04-14-2021 Council Packet - Laserfiche WebLink

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3 SETTING FORTH ALL THE RISKS, CONTAINS CERTAIN OF THE RISKS THAT SHOULD BE CONSIDERED PRIOR TO PURCHASING THE SERIES 2021D BONDS. IN ORDER TO MAKE AN INFORMED INVESTMENT DECISION, PROSPECTIVE INVESTORS SHOULD BE THOROUGHLY FAMILIAR WITH THIS OFFICIAL STATEMENT (INCLUDING THE APPENDICES HERETO) AND REVIEW THE ACTUAL DOCUMENTS SUMMARIZED HEREIN TO MAKE A JUDGMENT AS TO WHETHER THE SERIES 2021D BONDS ARE AN APPROPRIATE INVESTMENT FOR THE INVESTOR. Limited Obligations of Issuer THE SERIES 2021D BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER AND WILL NOT CONSTITUTE A DEBT, LIABILITY, GENERAL OBLIGATION OR PLEDGE OF THE FULL FAITH AND CREDIT OF THE ISSUER, THE HOST CITY, THE STATE OF MINNESOTA (THE “STATE”) OR ANY POLITICAL SUBDIVISION THEREOF. THE ISSUANCE OF THE SERIES 2021D BONDS DOES NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE ISSUER, THE HOST CITY, THE STATE, OR ANY POLITICAL SUBDIVISION THEREOF TO PAY THE SERIES 2021D BONDS FROM TAXES OR TO MAKE ANY APPROPRIATION THEREFORE. NO BONDHOLDER WILL HAVE THE RIGHT TO DEMAND PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2021D BONDS OUT OF ANY FUNDS OR FROM ANY SOURCES OF REVENUE OTHER THAN THOSE EXPRESSLY PLEDGED TO THE PAYMENT OF THE SERIES 2021D BONDS PURSUANT TO THE INDENTURE. Subordinate Nature of the Series 2021D Bonds The Senior Notes are senior in payment to the Series 2021D Bonds, and are secured by senior mortgages on the Project. Under the Indenture, an Event of Default with respect to the Series 2021D Bonds is not an event of default with respect to the Senior Notes. As long as the Senior Notes are outstanding, the Series 2021D Bonds cannot be accelerated upon an Event of Default. [No payments can be made by the Corporation with respect to the Series 2021D Bonds unless it is current on its payments and is in compliance with its covenants relating to the Senior Notes.] The Trustee, the Corporation, the Guarantor and the Senior Lender will enter into a Subordination and Intercreditor Agreement (the “Subordination and Intecreditor Agreement”) dated as of [May] 1, 2021, relating to the rights and priority of security interests of the Senior Lender and the Trustee. See “SECURITY FOR THE SERIES 2021D BONDS” herein. Adequacy of the Corporation’s Revenues The payment of principal of, premium, if any, and interest on the Series 2021D Bonds is intended to be made from Loan Repayments of the Corporation under the Loan Agreement. The Corporation has no significant assets other than the Project and the revenue derived therefrom. The ability of the Corporation to pay debt service on the Series 2021D Bonds is dependent upon the Corporation’s ability to maintain occupancy in the Project and to charge and collect rates sufficient to pay operating expenses and debt service. Future Revenues and Expenses As noted herein, and except to the extent payable from investment income or, under certain circumstances, proceeds of casualty insurance or condemnation awards, principal of and premium, if any, and interest on the Series 2021D Bonds is payable solely from Loan Repayments, and from the security provided by or pursuant to the Indenture, the Loan Agreement, the Subordinate Mortgage and the Guaranty. No representation or assurance is given or can be made that operating revenues, as presently estimated or otherwise, will be realized by the Corporation, the Trustee, or by any other person in amounts sufficient, together with such other money available under the Indentures and pledged to the Series 2021D Bonds, to pay debt service on the Series 2021D Bonds when due and to make other payments necessary to meet the obligations of the Corporation. Future revenues and expenses of the Project are subject to conditions which may change in the future to an extent that cannot be determined at this time. The realization of operating revenues from the Project by the Corporation generally is subject to, among other factors, federal and state policies affecting rental housing and the housing market generally, demand for skilled nursing care, assisted living and memory care facilities, the capability of management of the Project, the nature and condition of the housing stock in the neighborhoods in which the Project is located, future economic conditions and other conditions which are impossible to predict. Such conditions may include an inability of the Corporation’s