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use or application of the proceeds of such Bonds by the Issuer. The Trustee has not evaluated the risks,
benefits, or propriety of any investment in the Bonds and makes no representation, and has reached no
conclusions, regarding the value or condition of any assets or revenues pledged or assigned as security for
the Bonds, or the investment quality of the Bonds, about all of which the Trustee expresses no opinion and
expressly disclaims the expertise to evaluate.
CERTAIN BONDHOLDERS’ RISKS
The following is a summary of certain risks associated with a purchase of the Bonds. There are
other possible risks not discussed below. The Bonds are payable from the payments to be made by the
Borrower under the Loan Agreement and the Promissory Note, and from amounts on deposit in the Special
Funds and the interest earnings thereon. The Borrower’s obligation to make payments pursuant to the Loan
Agreement and the Promissory Note are nonrecourse obligations with respect to which the Borrower and
its partners have no personal liability (except as otherwise provided in the Promissory Note) and as to
which the Borrower and its partners have not pledged any of their respective assets. No person should
purchase any Bonds without carefully reviewing the following information, which summarizes some, but
not all factors that should be carefully considered before such purchase.
General
Payment of the Bond Debt Service Charges, and the Borrower’s obligations with respect to the
Bond Debt Service Charges, will be secured by and payable from Bond proceeds held in the Project Fund
and moneys deposited into the Collateral Fund and the Bond Fund, including the Interest Account and the
Remarketing Proceeds Account held in the Bond Fund, and interest earnings thereon. Although the
Borrower will execute the Promissory Note to evidence its obligation to repay the Loan, it is not expected
that any revenues from the Project or other amounts, except moneys in the Special Funds, and the interest
earnings thereon, will be available to satisfy that obligation. The Indenture requires the Trustee to verify,
before any disbursement of funds from the Project Fund, that the sum of the funds on deposit in the Project
Fund and the Collateral Fund after such disbursement will be at least equal to the then outstanding principal
amount of the Bonds. Funds on deposit in the Project Fund, the Collateral Fund, the Interest Account of the
Bond Fund, and the interest earnings thereon, have been calculated to be sufficient to pay the debt service
on the Bonds.
Limited Security for Bonds
The Bonds are not secured by the FHA Insured Mortgage Loan, any GNMA Security, the Project
or any mortgage on the Project. Investors should look exclusively to amounts on deposit in the Special
Funds under the Indenture and investment earnings on each as the source of payment of debt service on the
Bonds.
Early Redemption of the Bonds
Any person who purchases a Bond should consider the fact that the Bonds are subject to redemption
prior to the Initial Mandatory Tender Date. See “THE BONDS – Optional Redemption” herein.
Issuer Limited Liability
The Bonds will not be insured or guaranteed by any governmental entity or by the Issuer or any
member or program participant of the foregoing. The Holders of the Bonds will have no recourse to the
Issuer in the event of an Event of Default on the Bonds. The Trust Estate (as such term is defined in the
Indenture) for the Bonds will be the only source of payment on the Bonds.
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