and Improvements CoStar, Public Records, listing broker (Doug Schuster Newmark Grubb Knight Frank) Land Acres No. of Units 321 Land Sq Ft 750,539 Year Built 1999 Financial Data EGI $3,593,916 NOI $2,149,416 Total Expenses $1,444,500 Expense Ratio 40,19% OAR 6.20% EGIM 9.65 Remarks This property consists of 321 one, two, and three-bedroom units. Unit amenities include air conditioning, washer/dryer, walk-in closet, vaulted ceilings, and fireplaces, as well as stainless steel appliances. Common area amenities include a business center, clubhouse, playground, fitness center, BBQ area, swimming pool, among others. The property was approximately 96.9 percent occupied at the time of sale. The listing broker verified the sale date, sale price, NOI, occupancy, capitalization rate, and expenses.

216 Improved Sale No 2 Newport Village Apartments Transaction Property ID , Date of Sale Name Newport Village Apartments Adjusted Sale Price $31,510,000 Address 1827 West Gowan Road Price Per Unit $93,780 City North Las Vegas Sale Status Closed State Nevada Sale Conditions Seller Newport Partners LLC Financing Buyer Newport Holding 2017, LLC Confirmed With CoStar, Public Records Site and Improvements Land Acres No. of Units 336 Land Sq Ft 451,282 Year Built 2000 Financial Data EGI $3,515,150 NOI $2,048,150 Total Expenses $1,467,000 Expense Ratio 41.73% OAR 6.50% EGIM 8.96 Remarks This property consists of 336 one and two-bedroom units. Unit amenities include air conditioning, balconies, ceiling fan, dishwasher, garbage disposal, and others. Common area amenities include a clubhouse/conference room, courtyard, gated perimeter, BBQ/picnic area, and laundry facilities. The sale date, sale price, NOI, and capitalization rate were verified through CoStar, and Novogradac estimated the expenses to be $4,500 per unit. It should be noted that approximately $900,000 in deferred maintenance was required following the sale.

217 Improved Sale No 3 Tribeca North Luxury Apartment Homes Transaction Property ID Date of Sale Name Tribeca North Luxury Adjusted Sale Apartment Homes Price $35,350,000 Address 3825 Craig Crossing Drive Price Per Unit $113,301 City North Las Vegas Sale Status Closed State Nevada Sale Conditions Seller Craig Allen Development LLC Financing Buyer Craig Crossing Apartments LLC Confirmed With CoStar, Public Records, listing broker (Spencer Ballif - CBRE) Site and Improvements Land Acres No. of Units 312 Land Sq Ft 623,370 Year Built 2009 Financial Data EGI $3,274,015 NOI $1,870,015 Total Expenses $1,404,000 Expense Ratio 42.88% OAR 5.29% EGIM Remarks This property consists of 312 one, two, and three-bedroom units. Unit amenities include air conditioning, bay windows, ceiling fans, and views. Common area amenities include a business center, clubhouse, gated perimeter, WiFi, playground, swimming pool and spa, and on-site management.. The property was 95.0 percent occupied at the time of sale. The listing broker verified the sale date, sale price, occupancy, total expenses, NOI, and capitalization rate.

218 Improved Sale No 4 Azure Villas II Transaction Property ID Date of Sale Name Azure Villas II Adjusted Sale Price $21,000,000 Address 675 East Azure Avenue Price Per Unit $112,903 City North Las Vegas Sale Status Closed State Nevada Sale Conditions Seller Alliance Residential, LLC Financing Buyer MG Properties Group Confirmed With CoStar, Public Records, listing broker (Doug Schuster Newmark Grubb Knight Frank) Site and Improvements Land Acres 8.67 No. of Units 186 Land Sq Ft 377,665 Year Built 2008 Financial Data EGI $1,976,700 NOI $1,102,500 Total Expenses $874,200 Expense Ratio 44.23% OAR 5.25% EGIM Remarks This property consists of 186 one, two, and three-bedroom units. Unit amenities include air conditioning, balcony, ceiling fans, dishwasher, garbage disposal, granite countertops, and others. Common area amenities include a business center, clubhouse, courtyard, fitness center, BBQ area, swimming pool, among others. The property was approximately 97.8 percent occupied at the time of sale. The listing broker verified the sale date, sale price, NOI, occupancy, capitalization rate, and expenses.

