PRILIMINARY OFFIC STATEMENT 11-15-2001 44.

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or maintenance, (vi) general or local economic conditions, (vii) requirements with respect to the maintenance of the tax-exempt status of the Sponsor, or (viii) other factors. The economic viability of the Project may be adversely affected by changes in, or compliance with, applicable laws,regulations and tax rates. There can be no assurance that the cost of operating the Project will not exceed gross revenue therefrom. Some senior-oriented rental housing facilities have experienced delay or reduced lease-up following completion, lower than expected revenues, or higher than expected costs, and in both the national and local markets some of such facilities have experienced financing defaults. For information with respect to prospective marketing and leasing activities to be undertaken in connection with the Project, and potential tenants, see Appendix B under the heading "The Project." Lack of Operating Experience; Property Management The Borrower was created in 2001 and has no experience in the ownership and operation of senior housing facilities such as the Project. (See"The Borrower" in Appendix B to this Official Statement.) The Borrower will enter into a Management Agreement (the "Management Agreement") with Great Lakes Management Company, a Minnesota corporation (the " Manager"). Under the terms of the Management Agreement, the Manager will provide management services regarding all phases of the operation of the Project. The term of the Management Agreement is limited to five (5) years, with a two (2) year renewable term, subject to earlier termination as set forth in the Management Agreement. The executive offices of the Manager are located at 5000 Glenwood Avenue, Suite 150, Golden Valley, Minnesota. (See"The Project Management"in Appendix B to this Official Statement.)Upon expiration or earlier termination of the Management Agreement, if the Borrower is unable to enter into a new management agreement with the Manager on mutually acceptable terms or to attract a comparable replacement manager in a timely manner, the revenues of the Borrower from the Project may be adversely affected. Construction Risks Construction of any project is subject to the risks of cost overruns, noncompletion and delays due to a variety of factors, including, among other things, site difficulties, necessary design changes or final detailing,labor strife,delays in and shortages of materials, weather conditions, fire and casualty. Any delay in the completion of the Project could materially adversely affect the timely receipt of revenues required to pay the Series 2001 Bonds. The Borrower has entered into a contract for construction of the Project with Frana and Sons, Inc., Hopkins, Minnesota,which contract includes a guaranteed maximum price of$5,208,000 for the construction of the Project Facilities. In addition,Dunbar Development Corporation,Minneapolis,Minnesota,has been retained to act as the project coordinator of the Project. The Borrower has also entered into an agreement with Miller, Hanson, Westerbeck, Berger, Inc.,Minneapolis, Minnesota for the design of the Project. However,