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Section 3.4 Issuance Costs. No Sale Proceeds are expected to be used to finance
"Issuance Costs". Therefore, no more than two-percent of the Sale Proceeds of the Bonds will be
used to finance Issuance Costs. "Issuance Costs" of the Bonds include, but are not limited to: (a)
underwriter discount and fees; (b) counsel fees, including bond counsel and underwriter's counsel,
as well as any other specialized counsel fees; (c) financial advisor fees; (d) rating agency fees; (e)
trustee fees and trustee's counsel fees; (f) paying agent and certifying and authenticating agent fees
related to the issuance of the Bonds; (g) accountant fees related to the issuance of the Bonds; (h)
one time administrative charges payable by the Borrower to the Issuer at Closing; (i) publication
costs associated with the financing proceedings; and (j) costs of engineering and feasibility studies
necessary to the issuance of the Bonds.
The Borrower shall provide for any Issuance Costs of the Bonds in excess of the limit stated
above from other available money, which other available money shall not be proceeds derived
from the sale of any obligation the interest on which is excluded from gross income under Section
103 of the Code.
Section 3.5 Prohibited Facilities. No portion of the Sale Proceeds will be used to
provide any airplane, skybox or other private luxury box, health club facility, facility primarily
used for gambling, or store the principal business of which is the sale of alcoholic beverages for
consumption off premises.
Section 3.6 Volume Cap. The Virginia Department of Housing and Community
Development (the "Department"), as the state agency authorized to allocate volume cap for the
Commonwealth, approved the Borrower's request for volume cap allocation in the amount of
$24,000,000 with respect to the Bonds, as evidenced by letters from the Department dated June 1,
2026 awarding a tax exempt Bond allocation award from the Local Housing Authority in the
amount of $24,000,000.
Section 3.7 Public Hearing and Approval. The issuance of the Bonds was approved by
the City Council of the City of Newport News, Virginia (the “City”) on December 9, 2025
following a public hearing held by the Issuer on April 15, 2025, notice of which was published on
April 1, 2025 and April 8, 2025, respectively, in The Virginian Pilot, a newspaper of general
circulation in the City.
Section 3.8 Capital Expenditures. All costs of the Project will be capital expenditures
for federal income tax purposes.
Section 3.9 Delegation. With respect to the determination required pursuant to Section
42(m)(2)(d) of the Code, the Issuer delegates to the Virginia Housing state agency with respect to
the Project the obligation to make the determination that the amount of tax credits awarded to the
Project does not exceed the amount that is necessary for the financial feasibility of the Project and
its viability as a qualified low-income housing project through the tax credit period.
PART IV ARBITRAGE
Section 4.1 Bond Proceeds. On the basis of the facts, estimates and circumstances in
existence on the date hereof, the Issuer and Borrower reasonably expect Sale Proceeds in the
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