11-13-01 SUMM OF SIGN ASSUMP/ACCOUNTING

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$ 7,222,554 ORONO SENIOR HOUSING, LLC SUMMARY OF SIGNIFICANT ASSUMPTIONS AND ACCOUNTING POLICIES - continued DECEMBER 31, 2001, 2002, 2003, 2004, 2005 AND 2006 The construction of these units is expected to be funded as follows: Net bond proceeds (see Financing below) $ 6,637,520 Interest income - project fund 55,494 Deferred note payable 200,000 6,893,014 Total development construction costs (see page 7) (6,891,646 ) Working capital $ 1,368 Financing - These forecasts assume the construction is expected to be financed with $7,730,000 Senior Housing Revenue Bonds (Series 2001A), $210,000 Taxable Senior Housing Revenue Bonds (Series 2001B), $250,000 of subordinated bonds (Series 2001C), and $200,000 of deferred notes payable all issued by the City of Orono, Minnesota in November 2001. The Series 2001A Bonds and the Series 2001B Bonds are collectively referred to as the Senior Bonds. The assumptions for the total bond issue is as follows: Gross bond proceeds $ 8,190,000 Less: Capitalized interest fund 564,307 Markeing and lease up fund 70,000 Debt service reserve fund 573,806 _ Debt issuance costs 344,367 1,552,480 Net bond proceeds $ 6,637,520 Land sale - These forecasts assume the Organizaton, with bond proceeds will purchase the land for this development for $837,558. In consideration for the Organization's development of the land for senior housing the Organization will sell the land to the City of Orono for a $837,558 note. This note is a tax imcrement financing (TIF) note payable over 20 years including interest at 7%. ORONO SENIOR HOUSING, LLC SUMMARY OF SIGNIFICANT ASSUMPTIONS AND ACCOUNTING POLICIES - continued DECEMBER 31, 2001, 2002, 2003, 2004, 2005 AND 2006 The financing for the construction is expected to have the following principal reductions during the forecast periods ending December 31: Series 2001A [Series 2001B Series 2001C