219 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Valuation Analysis The sales selected for this analysis are summarized in the following table. IMPROVED SALES COMPARISON No. Property Name Sale Date Sale Price Number of Units Year Built Price / Unit EGIM Cap Rate 1 Sedona at Lone Mountain 03/2017 $34,668, $108, % 2 Newport Village Apartments 02/2017 $31,510, $93, % 3 Tribecca North Luxury Apartment Homes 09/2016 $35,350, $113, % 4 Azure Villas II 06/2016 $21,000, $112, % Average 289 $106, % EGIM Analysis We first estimate the Subject s value using the EGIM analysis. The EGIM compares the ratios of sales price to the annual gross income for the property, less a deduction for vacancy and collection loss. A reconciled multiplier for the Subject is then used to convert the Subject s anticipated effective gross income into an estimate of value. Expense Ratio EGIM ANALYSIS y = x EGIM As summarized below, we have concluded to an EGIM of 8.00 for the Subject. EGIM # Property Name Sale Price EGI Expense Ratio Total Expenses EGIM 1 Sedona at Lone Mountain $34,668,000 $3,593, % $1,444, Newport Village Apartments $31,510,000 $3,515, % $1,467, Tribecca North Luxury Apartment Homes $35,350,000 $3,274, % $1,404, Azure Villas II $21,000,000 $1,976, % $874, As Is Unrestricted $15,800,000 $1,979, % $958,

220 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Sales Price Per Unit Analysis Throughout our conversations with market participants and buyers and sellers of the comparable sales, the respondents indicated that the purchase price for multifamily developments is typically based upon a price per unit. This convention is typical of the multifamily industry and will be used in our analysis. The unadjusted price ranges from approximately $93,780 to $113,301 per unit for the improved sales. The adjustment grid follows at the end of this section. As illustrated, adjustments have been made based on price differences created by the following factors: Property Rights Financing Conditions of Sale Expenditures Immediately After Purchase Market Conditions Location Physical Characteristics Economic Characteristics Use Non-realty Components Property Rights All sales were of fee simple interest; therefore, no adjustments are necessary. Financing The sales were cash transactions; therefore, no adjustment is necessary. Conditions of Sale No unusual conditions existed or are known; therefore, no adjustment is necessary. Expenditure after Sale Sale 2 required approximately $900,000 in deferred maintenance following the sale, this has been accounted for in our adjustments. The remainder of the comparables did not require expenditures after the sale; therefore, no adjustment is necessary. Market Conditions The comparable sales transferred between June 2016 and March 2017, during relatively similar market conditions. Thus, no adjustments for market condition are warranted. Location Location encompasses a number of issues, including location within different market areas with different supply/demand pressures, the character/condition of surrounding development, access, and visibility. It is important to assess which factors truly impact value for different types of real estate. We have addressed this issue (as well as the remaining elements of comparison) on a comparable-by-comparable basis. To evaluate locational differences, we have relied upon differences in median rents, conversations with local brokers, and observations made during our market inspection. 81

