PRILIMINARY OFFIC STATEMENT 11-15-2001 44.

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0 J 4/9 PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 1.5, 2001 NEW ISSUE NONRATED DTC BOOK-ENTRY ONLY In the opinion of Faegre&Benson LLP,Minneapolis,Minnesota,Bond Counsel,according to existing federal and Minnesota laws,regulations,rulings and judicial decisions,as of their date of issuance,except as described under the heading "TAX MATTERS"herein,the Series 2001 Tax-Exempt Bonds bear interest which is not includable in gross income for purposes of federal income taxation and is not includable,to the same extent,in taxable net income of individuals,estates or trusts for Minnesota income tax purposes,but is subject to the Minnesota franchise tax imposed on corporations,including financial institutions. Interest on the Series 2001 Tax-Exempt Bonds is not an item of tax preference for purposes of the federal or Minnesota alternative minimum taxes applicable to individuals,but such interest is includable in adjusted current earnings for the purpose of determining the alternative minimum taxable income of corporations for purposes of the federal alternative minimum tax. The Series 2001 Tax-Exempt Bonds will be designated as'qualified tax exempt obligations"within the meaning of Section 265(b)(3)of the Internal Revenue Code. Interest on the Series 2001B Bonds is not exempt from federal or Minnesota income taxes. See"TAX MATTERS"herein. City of Orono,Minnesota $7,825,000*Senior Housing Revenue Bonds,Series 2001A $210,000*Senior Housing Revenue Bonds,Taxable Series 2001B $250,000*Senior Housing Revenue Bonds,Subordinate Series 2001C (Orono Woods Apartment Project) Dated:November 1,2001 Due: November 1,as shown below The Series 2001 Bonds offered hereby are special,limited revenue obligations of the City of Orono,Minnesota(the "City"),payable solely from amounts described herein,and do not constitute an indebtedness,a pecuniary liability,a moral or general obligation or a loan of the credit of the City or a charge,lien or encumbrance,legal or equitable,against the City's property,general credit or taxing powers. The Series 2001 Bonds are not secured by or payable from any taxes,revenues or assets of the City except for the City's interest in the Loan Agreement,amounts held pursuant to the Indenture,and amounts realized from a foreclosure of the Mortgages,all as described herein. Undefined terms used with initial capital letters on this cover are defined in the text hereof or Appendix A to this Official Statement. Pursuant to the Loan Agreement,all proceeds of the Series 2001 Bonds will be loaned by the City to Orono Senior Housing, LLC,a Minnesota limited liability company(the"Borrower"),the sole member of which is Wedum Foundation,a Minnesota nonprofit corporation and 501(c)(3)organization(the"Sponsor"),to be used with other funds of the Borrower to finance a portion of the costs of the development,acquisition,construction and equipping of a 62-unit senior housing facility located in Orono,Minnesota,designed to provide housing to the elderly(the"Project"),to fund a debt service reserve fund for the Senior Bonds,to fund the interest due during construction and lease-up of the Project and to pay certain costs of issuance. The Series 2001 Bonds will be payable solely from the money and investments held for the payment thereof by U.S.Bank Trust National Association,in Saint Paul,Minnesota,as Trustee,or its successors,under the Indenture,including Loan Repayments required to be made under the Loan Agreement by the Borrower and amounts held in the Debt Service Reserve Fund(but only with respect to the Senior Bonds). The obligations of the Borrower under the Loan Agreement are nonrecourse and are secured only by the Mortgaged Property or such other security as may from time to time be given for security of the obligations under the Loan Agreement or the Indenture(the"Collateral"). The Senior Bonds will be secured by a first leasehold mortgage lien on,security interest in,and assignment of leases and rents of,the Mortgaged Property and certain other security described herein. The Subordinate Bonds will be secured by a second leasehold mortgage lien on, security interest in,and assignment of leases and rents of,the Mortgaged Property. An investment in the Series 2001 Bonds is subject to certain risks. (See"BONDHOLDERS'RISKS"herein.) The Series 2001 Bonds are issuable as fully registered bonds of single maturities in denominations of$5,000 each or any multiple thereof. Ownership of the Series 2001 Bonds will be registered initially in the name of Cede&Co.,as nominee of The Depository Trust Company,New York,New York("DTC"),as securities depository for the Series 2001 Bonds.Unless and until the book- entry system with respect to the Series 2001 Bonds is terminated by DTC or the City,beneficial ownershiiinterests in the Series 2001 Bonds may be acquired in book-entry form only,in the principal amount of$5,000 or any multiple thereof of a single maturity,and will not be evidenced by individual bond certificates. (See"THE SERIES 2001 BONDS-Book-Entry Only System"herein.)Interest on the Series 2001 Bonds is payable on each May 1 and November 1,commencing May 1,2002,to the registered owners of the Series 2001 Bonds appearing of record in the Bond Register on the 15th day of the immediately preceding month. The Trustee will act as bond registrar,transfer agent and paying agent for the Series 2001 Bonds. The Series 2001 Bonds are subject to mandatory tender,mandatory and optional redemption and prepayment as described herein under"THE SERIES 2001 BONDS-Redemption Prior to Maturity"in this Official Statement. Maturity Schedule* $525,000 Serial Series 2001A Bonds Maturity Principal Interest Price Maturity Principal Interest Price (November 1) Amount Rate (November 1) Amount Rate 2006 2007 $ 70,000 2009 2010 $115,000 2008 105,000 125,000 110,000