PRILIMINARY OFFIC STATEMENT 11-15-2001 44.

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Moneys on deposit in the Operating Reserve Fund are pledged to and shall be used by the Trustee for the payment of(i)principal of and interest on the Senior Bonds when due, in the event amounts on deposit in the Senior Debt Service Account of the Bond Fund are insufficient and(ii)Operating Expenses(including deposits to the Taxes and Insurance Fund and the Repair and Replacement Fund). Amounts in the Operating Reserve Fund shall be valued in the manner and at the times as provided for the Debt Service Reserve Fund in the Indenture. Investment earnings from the Operating Reserve Fund in excess of the Operating Reserve Requirement shall be transferred to the Revenue Fund. Upon final payment, redemption or defeasance of all Series 2001 Bonds and the satisfaction of all obligations under the Loan Agreement, and so long as there is no default ongoing under the Loan Agreement,the Mortgage or the Indenture,then upon the release of this Indenture the Trustee shall remit all amounts on deposit in the Operating Reserve Fund to the Borrower(including the release of any bank letter of credit in its entirety). Mortgage and Subordinate Mortgage Under the Mortgage,the Borrower will grant the City a first leasehold mortgage lien on, a security interest in, and an assignment of leases and rents of the Mortgaged Property. As security for the Senior Bonds the City will assign,without recourse,all its interest in the Mortgage to the Trustee. The Mortgaged Property includes,in general,the leasehold interest in the land, the buildings and the furniture, fixtures and equipment and other tangible property owned by the Borrower and located at the Project. The Borrower may, subject to the Ground Lease, under certain circumstances, obtain a release from the lien of the Mortgage of a portion of the Mortgaged Property. (See, "The Mortgage" in Appendix A to this Official Statement.) The lien of the Mortgage is subject to Permitted Encumbrances, which include liens for taxes and special assessments not yet delinquent, and may include noninterfering utility and access easements or other encumbrances. In the event taxes or special assessments are not paid, liens for said unpaid amounts would be prior to the lien of the Mortgage. The Subordinate Mortgage on the Mortgaged Property, securing the Series 2001C Bonds, is expressly subordinate to the lien of the Mortgage and may not be enforced so long as the Senior Bonds are Outstanding. The Project will be specifically constructed for senior housing purposes. As a consequence, in the event of a foreclosure of the Mortgage, the number of entities which might purchase or lease the Mortgaged Property would be limited, and the sale price or rentals would thus be adversely affected. (See"BONDHOLDERS' RISKS -Enforceability of Remedies"). Defeasance Upon certain terms and conditions specified in the Indenture,the Series 2001 Bonds or portions thereof will be deemed to be paid and the security provided in the Indenture and the Loan Agreement may be discharged prior to maturity or redemption thereof upon the provision for payment of such Series 2001 Bonds in the manner set forth in the Indenture.