221 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL SALES LOCATION COMPARISON No. Property Name Zip Code Median Median Median Differential With Income Rent Home Value Subject Site Subject The Rubix $34,056 $834 $81,500 - Sale 1 Sedona at Lone Mountain $59,668 $1,322 $146,500-59% Sale 2 Newport Village Apartments $52,306 $1,114 $129,800-34% Sale 3 Tribecca North Luxury Apartment Homes $52,306 $1,114 $129,800-34% Sale 4 Azure Villas II $55,064 $1,208 $167,000-45% The Subject is located in northeast Las Vegas. All of the comparables are located within 7.5 miles of the Subject, in North Las Vegas. All of the comparables are located in zip codes with higher median household income, median rents, and median home values, indicating that the Subject is located in an inferior location to all of the comparable sales. As a result, we have adjusted Sale 1 downward by 30 percent, Sales 2 and 3 downward by 20 percent, and Sale 4 downward by 25 percent. Physical Characteristics Physical characteristics include building size, quality of construction, architectural style, building materials, age, condition, functional utility, site size, attractiveness, and amenities. In terms of physical characteristics, the Subject is considered to be slightly superior to Sales 1 and 2, and generally similar to Sales 3 and 4. Sales 1 and 2 were built in 1999 and 2000, respectively and Sales 3 and 4 were built in 2009 and 2008, respectively. The Subject was originally built in 2009 and was converted to multifamily in We have adjusted Sales 1 and 2 upward by five percent for physical characteristics, and Sales 3 and 4 have not been adjusted. Economic Characteristics Economic characteristics include all the attributes of a property that directly affect its income such as operating expenses, quality of management, tenant mix, rent concessions, lease terms, etc. The Subject offers only studio units. Sale 2 offers one and two-bedroom units and Sales 1, 3, and 4 offer one, two, and three-bedroom units. The unit mix at each of the comparables is superior to that of the Subject. As a result, we have adjusted Sale 2 downward by 15 percent, and Sales 1, 3, and 4 downward by 20 percent for superior unit mix. Use All of the properties are proposed for continued multifamily use; thus, no adjustments were warranted. Size In terms of size, the Subject is slightly larger than Sale 4, and slightly smaller than the remainder of the comparables sales. However, we do not believe the size differences are large enough to warrant an adjustment. 82

222 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL IMPROVED SALES DATA ADJUSTMENT GRID Subject Property Name The Rubix Sedona at Lone Mountain Newport Village Apartments Tribecca North Luxury Apartment Homes Azure Villas II Address 5300 E Craig Road 770 W Lone Mountain Road 1827 W Gowan Road 3825 Craig Crossing Drive 675 E Azure Avenue City Las Vegas North Las Vegas North Las Vegas North Las Vegas North Las Vegas Property Data Construction Description Midrise Garden Garden Garden Garden Year Built 2009 / Units Price/Unit $108,000 $93,780 $113,301 $112,903 Sales Data Date Mar-17 Feb-17 Sep-16 Jun-16 Interest Fee Simple Fee Simple Fee Simple Fee Simple Price $34,668,000 $31,510,000 $35,350,000 $21,000,000 Price Per Unit $108,000 $93,780 $113,301 $112,903 Adjustments Financing $34,668,000 $31,510,000 $35,350,000 $21,000,000 Conditions of Sale $34,668,000 $31,510,000 $35,350,000 $21,000,000 Expenditures After Purchase 0 $900, $34,668,000 $32,410,000 $35,350,000 $21,000,000 Market Conditions Adjusted Sale Price $34,668,000 $32,410,000 $35,350,000 $21,000,000 Adjusted Sale Price Per Unit $108,000 $96,458 $113,301 $112,903 Adjustments Location -25% -15% -15% -20% Physical Characteristics 5% 5% 0% 0% Economic Characteristics -20% -15% -20% -20% Use 0% 0% 0% 0% Size 0% 0% 0% 0% Non-realty Components 0% 0% 0% 0% Overall Adjustment -40% -25% -35% -40% Adjusted Price Per Unit $64,800 $72,344 $73,646 $67,742 The market rate comparables indicate a range from an adjusted sale price of $59,400 to $67,981 per unit with a mean of $64,250 per unit. We have placed slightly more weight on the two most recent sales. Thus, we have concluded to a price per unit of $65,000. SALES COMPARISON APPROACH Scenario Number of Units Price Per Unit Indicated Value (Rounded) As Is 236 $65,000 $15,300,000 Conclusion As a result of our analysis of the Subject s unrestricted scenario, the fee simple value As Is, via the Sales Comparison Approach, as of June 15, 2017: FIFTEEN MILLION THREE HUNDRED THOUSAND DOLLARS ($15,300,000) Please refer to the assumptions and limiting conditions regarding the restricted valuation and hypothetical conditions. 83

