PRILIMINARY OFFIC STATEMENT 11-15-2001 44.

Home Browse Search

levies by taxing jurisdictions,substitute alternative revenue sources for property taxes to pay for government services, expand the circumstances under which property ceases to be taxable, adversely affect market value,limit the taxable value of property or otherwise shift the burden of paying property taxes between various types of property, or modify remedies for collecting taxes, resulting in a reduction in the tax increment assistance. Such changes may include constitutional and statutory limitations on the rate of property taxation, the growth in the taxable valuation of property and the percentage of the market value of property subject to taxation. Income Restrictions In order to qualify for the tax increment assistance,the Borrower is required to lease at least 20% of the units in the Project to tenants whose incomes do not exceed 50%of the median gross income for the Minneapolis-St. Paul metropolitan area, adjusted for family size. These limitations on tenant incomes may in the future limit the revenues which can be generated by the Project, which must be sufficient to pay operating costs of the Project and to pay principal of and interest on the Series 2001 Bonds. In the event that Project revenues are not sufficient to pay operating costs of the Project and to pay principal of and interest on the Bonds, the Borrower would be in default under the Loan Agreement, and such default could result in an acceleration of the Series 2001 Bonds. See "TAX INCREMENT ASSISTANCE." Financial Forecast The forecasted financial statements prepared by the Borrower and examined by Virchow, Krause & Co., LLP, Minneapolis, Minnesota, are based upon assumptions made by the Borrower. No assurance can be given that the results described in the financial forecast will be achieved,or that there has been no change in underlying considerations since the date of the financial forecast. The Borrower does not intend to issue additional forecasts and, accordingly, there are risks inherent in using the financial forecast in the future as it becomes outdated. The financial forecast is only for the years ending December 31, 2001 through 2006 and does not cover the entire period during which the Series 2001 Bonds may be outstanding. No guaranty can be made that the financial forecast will correspond with the results actually achieved in the future because there is no assurance that actual events will correspond with the assumptions made by management of the Borrower. For example, the financial forecasts make certain assumptions as to demand for senior housing facilities and anticipated rent increases during the forecast period. These assumptions have been the subject of a market study. Inevitably, the Borrower's actual future operations and financial condition will differ from those projected, and actual future events and conditions will differ from those assumed by the Borrower. Such differences may be material and adverse. Actual operating results may be affected by many factors, including, but not limited to, increased costs, lower than anticipated revenues (as a result of insufficient occupancy, low rental rates, concessions or otherwise), taxes, changes in demographic trends, changes in the