223 XI. RECONCILIATION

224 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL RECONCILIATION We were asked to provide an estimate of the Subject s as is value. We considered the traditional approaches in the estimation of the Subject s value. The resulting value estimates are presented following: DIRECT CAPITALIZATION ANALYSIS Scenario Cap Rate Net Operating Income Indicated Value (Rounded) As Is 6.5% $1,020,617 $15,700,000 As Is -Assuming Non-Profit Ownership 6.5% $1,122,909 $17,300,000 SALES COMPARISON APPROACH Scenario Number of Units Price Per Unit Indicated Value (Rounded) As Is 236 $65,000 $15,300,000 The value indicated by the income capitalization approach is a reflection of a prudent investor s analysis of an income producing property. In this approach, income is analyzed in terms of quantity, quality, and durability. Due to the fact that the Subject is income producing in nature, this approach is the most applicable method of valuing the Subject property. Furthermore, when valuing the intangible items it is the only method of valuation considered. The sales comparison approach reflects an estimate of value as indicated by the sales market. In this approach, we searched the local market for transfers of similar type properties. These transfers were analyzed for comparative units of value based upon the most appropriate indices (i.e. $/Unit, OAR, etc.). Our search revealed several sales over the past two years. While there was substantial information available on each sale, the sales varied in terms of location, quality of income stream, condition, etc. As a result, the appraisers used both an EGIM and a sales price/unit analysis. These analyses provide a good indication of the Subject s market value. In the final analysis, we considered the influence of the two approaches in relation to one another and in relation to the Subject. In the case of the Subject several components of value can only be valued using either the income or sales comparison approach. As a result of our analysis of the Subject s as is scenario, the fee simple market value As Is as of June 15, 2017: FIFTEEN MILLION SEVEN HUNDRED THOUSAND DOLLARS ($15,700,000) As a result of our analysis of the Subject s as is scenario, the investment value As Is Assuming Non-Profit Ownership as of June 15, 2017: SEVENTEEN MILLION THREE HUNDRED THOUSAND DOLLARS ($17,300,000) Please refer to the assumptions and limiting conditions regarding the valuation conclusions and hypothetical conditions. 85

225 THE RUBIX LAS VEGAS, NEVADA -- APPRAISAL Reasonable Exposure Time: Statement 6, Appraisal Standards to USPAP notes that reasonable exposure time is one of a series of conditions in most market value definitions. Exposure time is always presumed to proceed the effective date of the appraisal. It is defined as the estimated length of time the property interests appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market. Based on our read of the market, historical information provided by the PwC Investor Survey and recent sales of apartment product, an exposure time of nine-to-twelve months appears adequate. 86

226 ADDENDUM A Assumptions and Limiting Conditions, Certification

227 Assumptions and Limiting Conditions 1. In the event that the client provided a legal description, building plans, title policy and/or survey, etc., the appraiser has relied extensively upon such data in the formulation of all analyses. 2. The legal description as supplied by the client is assumed to be correct and the author assumes no responsibility for legal matters, and renders no opinion of property title, which is assumed to be good and merchantable. 3. All encumbrances, including mortgages, liens, leases, and servitudes, were disregarded in this valuation unless specified in the report. It was recognized, however, that the typical purchaser would likely take advantage of the best available financing, and the effects of such financing on property value were considered. 4. All information contained in the report which others furnished was assumed to be true, correct, and reliable. A reasonable effort was made to verify such information, but the author assumes no responsibility for its accuracy. 5. The report was made assuming responsible ownership and capable management of the property. 6. The sketches, photographs, and other exhibits in this report are solely for the purpose of assisting the reader in visualizing the property. The author made no property survey, and assumes no liability in connection with such matters. It was also assumed there is no property encroachment or trespass unless noted in the report. 7. The author of this report assumes no responsibility for hidden or unapparent conditions of the property, subsoil or structures, or the correction of any defects now existing or that may develop in the future. Equipment components were assumed in good working condition unless otherwise stated in this report. 8. It is assumed that there are no hidden or unapparent conditions for the property, subsoil, or structures, which would render it more or less valuable. No responsibility is assumed for such conditions or for engineering, which may be required to discover such factors. 9. The investigation made it reasonable to assume, for report purposes, that no insulation or other product banned by the Consumer Product Safety Commission has been introduced into the Subject premises. Visual inspection by the appraiser did not indicate the presence of any hazardous waste. It is suggested the client obtain a professional environmental hazard survey to further define the condition of the Subject soil if they deem necessary. 10. Any distribution of total property value between land and improvements applies only under the existing or specified program of property utilization. Separate valuations for land and buildings must not be used in conjunction with any other study or appraisal and are invalid if so used.

228 11. A valuation estimate for a property is made as of a certain day. Due to the principles of change and anticipation the value estimate is only valid as of the date of valuation. The real estate market is nonstatic and change and market anticipation is analyzed as of a specific date in time and is only valid as of the specified date. 12. Possession of the report, or a copy thereof, does not carry with it the right of publication, nor may it be reproduced in whole or in part, in any manner, by any person, without the prior written consent of the author particularly as to value conclusions, the identity of the author or the firm with which he or she is connected. Neither all nor any part of the report, or copy thereof shall be disseminated to the general public by the use of advertising, public relations, news, sales, or other media for public communication without the prior written consent and approval of the appraiser. Nor shall the appraiser, firm, or professional organizations of which the appraiser is a member be identified without written consent of the appraiser. 13. Disclosure of the contents of this report is governed by the Bylaws and Regulations of the professional appraisal organization with which the appraiser is affiliated: specifically, the Appraisal Institute. 14. The author of this report is not required to give testimony or attendance in legal or other proceedings relative to this report or to the Subject property unless satisfactory additional arrangements are made prior to the need for such services. 15. The opinions contained in this report are those of the author and no responsibility is accepted by the author for the results of actions taken by others based on information contained herein. 16. Opinions of value contained herein are estimates. There is no guarantee, written or implied, that the Subject property will sell or lease for the indicated amounts. 17. All applicable zoning and use regulations and restrictions are assumed to have been complied with, unless nonconformity has been stated, defined, and considered in the appraisal report. 18. It is assumed that all required licenses, permits, covenants or other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. 19. On all appraisals, subject to satisfactory completion, repairs, or alterations, the appraisal report and value conclusions are contingent upon completion of the improvements in a workmanlike manner and in a reasonable period of time. A final inspection and value estimate upon the completion of said improvements should be required. 20. All general codes, ordinances, regulations or statutes affecting the property have been and will be enforced and the property is not subject to flood plain or utility restrictions or moratoriums, except as reported to the appraiser and contained in this report. 21. The party for whom this report is prepared has reported to the appraiser there are no original existing condition or development plans that would subject this property to the regulations of the Securities and Exchange Commission or similar agencies on the state or local level. 22. Unless stated otherwise, no percolation tests have been performed on this property. In making the appraisal, it has been assumed the property is capable of passing such tests so as to be developable to its highest and best use, as detailed in this report. 23. No in-depth inspection was made of existing plumbing (including well and septic), electrical, or heating

229 systems. The appraiser does not warrant the condition or adequacy of such systems. 24. No in-depth inspection of existing insulation was made. It is specifically assumed no Urea Formaldehyde Foam Insulation (UFFI), or any other product banned or discouraged by the Consumer Product Safety Commission has been introduced into the appraised property. The appraiser reserves the right to review and/or modify this appraisal if said insulation exists on the Subject property. Acceptance of and/or use of this report constitute acceptance of all assumptions and the above conditions. Estimates presented in this report are not valid for syndication purposes.

230 Certification The undersigned hereby certify that, to the best of our knowledge and belief: The statements of fact contained in this report are true and correct; The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, conclusions, and recommendations; We have no present or prospective interest in the property that is the subject of this report, and we have no personal interest with respect to the parties involved; The appraisal division has performed no other services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment; We have no bias with respect to any property that is the subject of this report or to the parties involved with this assignment; Our engagement in this assignment was not contingent upon developing or reporting predetermined results; Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal; Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice; Matt Yunker has made a personal inspection of the property that is the subject of this report and comparable market data incorporated in this report and is competent to perform such analyses. In addition to the inspection, Erin Weber provided significant professional assistance to the appraiser including conducting internet research, compiling and coalescing data, analyzing data trends, evaluating and analyzing comparable data, and drafting text and documents. Brad Weinberg, MAI, CVA, CRE, oversaw all data collection and reporting in this appraisal and reviewed the report. No one other than those listed on this page provided any significant real property appraisal assistance. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. As of the date of this report, Brad Weinberg, MAI, CVA, CRE, has completed the requirements of the continuing education program of the Appraisal Institute. Brad E. Weinberg, MAI, CVA, CRE Partner Certified General Real Estate Appraiser Nevada License #ATMP CG

231 ADDENDUM B Qualifications of Consultants

232 CURRICULUM VITAE BRAD E. WEINBERG, MAI, CVA, CCIM I. Education University of Maryland, Masters of Science in Accounting & Financial Management University of Maryland, Bachelors of Arts in Community Planning II. Licensing and Professional Affiliations MAI Member, Appraisal Institute, No Certified Investment Member (CCIM), Commercial Investment Real Estate Institute Certified Valuation Analyst (CVA), National Association of Certified Valuators and Analysts (NACVA) Member, Urban Land Institute Member, National Council of Housing Market Analysts (NCHMA) State of Connecticut Certified General Real Estate Appraiser, No. RCG Washington, D.C. Certified General Real Estate Appraiser; No. GA10340 State of Florida Certified General Real Estate Appraiser; No. RZ3249 State of Georgia Certified General Real Property Appraiser; No State of Maine Certified General Real Estate Appraiser, No. CG3435 State of Maryland Certified General Real Estate Appraiser; No Commonwealth of Massachusetts Certified General Real Estate Appraiser; No State of Michigan Certified General Real Estate Appraiser, No State of Nebraska Certified General Real Estate Appraiser, No. CG R State of New Jersey Certified General Real Estate Appraiser; No. 42RG State of Ohio Certified General Real Estate Appraiser; No State of Pennsylvania Certified General Real Estate Appraiser; No. GA State of South Carolina Certified General Real Estate Appraiser; No III. Professional Experience Partner, Novogradac & Company LLP President, Capital Realty Advisors, Inc. Vice President, The Community Partners Realty Advisory Services Group, LLC President, Weinberg Group, Real Estate Valuation & Consulting Manager, Ernst & Young LLP, Real Estate Valuation Services Senior Appraiser, Joseph J. Blake and Associates Senior Analyst, Chevy Chase F.S.B. Fee Appraiser, Campanella & Company IV. Professional Training Appraisal Institute Coursework and Seminars Completed for MAI Designation and Continuing Education Requirements

233 Brad E. Weinberg Qualifications Page 2 Commercial Investment Real Estate Institute (CIREI) Coursework and Seminars Completed for CCIM Designation and Continuing Education Requirements V. Speaking Engagements and Authorship Numerous speaking engagements at Affordable Housing Conferences throughout the Country Participated in several industry forums regarding the Military Housing Privatization Initiative Authored New Legislation Emphasizes Importance of Market Studies in Allocation Process, Affordable Housing Finance, March 2001 VI. Real Estate Assignments A representative sample of Due Diligence, Consulting or Valuation Engagements includes: On a national basis, conduct market studies and appraisals for proposed Low-Income Housing Tax Credit properties. Analysis includes preliminary property screenings, market analysis, comparable rent surveys, demand analysis based on the number of income qualified renters in each market, supply analysis and operating expense analysis to determine appropriate cost estimates. On a national basis, conduct market studies and appraisals of proposed new construction and existing properties under the HUD Multifamily Accelerated Processing program. This includes projects under the 221(d)3, 221(d)4, 223(f), and 232 programs. Completed numerous FannieMae and FreddieMac appraisals of affordable and market rate multifamily properties for DUS Lenders. Managed and completed numerous Section 8 Rent Comparability Studies in accordance with HUD s Section 9 Renewal Policy and Chapter 9 for various property owners and local housing authorities. Developed a Flat Rent Model for the Trenton Housing Authority. Along with teaming partner, Quadel Consulting Corporation, completed a public housing rent comparability study to determine whether the flat rent structure for public housing units is reasonable in comparison to similar, market-rate units. THA also requested a flat rent schedule and system for updating its flat rents. According to 24 CFR , public housing authorities (PHAs) are required to establish flat rents, in order to provide residents a choice between paying a flat rent, or an income-based rent. The flat rent is based on the market rent, defined as the rent charged for a comparable unit in the private, unassisted market at which a PHA could lease the public housing unit after preparation for occupancy. Based upon the data collected, the consultant will develop an appropriate flat rent schedule, complete with supporting documentation outlining the methodology for determining and applying the rents. We developed a system that THA can implement to update the flat rent schedule on an annual basis.

234 Brad E. Weinberg Qualifications Page 3 As part of an Air Force Privatization Support Contractor team (PSC) to assist the Air Force in its privatization efforts. Participation has included developing and analyzing housing privatization concepts, preparing the Request for Proposal (RFP), soliciting industry interest and responses to housing privatization RFP, Evaluating RFP responses, and recommending the private sector entity to the Air Force whose proposal brings best value to the Air Force. Mr. Weinberg has participated on numerous initiatives and was the project manager for Shaw AFB and Lackland AFB Phase II. Conducted housing market analyses for the U.S. Army in preparation for the privatization of military housing. This is a teaming effort with Parsons Corporation. These analyses were done for the purpose of determining whether housing deficits or surpluses exist at specific installations. Assignment included local market analysis, consultation with installation housing personnel and local government agencies, rent surveys, housing data collection, and analysis, and the preparation of final reports. Developed a model for the Highland Company and the Department of the Navy to test feasibility of developing bachelor quarters using public-private partnerships. The model was developed to test various levels of government and private sector participation and contribution. The model was used in conjunction with the market analysis of two test sites to determine the versatility of the proposed development model. The analysis included an analysis of development costs associated with both MILCON and private sector standards as well as the potential market appeal of the MILSPECS to potential private sector occupants.

235 STATEMENT OF PROFESSIONAL QUALIFICATIONS LINDSEY SUTTON EDUCATION Texas State University, Bachelor of Business Administration in Finance State of Texas Appraiser Trainee No. TX EXPERIENCE Novogradac & Company LLP, Manager, December Present Novogradac & Company LLP, Real Estate Analyst, September December 2012 Novogradac & Company LLP, Real Estate Researcher February 2010 September 2011 REAL ESTATE ASSIGNMENTS A representative sample of work on various types of projects: Performed market studies for proposed new construction and existing Low Income Housing Tax Credit, USDA Rural Development, Section 8 and market rate multifamily and age-restricted developments. This included property screenings, market and demographic analysis, comparable rent surveys, supply and demand analysis, determination of market rents, expense comparability analysis, and other general market analysis. Property types include proposed multifamily, acquisition with rehabilitation, historic rehabilitation, adaptive reuse, and single-family development. Conduct physical inspections of subject properties and comparables to determine condition and evaluate independent physical condition assessments. Assist on appraisals using the cost approach, income capitalization approach, and sales comparison approach for Low Income Housing Tax Credit, USDA Rural Development, and Section 8 properties. Additional assignments also include partnership valuations and commercial land valuation. Prepared HUD Market-to-Market rent comparability studies for Section 8 multifamily developments. Perform valuations of General and/or Limited Partnership Interest in a real estate transaction, as well as LIHTC Year 15 valuation analysis. Prepare Fair Market Value analyses for solar panel installations in connection with financing and structuring analyses performed for various clients. The reports are used by clients to evaluate with their advisors certain tax consequences applicable to ownership. Additionally, these reports can be used in connection with application for the Federal grant identified as Section 1603 American Recovery & Reinvestment Act of 2009 and the ITC funding process. Analyze historic audited financial statements to determine property expense projections. Perform market studies and assist on appraisals for proposed and existing multifamily properties under the HUD MAP program. These reports meet the requirements outlined in Chapter 7 of the HUD MAP Guide for the 221(d)4, 223(f), and the LIHTC Pilot Program. Consult with lenders and developers and complete valuation assignments under the HUD RAD program.

236 Completed assignments in the following states: California Florida Illinois Mississippi Texas Washington Utah Iowa New Jersey Louisiana Arizona Tennessee Georgia North Carolina Oregon Indiana Oklahoma Missouri Michigan Nebraska Virgin Islands Minnesota New York Wisconsin Maryland Delaware Arkansas West Virginia Tennessee South Carolina Connecticut Ohio

237 STATEMENT OF PROFESSIONAL QUALIFICATIONS Matthew A. Yunker I. Education The Ohio State University Columbus, OH Bachelor of Science in Family Financial Management II. Professional Experience Manager, Novogradac & Company LLP Associate Developer, PIRHL Developers Development Associate, WXZ Development/Zelnik Realty Investment Real Estate Broker, Marcus & Millichap Associate Relationship Manager, National City Bank III. Real Estate Assignments A representative sample of Due Diligence, Consulting, or Valuation Engagements includes: Conducted numerous market and feasibility studies for family and senior affordable housing. Properties are generally Section 42 Low Income Housing Tax Credit Properties. Local housing authorities, developers, syndicators and lenders have used these studies to assist in the financial underwriting and design of LIHTC properties. Analysis typically includes; physical inspection of site and market, unit mix determination, demand projections, rental rate analysis, competitive property surveying and overall market analysis. Market studies completed in: Alaska, District of Columbia, Florida, Georgia, Illinois, Mississippi, Michigan, Nevada, New Jersey, and Virginia. Assisted in numerous appraisals of proposed new construction and existing Low- Income Housing Tax Credit properties. Conducted and assisted in market studies for projects under the HUD guidelines. Assisted in appraisals of proposed new construction properties under the HUD guidelines. Assisted in valuations of subsidized properties according to HUD guidelines. Performed all aspects of data collection and data mining for web-based rent reasonableness systems for use by local housing authorities. Assisted in numerous valuations of partnership interests for a variety of functions including partnership sale, charitable donation, partner disputes, determination of exit strategies, etc.

238 I. Education STATEMENT OF PROFESSIONAL QUALIFICATIONS Erin L. Weber DePaul University, Chicago, Illinois Bachelor of Arts in Environmental Studies Minor and Certificate in GIS II. Professional Experience Analyst, Novogradac & Company LLP Real Estate Market Analyst, Circle K, d.b.a. The Pantry Research Analyst, DDR Corp. Research Assistant, DePaul University III. Real Estate Assignments A representative sample of work on various types of projects: Assist in performing and writing market studies and appraisals of proposed and existing Low-Income Housing Tax credit (LIHTC) properties Conduct preliminary property screenings, market analysis, comparable rent surveys, and demand analysis of competitive LIHTC properties and market rate properties operating in the target market area Analyze and research economic trends such as unemployment, average wages, median income levels, and demand for low income housing in the target market area. Research web-based rent reasonableness systems and contact local housing authorities for utility allowance schedules, payment standards, and housing choice voucher information Experienced in data collection and analysis for commercial space used in retail Experienced in research and analysis of commercial real estate acquisitions and dispositions

239 ADDENDUM C Subject Photos

240 Exterior/Entrance of Subject Exterior of Subject Exterior of Subject Exterior of Subject Subject parking Dog Area

241 Fitness Center Fitness Center Laundry Area Vending Area Typical hallway Community Room

242 Patio Area Typical stairway Typical unit number Elevator Mail Center Office

243 Typical living space Typical bathroom Typical kitchen area Typical living area Typical bathroom Typical kitchen area

244 Former Walmart, southwest of Subject Commercial use, west of Subject Convenience store, southeast of Subject Commercial use, south of Subject

245 ADDENDUM D Engagement Letter

246 May 25, 2017 Lynd Opportunity Partners Mr. Lewis Borsellino 8000 IH 10 West #1200, San Antonio, Texas RE: The Rubix 5300 East Craig Road, Las Vegas, NV NDDS Project # Dear Mr. Borsellino, National Due Diligence Services (NDDS), a division of American Surveying & Mapping, Inc. (ASM) is a full service professional due diligence firm providing an integrated suite of professional services associated with commercial real estate acquisition, finance and servicing. NDDS specializes in property condition assessments, construction services, and environmental assessments associated with commercial real estate acquisition, finance, construction, and disposition. As a national provider of real estate assessment services, NDDS is relied upon by institutional lenders, mortgage bankers and equity investors to provide due diligence services nationwide. NDDS s Professionals average 25 years of hands-on experience conducting in depth evaluations of physical and environmental risk associated with real property. NDDS is strategically positioned to provide the information you need quickly and efficiently. Property / Fees Site Location ESA PCA The Rubix (2 four story Multi-Family buildings (234 units) on 7.8 Acres) 5300 East Craig Road, Las Vegas, NV $2,950 $3,550 Timing and Deliverables We will electronically deliver the draft reports within 15 Business days upon receipt of your official authorization to proceed and subject to prompt access to subject property. The scope of services to be provided is further described in attachments to this proposal. Please familiarize yourself with the proposed services and let me know if they do not meet your needs. Corporate Headquarters 3191 Maguire Blvd., Suite 200, Orlando, FL PH: Fax: