OFFICIAL STATEMENT

NEW ISSUE-Book-Entry Only RATING: Standard & Poor’s “AAA” (See “RATING” herein.)

In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming continuing compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes, except for interest on any Bond for any period during which such Bond is held by a “substantial user” of the facilities financed by the Bonds or a “related person” within the meaning of Section 147(a) of the Code. However, interest on the Bonds is a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel is also of the opinion that interest on the Bonds is exempt from State of California income taxation, excepting inheritance and gift taxes. For a more complete description, see “TAX MATTERS" herein.

$7,000,000

City of Los Angeles Multifamily Housing Revenue Bonds

(GNMA Mortgage-Backed Securities Program—Broadway Plaza Project) Series 2008A

Dated: Date of Delivery Due: As shown on the inside front cover

The $7,000,000 of City of Los Angeles Multifamily Housing Revenue Bonds (GNMA Mortgage-Backed Securities Program-Broadway Plaza Project) Series 2008A (the “Series 2008A Bonds” and, together with any Additional Bonds (as defined herein), the “Bonds”), are being issued by the City of Los Angeles (the “Issuer”) pursuant to an Indenture of Trust dated as of April 1, 2008 by and between the Issuer and U.S. Bank National Association, as trustee (the “Trustee”) (the “Indenture”). The Bonds are being issued only as fully registered bonds in denominations of integral multiples of $5,000 (and, in the case of one Bond, an integral amount of $5,000 plus an integral multiple of $1,000 in excess thereof). Interest on the Bonds is payable on each March 20 and September 20 commencing on September 20, 2008, at the rates set forth on the inside front cover, and at maturity. The principal of and redemption premium, if any, and interest on the Bonds will be paid by the Trustee, to The Depository Trust Company (“DTC”), which will act as securities depository for the Bonds. DTC will be responsible for remitting principal and interest on the Bonds to its Participants, which will be responsible for remitting such principal and interest to the Beneficial Owners of such Bonds, as described under the caption “BOOK ENTRY SYSTEM” herein. Individual purchases will be made in book-entry form only in the principal amount of $5,000 and integral multiples thereof ((and, in the case of one Bond, an integral amount of $5,000 plus an integral multiple of $1,000 in excess thereof)). Purchasers will not receive certificates representing their interest in the Bonds.

The Bonds are being issued by the Issuer to provide additional financing for the acquisition, rehabilitation and development of an 82-unit multifamily rental housing development located in Los Angeles, California (the “Project”). The Project is to be partially occupied by individuals and households of low income within the meaning of and for the period required by Section 142(d) of the Internal Revenue Code of 1986, as amended. The Federal Housing Administration (“FHA”) has issued an Amendment to Commitment for Insurance Advances commitment (the “Commitment”) that will allow Capmark Finance Inc. (the “Mortgage Lender”), upon compliance with the terms and conditions thereof, to make an additional loan to the Borrower evidenced by an increase to the existing nonrecourse mortgage note (the “Mortgage Note”) secured by a first lien mortgage (the “Mortgage”) on the Project and to issue and deliver to the Trustee, on or prior to the dates set forth herein, fully modified mortgage backed securities in respect of such loan (the “GNMA Securities”) guaranteed as to timely payment of principal and interest by the Government National Mortgage Association (“GNMA”), with respect to the Mortgage Note. Certain proceeds of the Bonds will be used to acquire GNMA Securities guaranteed as to timely payment of principal and interest by GNMA from the Mortgage Lender to provide financing to the Borrower, for the financing of the Project. See “THE PROJECT AND THE PRIVATE PARTICIPANTS” and “APPENDIX A—SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS.”

Prior to acquisition of the GNMA Securities, the Bonds will be secured by amounts invested by the Trustee in Permitted Investments. See “SECURITY FOR THE BONDS.” Upon delivery of the GNMA Securities by the Mortgage Lender, it is anticipated that the Bonds will be secured primarily by certain funds held under the Indenture and by the GNMA Securities issued or to be issued by the Mortgage Lender in connection with a mortgage loan (the “Mortgage Loan”) made pursuant to a Financing Agreement dated as of April 1, 2008 (the “Financing Agreement”), among the Issuer, the Borrower, the Trustee and the Mortgage Lender, and held by the Trustee. The Issuer has previously issued its $10,000,000 City of Los Angeles Multifamily Housing Revenue Refunding Bonds (GNMA Mortgage-Backed Securities Program-Broadway Plaza Project) Series 2003D (the “Series 2003D Bonds”), the proceeds of which were loaned to the Borrower to finance the rehabilitation and development of the Project. The Series 2003D Bonds are secured under a separate indenture than the Series 2008A Bonds.

The Bonds maturing on March 20, 2045 are subject to acceleration of maturity and optional and mandatory redemption prior to maturity, in whole or in part, at the prices and under the circumstances described herein including but not limited to failure to deliver the PLC (as defined herein) by the Final Delivery Date (as defined herein) (as such date may be extended). Persons who purchase such Bonds at a price in excess of their principal amount risk the loss of any premium paid in the event such Bonds are redeemed prior to maturity. See “THE BONDS - Redemption of Bonds” and “APPENDIX A—SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS—The Indenture.”

The Bonds are not subject to redemption, and the rate of interest on the Bonds is not subject to adjustment, by reason of the interest on the Bonds being included in gross income for purposes of federal income taxation.

THE BONDS ARE NOT AND NEVER SHALL BECOME GENERAL OBLIGATIONS OF THE ISSUER BUT ARE SPECIAL, LIMITED OBLIGATIONS PAYABLE BY THE ISSUER SOLELY AND ONLY FROM THE REVENUES AND THE OTHER ASSETS PLEDGED UNDER THE INDENTURE FOR SUCH PURPOSE, WHICH REVENUES, TOGETHER WITH ANY SUCH OTHER ASSETS PROVIDED THEREIN, ARE SPECIFICALLY AND IRREVOCABLY GRANTED, BARGAINED, SOLD, CONVEYED, TRANSFERRED, ALIENATED, ASSIGNED AND PLEDGED TO SUCH PURPOSES IN THE MANNER AND TO THE EXTENT PROVIDED THEREIN. THE BONDS AND THE INTEREST THEREON DO NOT AND NEVER SHALL CONSTITUTE A DEBT OR AN INDEBTEDNESS OR A GENERAL OBLIGATION OF THE ISSUER, THE STATE OF CALIFORNIA, OR ANY COUNTY, CITY OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF CALIFORNIA, OR A LOAN OF THE FAITH OR CREDIT OR THE TAXING POWER OF ANY OF THEM, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISIONS, NOR SHALL THE BONDS BE CONSTRUED TO CREATE ANY MORAL OBLIGATION ON THE PART OF THE ISSUER, THE STATE OF CALIFORNIA, OR ANY COUNTY, CITY OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF CALIFORNIA WITH RESPECT TO THE PAYMENT OF THE BONDS. THE BONDS SHALL NOT BE PAYABLE FROM THE GENERAL REVENUES OF THE ISSUER, AND NEITHER THE ISSUER NOR THE STATE OF CALIFORNIA NOR ANY POLITICAL CORPORATION, SUBDIVISION OR AGENCY THEREOF WILL BE LIABLE THEREON, NOR IN ANY EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE SPECIFICALLY PLEDGED THEREFOR.

A DETAILED MATURITY SCHEDULE IS SET FORTH

ON THE NEXT PAGE

This cover page and the inside front cover contain certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision.

The Bonds are offered when, as and if issued and received by the Purchaser, and subject to the approving opinion of Kutak Rock LLP, Omaha, Nebraska (“Bond Counsel”). Certain legal matters will be passed upon for the Purchaser by Eichner & Norris PLLC, Washington, D.C., for the Mortgage Lender by its counsel, Law Office of William F. Michaud, Corte Madera, California and for the Borrower by Bocarsly Emden Cowan Esmail Parker & Arndt, Los Angeles, California. It is expected that the Bonds will be available for delivery through the facilities of The Depository Trust Company on or about April 10, 2008.

Dated: April 8, 2008

MATURITY SCHEDULE

Series 2008A Bonds

Maturity Date

Principal Amount

Interest Rate

CUSIP

Price

September 20, 2009

March 20, 2045 $5,500,000 $1,500,000

4.00% 6.00%

544582 VW6 544582 VX4

100% 100%

CITY OF LOS ANGELES

Antonio R. Villaraigosa, Mayor

COUNCIL OF THE CITY OF LOS ANGELES

Ed Reyes Jan Perry

Wendy Greuel Herb J. Wesson, Jr.

Dennis Zine Bill Rosendahl

Tom LaBonge Greig Smith

Jack Weiss Eric Garcetti

Tony Cardenas José Huizar

Richard Alarcón Janice Hahn

Bernard Parks

CITY OFFICIALS

Rockard J. Delgadillo, City Attorney Laura Chick, City Controller

Karen L. Sisson, Chief Administrative Officer Joya C. DeFoor, City Treasurer Karen E. Kalfayan, City Clerk

LOS ANGELES HOUSING DEPARTMENT

Mercedes Marquez, General Manager Marlene Garza, Assistant General Manager

OFFICE OF THE CITY ATTORNEY

Craig Takenaka, Assistant City Attorney Gayle Takahashi, Deputy City Attorney

No dealer, broker, salesman or other person has been authorized by the Issuer or the Purchaser to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the Issuer and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Issuer or, except with respect to the information under “THE ISSUER” and “ABSENCE OF LITIGATION” (as such information thereunder pertains to the Issuer). The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer or any other parties described herein since the date as of which such information is presented.

TABLE OF CONTENTS

INTRODUCTION ........................................................................................................................................ 1 THE ISSUER................................................................................................................................................ 3 SECURITY FOR THE BONDS................................................................................................................... 5 THE GNMA MORTGAGE-BACKED SECURITIES PROGRAM............................................................ 5 THE INVESTMENT AGREEMENT........................................................................................................... 9 THE BONDS ................................................................................................................................................ 9 BOOK ENTRY SYSTEM .......................................................................................................................... 15 THE MORTGAGE NOTE AND MORTGAGE ........................................................................................ 17 THE PROJECT AND THE PRIVATE PARTICIPANTS.......................................................................... 18 SOURCES AND USES OF FUNDS .......................................................................................................... 22 CERTAIN RISKS TO THE BONDHOLDERS ......................................................................................... 22 TAX MATTERS......................................................................................................................................... 25 UNDERWRITING ..................................................................................................................................... 26 CONFLICTS OF INTEREST..................................................................................................................... 26 RATING ..................................................................................................................................................... 27 ABSENCE OF LITIGATION .................................................................................................................... 27 CERTAIN LEGAL MATTERS.................................................................................................................. 27 CONTINUING DISCLOSURE.................................................................................................................. 27 MISCELLANEOUS ................................................................................................................................... 29 APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS APPENDIX B – FORM OF LEGAL OPINION OF BOND COUNSEL

OFFICIAL STATEMENT

$7,000,000 City of Los Angeles

Multifamily Housing Revenue Bonds (GNMA Mortgage-Backed Securities Program – Broadway Plaza Project)

Series 2008A

INTRODUCTION

The purpose of this Official Statement, including the cover page and the attached appendices, is to set forth certain information in connection with the sale by the City of Los Angeles (the “Issuer”) of its $7,000,000 Multifamily Housing Revenue Bonds (GNMA Mortgage-Backed Securities Program - Broadway Plaza Project) Series 2008A (the “Series 2008A Bonds” and, together with any Additional Bonds (as defined herein), the “Bonds”).

The Bonds are being issued under an Indenture of Trust dated as of April 1, 2008 (the “Indenture”), between the Issuer and U.S. Bank National Association, as trustee (the “Trustee”), to provide additional financing to 901 South Broadway Limited Partnership, a California limited partnership (the “Borrower”) to acquire and rehabilitate a multifamily housing project located at 901 South Broadway, Los Angeles, California (the “Project”). The Project is to be partially occupied by individuals and households of low income to the extent, within the meaning of and for the period required by Section 142(d) of the Internal Revenue Code of 1986 (the “Code”), all for the public purpose of providing residential housing for low income households and individuals.

The Issuer has previously issued its $10,000,000 City of Los Angeles Multifamily Housing Revenue Refunding Bonds (GNMA Mortgage-Backed Securities Program-Broadway Plaza Project) Series 2003D (the “Series 2003D Bonds”), the proceeds of which were loaned to the Borrower to finance the rehabilitation and development of the Project. The Series 2003D Bonds are secured by a separate indenture than the Series 2008A Bonds.

The Federal Housing Administration (“FHA”) has issued an Amendment to Commitment for Insurance of Advances commitment to Capmark Finance Inc. (the “Mortgage Lender”) with respect to the Project (the “Commitment”), pursuant to which the Mortgage Lender, upon compliance with the terms and conditions thereof, will increase an existing loan to the Borrower, evidenced by an increase of an existing nonrecourse mortgage note in the amount of $1,500,000 (the “Mortgage Note”) secured by a first lien mortgage (the “Mortgage”) on the Project and will issue and deliver to the Trustee fully modified mortgage backed securities in respect of such loan (the “GNMA Securities”) guaranteed as to timely payment of principal and interest by the Government National Mortgage Association (“GNMA”), with respect to the Mortgage Note. The principal and interest on the $5,500,000 Bonds maturing on September 20, 2009 is intended to be payable primarily from cash and investments on deposit under the Indenture.

The Bonds will be dated the Date of Delivery and will bear interest at the rates set forth on the inside front cover of this Official Statement, payable at maturity and on each March 20 and September 20 commencing on September 20, 2008, to maturity or earlier redemption, calculated on the basis of a 360-day year of twelve 30-day months. If the scheduled payment date is not a Business Day, payment will be made on the next Business Day.

The initial purchaser of the Bonds has agreed in the Bond Purchase Agreement among the Issuer, the Borrower and the Purchaser to fund the purchase price of the Bond from time to time to provide funds

for deposit in the Mortgage Loan Fund and Bond Proceeds Account of the Collateral Fund for the payment of requisitions therefrom.

The principal of and premium, if any, and interest on the Bonds are payable from the payments on the GNMA Securities, from the cash and investments held in the Collateral Fund, and from any other security pledged under the Indenture. The Bonds are to be secured primarily by certain funds held by the Trustee under the Indenture in the Collateral Fund and by GNMA Securities issued or to be issued by the Mortgage Lender in connection with a mortgage loan (the “Mortgage Loan”), pursuant to the Financing Agreement dated as of April 1, 2008 (the “Financing Agreement”) among the Issuer, the Borrower, the Trustee and the Mortgage Lender, and to be held by the Trustee. Prior to the acquisition of the GNMA Securities by the Trustee, the Bonds will be secured by amounts invested in Permitted Investments. The Issuer has previously issued the Series 2003D Bonds, the proceeds of which were loaned to the Borrower to finance the rehabilitation and development of the Project. The Series 2003D Bonds will be secured by a separate indenture than the Series 2008A Bonds. See “THE GNMA MORTGAGED-BACKED SECURITIES PROGRAM” and “SECURITY FOR THE BONDS.”

The Bonds maturing on March 20, 2045 are subject to optional redemption prior to maturity as a whole or in part at any time on or after September 20, 2013 upon payment of the redemption prices set forth under “THE BONDS – Redemption of Bonds.” The Bonds maturing on March 20, 2045 are also subject to special mandatory redemption on August 15, 2009 in the event the PLC is not delivered to the Trustee on or prior to July 31, 2009 (the “Final Delivery Date”) (as such date may be extended in accordance with the Indenture), at a redemption price of par. See “THE BONDS – Redemption of Bonds” herein. Any person who purchases a Bond at a price above par should consider the risk that such premium may be lost in the event that the Bond is redeemed prior to maturity. See “THE BONDS – Redemption of Bonds” and “APPENDIX A — SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS — The Indenture.”

The Borrower's obligations under the Financing Agreement are evidenced in part by the Mortgage Note and are secured by the Mortgage. See “THE MORTGAGE NOTE AND MORTGAGE.”

THE BONDS ARE NOT AND NEVER SHALL BECOME GENERAL OBLIGATIONS OF THE ISSUER BUT ARE SPECIAL, LIMITED OBLIGATIONS PAYABLE BY THE ISSUER SOLELY AND ONLY FROM THE REVENUES AND THE OTHER ASSETS PLEDGED UNDER THE INDENTURE FOR SUCH PURPOSE, WHICH REVENUES, TOGETHER WITH ANY SUCH OTHER ASSETS PROVIDED THEREIN, ARE SPECIFICALLY AND IRREVOCABLY GRANTED, BARGAINED, SOLD, CONVEYED, TRANSFERRED, ALIENATED, ASSIGNED AND PLEDGED TO SUCH PURPOSES IN THE MANNER AND TO THE EXTENT PROVIDED THEREIN. THE BONDS AND THE INTEREST THEREON DO NOT AND NEVER SHALL CONSTITUTE A DEBT OR AN INDEBTEDNESS OR A GENERAL OBLIGATION OF THE ISSUER, THE STATE OF CALIFORNIA, OR ANY COUNTY, CITY OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF CALIFORNIA, OR A LOAN OF THE FAITH OR CREDIT OR THE TAXING POWER OF ANY OF THEM, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISIONS, NOR SHALL THE BONDS BE CONSTRUED TO CREATE ANY MORAL OBLIGATION ON THE PART OF THE ISSUER, THE STATE OF CALIFORNIA, OR ANY COUNTY, CITY OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF CALIFORNIA WITH RESPECT TO THE PAYMENT OF THE BONDS. THE BONDS SHALL NOT BE PAYABLE FROM THE GENERAL REVENUES OF THE ISSUER, AND NEITHER THE ISSUER NOR THE STATE OF CALIFORNIA NOR ANY POLITICAL CORPORATION, SUBDIVISION OR AGENCY THEREOF WILL BE LIABLE THEREON,

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NOR IN ANY EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE SPECIFICALLY PLEDGED THEREFOR.

Included in this Official Statement is information concerning the Issuer, the Mortgage Lender, the Borrower, the Project and the sources of payment for the Bonds, together with summaries of the terms of the Bonds and certain provisions of the Indenture, the Financing Agreement, the Regulatory Agreement and certain documents related thereto. All references herein to agreements or documents are qualified in their entirety by references to the definitive forms thereof, copies of which are available for inspection at the corporate trust office of the Trustee.

THE ISSUER

General Description

The Issuer is a municipal corporation and charter city originally incorporated in 1850. Under the Act, the Issuer is empowered to issue revenue bonds for the purpose, among others, of financing and refinancing multifamily residential rental developments.

The Issuer is governed by the Mayor and the City Council (the “Council”). The Mayor is elected at large for a four-year term. As executive officer of the Issuer, the Mayor supervises the administrative process of the Issuer and works with the Council in matters relating to legislation, budget and finance. The Mayor recommends and submits the annual budget to the Council and passes upon subsequent appropriations and transfers, approves or vetoes ordinances, and appoints certain city officials and commissioners. As prescribed by the Issuer's Charter and City ordinances, the Mayor operates an executive department, of which he is the ex-officio head. The current Mayor, Antonio R. Villaraigosa, was elected to his first term in the June 2005 election.

The Council, the governing body of the Issuer, is a full time council and enacts ordinances subject to the approval or veto of the Mayor. The Council may override the veto of the Mayor by a two-thirds vote. The Council orders elections, levies taxes, authorizes public improvements, approves contracts, adopts zoning, and other land use controls and adopts traffic regulations. The Council adopts or modifies the budget proposed by the Mayor and provides the necessary funds, facilities, equipment and supplies for the budgetary departments and offices of the Issuer. The Council creates positions, fixes salaries and authorizes the number of employees in budgetary departments. The Council consists of 15 members elected by district for four-year terms.

The other two elective offices of the Issuer are the Controller and the City Attorney, both elected for four-year terms. The Controller is the chief accounting office for the Issuer. The current Controller, Laura Newman Chick, was elected to her second term in the March 2005 election. The City Attorney is attorney and legal advisor to the Mayor, the Council and all officers, boards and departments of the Issuer, and prosecutes misdemeanors. The current City Attorney, Rockard J. Delgadillo, was reelected to a second four year term in the March 2005 election.

The Chief Administrative Officer, appointed by the Mayor and confirmed by the Council, is the chief financial advisor to the Mayor and Council and reports directly to both. Karen L. Sisson is serving as the Acting City Administrative Officer.

The City Treasurer, appointed by the Mayor and confirmed by the Council, receives and is the custodian of funds of the Issuer and affiliated entities. Joya C. DeFoor is serving as the City Treasurer.

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The Issuer has 36 departments, bureaus, commissions and offices for which operating funds are annually budgeted by the Council. In addition, five departments (the Departments of Water and Power, Harbor, Airports and the two pension systems), the Community Redevelopment Agency and the Housing Authority are under the control of boards appointed by the Mayor and confirmed by the Council.

Los Angeles Housing Department

The Los Angeles Housing Department (the “Housing Department”) includes the Housing Development Division, the Regulatory Compliance and Code Division, and the Administrative Services Unit. The Housing Department is under the management and control of a General Manager appointed by the Mayor and approved by the Council.

The Housing Development Division designs, implements and administers a variety of programs to provide quality housing for very low-, low- and moderate-income residents within the Issuer’s jurisdiction. The Housing Development Division is funded mainly through the Housing and Community Development Act of 1992, as amended. The Housing Development Division concentrates its efforts on the rehabilitation, production and preservation of affordable housing units.

The goal of the Housing Development Division is to provide newly constructed and rehabilitated affordable housing units for rent or sale to very low-, low- or moderate-income households. This is accomplished through the coordination of public and private sector resources, including the use of the Affordable Housing Trust Fund, HUD-subsidized programs, land write-down assistance, tax-exempt bond financing and other available resources.

Affordable Housing Commission

Concurrently with the creation of the Housing Department, the Issuer created an Affordable Housing Commission (the “Commission”) consisting of seven members appointed by the Mayor. The Commission advises the Mayor, the Council and the General Manager of the Housing Department on housing matters. The Commission may conduct public meetings and hearings to obtain information and input on housing issues and, in turn, make recommendations on housing policies and goals to meet the Issuer’s affordable housing needs.

Prior Bond Issues of the Issuer

The Issuer has previously issued and may in the future issue bonds to finance multifamily housing projects unrelated to the Project. Such bonds may have been, currently are or may be in the future, in default. Such bonds are unrelated to the Bonds or the Project and revenues pledged to secure such bonds do not secure the Bonds and the revenues pledged to secure the Bonds do not secure the payment of any other bonds of the Issuer.

THE BONDS ARE NOT AN OBLIGATION, EITHER GENERAL OR SPECIAL, AND DO NOT CONSTITUTE A PLEDGE OF THE GENERAL CREDIT OR TAXING POWER OF THE ISSUER OR THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF BUT ARE PAYABLE SOLELY FROM THE REVENUES AND PROPERTY PLEDGED THEREFOR IN THE INDENTURE AND NEITHER THE ISSUER, THE STATE OF CALIFORNIA NOR ANY SUCH POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE THEREON. THE BONDS ARE NOT A DEBT OF THE UNITED STATES OF AMERICA OR OF ANY AGENCY OF THE UNITED STATES OF AMERICA AND ARE NOT GUARANTEED BY THE FULL FAITH AND CREDIT OF THE UNITED STATES OF AMERICA. THE BONDS ARE A SPECIAL LIMITED OBLIGATION OF THE

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ISSUER, PAYABLE SOLELY OUT OF THE TRUST ESTATE PLEDGED THEREFOR PURSUANT TO THE INDENTURE, WHICH IS THE SOLE ASSET OF THE ISSUER PLEDGED THEREFOR.

SECURITY FOR THE BONDS

The Bonds are special, limited obligations of the Issuer, and are secured by a pledge of and lien on the Trust Estate, including all Revenues (subject to their disbursement and application in accordance with the Indenture). Revenues are defined in the Indenture as (i) all income derived from the investment of money credited to the funds and accounts created under the Indenture except the Cost of Issuance Fund, General Fund and Rebate Fund; and (ii) on and after the respective dates of delivery thereof, all payments required to be made to the Trustee under the GNMA Securities. See “THE GNMA MORTGAGE-BACKED SECURITIES PROGRAM.”

THE BONDS ARE NOT AND NEVER SHALL BECOME GENERAL OBLIGATIONS OF THE ISSUER BUT ARE SPECIAL, LIMITED OBLIGATIONS PAYABLE BY THE ISSUER SOLELY AND ONLY FROM THE REVENUES AND THE OTHER ASSETS PLEDGED UNDER THE INDENTURE FOR SUCH PURPOSE, WHICH REVENUES, TOGETHER WITH ANY SUCH OTHER ASSETS PROVIDED THEREIN, ARE SPECIFICALLY AND IRREVOCABLY GRANTED, BARGAINED, SOLD, CONVEYED, TRANSFERRED, ALIENATED, ASSIGNED AND PLEDGED TO SUCH PURPOSES IN THE MANNER AND TO THE EXTENT PROVIDED THEREIN. THE BONDS AND THE INTEREST THEREON DO NOT AND NEVER SHALL CONSTITUTE A DEBT OR AN INDEBTEDNESS OR A GENERAL OBLIGATION OF THE ISSUER, THE STATE OF CALIFORNIA, OR ANY COUNTY, CITY OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF CALIFORNIA, OR A LOAN OF THE FAITH OR CREDIT OR THE TAXING POWER OF ANY OF THEM, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISIONS, NOR SHALL THE BONDS BE CONSTRUED TO CREATE ANY MORAL OBLIGATION ON THE PART OF THE ISSUER, THE STATE OF CALIFORNIA, OR ANY COUNTY, CITY OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF CALIFORNIA WITH RESPECT TO THE PAYMENT OF THE BONDS. THE BONDS SHALL NOT BE PAYABLE FROM THE GENERAL REVENUES OF THE ISSUER, AND NEITHER THE ISSUER NOR THE STATE OF CALIFORNIA NOR ANY POLITICAL CORPORATION, SUBDIVISION OR AGENCY THEREOF WILL BE LIABLE THEREON, NOR IN ANY EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE SPECIFICALLY PLEDGED THEREFOR.

THE GNMA MORTGAGE-BACKED SECURITIES PROGRAM

The summary and explanation of the GNMA Mortgage-Backed Securities Program and the other documents referred to herein do not purport to be complete, and reference is made to the GNMA I Mortgage-Backed Securities Guide (GNMA Handbook 5500.3 REV-6, as amended) and to said documents for full and complete statements of their provisions.

The Government National Mortgage Association (“GNMA”) is a non-stock corporate instrumentality of the United States within the Department of Housing and Urban Development (“HUD”) with its principal office in Washington, D.C.

The GNMA Securities will be a “fully modified pass-through” mortgage-backed security issued and serviced by the Mortgage Lender. The face amount of the GNMA Securities will be in the same amount as the outstanding principal balance of the Mortgage Note. The Mortgage Lender will be required to pass through to the Trustee, as the holder of the GNMA Securities, by the 15th day of each

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month the monthly scheduled installments of principal and interest on the Mortgage Note (less the GNMA guarantee fee and the Mortgage Lender’s servicing fee), whether or not the Mortgage Lender receives such payment from the Borrower, plus any unscheduled prepayments of principal of the Mortgage Note received by the Mortgage Lender. GNMA guarantees the timely payment of the principal of and interest on the GNMA Securities.

Two types of GNMA Securities are intended to be issued by the Mortgage Lender in connection with the financing of the Project: (i) Construction Loan Certificates (“CLCs”), which are to be issued with respect to each construction loan advance under the Mortgage Loan and (ii) the Project Loan Certificate (“PLC”), which is to be issued with respect to the permanent Mortgage Loan. CLCs are expected to be dated the first day of the month following the month in which a construction advance is made under the Mortgage Loan and to provide that accrued interest for thirty (30) days is payable by the Mortgage Lender to the Trustee as holder of the CLCs commencing forty-five (45) days after the issue date, and continuing on the fifteenth (15th) day of each successive month thereafter until maturity of the CLCs (as such may be extended with the approval of GNMA) or exchange of the CLCs for the PLC, whichever is earlier.

GNMA Guaranty

GNMA is authorized by Section 306(g) of Title III of the National Housing Act to guarantee the timely payment of the principal of, and interest on, securities which are based on and backed by mortgage pools consisting of a single mortgage insured by the Federal Housing Administration (“FHA”) pursuant to Section 221(d)(4) of the National Housing Act. Section 306(g) of the National Housing Act further provides that “[t]he full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any guaranty under this subsection.” An opinion, dated December 12, 1969, of the then Assistant Attorney General of the United States, states that such guaranties under Section 306(g) of mortgage-backed securities of the type being delivered to the Trustee on behalf of the Issuer are authorized to be made by GNMA and “would constitute general obligations of the United States backed by its full faith and credit.”

Pursuant to such authority, GNMA, upon delivery of the GNMA Securities to the Mortgage Lender in accordance with the GNMA Guaranty Agreement (as hereinafter defined), will have guaranteed the timely payment of the principal of and interest on the GNMA Securities.

GNMA Borrowing Authority

In order to meet its obligations under such guaranty, GNMA, in its corporate capacity under Section 306(d) of Title III of the National Housing Act, may issue its general obligations to the United States Treasury Department (the “Treasury”) in an amount outstanding at any one time sufficient to enable GNMA, with no limitations as to amount, to perform its obligations under its guaranty of the timely payment of the principal of and interest on the GNMA Securities. The Treasury is authorized to purchase any obligations so issued by GNMA and has indicated in a letter dated February 13, 1970, from the then Secretary of the Treasury to the then Secretary of HUD that the Treasury will make loans to GNMA, if needed, to implement the aforementioned guaranty.

GNMA warrants to the holder of the GNMA Securities in the GNMA Guaranty Agreement, that, in the event it is called upon at any time to make good its guaranty of the payment of principal of and interest on the GNMA Securities, it will, if necessary, in accordance with Section 306(d), apply to the Treasury for a loan or loans in amounts sufficient to make payments of principal and interest on the GNMA Securities.

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Servicing of the Mortgage Loan

The Mortgage Lender is responsible for servicing and otherwise administering the Mortgage Loan in accordance with generally accepted practices of the mortgage banking industry and the GNMA Servicer’s Guide.

The monthly remuneration of the Mortgage Lender, for its servicing and administrative functions, and the guaranty fee charged by GNMA, are based on the unpaid principal amount of the GNMA Securities outstanding. The total of the servicing and guaranty fees with respect to the GNMA Securities is 0.25% per annum, payable monthly, calculated on the principal balance of the GNMA Securities outstanding on the last day of the month preceding such date of calculation. Of the 0.25% total fee, part is paid to GNMA as a guaranty fee, and the remainder is retained by the Mortgage Lender as a servicing fee. The GNMA Securities carry an interest rate that is 0.25% per annum less than the interest rate on the Mortgage Note because the servicing and guaranty fee is deducted from payments on the Mortgage Note.

It is expected that interest and principal payments on the Mortgage Note will be the source of money for payments on the GNMA Securities. If such payments are less than what is due, the Mortgage Lender may advance its own funds to ensure timely payment of scheduled installments of principal and interest due on the GNMA Securities. GNMA guarantees such timely payment in the event of the failure of the Mortgage Lender to pass through such scheduled principal and interest payments when due.

The Mortgage Lender is required to advise GNMA in advance of any impending default on scheduled payments on the GNMA Securities so that GNMA as guarantor will be able to continue such payments as scheduled on the 15th day of each month. If, however, such payments are not received as scheduled, the Trustee, on behalf of the Issuer, has recourse directly to GNMA.

The guaranty agreement entered into by GNMA and the Mortgage Lender in connection with the issuance of the GNMA Securities (the “GNMA Guaranty Agreement”) will provide that, in the event of a default by the Mortgage Lender, including (i) a request to GNMA to make a payment of principal or interest on a GNMA Securities when the Borrower is not in default under the Mortgage Note, (ii) insolvency of the Mortgage Lender, or (iii) default by the Mortgage Lender under any other guaranty agreement with GNMA, GNMA will have the right, by letter to the Mortgage Lender, to effect and complete the extinguishment of the Mortgage Lender’s interest in the Mortgage Note, and the Mortgage Note will thereupon become the absolute property of GNMA, subject only to the unsatisfied rights of the holder of the GNMA Securities. In such event, the GNMA Guaranty Agreement will provide that on and after the time GNMA directs such a letter of extinguishment to the Mortgage Lender, GNMA will be the successor in all respects to the Mortgage Lender in its capacity under the GNMA Guaranty Agreement and the transaction and arrangements set forth or arranged for therein, and will be subject to all responsibilities, duties and liabilities (except the Mortgage Lender’s indemnification of GNMA), theretofore placed on the Mortgage Lender by the terms and provisions of the GNMA Guaranty Agreement, provided that at any time, GNMA may enter into an agreement with any other eligible issuer of GNMA securities under which the latter undertakes and agrees to assume any part or all such responsibilities, duties or liabilities theretofore placed on the Mortgage Lender, and provided that, no such agreement will detract from or diminish the responsibilities, duties or liabilities of GNMA in its capacity as guarantor of the GNMA Securities or otherwise adversely affect the rights of the holders thereof.

Payment of Principal and Interest on the GNMA Securities

As a condition to the issuance of each CLC, the Mortgage Lender will be obligated to deliver certain documents to GNMA prior to the anticipated delivery date of such GNMA Securities, including evidence of the advance of the Mortgage Loan and its endorsement for FHA Insurance. During this

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period between the date of an advance under the Mortgage Loan and the issuance of a GNMA guaranty of the related CLC, it is possible that the Borrower could default under the Mortgage or the Mortgage Note or the Mortgage Lender could default under the GNMA Guaranty Agreement. GNMA has stated, among other things, that, in the event of either or both types of default, it nevertheless will (except in the event of fraud or misrepresentation by the Mortgage Lender) be obligated to approve the issuance of the CLC corresponding to the advance under the Mortgage Note made prior to the default (GNMA has not made such a statement with respect to issuance of a PLC).

In the event the Mortgage Lender is in default under the GNMA Guaranty Agreement subsequent to an advance under the Mortgage Note but prior to approval by GNMA of the issuance of a CLC corresponding to such advance, GNMA is not required to assume the Mortgage Lender's liability and responsibility under the Mortgage and the building loan agreement to complete the financing of the Project and the issuance of the remaining GNMA Securities. If it were to decide to complete the financing, at its option, GNMA could either assume the role of the Mortgage Lender and issue the GNMA Securities to the Trustee, or could arrange for issuance of the GNMA Securities by another authorized issuer of GNMA Securities. In the event GNMA decides not to complete or arrange for the completion of the financing, no further proceeds of the Bonds would be advanced to acquire additional GNMA Securities with respect to the Project. GNMA would remain obligated to make payments under GNMA Securities previously issued.

Payment of interest on the GNMA Securities is required to be made in monthly installments on or before the 15th day of each month commencing the month next following the date of issuance of such GNMA Securities. The CLCs shall provide for payment of interest only until maturity at a rate equal to the interest rate on the Mortgage Note less the guaranty and servicing fees computed in accordance with the GNMA Mortgage-Backed Securities Guide. Accrued interest for 30 days shall be payable to the holders of the securities commencing on the 15th day of the month next following the issue date and shall be due continuously on the 15th day of each successive month. The CLCs will mature on the earlier of their stated maturity date or upon issuance of the PLC (i.e., after the final endorsement of the Mortgage Note and after the Mortgage Lender has complied with all of the requirements of the said guide for issuance of the PLC). The CLC Maturity Date was established by allowing at least 200% of the HUD anticipated construction time. Upon approval by GNMA, in instances of mortgage default or other unusual circumstances preventing the finally endorsed mortgage from becoming eligible for mortgage-backed security pooling, retirement shall be by payment of cash. Payment of principal on the PLC is expected to commence 15 days after the commencement of amortization of principal of the Mortgage Note.

Each of the monthly installments shall be subject to adjustment by reason of any prepayments or other early or unscheduled recoveries of principal on the Mortgage Note. In any event, the Mortgage Lender is required to pay to the Trustee, as holder of the GNMA Securities, monthly installments of not less than the interest due on the GNMA Securities at the rate specified in the GNMA Securities, together with any scheduled installments of principal whether or not collected from the Borrower (unless the Borrower has credited a prior prepayment against a scheduled installment of principal) and any prepayments or early recovery of principal. Final payment of the PLC shall be made upon surrender of the outstanding PLC.

Liability of Mortgage Lender

The GNMA Securities will not constitute a liability of nor evidence any recourse against the Mortgage Lender. The GNMA Securities are based on and backed by the Mortgage on the real property securing the Mortgage Note. Recourse may be had by the Trustee only to GNMA in the event of any

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failure of timely payment as provided for in the GNMA Guaranty Agreement with respect to the GNMA Securities.

THE INVESTMENT AGREEMENT

Amounts on deposit in the Revenue Fund and in the Collateral Fund will be invested by the Trustee in an investment agreement (the “Investment Agreement”) with San Sabia Capital Corporation, a Delaware corporation (the “Investment Agreement Provider”).

Under the Investment Agreement, the Investment Agreement Provider will pay interest at the rate of 1.88% per annum on money credited to the Mortgage Loan Fund, the Equity Fund and the Interest Reserve account of the Revenue Fund to the maturity of the Bonds, and to the Collateral Fund to the maturity of the Bonds maturing on September 20, 2009.

The Investment Agreement represents the unsecured obligation of the Investment Agreement Provider to provide repayment to the Trustee of money invested in the Investment Agreement pursuant to the Indenture. The Issuer and the Purchaser make no representation as to the ability of the Investment Agreement Provider to make payments thereunder in amounts necessary to make scheduled payments of debt service on the Bonds.

The rating shown on the cover page of this Official Statement is dependent in part on the fact that certain funds will be invested in the Investment Agreement. A downgrading of the credit rating of the Investment Agreement Provider may have an adverse effect on the rating for the Bonds.

THE BONDS

General

The Bonds will be issued as fully-registered bonds in denominations of integral multiples of $5,000 (with the exception of one Bond which will be issued in the amount of $5,000 plus an integral multiple of $1,000 in excess thereof). The Bonds will be dated the Date of Delivery, and will bear interest at the rates and mature on the dates and in the amounts set forth on the inside front cover of this Official Statement.

Each Bond will bear interest from the later of April 1, 2008, or the most recent date to which interest has been paid or made available for payment pursuant to the Indenture.

For as long as The Depository Trust Company (“DTC”) or its nominee is the Registered Owner of the Bonds, payments of principal and interest on the Bonds will be made on the date such payments are due and payable at the place and in the manner agreed upon by the Trustee and DTC. If the Bonds are in certificated form, the principal of and premium, if any, on the Bonds will be payable at the Principal Office of the Trustee in Los Angeles, California and, except as provided in the Indenture for defaulted interest, interest on the Bonds will be payable (a) by check of the Trustee mailed on the Interest Payment Date to Registered Owners on the Record Date, (b) at the request of any Registered Owner of $1,000,000 or more aggregate principal amount of Bonds and for a fee, by wire transfer to an account within the United States of America designated by such Registered Owner to the Trustee in writing at least 15 days prior to the Interest Payment Date, or (c) by Automatic Clearinghouse Transfers, at no cost to the Bondowner, in next day funds to the account within the United States designated by the Bondowner in writing at least 15 days prior to the Interest Payment Date.

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The Bonds may be transferred or exchanged by Bondowners at the Principal Office of the Trustee. Whenever any Bond or Bonds are to be surrendered for transfer or exchange, the Trustee is required to authenticate and deliver a new fully registered Bond or Bonds duly executed by the Issuer, of Authorized Denomination or Denominations in the appropriate principal amount to the transferee or Bondowner in exchange therefor. The Trustee will require the payment by the Bondowner requesting such exchange or transfer of any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. The Trustee is not required to transfer or exchange any Bonds called for redemption or during the period between a Record Date and the next succeeding Interest Payment Date.

If any Bond is mutilated, lost, destroyed or stolen, the mutilated Bond or evidence of such loss, destruction or theft may be submitted to the Trustee, and if such Bond or evidence satisfactory to the Trustee and, in case of a lost, stolen or destroyed Bond, indemnity satisfactory to the Trustee is given, the Issuer will execute, and the Trustee will thereupon authenticate and deliver, a new Bond of like tenor and a number not contemporaneously outstanding in lieu of and in substitution for the Bond so mutilated, lost, destroyed or stolen (or if any such Bond has matured, instead of issuing a substitute Bond, the Trustee may pay the same). The Trustee may require payment of a reasonable fee for each new Bond so delivered and payment of the expenses which may be incurred by the Trustee.

The Bonds initially will be registered in the name of Cede & Co., as nominee of DTC, and held by DTC on behalf of the beneficial owners of the Bonds. DTC will, by book-entry, record beneficial ownership and transfers of the Bonds in its custody and will forward all notices and payments received in respect of any Bonds held by it to the beneficial owners of the Bonds as shown on its books of account. DTC acts as agent solely for its Participants and not for the beneficial owners of the Bonds, the Issuer or the Purchaser. See “BOOK ENTRY SYSTEM.”

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Additional Bonds

Additional Bonds may be issued pursuant to the Indenture and, if so issued, shall be secured pari passu with all other Bonds issued under the Indenture. Additional Bonds shall have such terms, be in such amounts and be dated such dates as specified by the Issuer. No Additional Bonds may be issued under the Indenture unless there is delivered to the Issuer and the Trustee (i) written confirmation from each Rating Agency then rating the Bonds that the issuance of such Additional Bonds will not adversely affect the rating on the then-Outstanding Bonds and (ii) an opinion of Bond Counsel to the effect that the issuance of such Additional Bonds will not, in and of itself, adversely affect the exclusion from gross income of interest on the Bonds for purposes of federal income taxation.

Drawdown Bond Provisions

The initial purchaser of the Bonds has agreed in the Bond Purchase Agreement among the Issuer, the Borrower and the Purchaser to fund the purchase price of the Bond from time to time to provide funds for deposit in the Mortgage Loan Fund and Bond Proceeds Account of the Collateral Fund for the payment of requisitions therefrom. Amounts funded in such manner shall be noted on the principal log in the form attached to each Bond and acknowledged thereon by the Trustee, provided the Trustee may maintain such principal log through its bond recordkeeping system. Such amounts shall begin to accrue interest only upon deposit by the initial purchaser of the Bonds and notation on the Bond principal log by the Trustee. Notwithstanding anything herein to the contrary, the aggregate purchase price of the Bonds may not exceed $7,000,000 and no additional amounts may be funded after April 1, 2011.

Redemption of Bonds

Optional Redemption. In the event the Borrower exercises any option to prepay the Mortgage Note and amounts are paid under the GNMA Security representing such prepayments or from the proceeds of refunding bonds, the Bonds maturing on March 20, 2045 are subject to redemption prior to maturity as a whole or in part at any time on or after September 20, 2013, on the earliest practicable date after such prepayment for which timely notice of redemption can be given under the Indenture, at the following redemption prices (expressed as percentages of the principal amount of such Bonds as of the redemption date of such Bonds to be redeemed) plus accrued interest to the redemption date:

Redemption Dates Redemption Prices

September 20, 2013 through September 19, 2014 102% September 20, 2014 through September 19, 2015 101% September 20, 2015 and thereafter 100%

Payment of any premium will be made only with Available Money.

Special Mandatory Redemption. The Bonds maturing on March 20, 2045 are subject to redemption from amounts in the Special Mandatory Redemption Account at a redemption price of 100% of the principal amount to be redeemed plus accrued interest to the redemption date:

(a) [reserved];

(b) in whole or in part, (i) on the 15th day following the Final Delivery Date (as such date may be extended in accordance with the Indenture) if the PLC is not delivered to the Trustee by the Final Delivery Date, from moneys transferred from the Mortgage Loan Fund to the Special Mandatory

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Redemption Account pursuant to the Indenture and (ii) from maturing principal of the CLCs on the CLC Maturity Date;

(c) in part on the earliest practicable date after delivery of the PLC to the Trustee to the extent that the PLC is delivered in a principal amount less than $1,500,000 (or such lower amount caused by scheduled payments made on the Mortgage Loan), from moneys transferred from the Mortgage Loan Fund to the Special Mandatory Redemption Account pursuant to the Indenture;

(d) in whole or in part in an amount equal to the corresponding payments on a GNMA Security, on the 15th day following the receipt of such payments, if the Trustee receives payments on a GNMA Security exceeding regularly scheduled payments of principal and interest thereon, including payments representing (A) casualty insurance proceeds or condemnation awards applied to the prepayment of Mortgage Loan following a partial or total destruction or condemnation of the Project (or transfer of title in lien of condemnation); (B) mortgage insurance proceeds or other amounts received with respect to the Mortgage Loan or the GNMA Security upon the occurrence of an event of default under the Mortgage Loan; (C) a prepayment of the Mortgage Loan or any GNMA Security required by the applicable rules, regulations, policies and procedures of HUD or GNMA including in the event a PLC is not delivered by the CLC Maturity Date, as such date may be extended in accordance with the Indenture; (D) notwithstanding any prepayment prohibition imposed and/or penalty required by the Mortgage Note with respect to prepayment made prior to September 1, 2015 prepayment on the Mortgage Loan made in part or in full without prepayment penalty if HUD determines that such prepayment avoids a mortgage insurance claim and is therefore in the best interest of the federal government; or (E) prepayments on the Mortgage Loan or GNMA Security made without notice while the Borrower is under the supervision of a trustee in bankruptcy or similar official; and

(e) following delivery of the PLC, in part on the earliest practicable date (but only in Authorized Denominations) from amounts in the Revenue Fund in excess of $100,000 pursuant to the Indenture.

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Mandatory Sinking Fund Redemption. The Bonds maturing March 20, 2045 are subject to redemption, and shall be redeemed, in part at a redemption price equal to 100% of the principal amount to be redeemed plus interest accrued to the sinking fund redemption date in the amounts and on the sinking fund redemption dates set forth below:

Redemption Date Principal Amount Redemption Date Principal Amount September 20, 2009 March 20, 2010 September 20, 2010 March 20, 2011 September 20, 2011 March 20, 2012 September 20, 2012 March 20, 2013 September 20, 2013 March 20, 2014 September 20, 2014 March 20, 2015 September 20, 2015 March 20, 2016 September 20, 2016 March 20, 2017 September 20, 2017 March 20, 2018 September 20, 2018 March 20, 2019 September 20, 2019 March 20, 2020 September 20, 2020 March 20, 2021 September 20, 2021 March 20, 2022 September 20, 2022 March 20, 2023 September 20, 2023 March 20, 2024 September 20, 2024 March 20, 2025 September 20, 2025 March 20, 2026 September 20, 2026 March 20, 2027

$5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000

10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000

September 20, 2027 March 20, 2028 September 20, 2028 March 20, 2029 September 20, 2029 March 20, 2030 September 20, 2030 March 20, 2031 September 20, 2031 March 20, 2032 September 20, 2032 March 20, 2033 September 20, 2033 March 20, 2034 September 20, 2034 March 20, 2035 September 20, 2035 March 20, 2036 September 20, 2036 March 20, 2037 September 20, 2037 March 20, 2038 September 20, 2038 March 20, 2039 September 20, 2039 March 20, 2040 September 20, 2040 March 20, 2041 September 20, 2041 March 20, 2042 September 20, 2042 March 20, 2043 September 20, 2043 March 20, 2044 September 20, 2044 March 20, 2045*

$15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 30,000 30,000 30,000 30,000 30,000 35,000 35,000 35,000 35,000 40,000 40,000 40,000 40,000 40,000 45,000 45,000 45,000 45,000 45,000 50,000 50,000

_______________ * Maturity.

In the event of an optional or special mandatory redemption in part, the sinking fund redemption requirements of the Bonds will be reduced so that the resulting decrease in total annual debt service on the Bonds each year is proportional, as nearly as practical, to the decrease in principal and interest payments each year under the GNMA Securities, except that in the event of a partial redemption of Bonds which relates to amortization payments on the Mortgage Note, the principal amount redeemed will be credited against the next succeeding sinking fund redemption requirement(s).

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Notice of Redemption. The Trustee, or the Bond Registrar on behalf of the Trustee, will give notice of redemption not less than 30 nor more than 60 days prior to the redemption date, except that with respect to a special mandatory redemption under (b) above, the Trustee (or Bond Registrar) will give such notice on the Final Delivery Date; and with respect to any special mandatory redemption under (c), (d) or (e) above, the Trustee (or Bond Registrar) will give such notice within 5 days upon receipt of any prepayment on account of any GNMA Securities. Notice will be given by first-class mail, postage prepaid, to each Owner of Bonds to be redeemed at the address of such Owner as appearing on the Bond Register; and also to the Rating Agency, if any, at its office in New York, New York (or its successor), to the Purchaser, at its office in New York, New York (or its successor), and to such other Persons as the Issuer specifies to the Trustee in writing, including all Persons then required by law or regulation to receive notice of redemption of the Bonds.

The Trustee will not send notice of any optional redemption unless the Trustee has received either (1) payment of such amount on account of the GNMA Security, or (2) written notice from the Issuer of its intent to issue refunding bonds on or before the redemption date. Notice of redemption pursuant to clause (2) above may be rescinded if the refunding bonds are not issued on or before the redemption date, and failure to redeem Bonds in such circumstances will not constitute an Event of Default under the Bonds or the Indenture.

Neither failure of any Bondowner to receive such notice nor any defect in any notice so mailed will affect the sufficiency of the proceedings for the redemption of any of the Bonds. Each notice of redemption will state, among other things, the redemption date, the redemption price, the place at which the Bonds are to be surrendered for payment, that the interest on the Bonds designated for redemption will cease to accrue from and after such redemption date and, if less than all of the Bonds outstanding are to be redeemed, an identification of the Bonds or portions thereof to be redeemed.

The Trustee will provide one additional notice of redemption to Owners of Bonds that are not presented for payment within 60 days of the redemption date.

Notwithstanding the foregoing, as long as the Bonds are in book-entry form notice of redemption will be given in accordance with the requirements of DTC.

Selection of Bonds for Redemption. In the event of a partial redemption of Bonds pursuant to the Indenture, the portions thereof to be redeemed shall be selected pro rata among maturities and randomly within each maturity in such manner as the Trustee in its discretion may determine, each portion of $5,000 (with one $1,000 Bond, if still Outstanding, in the case of the Series 2008A Bonds) principal amount of the Bonds being counted as one Bond for such purpose.

Effect of Redemption. Notice of redemption having been given as described above, the Bonds or portions thereof designated for redemption will be due and payable on the date fixed for redemption and, unless the Issuer defaults in the payment of the principal thereof and premium, if any, and interest thereon, SUCH BONDS OR PORTIONS THEREOF WILL CEASE TO BEAR INTEREST FROM AND AFTER THE DATE FIXED FOR REDEMPTION WHETHER OR NOT SUCH BONDS ARE PRESENTED AND SURRENDERED FOR PAYMENT ON THE REDEMPTION DATE. If any Bond or portion thereof called for redemption (other than an optional redemption) is not paid upon presentation and surrender thereof for redemption, such Bond or portion thereof will continue to bear interest at the rate set forth thereon until paid or until due provision is made for the payment thereof.

With respect to optional redemptions only, if the Bond Registrar does not have funds in its possession on the redemption date sufficient to pay the principal and premium, if any, and interest (including interest accruing to the redemption date) of all of the Bonds to be optionally redeemed for any

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reason (including, but not limited to, failure to issue any refunding obligations intended for such purpose on or prior to the date fixed for redemption), then the purported optional redemption and such notice of redemption shall be void, and the Bond Registrar will so notify the Trustee. Such event does not constitute an Event of Default under the Indenture.

BOOK ENTRY SYSTEM

Portions of the information relating to the Book Entry System under this heading have been furnished by DTC, but have not been independently verified by the Purchaser or the Issuer. Neither the Purchaser nor the Issuer makes any representation whatsoever as to the accuracy, adequacy or completeness of such information.

The Bonds will be available in book-entry form only. Purchasers of the Bonds will not receive certificates representing their interests in the Bonds purchased.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each issue of the Bonds, each in the aggregate principal amount of such issue, and will be deposited with DTC.

DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant

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through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices, if any, shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts, upon DTC’s receipt of funds and corresponding detail information from the Issuer or Agent on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, Agent, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

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DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.

Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC.

The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.

THE MORTGAGE NOTE AND MORTGAGE

This summary and explanation of the Mortgage Note and Mortgage do not purport to be comprehensive and are qualified in their entirety by reference to the Mortgage Note and Mortgage for full and complete statements of their provisions.

Upon execution, the Mortgage from the Borrower to the Mortgage Lender secures the Mortgage Note. Upon the purchase of the GNMA Securities from the Mortgage Lender by the Trustee, on behalf of the Issuer, monthly scheduled installments of principal and/or interest on the Mortgage Note (less the GNMA guaranty fee and the Mortgage Lender's servicing fee) will be passed through to the Trustee as scheduled payments of principal and/or interest on the GNMA Securities.

Upon Closing, the Mortgage Loan, as evidenced by the Mortgage Note and Mortgage, (a) will be insured by FHA pursuant to and in accordance with the provisions of Section 220 of the National Housing Act and applicable regulations thereunder, as evidenced by the endorsement by FHA of the Mortgage Note evidencing the Mortgage Loan; (b) will be in a maximum principal amount for that property; (c) will have a final maturity not later than March 1, 2045; (d) commencing on July 1, 2009, is expected to be payable in equal monthly installments of principal and interest in an amount equal to $8,796.32; (e) will be secured on a nonrecourse basis; and (g) will not be subject to prepayment prior to September 1, 2013, without the consent of the holder of the Mortgage Note except that: (i) the Mortgage Note is subject to mandatory prepayment in whole or in part at any time, without premium or penalty, from the proceeds of any casualty insurance or condemnation awards received following a partial or total destruction or condemnation of the Project, in the event and to the extent that such casualty proceeds or condemnation awards are not applied to the repair or restoration of the Project in accordance with the FHA Loan Documents; (ii) the Mortgage Note is subject to prepayment in whole or in part at the option of the Borrower, on September 1, 2013, or on the last day of any month thereafter, upon at least 30 days' advance written notice to the Mortgage Lender, and upon payment of the principal amount of the Mortgage Note to be prepaid together with the applicable prepayment premium plus interest to the end of the month in which the prepayment is made; (iii) the Mortgage Note is subject to mandatory prepayment in whole or in part without the consent of the mortgagee and without prepayment penalty if HUD determines that prepayment will avoid an FHA insurance claim and therefore is in the best interest of the Federal government, notwithstanding any prepayment prohibition imposed and/or penalty required by the Mortgage Note with respect to prepayments; (iv) the Mortgage Note is subject to prepayment in whole or in part if required by the applicable rules, regulations, policies and procedures of HUD or GNMA; and (v) the Mortgage Note is subject to prepayment in whole or in part if required by a trustee in a bankruptcy proceeding with respect to the Borrower pursuant to a final, non-appealable order of a bankruptcy court. In the event of a partial prepayment, the Mortgage Note may be reamortized to reflect its reduced principal amount.

NO ASSURANCE CAN BE GIVEN THAT THE MORTGAGE NOTE WILL BE DELIVERED IN THE TIMEFRAME OR AMOUNT ASSUMED HEREIN. ANY SUCH FAILURE OR DELAY

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WILL RESULT IN A REDEMPTION IN WHOLE OR IN PART OF THE BONDS. SEE “THE BONDS – Redemption – Extraordinary Mandatory Redemption” HEREIN.

If the Borrower makes any such prepayment on the Mortgage Note, the amount prepaid will be paid to the Mortgage Lender and passed through to the Trustee, as a prepayment on the GNMA Security, and applied to the redemption of Bonds, as described under “THE BONDS – Redemption of Bonds.”

THE PROJECT AND THE PRIVATE PARTICIPANTS

The following information has been provided by the Borrower for use herein. While the information is believed to be reliable, neither the Issuer or the Purchaser, nor any of their respective counsel, members, officers or employees make any representations as to the accuracy or sufficiency of such information.

Plan of Financing

The total permanent project cost of the Project is estimated by the Borrower to be $37,250,352, not including interim sources or uses of funds. The sources and uses of funds for the Project are projected to be approximately as follows:

Sources of Funds Series 2003 Bond Proceeds Series 2008A Bond Proceeds CRA Loan CDBG Loan Section 108 Loan Limited Partner Equity Borrower Equity General Partner Loan Partnership Proceeds Misc. Rents & Prop. Taxes Refund Deferred Fees

$10,000,000 7,000,000

909,809 2,100,617

500,000 9,973,952

726,591 221,287

1,337,287 31,305

4,449,504

Total

$37,250,352

Uses of Funds Acquisition Hard Construction Costs Additional Soft Dev. Costs Financing fees/Construction Interest Cost of Bond Issuance Developer’s Fee Legal, Organization, Accounting Fees Reserves, Working Capital Payoff of portion of 2008A Bonds

$4,155,136 13,017,773

3,474,415 4,002,288 1,131,105 5,294,504

398,350 276,781

5,500,000

Total $37,250,352

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Subordinate Loans and Grants

The Borrower represents that the Project will secure, or has secured, the following additional loans (the “Subordinate Loans”). While the information is believed to be reliable, neither the Issuer or the Purchaser, nor any of their respective counsel, members, officers or employees make any representations as to the accuracy or sufficiency of such information. Furthermore, the Purchaser has not considered the viability of the Project if such additional loans cannot be secured.

CRA Loan. The Borrower received a $700,000 loan (the “CRA Loan”) from the Community Redevelopment Agency of the City of Los Angeles, California (the “CRA”) on or about July, 2003. The amount of the CRA Loan was increased to $909,809 on or about July, 2004. The CRA Loan has been fully funded to the Borrower. The Borrower has represented that the CRA Loan will bear interest at 2% per annum with a term of 43 years. The CRA Loan is secured by a subordinate deed of trust on the Project, and will be repaid from surplus cash.

CDBG Loan. The Borrower also received a $2,100,617 loan (the “CDBG Loan”) from the City of Los Angeles, Los Angeles Housing Department (“LAHD”) on or about October, 2001. The CDBG Loan has been fully funded to the Borrower. The Borrower has represented that the CDBG Loan will bear interest at 5% per annum and will have a term of 40 years. The CDBG Loan is secured by a subordinate deed of trust on the Project, and will be repaid from surplus cash.

Section 108 Loan. The borrower also received a $500,000 loan (the “Section 108 Loan”) from the LAHD. The Section 108 Loan has been fully funded and the proceeds have been used toward predevelopment expenses. The borrower has represented that the Section 108 Loan will bear interest at 2% per annum and will have a term of 40 years. The Section 108 Loan is secured by a subordinate deed of trust on the Project and will be repaid from surplus cash.

Limited Partner Equity Investment

Pursuant to that certain second Amended and Restated Agreement of Limited Partnership of the Borrower (the “Partnership Agreement”), The Sherwin-Williams Company, an Ohio corporation (“Sherwin-Williams”) owns a 99.9% limited partnership interest in the Borrower. Pursuant to the Partnership Agreement, Sherwin-Williams is obligated to make certain capital contributions (the “Limited Partner Equity”) to the Borrower which are expected to total approximately $9,973,952, subject to numerous adjustments and conditions, including without limitation, the terms and conditions that are set forth in the Partnership Agreement which could result in the amounts funded and/or the timing or even occurrence of the funding varying significantly from the amount set forth above and neither the Issuer nor the Purchaser makes any representation as to the availability of such funds. Sherwin-Williams has funded approximately $2,890,842 of the Limited Partner Equity as of the date hereof. Sherwin-Williams shall fund the remaining $7,083,110 of the Limited Partner Equity concurrently with the Issuance of the Series 2008A Bonds. The Borrower’s expectations are that the funds available at initial endorsement of the Mortgage Note will be sufficient for completion.

Regulatory Agreements

The Project is subject to the Regulatory Agreement and a Regulatory Agreement with respect to the Series 2003D Bonds which imposes certain requirements on the Borrower with respect to the tax-exempt status of the Bonds under the Code, which include, among other requirements, a set aside of 20% of the units for rental to persons or families having incomes at or below 50% of area median gross income, adjusted for family size and determined in accordance with Section 142(d) of the Code and certain other requirements under state law. The rental payments for these set-aside units shall not exceed

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30% of an amount equal to 50% of the median adjusted gross income for the Area, adjusted and limited as indicated in the Regulatory Agreement. See “APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS—The Regulatory Agreement” herein for a description of the requirements affecting the operation of the Project in order to assure compliance with the Code and state law.

The Project is also encumbered by an Extended Use Agreement required by the Code and the California Tax Credit Allocation Committee (the “TCAC Regulatory Agreement”), which will (a) restrict the income levels of 20% of the units in the Project to amounts not greater than 50% of area median income, adjusted for family size, and restrict the rents which may be charged for occupancy of such units in the Project to not more than 30% of 50% of area median income, adjusted for family size.

Additional restrictions on rent and occupancy are imposed on the Project pursuant to the HUD Regulatory Agreement (as defined in the Indenture).

Furthermore, the Project may be subject to additional rent, use or occupancy restrictions that may be imposed by any subordinate lender or grant provider.

The Project

Broadway Plaza Apartments (the “Project”) is comprised of one 6-story apartment building on approximately 15,115 square feet of land located at the corner of 9th and Broadway in the center of the garment district in the City of Los Angeles, California. The Project contains 82 units (one of which is a manager’s unit). The Project involves the rehabilitation and adaptive re-use of an existing warehouse and garment manufacturing building with historical significance. All of the units will consist of efficiency, one and two bedrooms and have an oven/range, sink, refrigerator, garbage disposal, cable television, heating and air conditioning system and telephone access. The interior finish includes countertops, vinyl and carpet flooring, curtains/Venetian blinds and cabinets. Planned residential amenities aside from its unique location and historical significance include a community room, laundry room and related facilities, security access, and three elevators (two passenger elevators and one freight elevator).

The unit mix of the Project is as follows:

Unit Type

Number of Units

Approximate Square Footage

Studio 31 507 1 BR/ 1 BA 43 595 2 BR/ 2 BA 8 1109

TOTAL 82

The Borrower

The Borrower is 901 South Broadway Limited Partnership, a California limited partnership, formed for the purpose of developing, rehabilitating, owning, maintaining, and operating the Project. The sole general partner of the Borrower is Standard Development, LLC, a California limited liability company (“Standard”). Standard has a 0.1% general partner interest in the Borrower. The sole member of Standard is Allen P. Gross. Mr. Gross has substantial experience in the development and operation of multi-family and mixed use urban infill projects. The sole limited partner of the Borrower is The Sherwin-Williams Company, an Ohio corporation (“Sherwin-Williams”). Sherwin-Williams has a 99.9% limited partnership interest in the Borrower.

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The Borrower has no substantial assets other than the Project and does not intend to acquire any other substantial assets or to engage in any substantial business activities other than those related to the ownership of the Project. However, the General Partner and the principals thereof are engaged in and will continue to engage in the acquisition, development, ownership and management of similar types of housing projects. The General Partner and its members may be financially interested in, as officers, partners or otherwise, and devote substantial times to, business and activities that may be inconsistent or competitive with the interests of the Project.

The obligations and liabilities of the Borrower under the Mortgage Note and Mortgage are of a nonrecourse nature and are limited to the Project and moneys derived from the operation of the Project. Neither the Borrower nor its partners have any personal liability for payments on the Mortgage Note to be applied to pay the principal of and interest on the Bonds. Furthermore, no representation is made that the Borrower has substantial funds available for the Project. Accordingly, neither the Borrower's financial statements nor those of its members are included in this Official Statement.

A default on the Mortgage Loan by the Borrower could result in a redemption of the Bonds prior to their scheduled maturities. See “THE BONDS – Redemption of Bonds.”

Project Background

The Borrower was formed in 2001 for the purpose of developing, rehabilitating, owning, maintaining, and operating the Project. At the time of its formation, the general partners of the Borrower were Vista Affordable Housing Corporation, a California corporation (“VAHC”), and Beyond Shelter Housing Development Corporation, a California nonprofit public benefit corporation (“Beyond Shelter” and collectively with VAHC, the “Original General Partners”), each of which had a 0.5% general partner interest in the Borrower. Sherwin-Williams was the sole limited partner of the Borrower.

From the period commencing with the issuance of the Series 2003D Bonds and ending in the Spring of 2005, the Borrower undertook the rehabilitation of the Project. In the Spring of 2005, the Project had become subject to certain cost overruns. Additionally, the contractor retained by the Borrower filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Central District of California in April, 2005. The aforementioned events caused rehabilitation of the Project to cease and for certain of the Borrower’s lenders to declare the Borrower in default of certain of its obligations.

In October, 2006 the Original General Partners withdrew from the Borrower and Standard was admitted to the Borrower as the sole General Partner. Because Standard was not a partner of the Borrower prior to October, 2006, Standard does not have knowledge of certain matters occurring before its admission to the Borrower. Since its admission to the Borrower, Standard has caused the Borrower to cure outstanding lender defaults and to restructure the financing of the Project as set forth herein.

The Manager

The Project will be managed by Standard Development (the “Manager”). The Manager will assume responsibility for the day-to-day management and marketing services for the Project.

The Mortgage Lender

Capmark Finance Inc. (the “Mortgage Lender”), is approved as a GNMA Issuer and FHA Mortgagee. The Mortgage Lender is organized under the laws of the State of California and is duly

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qualified and authorized to conduct business in accordance with the terms of its articles of incorporation and bylaws.

To be approved by GNMA to issue modified pass-through securities with respect to long-term

mortgages on multifamily project, a GNMA issuer is required to have a net worth (based on audited financial statements) equal to at least $500,000 plus 0.2 percent of any securities outstanding in excess of $30,000,000.

The Trustee

U.S. Bank National Association will serve as Trustee under the Indenture. The Trustee is a national banking association organized under the laws of the United States of America. The mailing address of the Trustee is U.S. Bank National Association, 633 West Fifth Street, 24th Floor, Los Angeles, California, Attention: Corporate Trust. The obligations of the Trustee are described in the Indenture. The Trustee has not independently passed upon the validity of the Bonds, the security of the payment therefor, the value or condition of any assets pledged to the payment thereof, the adequacy of the provisions for such payment, the status for federal or state income tax purposes of the interest on the Bonds, or the investment quality of the Bonds. Except for the contents in this section, the Trustee has not reviewed or participated in the preparation of this Official Statement and has assumed no responsibility for the nature, content, accuracy or completeness of the information included in this Official Statement.

SOURCES AND USES OF FUNDS

A breakdown of the estimated sources and uses of funds is as follows:

Sources of Funds Par Amount of Bonds Purchaser’s Premium Tax Credit Equity

$51,000 205,000

5,844,729

Total $6,100,729 Uses of Funds

Deposit to Interest Account of the Revenue Fund (2003 Indenture) Deposit to Bond Proceeds Account of the Collateral Fund Deposit to Equity Account Deposit to Interest Reserve Account of the Revenue Fund Deposit to Revenue Fund Deposit to Costs of Issuance Fund

$120,000 51,000

5,327,829 70,000 15,000

516,900

Total $6,100,729

CERTAIN RISKS TO THE BONDHOLDERS

The Bonds are special, limited obligations of the Issuer. The Bonds will be secured by and payable only from payments to be made on the GNMA Securities and from money held under the Indenture for the benefit of the Bonds and investment earnings thereon (other than amounts, if any, held in the Rebate Fund and the Costs of Issuance Fund).

Prospective purchasers of the Bonds should consider carefully all possible factors which may affect both the operations and revenues of the Project and consequently create the possibility that the

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Bonds may be redeemed prior to maturity or that the interest on and principal of the Bonds might bear taxable interest from their date of issuance. The following list of possible factors, while not setting forth all the factors which must be considered, contains some of the factors which should be considered prior to purchasing Bonds:

(1) Early Redemption Without Premium. Purchasers of Bonds maturing on March 20, 2045, including those who purchase such Bonds at a price in excess of their principal amount or who hold such a Bond trading at a price in excess of par, should consider the fact that such Bonds are subject to redemption at a redemption price equal to their principal amount plus accrued interest in the event such Bonds are redeemed prior to maturity. This could occur, for example, in the event the PLC is not delivered by the Final Delivery Date or is delivered in an aggregate principal amount less than $1,500,000, in the event that the Mortgage Note is prepaid as a result of a casualty or condemnation award payments affecting the Project or in the event there is a default under the Mortgage. See “THE BONDS – Redemption of Bonds – Special Mandatory Redemption” herein.

It is anticipated that the Trustee will acquire the GNMA Securities on or before the Final Delivery Date. The purchase of the GNMA Securities is subject to the following conditions, among others: (a) the submission by the Mortgage Lender to GNMA of certain documents required by GNMA in form and substance satisfactory to GNMA; (b) the Mortgage Lender's continued compliance, on the date of issuance of the GNMA Securities, with all of GNMA's eligibility requirements, specifically including, but not limited to, certain net worth requirements; and (c) the Mortgage Lender's continued ability to issue and deliver GNMA Securities, as such ability may be affected by the Mortgage Lender's bankruptcy, insolvency or reorganization. In the event that the GNMA Securities are not issued as a result of a failure of any of the conditions listed above, or if the GNMA Securities are not delivered to the Trustee on or before the Final Delivery Date, the Bonds will be subject to early redemption in whole or in part as discussed under “THE BONDS – Redemption of Bonds – Special Mandatory Redemption” herein.

(2) Economic Feasibility. The economic feasibility of the Project depends on large part upon its being substantially occupied at projected rent levels. The Borrower is required to maintain the Project as a “project for residential rental property” as defined in the Internal Revenue Code of 1986, as amended (the “1986 Code”) and rental and occupancy restriction under several agreements described herein. See “APPENDIX A–SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS–The Regulatory Agreement” herein. There can be no assurance that in the future the Borrower will be able to rent units at rentals which will enable them to make timely payments on the Mortgage Note.

The Borrower anticipates that the Project will generate sufficient rental income to cover operating expenses and debt service on the Mortgage Loan, but if the Project is unable to do so, it could result in a default on the Mortgage Loan, a prepayment of the GNMA Security and a redemption of all or a portion of the Bonds at par. See “THE BONDS – Redemption of Bonds” herein.

(3) No Acceleration or Redemption upon Loss of Tax Exemption on the Bonds. The exemption of interest on the Bonds from gross income for federal income tax purposes is dependent upon continuing compliance by the Borrower with various requirements including certain of the covenants set forth in the Regulatory Agreement. In the event of a breach by the Borrower of the covenants contained in the Regulatory Agreement, the Trustee may sue for specific performance of the Regulatory Agreement or for an injunction against any violation of the provisions of the Regulatory Agreement or pursue any other remedies available at law or in equity. The availability of equitable remedies such as specific performance or an injunction to enforce those covenants is generally subject to the discretion of the court and no assurances can be given that the Issuer or the Trustee would be able to obtain such relief after proving a breach by the Borrower of any of the covenants contained in the Regulatory Agreement. While

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the Regulatory Agreement is designed to meet the requirements of Section 142(d) of the Internal Revenue Code of 1986, as amended, provisions in the Regulatory Agreement give HUD the right to require the Issuer to remove or void requirements, including those designed to ensure compliance with Section 142(d), if in HUD's opinion, such requirements threaten the financial viability of the Project. Furthermore, as a condition of HUD insuring the Mortgage Loan, the Regulatory Agreement is made expressly subordinate to the Mortgage. Enforcement of the Regulatory Agreement therefore is expressly limited and may not result in any claim under the Mortgage or against the Project, the Mortgage Loan proceeds, any reserves or deposits required by HUD to be made with the mortgagees or another person or entity under HUD regulations, or against the rents or other income from the Project. Consequently the rights of the Issuer or the Trustee to enforce a claim for money damages would be severely restricted and, among other things, it would not be possible to accelerate the Mortgage Loan due to a violation of the Regulatory Agreement.

The Borrower's failure to comply with the terms of the Regulatory Agreement may cause the tax exemption of interest on the Bonds to be adversely affected. No assurance can be given that the Borrower will comply with the Regulatory Agreement to the extent necessary to maintain the exemption from taxation of interest on the Bonds or that the Issuer or the Trustee can remedy non-compliance by the Borrower. See “APPENDIX A — SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS — The Regulatory Agreement.”

There is no provision in the Indenture for an acceleration of the indebtedness evidenced by the Bonds or payment of additional interest by the Issuer or any other party if interest on the Bonds becomes subject to federal income taxes and owners of the Bonds may be required to hold the Bonds bearing taxable interest until maturity.

(4) Secondary Market Prices. The Purchaser will not be obligated to repurchase any of the Bonds, and no representation is made concerning the existence of any secondary market for the Bonds. No assurance can be given that any secondary market will develop following the completion of the offering of the Bonds, and no assurance can be given that the initial offering prices for the Bonds will continue for any period of time.

(5) Competing Facilities. The Issuer and the Borrower and persons who may be affiliated with each may finance, develop, construct, and operate other facilities that could compete with the Project for tenants. Any competing facilities, if so constructed, could adversely affect occupancy and revenues of the Project.

(6) Investments. Scheduled payments on the GNMA Securities will be received and deposited by the Trustee in the Revenue Fund on a monthly basis. Scheduled payments on the Bonds are made semiannually. Amounts held in the Revenue Fund and the Collateral Fund will be invested in the Investment Agreement with the Investment Agreement Provider (see “THE INVESTMENT AGREEMENT”) until such funds are needed to pay principal of and interest on the Bonds. Amounts held in the Collateral Fund will be invested in the Investment Agreement. The Bonds have been structured based on the assumption that amounts in the Mortgage Loan Fund, the Collateral Fund and the Interest Reserve account of the Revenue Fund are invested in the Investment Agreement at a rate of 1.88% per annum, and that amounts on deposit in the Revenue Fund (excluding amounts deposited in the Interest Reserve account) are invested in Permitted Investments with an assumed rate of 1.75% per annum. No assurance can be given that such rates can be achieved or maintained and could result in insufficient funds to cover debt service on the Bonds.

The Investment Agreement represents the unsecured general obligation of the Investment Agreement Provider to provide repayment to the Trustee of money invested in the Investment Agreement

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pursuant to the Indenture at the rates agreed upon therein. Failure to achieve such rate of return could adversely affect the ability to make scheduled payments on the Bonds. The Issuer and the Purchaser make no representation as to the ability of the Investment Agreement Provider to make payments under the Investment Agreement in amounts necessary to make scheduled payments of debt service on the Bonds.

(7) Issuance of GNMA Securities. It is anticipated that the Trustee will acquire the PLC before the Final Delivery Date (July 31, 2009), as such date may be extended pursuant to the terms of the Indenture). In the event that the PLC is not issued as provided in the Indenture the Bonds will be subject to early redemption in whole or in part as discussed under “THE BONDS – Redemption of Bonds” herein.

(8) Enforceability of Remedies. The remedies available to the Trustee, the Issuer and the Owners of the Bonds upon an event of default under the Financing Agreement, the Indenture or the other Project documents are in many respects dependent upon judicial actions which are often subject to discretion and delay. The various legal opinions to be delivered in connection with the delivery of the Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by principles of equity and by bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting the rights of creditors generally.

TAX MATTERS

In General

In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes, except for interest on any Bond for any period during which such Bond is held by a “substantial user” of the facilities financed by the Bonds or a “related person” within the meaning of Section 147(a) of the Code. The opinion described in the preceding sentence assumes compliance by the Issuer and the Borrower with covenants designed to satisfy the requirements of the Code that must be met subsequent to the issuance of the Bonds. Failure to comply with such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Issuer and the Borrower have covenanted to comply with such requirements. Bond Counsel has expressed no opinion regarding other federal tax consequences arising with respect to the Bonds. Bond Counsel is also of the opinion that interest on the Bonds is exempt from State of California income taxation, excepting inheritance and gift taxes.

Bond Counsel is further of the opinion that interest on the Bonds is a specific preference item for purposes of the federal alternative minimum tax.

The accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the owners of the Bonds. The extent of these other tax consequences will depend upon such owner’s particular tax status and other items of income or deduction. Bond Counsel has expressed no opinion regarding any such consequences. Purchasers of the Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of social security or railroad retirement benefits, taxpayers otherwise entitled to claim the earned income credit, or taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, should consult their tax advisors as to the tax consequences of purchasing or owning the Bonds.

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Back-Up Withholding

As a result of the enactment of the Tax Increase Prevention and Reconciliation Act of 2005, interest on tax-exempt obligations such as the Bonds is subject to information reporting in a manner similar to interest paid on taxable obligations. Backup withholding may be imposed on payments made after March 31, 2007 to any bondholder who fails to provide certain required information including an accurate taxpayer identification number to any person required to collect such information pursuant to Section 6049 of the Code. The new reporting requirement does not in and of itself affect or alter the excludability of interest on the Bonds from gross income for federal income tax purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations.

Changes in Federal and State Tax Law

From time to time, there are legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to above or adversely affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value of the Bonds. An example of such litigation is the case of Davis v. Kentucky Department of Revenue, 197 S.W.3d 557 (2006), the oral argument for which was heard by the U.S. Supreme Court on November 5, 2007 with a decision expected to be rendered in the spring of 2008, challenging Kentucky's taxation of bonds issued by other states and their political subdivisions differently than it taxes bonds issued by Kentucky and its political subdivisions. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Bonds or the market value thereof would be impacted thereby. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending legislation, regulatory initiatives or litigation.

UNDERWRITING

Citicorp Municipal Mortgage Inc., a Delaware Statutory Trust (the “Purchaser”) has agreed, subject to certain conditions, to purchase the Bonds from the Issuer as described in the Bond Purchase Agreement a price of 100% of the aggregate principal amount thereof, plus an additional amount of $205,000. For its services relating to the transaction, the Purchaser will receive a fee of $125,000 (excluding an additional amount of $205,000 to be paid to the Purchaser to reimburse the Purchaser for an additional amount paid by the Purchaser to the Issuer in excess of the price of the Bonds). From its fees, the Purchaser will be obligated to pay certain costs and expenses of the financing.

The obligation of the Purchaser to purchase the Bonds is subject to certain terms and conditions set forth in the Bond Purchase Agreement

CONFLICTS OF INTEREST

Some or all of the fees of the Purchaser, Purchaser’s counsel and Bond Counsel are contingent upon the issuance and sale of the Bonds. None of the officers of the Issuer have interests in the issuance of the Bonds that are prohibited by applicable law.

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RATING

Standards & Poor’s Rating Services, Inc., a Division of the McGraw-Hill Companies, Inc., is expected to assign the rating set forth on the cover page hereof. Such rating reflects only the view of the Rating Agency at the time the rating is given, and the Issuer makes no representation as to the appropriateness of the rating. An explanation of the significance of such rating may be obtained only from the Rating Agency. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward, suspended or withdrawn entirely by the Rating Agency, if, in its judgment, circumstances so warrant. Any such downward revision, suspension or withdrawal of such rating may have an adverse effect on the market price of the Bonds.

ABSENCE OF LITIGATION

It is one of the several conditions to the Purchaser’s duty to accept the Bonds at closing that the Issuer deliver a certificate stating among other things that there is no proceeding pending or threatened to restrain or enjoin the issuance, sale or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the Issuer taken with respect to the issuance or sale thereof, the pledge or application of any money or securities provided for the payment of the Bonds or the existence or powers of the Issuer insofar as they relate to the authorization, sale and issuance of the Bonds or such pledge or application of money and securities.

There is no litigation now pending against the Borrower or, to the knowledge of officers of the Borrower, threatened, restraining or enjoining the issuance, sale, execution or delivery of the Bonds, the Indenture, the Financing Agreement or the Mortgage Note, or in any way contesting or affecting the validity of any of these documents or of any proceedings of the Borrower taken with respect to the issuance or sale of, or the pledge or application of any money or security provided for the payment of, the Bonds or the Mortgage Note.

There is no litigation of any nature now pending against the Borrower or, to the knowledge of officers of the Borrower, threatened which, if successful, would materially adversely affect the operations or financial condition of the Borrower.

CERTAIN LEGAL MATTERS

Certain legal matters in connection with the issuance of the Bonds are subject to the approval of Kutak Rock LLP, Omaha, Nebraska (“Bond Counsel”). Certain legal matters will be passed upon for the Purchaser by Eichner & Norris PLLC, Washington, D.C., for the Mortgage Lender by its counsel, Law Office of William F. Michaud, Corte Madera, California and for the Borrower by Bocarsly Emden Cowan Esmail Parker & Arndt, Los Angeles, California.

CONTINUING DISCLOSURE

The Borrower has undertaken all responsibilities for any continuing disclosure to Bondholders as described below, and the Issuer shall have no liability to the Holders of the Bonds or any other person with respect to such disclosures.

The Borrower has covenanted for the benefit of holders and beneficial owners of the Bonds to provide certain financial information and operating data relating to the Borrower by not later than June 1 in each year commencing June 1, 2008 (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by U.S. Bank National Association, as dissemination agent (the “Dissemination Agent”) on behalf of the Borrower with each

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Nationally Recognized Municipal Securities Information Repository and with the State Information Depository, if any. The notices of material events will be filed by the Dissemination Agent on behalf of the Borrower with the Nationally Recognized Municipal Securities Information Repository or the Municipal Securities Rulemaking Board, and with the State Information Depository, if any. The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth in the Financing Agreement. These covenants have been made in order to assist the Purchaser in complying with SEC Rule 15c2-12(b)(5). The Borrower has never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events.

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MISCELLANEOUS

All of the summaries or descriptions of provisions of the Indenture, the Financing Agreement and other documents are made subject to all of the provisions of law and such documents and these summaries do not purport to be complete statements of such provisions. Reference is hereby made to such documents for further information in connection therewith. Copies of the aforementioned documents may be obtained from the Trustee.

The agreements of the Issuer with the Bondowners are fully set forth in the Indenture. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Any statements herein involving matters of opinion or estimates, whether or not expressly so stated, are intended merely as such and not as representations of fact. This Official Statement has been approved by the Issuer and Borrower.

CITY OF LOS ANGELES, as Issuer by Los Angeles Housing Department

By: /s/ Marlene Garza Assistant General Manager

[Signatures continued on next page]

[Counterpart signature page to Official Statement]

901 SOUTH BROADWAY LIMITED PARTNERSHIP, a California limited partnership

By: Standard Development, LLC, a California limited liability company, General Partner

By: /s/ Allen Gross Allen Gross, Manager

APPENDIX A

SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS

Certain Definitions

The following are certain definitions pertaining to the Bonds. All other capitalized terms used but not defined in this Official Statement have the meanings assigned to them in the Indenture, the Financing Agreement and the Regulatory Agreement.

“Act” means Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented.

“Act of Bankruptcy” means notice to the Trustee that the Borrower has become insolvent or has failed to pay its debts generally as such debts become due or has admitted in writing its inability to pay any of its indebtedness or has consented to or has petitioned or applied to any authority of the State of California for the appointment of a receiver, liquidator, trustee or similar official for itself or for all or any substantial part of its properties or assets or that any such trustee, receiver, liquidator or similar official has been appointed or that insolvency, reorganization or liquidation proceedings (or similar proceedings) have been instituted by or against the Borrower.

“Additional Bonds” means any additional bonds issued under the Indenture.

“Adjusted Income” means the adjusted income of a person (together with the adjusted income of all persons who intend to reside with such person in one residential unit) as calculated pursuant to Section 142(d)(2)(A) of the Code.

“Area” means the Los Angeles Primary Metropolitan Area.

“Authorized Officer” shall mean the Mayor or the General Manager, any Assistant General Manager, acting Assistant General Manager or Executive Officer of the Los Angeles Housing Department of the Issuer, and any other officer or employee of the Issuer designated to perform a specified act, to sign a specified document or to act generally, on behalf of the Issuer by a written certificate furnished to the Trustee, which certificate is signed by the Mayor or the General Manager, any Assistant General Manager, acting Assistant General Manager or Executive Officer of the Los Angeles Housing Department and contains the specimen signature of such other officer or employee of the Issuer.

“Authorized Denomination” means $5,000 or any integral multiple thereof within a single maturity; provided, however, that one Bond may be outstanding in an integral amount of $5,000 plus an integral multiple of $1,000 in excess thereof.

“Authorized Representative” means, with respect to the Trustee, any officer or administrator thereof responsible for trust administration; with respect to the Issuer, any Authorized Officer; and with respect to the Borrower, any officer of the Borrower or any other Person or Persons designated to act on behalf of the Borrower by a certificate of the Borrower filed with the Issuer and the Trustee.

“Available Money” means proceeds of the Bonds, payments made under the GNMA Securities, any payment made by the Borrower and held by the Trustee for a period of 366 days, provided that no Act of Bankruptcy with respect to the Borrower has occurred during such period, or any money with respect to which the Trustee has received an opinion of nationally recognized bankruptcy counsel to the effect that the use by the Trustee of such money in accordance with the Indenture would not constitute an

avoidable preference or be subject to the automatic stay provisions of Section 547 and 362(a), respectively, of the United States Bankruptcy Code or similar laws of the United States of America or the State of California in the event a petition in bankruptcy is filed by or against the entity depositing such money.

“Beneficial Owner” means a beneficial owner of all or a portion of the Bonds while the Bonds are in fully immobilized form.

“Bond” or “Bonds” means any one or more of the Issuer’s Multifamily Housing Revenue Bonds (GNMA Mortgage-Backed Securities Program - Broadway Plaza Project) Series 2008A and any Additional Bonds authorized, authenticated and delivered under the Indenture.

“Bond Closing” means the date upon which the Issuer delivers the Bonds to the initial purchaser thereof in exchange for the moneys representing initial advance of proceeds of the Bonds.

“Bond Counsel” means an attorney at law, a firm of attorneys or firms of attorneys of nationally recognized standing in matters pertaining to the tax status of interest on bonds issued by states and their political subdivisions, who is or are selected by the Issuer and is or are duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia.

“Bond Register” means the registration books required to be maintained pursuant to the Indenture.

“Bond Registrar” means the party so appointed pursuant to the Indenture.

“Bond Year” means the period commencing on March 21 of each year and ending on the immediately succeeding March 20th, provided the first Bond Year shall commence on the Closing Date and end on March 20, 2009.

“Bondowner” or “Owner” means the Registered Owner of any Bond.

“Borrower” means 901 South Broadway Limited Partnership, a California limited partnership, as the owner of the Project, and its successors and assigns as such owner.

“Business Day” means any day other than (i) a Saturday or a Sunday, or (ii) a day on which commercial banks in the city or cities in which are located the Principal Office of the Trustee and Bond Registrar are located, are authorized or required by law or executive order to close.

“CDLAC” means the California Debt Limit Allocation Committee or its successors.

“Certificate of Continuing Program Compliance” means the Certificate to be filed by the Borrower with the Issuer and the Trustee pursuant to the Regulatory Agreement, which will be substantially in the form attached to the Regulatory Agreement or in such other comparable form as may be provided by the Issuer to the Borrower.

“CLC” means a construction loan certificate which is a GNMA Security which represents an amount advanced by the Mortgage Lender under the Mortgage Loan to the Borrower for Project Costs.

“CLC Maturity Date” means August 15, 2009 or such later date to which it may be extended pursuant to the Indenture.

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“Closing Date” means the date of issuance of the Series 2008A Bonds, being April 10, 2008.

“Code” means the Internal Revenue Code of 1986, as amended, together with corresponding and applicable final, temporary or proposed regulations and revenue rulings issued or amended with respect thereto by the United States Treasury Department or Internal Revenue Service, to the extent applicable to the Bonds. All references in the Indenture to sections, paragraphs or other subdivisions of the Code or the regulations promulgated thereunder shall be deemed to be references to correlative provisions of any predecessor or successor code or regulations promulgated thereunder.

“Collateral Fund” means the fund so designated and established by the Indenture.

“Commencement of Amortization” means the date on which the Borrower is scheduled to begin to repay principal of the Mortgage Loan (being July 1, 2009).

“Commitment” means, when and as issued, that certain Section 220 mortgage insurance program commitment for Insurance of Advances relating to the Project, and any amendments or supplements thereto, from HUD to the Mortgage Lender.

“Cost of Issuance Fund” means the fund so designated and established by the Indenture.

“Counsel” means an attorney at law or a firm of attorneys (who may be an employee of or counsel to the Issuer or the Borrower or the Trustee) duly admitted to the practice of law before the highest court of any state of the United States of America or of the District of Columbia.

“Date of Delivery” means April 10, 2008.

“Debt Service” means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation.

“Determination of Taxability” means a final judgment or order of a court of original jurisdiction, a final order of any other court of competent jurisdiction, or a final ruling or decision of the Internal Revenue Service, in any such case to the effect that the interest on the Bonds (other than interest on any Bond for a period during which such Bond is held by a “substantial user” of any facility financed with the proceeds of the Bonds or a “related person,” as such terms are used in Section 147(a) of the Code) is not excludable from the gross income of the owners thereof for federal income tax purposes. With respect to the foregoing, a judgment or order of a court or a ruling or decision of the Internal Revenue Service shall be considered final only if no appeal or action for judicial review has been filed and the time for filing such appeal or action has expired.

“Dissemination Agent” means the agent of the Borrower designated as such pursuant to the Financing Agreement.

“DTC” means The Depository Trust Company, New York, New York.

“Equity Fund” means the fund so designated and established by the Indenture.

“FHA” means the Federal Housing Administration, an organizational unit within HUD or any successor entity and any authorized representatives or agents thereof, including the Secretary of HUD, the Federal Housing Commissioner and their representatives or agents.

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“FHA Insurance” means the insurance of the Mortgage Note by FHA pursuant to Section 220 of the National Housing Act.

“Final Delivery Date” means July 31, 2009, or such later date to which it may be extended pursuant to the Indenture.

“Final Endorsement” means the date on which the Mortgage Note is finally endorsed for mortgage insurance by FHA, following compliance with the terms and conditions of the Commitment.

“Financing Agreement” means the Financing Agreement, dated as of April 1, 2008, among the Issuer, the Mortgage Lender, the Trustee and the Borrower.

“Financing Documents” means the Indenture, the Financing Agreement, the Tax Certificate and the Regulatory Agreement.

“General Fund” means the fund so designated and established by the Indenture.

“GNMA” means the Government National Mortgage Association, an organizational unit within HUD, or any successor entity and any authorized representatives or agents thereof, including the Secretary of HUD.

“GNMA Documents” means the commitments issued by GNMA to the Mortgage Lender to guaranty the GNMA Securities and all other documents, certifications and assurances executed and delivered by the Mortgage Lender, GNMA or the Borrower in connection with the GNMA Securities, as amended and supplemented from time to time.

“GNMA Securities” or “GNMA Security” means a fully-modified pass-through security in the form of a CLC or a PLC issued by the Mortgage Lender, purchased by and registered in the name of the Trustee or its designee and guaranteed by GNMA as to timely payment of principal and interest on a PLC and as to timely payment of interest only until maturity and timely payment of principal at maturity on a CLC, pursuant to Section 306(g) of the National Housing Act of 1934, as amended, and the regulations promulgated thereunder, backed by the Mortgage Loan made by the Mortgage Lender to finance the Project pursuant to the Commitment, the Mortgage Loan Documents and the Financing Agreement, which Mortgage Loan is insured by the Secretary of Housing and Urban Development by and through the FHA.

“HUD” means the United States Department of Housing and Urban Development.

“HUD Regulatory Agreement” means the Regulatory Agreement for Multifamily Housing Projects dated as of December 1, 2003, relating to the Project between HUD and the Borrower.

“Income Certification” means a Verification of Income and Occupancy Certificate in the form attached to the Regulatory Agreement or in such other comparable form as may be provided by the Issuer to the Borrower.

“Interest Account” means the account so designated and established in the Revenue Fund by the Indenture.

“Interest Payment Date” means (a) March 20 and September 20 of each year commencing September 20, 2008, or (b) any other date upon which interest on the Bonds is due and payable, whether by maturity, acceleration, prior redemption, or otherwise.

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“Interest Requirement” means the interest accruing to maturity on the Outstanding principal amount of Series 2008A Bonds maturing September 20, 2009, calculated at a rate of 2.12% per annum.

“Interest Reserve Account” means the account so designated and established in the Revenue Fund by the Indenture.

“Investment Agreement” shall mean and include the Investment Agreement between the Trustee and the Investment Agreement Provider, dated as of April 10, 2008, or any substitute investment agreement containing substantially similar provisions.

“Investment Agreement Provider” means San Sabia Capital Corporation, a Delaware corporation, together with its authorized successors and assigns under the Investment Agreement, or any provider of a substitute Investment Agreement in accordance with the Indenture.

“Issuance Costs” means all costs and expenses of issuance of the Bonds, including, but not limited to:

(a) underwriter’s discount or fee;

(b) counsel fees, including Bond counsel, Purchaser’s counsel, Issuer’s counsel, Borrower’s counsel and Mortgage Lender’s counsel, as well as any other specialized counsel fees incurred in connection with the issuance of the Bonds;

(c) financial advisor fees and expenses incurred in connection with the issuance of the Bonds;

(d) initial fees and expenses of the Trustee, including Trustee counsel fees and expenses in connection with the issuance of the Bonds;

(e) costs of printing the preliminary and final Official Statement;

(f) publication or copying costs associated with the financing proceedings; and

(g) initial fees and expenses, if any, of the Issuer and the Rating Agency.

“Issuer” means the City of Los Angeles, a municipal corporation and charter city of the State of California, duly organized and existing under the laws of the State.

“Issuer Annual Fee” means (a) the initial fee paid to the Issuer by the Borrower on the Closing Date in the amount of $17,500 (0.25% of $7,000,000, the maximum initial principal amount of the Bonds); (b) the ongoing annual fee equal to $8,750 per year (0.125% of the maximum initial principal amount of the Bonds), and 0.125% of the principal amount of any Additional Bonds, payable by the Borrower to the Trustee in monthly installments on the first day of each month, commencing May 1, 2008, for remittance to the Issuer by the Trustee semiannually in arrears on each March 20 and September 20, commencing September 20, 2008, provided that if the Financing Agreement terminates prior to the end of the Qualified Project Period (as defined in the Regulatory Agreement), the Borrower shall pay to the Issuer on such Financing Agreement termination date a sum equal to the present value of the Issuer Annual Fee payable with respect to each Series to the end of the Qualified Project Period, discounted at the yield of the United States treasury security maturing nearest the end of the Qualified Project Period, on the date of such prepayment. Any accrued and unpaid amounts shall be immediately due and owing upon any transfer of the Project (in addition to any fee typically charged by the Issuer to approve such a

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transfer). Accrued and unpaid Issuer Annual Fees shall not bear interest. The Issuer Annual Fee shall be paid directly by the Borrower pursuant to the Financing Agreement and not from funds held under the Indenture.

“Law” shall mean Section 248 of the City Charter of the Issuer and Article 6.3 of Chapter 1 of Division 11 of the Los Angeles Administrative Code, as amended.

“Low Income Tenant” means any tenant whose adjusted income does not exceed limits determined in a manner consistent with determinations of low income families under Section 8 of the Housing Act, except that the percentage of median gross income that qualifies as low income shall be fifty percent (50%) of median gross income for the Area with adjustments for family size. If all the occupants of a unit are students (as defined under Section 151(c) of the Code), no one of whom is entitled to file a joint return under Section 6013 of the Code, such occupants shall not qualify as Low Income Tenants. The determination of a tenant’s status as a Low Income Tenant shall be made by the Borrower upon initial occupancy of a unit by such Tenant and annually thereafter and at any time the Borrower has knowledge that the number of occupants in the unit has increased, on the basis of an income certification executed by the Tenant.

“Low Income Units” means the units required to be rented to, or held available for occupancy by, Low Income Tenants pursuant to the Regulatory Agreement.

“Mortgage” means the Construction and Permanent Deed of Trust with Assignment of Rents dated as of December 1, 2003, as amended by the Supplemental Deed of Trust with Assignment of Rents dated March 1, 2004, the Modification and Consolidation Agreement dated March 1, 2004, the Second Supplemental Deed of Trust with Assignment of Rents dated April 1, 2008, and the Second Modification and Consolidation Agreement dated April 1, 2008, that will be delivered by the Borrower as trustor for the benefit of the Mortgage Lender, securing the repayment of the Mortgage Note.

“Mortgage Lender” means Capmark Finance Inc., or its successors and assigns or, if it loses its status as an FHA-approved mortgagee, any other mortgagee approved by FHA, and their respective successors or assigns, with respect to the Mortgage Loan.

“Mortgage Loan” means the loan to be originated by the Mortgage Lender to the Borrower pursuant to the Mortgage Loan Documents and the Financing Agreement to provide permanent financing for part of the Project’s Project Costs. Amounts deposited in the Bond Proceeds Account of the Collateral Fund are not part of the Mortgage Loan.

“Mortgage Loan Documents” means the Mortgage, the HUD Regulatory Agreement, the Mortgage Note and all other documents required by the Mortgage Lender and/or HUD in connection with the Mortgage Loan.

“Mortgage Loan Fund” means the fund so designated and established by the Indenture.

“Mortgage Note” means the Deed of Trust Notes to be executed by the Borrower to evidence the obligation to repay the Mortgage Loan, as amended and supplemented from time to time.

“National Housing Act” means the National Housing Act of 1934, as amended, and the applicable regulations thereunder.

“Outstanding” or “Bonds outstanding,” in connection with the Bonds means, as of the time in question, all Bonds authenticated and delivered under the Indenture, except:

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(a) Bonds theretofore cancelled or required to be cancelled under the Indenture;

(b) Bonds which are deemed to have been paid in accordance with the Indenture; and

(c) Bonds in substitution for which other Bonds have been authenticated and delivered pursuant to the Indenture.

In determining whether the Owners of a requisite aggregate principal amount of Outstanding Bonds have concurred in any request, demand, authorization, direction, notice, consent or waiver under the provisions of the Indenture, Bonds which are registered on the Bond Register in the name of the Borrower, the Issuer or any other obligor on the Bonds, or any person actually known to the Trustee to be an affiliate of any one of said entities (for the purpose of this definition an “affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person) shall be disregarded and deemed not to be outstanding under the Indenture for the purpose of any such determination. For purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. Bonds (in certificated form) so owned, which have been pledged in good faith, may be regarded as Outstanding if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Borrower, the Issuer, or any other obligor on the Bonds, or any affiliate of any of the foregoing. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of Counsel shall be full protection to the Trustee.

“Owner” means the Registered Owner of any Bond.

“Permitted Investments” mean any of the following for the moneys held under the Indenture then proposed to be invested therein:

(i) Government Obligations;

(ii) Federal Housing Administration’s debentures;

(iii) Federal Home Loan Mortgage Corporation’s (FHLMC) participation certificates (excluding stripped mortgage securities which are purchased at prices exceeding their principal amounts) which guarantee timely payment of principal and interest and senior debt obligations;

(iv) Farm Credit Banks’ (Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) consolidated system wide bonds and notes;

(v) Federal Home Loan Banks’ consolidated debt obligations;

(vi) Fannie Mae’s mortgage-backed securities (excluding stripped mortgage securities which are purchased at prices exceeding their principal amounts) and senior debt obligations;

(vii) Student Loan Marketing Association’s (Sallie Mae) senior debt obligations (excluding securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date) and letter of credit backed issues;

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(viii) Resolution Funding Corp’s (REFCORP) debt obligations;

(ix) Federal funds, certificates of deposit, time deposits, deposit accounts and bankers’ acceptances (having original maturities of not more than 365 days) of any bank (including the Trustee or any affiliate of the Trustee), the unsecured short term obligations of which are rated “A-1+” by Standard & Poor’s;

(x) Deposits which are fully insured by the Federal Deposit Insurance Corp. (FDIC);

(xi) Debt obligations rated “AAA” by Standard & Poor’s (excluding securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date);

(xii) Commercial paper (having original maturities of not more than 270 days) rated “A-1+” by Standard & Poor’s;

(xiii) Shares of a money market mutual fund or other collective investment fund registered under the federal Investment Company Act of 1940, whose shares are registered under the federal Securities Act of 1933, and having a rating of “AAA” by Standard & Poor’s or “Aaa” by Moody’s, which only invests in obligations described in (i) above, and repurchase agreements and reverse repurchase agreements relating to such securities, including money market mutual funds from which the Trustee or its affiliates receive a fee for investment advisory or other services to the fund;

(xiv) Shares of a tax-exempt municipal money market mutual fund or other collective investment fund registered under the federal Investment Company Act of 1940, whose shares are registered under the federal Securities Act of 1933, and having a rating of “AAA” by Standard & Poor’s or a “Aaa” by Moody’s, for which at least 95% of the income paid to the holders on interest in such money market fund will be excludable from gross income under Section 103 of the Code, including money market funds for which the Trustee or its affiliates receive a fee for investment advisory or other services to the fund.

(xv) Repurchase agreements with any institution the unsecured, uninsured and unguaranteed debt obligations of which are rated “AAA” by Standard & Poor’s; or commercial paper of which is rated “A-1+” by Standard & Poor’s;

(xvi) Any stripped securities assessed or rated “AAA” by Standard & Poor’s; and

(xvii) The Investment Agreement.

“Person” means any natural person, firm, partnership, association, corporation, trust or public body.

“PLC” means the permanent loan certificate which is the GNMA Security issued after Final Endorsement.

“Principal Account” means the Account so designated and established in the Revenue Fund by the Indenture.

“Principal Office” means, when used in respect to the Trustee, the corporate trust office of the Trustee located in Los Angeles, California at the address shown in the Indenture or such other location

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designated in writing by the Trustee for any particular purpose, including, but not limited to, for purposes of payments on the Bonds and any exchange, transfer, or surrender of the Bonds.

“Project” means the multifamily rental housing facility known as Broadway Plaza Apartments, located in the City of Los Angeles, California, and described in Exhibit A to the Regulatory Agreement, and any real property, structures, buildings, fixtures or equipment acquired in substitution for, as a renewal or replacement of, or a modification or improvement to, all or any part of such facility, but excluding those retail sales facilities, other commercial space or facilities or recreational, fitness or business facilities available to members of the general public located within such structures and buildings.

“Project Costs” means, to the extent authorized by the Code, the Act and the Law, any and all costs, including financing costs, incurred by the Borrower with respect to the acquisition, construction, renovation, improvement, equipping and refinancing (provided that refinancing is owed to persons who are not related to the Borrower within the meaning of Section 144(a)(3) of the Code), as the case may be, of the Project, including, without limitation, costs for site preparation, the planning of housing, other facilities and improvements, the acquisition of real property and of tangible personal property, the removal or demolition of existing structures, the acquisition, refinancing or construction of housing and other facilities and improvements, and all other work in connection therewith, including, without limitation, the cost of consulting, accounting and legal services, payment of principal of and interest on a construction loan, other expenses necessary or incident to determining the feasibility of the Project, contractors’ and Borrower’s overhead and supervisors’ fees and costs directly allocable to the Project, title insurance premiums, costs of surveys and appraisals, administrative and other expenses necessary or incident to the development and the financing thereof (including reimbursement, if any, to any municipality, county or entity for expenditures made, with the approval of the Issuer, for the Project), and all other costs approved by Bond Counsel, but excluding Issuance Costs.

“Project Facilities” means the buildings, structures and other improvements on the Project Site to be reconstructed, constructed or improved by the Borrower, and all fixtures and other property owned by the Borrower and located on, or used in connection with, such buildings, structures and other improvements constituting the Project. Project Facilities do not include retail sales facilities, leased office space or recreational, fitness or business facilities available to members of the general public.

“Qualified Project Period” means the period beginning on the first date upon which 10% of the dwelling units in the Project are first occupied and ending on the latest of (a) the date which is 15 years after the later of (i) the Closing Date or (ii) the date on which at least 50% of the dwelling units in the Project are first occupied, (b) the first date on which no tax-exempt private activity bond (as that phrase is used in Section 142(d)(2) of the Code) issued with respect to the Project is outstanding or (c) the date on which any assistance provided with respect to the Project under Section 8 of the Housing Act terminates. The CDLAC Conditions apply for a period which, in some cases, exceeds the Qualified Project Period.

“Rating Agency” means Moody’s Investors Service and/or Standard & Poor’s Credit Market Services, a division of the McGraw-Hill Companies, Inc., or any successors and assigns or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized rating agency designated by the Issuer, which maintains a rating on the Bonds. The initial Rating Agency shall be Standard & Poor’s Credit Market Services.

“Rebate Amount” means the amount, if any, determined to be payable with respect to the Bonds by the Issuer to the United States of America pursuant to Section 148 of the Code, calculated in accordance with the Tax Agreement.

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“Rebate Analyst” means any nationally recognized firm of certified public accountants, any reputable firm which offers to the tax-exempt bond industry rebate calculation serves and holds itself out as having expertise in that area, or such other Person as is approved by the Issuer initially, Eichner & Norris PLLC, Washington, D.C.

“Rebate Fund” means the Fund of that name established pursuant to the Indenture.

“Rebate Monitoring Fee” means an amount not to exceed $3,750 per Series payable on March 20, 2013 and each fifth anniversary thereof; provided, however, that the portion of such fee payable from Revenues shall be ratably reduced upon a special mandatory prepayment of the Mortgage Loan, with the amount of any such reduction being paid directly by the Borrower in accordance with the Financing Agreement. The Rebate Monitoring Fee shall be paid directly by the Borrower pursuant to the Financing Agreement and shall not be payable from funds held under the Indenture.

“Record Date” means, except for payment of defaulted interest, while the Bonds are in book-entry only form, the fifth calendar day prior to the Interest Payment Date, and while the Bonds are in certificated form, the fifth calendar day of the month in which an Interest Payment Date occurs. With respect to any payment of defaulted interest, a Special Record Date will be established by the Trustee in accordance with the Indenture.

“Registered Owner,” “Owner” or “Bondowner” means the person or persons in whose name or names a Bond shall be registered on books of the Trustee kept for that purpose in accordance with the terms of the Indenture.

“Regulations” means the proposed, temporary or permanent regulations promulgated under the Code.

“Regulatory Agreement” means the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of April 1, 2008, by and among the Issuer, the Trustee and the Borrower, as amended from time to time.

“Resolution” means each Resolution duly adopted and approved by the Issuer, authorizing, inter alia, the issuance and sale of a series of Bonds and the execution of the Indenture.

“Revenue Fund” means the fund so designated and established by the Indenture.

“Revenues” means (i) all income derived from the investment of money credited to the funds and accounts created under the Indenture (including moneys received pursuant to the Investment Agreement) except the Cost of Issuance Fund, General Fund, Equity Fund and Rebate Fund; and (ii) all payments required to be made to the Trustee under the GNMA Securities.

“Special Mandatory Redemption Account” means the account so designated and established in the Revenue Fund by the Indenture.

“Series” means each Series of Bonds issued under the Indenture, including without limitation, the Series 2008A Bonds.

“Series 2008A Bond” or “Series 2008A Bonds” means any one or more of the Issuer’s Multifamily Housing Revenue Bonds (GNMA Mortgage-Backed Securities Program – Broadway Plaza Project) Series 2008A, authorized, authenticated and delivered under the Indenture in the initial aggregate principal amount of $7,000,000.

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“State” means the State of California.

“Surplus Cash” has the same meaning as that term in the HUD Regulatory Agreement.

“Tax Certificate” means the Tax Certificate as to Arbitrage and the Provisions of Sections 103 and 141-150 of the Internal Revenue Code of 1986 dated the date of Bond Closing, executed by the Issuer and the Borrower, as it may be supplemented or amended from time to time.

“Trust Indenture Act” means the Trust Indenture Act of 1939 (Act of August 3, 1939, 53 Stat. 1149, 15 U.S.C., Secs. 77aaa-77bbbb, as amended).

“Trustee” means U.S. Bank National Association, as trustee under the Indenture, or any successor trustee or co-trustee appointed in accordance with the terms of the Indenture.

“Trustee Fee” means, as it relates to the Series 2008A Bonds, an annual fee equal to the greater of 0.028% of the outstanding principal amount of the Bonds or $1,500, paid in arrears commencing April 1, 2009. The Trustee Fee and out of pocket expenses of the Trustee shall be paid directly by the Borrower pursuant to the Financing Agreement and shall not be payable from funds held under the Indenture.

“Trust Estate” means the property conveyed to the Trustee pursuant to the granting clauses of the Indenture.

The following statements are brief summaries of certain provisions of the major documents executed in connection with the issuance of the Bonds that have not been described elsewhere in this Official Statement. These summaries do not purport to be complete and reference is made to the actual documents available from the Trustee for a full and complete statement of the provisions thereof.

THE INDENTURE

Funds and Accounts

The Indenture creates the following Funds and Accounts relating to the Bonds:

(a) the Mortgage Loan Fund;

(b) the Cost of Issuance Fund;

(c) the Revenue Fund, with an Interest Account, a Principal Account, a Special Mandatory Redemption Account and an Interest Reserve Account therein;

(d) the General Fund;

(e) the Collateral Fund, with a Bond Proceeds Account and a Collateral Account consisting of an Available Moneys Subaccount and a Borrower Funds Subaccount therein; and

(f) the Equity Fund.

The Trustee is also authorized to create, if necessary, an Available Money Account, in the Revenue Fund and a Rebate Fund.

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Mortgage Loan Fund

(a) Generally. The Trustee shall, on the date of the Series 2008A Bond Closing, deposit into the Mortgage Loan Fund the amounts specified by the Indenture. Such moneys shall be held by the Trustee in trust and shall be applied or disbursed in accordance with this section and the Financing Agreement to acquire GNMA Securities, together with funds currently on deposit therein.

(b) Investment Earnings Deposited into the Revenue Fund. Investment earnings received by the Trustee on the Mortgage Loan Fund are Revenues and shall be deposited, when received, into the Revenue Fund.

(c) Acquisition of GNMA Securities. The Trustee shall use and apply moneys in the Mortgage Loan Fund to acquire the GNMA Securities from the Mortgage Lender upon the following terms and conditions:

(i) the Trustee shall have received each of the documents set forth in the Financing Agreement;

(ii) the purchase price of each CLC shall be (except as otherwise provided in the Financing Agreement) the principal amount thereof plus accrued and unpaid interest thereon to but not including the date the CLC is delivered to the Trustee or its nominee, with the principal amount being paid from the Mortgage Loan Fund and the accrued interest being paid from the Interest Account of the Revenue Fund (or, to the extent funds therein are insufficient, from the Interest Reserve Account), provided, however, that the aggregate amount disbursed from the Mortgage Loan Fund for the purchase of CLCs shall not exceed $1,500,000 minus the aggregate amount transferred from the Mortgage Loan Fund to the Special Mandatory Redemption Account pursuant to Sections 3.04(d) and (e);

(iii) the Trustee shall use and apply moneys from the Mortgage Loan Fund to acquire the GNMA Securities from the Mortgage Lender.

(iv) if the PLC has a principal amount greater than the aggregate principal amount of the CLCs previously purchased, the purchase price of the PLC shall consist of (x) the exchange of such CLCs for the PLC, (y) from the Mortgage Loan Fund an amount equal to the difference between the principal amount of the PLC and the aggregate principal amount of the CLCs, and (z) from the Revenue Fund an amount equal to accrued interest on the PLC at the pass through rate on the PLC; provided, however, that the aggregate amount disbursed from the Mortgage Loan Fund for the purchase of CLCs and the PLC and to reflect amortization payments on the Mortgage Loan shall not exceed $1,500,000; and provided, further, that the amount of any principal payments on the Mortgage Loan that have been retained by the Mortgage Lender pending delivery of the PLC will, if such amount has been included in the amount of the PLC, be paid by the Mortgage Lender to the Trustee as a prepayment of the PLC and in such case shall be deposited by the Trustee in the Revenue Fund or returned to the Mortgage Lender if owing as a payment on the PLC, or, if such amount has not been included in the amount of the PLC, shall be transferred by the Trustee from the Mortgage Loan Fund to the Revenue Fund to the extent not previously transferred in accordance with the Indenture; and;

(v) if the PLC has a principal amount (adjusted, if necessary, to include the amount of any prior principal payments on the Mortgage Loan) less than the aggregate principal amount of the CLCs previously purchased, the Trustee shall exchange the CLCs for the PLC, but only upon receipt from the Mortgage Lender of an amount equal to the difference between the

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aggregate principal amount of the CLCs and the principal amount (as adjusted) of the PLC, which amount shall be deposited in the Special Mandatory Redemption Account of the Revenue Fund or returned to the Mortgage Lender if owing as a payment on the PLC; provided, however, that the amount of any principal payments on the Mortgage Loan that have been retained by the Mortgage Lender pending delivery of the PLC shall, if included in the amount of the PLC, be paid by the Mortgage Lender to the Trustee as a prepayment of the PLC and be deposited in the Revenue Fund or returned to the Mortgage Lender if owing as a payment on the PLC, or, if not included in the amount of the PLC, be transferred by the Trustee from the Mortgage Loan Fund to the Revenue Fund to the extent not previously transferred in accordance with the Indenture; and

(d) Transfer of Excess Proceeds; Extension of Final Delivery Date. The Trustee shall transfer all amounts remaining in the Mortgage Loan Fund after making any transfers set forth in subparagraph (c) above to the Special Mandatory Redemption Account in the Revenue Fund as of the close of business on the Final Delivery Date (initially July 31, 2009) if the PLC has not been delivered to the Trustee on or before such date (with any investment earnings being transferred to the Revenue Fund); provided, however, that such transfer shall be delayed at the written request of the Mortgage Lender or the Borrower filed with the Trustee, if the Trustee shall have received, not less than 15 days prior to the then applicable Final Delivery Date, such written request accompanied, in the case of any further extension of such date, by (i) a cash flow projection verified by an independent certified public accountant or other firm acceptable to the Rating Agency demonstrating that the sum of (A) the amount in the Mortgage Loan Fund, (B) the investment earnings to accrue on the amounts held in the Mortgage Loan Fund and/or the Revenue Fund, (C) the payments on the GNMA Securities assuming each GNMA Security that has not been delivered to the Trustee is dated not earlier than the latest date on which it may be delivered to the Trustee, and (D) any additional sums paid to the Trustee by or on behalf of the Borrower for deposit into the Interest Reserve Account (accompanied by an unqualified opinion of nationally recognized bankruptcy counsel to the effect that such sums are not subject to the provisions of Sections 362(a) and 547 of the Federal Bankruptcy Code) will be at least equal to the debt service on the Bonds as originally scheduled and will also be at least equal to debt service on the Bonds through the date 15 days after the end of any such extension period (assuming the redemption of Bonds with unexpended proceeds on such date), plus in each case applicable accrued fees and expenses of the Trustee, the Issuer and the Rebate Analyst and any costs incurred in connection with such extension, (ii) arrangements satisfactory to the Trustee for the making of the investments contemplated by the cash flow projection, (iii) an opinion of Bond Counsel to the effect that such extension will not have any adverse effect on the exclusion of interest on the Bonds from gross income for federal income tax purposes, (iv) written evidence that if the PLC has not yet been delivered to the Trustee, the Commitment from HUD will remain valid and in effect at least through the proposed Final Delivery Date, (v) written evidence (which may be written confirmation from the Mortgage Lender) that if the PLC has not yet been delivered, the CLC Maturity Date will be extended at least to the proposed Final Delivery Date, and (vi) written confirmation of the rating then outstanding on the Bonds from each Rating Agency.

If Commencement of Amortization occurs on the Mortgage Loan or any portion thereof prior to the delivery of the PLC, under no circumstances shall the Mortgage Lender pass through to the Trustee principal payments on the Mortgage Note made prior to issuance and delivery of the PLC (the “Accrued Principal Payments”) unless required to do so by GNMA or FHA; such Accrued Principal Payments, however, shall be paid by the Mortgage Lender to the Trustee in full upon issuance and delivery of the PLC if the PLC includes such Accrued Principal Payments or shall be retained by the Mortgage Lender, if the principal amount of the PLC has been reduced by the aggregate amount of such Accrued Principal Payments. In addition, the parties hereto agree that if amortization of principal commences prior to issuance and delivery of the PLC, the Trustee shall be entitled to use funds on deposit in the Mortgage Loan Fund in amounts up to the aggregate Accrued Principal Payments (but in no event shall the amount transferred pursuant to the provisions of this paragraph exceed (x) the original principal amount of the

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Bonds minus (y) the aggregate amount of CLCs purchased by the Trustee minus (z) any funds previously transferred pursuant to the provisions of this paragraph), as calculated by the Mortgage Lender, to make payments due to Bondholders of the Bonds as and to the extent such payments become due and payable unless other Available Money has been made available to the Trustee by the Borrower or the Lender to make such payments in full. The Mortgage Lender shall provide to the Trustee upon the Trustee’s written request, a schedule of such payments. Notwithstanding any other provisions in the Indenture, the Trustee shall not purchase an aggregate amount of CLCs in excess of the original principal amount of the Bonds minus any funds previously transferred pursuant to this paragraph. Any funds in the Mortgage Loan Fund so used by the Trustee shall not be replenished by the Issuer or the Trustee. Immediately upon request by the Trustee, the Mortgage Lender agrees to notify the Trustee in writing as to the amount of the Accrued Principal Payments.

(e) Acquisition of Final PLC. If and when the PLC has been acquired by the Trustee for the Mortgage Loan, the Trustee shall transfer any amount remaining in the Mortgage Loan Fund due to a reduction of the Mortgage Loan (as confirmed in writing by the Mortgage Lender) to the Special Mandatory Redemption Account and otherwise to the Revenue Fund (with any investment earnings being transferred to the Revenue Fund).

(f) Holding of GNMA Securities. If any GNMA Security is in book-entry only form, then the following shall apply:

(i) the GNMA Security must be registered in the name of the Trustee or the participant acting on behalf of the Trustee at the depository for such book-entry designation at the time of purchase of the GNMA Security by the Trustee and the Trustee or the participant acting on behalf of the Trustee shall have a first-lien position perfected security interest in the GNMA Security; and

(ii) the Trustee shall be or shall become a participant in the GNMA depository, currently the Federal Reserve Bank System or shall have entered into a custody agreement with respect to the GNMA Security with a member of the Federal Reserve Bank System.

Cost of Issuance Fund

On Bond Closing, the Trustee shall deposit into the Cost of Issuance Fund the amounts required by the Indenture. Moneys on deposit in the Cost of Issuance Fund shall be applied to pay Issuance Costs. Such costs shall be payable upon submission of a written request from a duly authorized officer or agent of the Borrower to the Trustee stating that the amount indicated thereon is justly due and owing, has not been the subject of another written request which has been paid, and is a proper cost of issuing the Bonds or implementing the financing for the Project. Any moneys remaining in the Cost of Issuance Fund on the 180th day following Bond Closing shall be transferred at the direction of the Issuer.

Moneys in the Cost of Issuance Fund shall be invested only in Permitted Investments as described in the Indenture. Investment Income (including interest) on such investment shall be retained in the Cost of Issuance Fund.

Revenue Fund

(a) Deposit and Application of Revenues. The Trustee shall deposit all Revenues received by it into the Revenue Fund. Subject to the Indenture as to any Rebate Amount, on or before each March 20 and September 20, commencing September 20, 2008, and on or before any other Interest Payment Date, all Revenues shall be transferred by the Trustee to the Accounts of the Revenue Fund as follows, in

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the following order of priority, the requirements of each such Account at the time of deposit to be satisfied, and the results of such satisfaction being taken into account, before any payment or transfer is made subsequent in priority:

(i) Interest Account. The Trustee shall deposit into the Interest Account an amount which, together with the amount then on deposit in the Interest Account, is sufficient to pay the interest becoming due and payable on the Bonds on the next Interest Payment Date. If and to the extent that the amount in the Interest Account is, after such deposit, insufficient to pay such interest, the amount of the deficiency shall be transferred from the Interest Reserve Account to the Interest Account. Moneys on deposit in the Interest Account shall be applied solely to pay the interest on the Bonds as the same becomes due and payable and to acquire GNMA Securities as herein provided.

(ii) Principal Account. The Trustee shall deposit into the Principal Account an amount which, together with the amount then on deposit in the Principal Account, is sufficient to pay the principal becoming due and payable on the Bonds due on the next Interest Payment Date, whether upon the maturity of Bonds or by application of the sinking fund installments specified in the Indenture. If and to the extent that the amount in the Principal Account is, after such deposit, insufficient to pay such principal, the amount of the deficiency shall be transferred from the Interest Reserve Account to the Principal Account. Moneys on deposit in the Principal Account shall be applied solely to pay the principal of the Bonds as the same shall become due and payable at scheduled maturity or by sinking fund redemption, subject to the provisions of the Indenture. On each date on which any principal becomes payable on the Bonds (whether at maturity or upon optional or sinking fund redemption), the Trustee shall set aside and hold in trust, an amount from the Principal Account sufficient to pay the amount of principal of the Bonds becoming due and payable on such date.

(iii) [Reserved]

(iv) Balances. Any remaining balance less than or equal to $100,000 (exclusive of amounts in the Interest Reserve Account) shall be retained in the Revenue Fund.

(v) Excess Proceeds Redemption. Any amounts remaining on deposit in the Revenue Fund (exclusive of amounts in the Interest Reserve Account) in excess of $100,000 shall be transferred to the Special Mandatory Redemption Account for application to the redemption of Bonds pursuant to the Indenture.

(b) Special Mandatory Redemption Account. The Trustee shall deposit into the Special Mandatory Redemption Account (i) all amounts transferred from the Mortgage Loan Fund pursuant to the Indenture; (ii) all amounts attributable to the receipt by the Trustee of payments under GNMA Securities exceeding regularly scheduled payments of principal and interest thereon, including payments representing (A) casualty insurance proceeds or condemnation awards applied to the prepayment of the Mortgage Loan following a partial or total destruction or condemnation of the Project (or transfer of title in lieu of condemnation); (B) mortgage insurance proceeds or other amounts received with respect to the Mortgage Loan or the applicable GNMA Security upon the occurrence of an event of default under the Mortgage Loan; (C) a prepayment of the Mortgage Loan or any GNMA Security required by the applicable rules, regulations, policies and procedures of HUD or GNMA, including in the event the PLC is not delivered by the CLC Maturity Date, as such date may be extended in accordance with the Indenture; (D) notwithstanding any prepayment prohibition imposed and/or penalty required by the Mortgage Note with respect to prepayment made prior to the first date on which the Mortgage Note is prepayable with a premium of 1% or less, prepayment on the Mortgage Loan made in part or in full

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without prepayment penalty if HUD determines that such prepayment avoids a mortgage insurance claim and is therefore in the best interest of the federal government; (E) prepayments on the Mortgage Loan or any GNMA Security made without notice; or (F) funds paid for any other reason other than an optional prepayment of the Mortgage Note; and (iii) amounts required to be transferred from the Revenue Fund pursuant to the Indenture. The Trustee shall use such amounts, as soon as practicable after each such deposit, solely to redeem Bonds pursuant to the Indenture.

(c) Available Money Account. If the Borrower shall deposit with the Trustee moneys to be used to pay the redemption premium on the Bonds in accordance with the Indenture, the Trustee shall establish an Available Money Account in the Revenue Fund and a separate subaccount therein for each such deposit. Moneys on deposit in the Available Money Account which represent Available Money shall be transferred to the Principal Account to the extent necessary to pay the premium, if any, on the Bonds as the same shall become due and payable by redemption. Such moneys shall be paid to the Bondowners only if they constitute Available Money. Any excess moneys in the Available Money Account shall be paid to the Borrower that deposited such funds with the Trustee.

(d) Interest Reserve Account. Amounts in the Interest Reserve Account shall be transferred to the Interest Account or the Principal Account, as the case may be, as provided in subsection (a) above.

As of the close of business on the first Interest Payment Date after the CLC Maturity Date, the Trustee shall transfer any remaining amount in the Interest Reserve Account in the following amounts in the following order of priority:

(i) first, to the Revenue Fund, an amount that, when added to the amount in the Revenue Fund, equals an amount set forth in the Indenture (or such other amount approved by the Rating Agency);

(ii) second, to the General Fund, such amount as is necessary to provide for fees and expenses then due and payable from the General Fund pursuant to the Indenture that have not been otherwise provided for therein;

(iii) third, to the Mortgage Lender in an amount equal to (A) all amounts provided by the Mortgage Lender to effect any extension of the Final Delivery Date, as set forth in a certificate of the Mortgage Lender, plus (B) all costs incurred by the Mortgage Lender in effecting the issuance of the GNMA Securities, as set forth in a certificate of the Mortgage Lender; and

(iv) fourth, the Issuer to the extent of any amounts then owing the Issuer by the Borrower, as evidenced by a written demand for payment of such amounts presented by the Issuer to the Trustee, then to the extent of any remaining amounts, to the Community Redevelopment Agency of the City of Los Angeles (the “CRA”) to the extent of any amounts then owing by the Borrower to the CRA, as evidenced by a written demand for payment of such amounts presented by the CRA to the Trustee; and, finally, to the extent of any remaining amounts, to the Borrower. No transfer shall be made by the Trustee pursuant to the Indenture until the written demand of the CRA referenced in the preceding sentence has been received by the Trustee. No transfer shall be made to the Borrower under the Indenture until the written demands of both the CRA and the Issuer have been received by the Trustee.

(e) Investment. Amounts in the Revenue Fund and all accounts therein shall be invested in the Investment Agreement, provided, however, that if the Investment Agreement is terminated pursuant to its terms as a result of a downgrade or default, amounts in the Revenue Fund shall be invested in other

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Permitted Investments, at the instruction of the Borrower delivered to the Trustee from time to time. The Borrower shall use its best efforts to obtain (after consultation with the Mortgage Lender) a new investment agreement with terms as advantageous as practicable in comparison to the original Investment Agreement.

(f) Acquisition of GNMA Securities. Amounts in the Revenue Fund (first from the Interest Account and then from the Interest Reserve Account) shall be used as necessary to pay interest of GNMA Securities when acquired.

General Fund

On each March 20 and September 20, commencing September 20, 2008, the Trustee shall deposit into the General Fund, solely from funds provided by the Borrower and not from any amounts held under the Indenture in the priority specified in the Indenture, the amounts necessary to pay the Issuer Annual Fee, Trustee Fee and Rebate Monitoring Fee, then due. The Trustee shall apply such moneys solely for the following purposes, in the following order of priority:

(a) first, to the Trustee for the payment of the Trustee Fee then due and to be paid from Revenues;

(b) second, to the Rebate Analyst and the Dissemination Agent, as applicable, the amount of the respective Rebate Monitoring Fee or Dissemination Agent Fee then due;

(c) third, any Issuer Annual Fee amounts then due and payable.

Moneys in the General Fund shall be invested only in Permitted Investments as described in the Indenture. Investment income (including interest) on such investment shall be retained in the General Fund. Amounts in the General Fund are not part of the Trust Estate.

Rebate Fund

If the Trustee shall receive amounts determined in accordance with the Tax Certificate to be Rebate Amounts and specified as such by the Rebate Analyst, the Trustee shall establish a Rebate Fund and deposit such amounts therein. The Trustee shall withdraw such amounts to pay the Rebate Amount required to be paid to the United States of America as specified in writing by the Rebate Analyst or the Issuer. The Trustee shall not be responsible for calculating Rebate Amounts, for the adequacy or correctness of any rebate report, or for enforcing compliance with rebate filing or reporting requirements. The Trustee shall be deemed conclusively to have complied with the provisions of the Indenture if it follows the written directions of the Rebate Analyst, the Issuer or the Borrower.

Moneys in the Rebate Fund shall be invested only in Permitted Investments as described in the Indenture. Investment income (including interest) on such investment shall be retained in the Rebate Fund.

Collateral Fund

(a) There shall be deposited to the Collateral Fund, on the Closing Date, the amounts set forth in the Indenture. Amounts in the Bond Proceeds Account of the Collateral Fund shall be released as set forth in the Collateral Fund Requisition Certificate in the form attached to the Indenture, to or at the direction of the Borrower on or after the Closing Date to pay or to reimburse the Borrower for payment of the amounts set forth in such requisition, provided that the total of such disbursements plus the Interest

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Requirement shall not exceed the total amount of funds held in the Available Moneys Subaccount of the Collateral Fund, provided that on the maturity date of the Series 2008A Bonds maturing September 20, 2009 such disbursement may be made concurrently with delivery of an opinion that all moneys held in the Collateral Fund constitute Available Moneys.

(b) Amounts held in the Available Moneys Subaccount of the Collateral Account of the Collateral Fund shall be applied to the payment of the Bonds maturing September 20, 2009 at their maturity or earlier redemption or acceleration. Amounts in the Collateral Account shall be invested in the Investment Agreement. Amounts held in the Equity Fund shall, at the written direction of the Borrower, be transferred to (i) the Borrower Funds Subaccount of the Collateral Account of the Collateral Fund; or (ii) as directed in writing by the Borrower for payment of Project related costs, provided that any such disbursement shall not result in the sum of the aggregate amount of such disbursements plus the Interest Requirement exceeding the sum of amounts held in the Bond Proceeds Account of the Collateral Fund and the Available Moneys Subaccount of the Collateral Fund. Once moneys have been held in the Borrower Funds Subaccount of the Collateral Account for more than 91 days during which no Act of Bankruptcy has occurred or the Trustee has received an opinion that such funds constitute Available Moneys, such moneys shall, at the written request of the Borrower, be transferred to the Available Moneys Subaccount of the Collateral Fund and, except as provided in subparagraph (c) below, used to pay the principal of and interest on Series 2008A Bonds maturing September 20, 2009. Revenues from the investment of amounts on deposit in the Collateral Account shall be deposited upon receipt into the Revenue Fund.

(c) Amounts in the Collateral Account shall, to the extent funds in the other funds and accounts under the Indenture are inadequate, be used to pay principal of and interest then due on the Bonds.

Equity Fund

The Trustee shall deposit into the Equity Fund all sums delivered by the Borrower for deposit therein. Moneys held in the Equity Fund shall be held therein until transferred to the Borrower Funds Subaccount of the Collateral Fund under the Indenture or requisitioned in writing by the Borrower to pay Project Costs. The Equity Fund shall be invested in the Investment Agreement but shall not be included in the Trust Estate. Investment earnings on funds held in the Equity Fund shall be retained therein.

Defaults

Each of the following events constitutes an “Event of Default” under the Indenture:

(a) Failure to pay any installment of interest on any Bond when such interest installment becomes due and payable;

(b) Failure to pay the principal of or premium, if any, on any Bond, whether at stated maturity or, upon proceedings for redemption or upon the maturity itself; and

(c) Any material representation or warranty made by the Issuer in the Indenture or the Bonds shall have been untrue when made or any failure by the Issuer to observe and perform any covenant, condition or agreement contained in the Indenture or in the Bonds, and the continuation of such failure for a period of 60 days after written notice thereof, specifying such breach or failure and requesting the same to be remedied, has been given to the Issuer, the Borrower and the Bondowners by the Trustee or to the Issuer, the Borrower and the Trustee by the Owners of not less than a majority in aggregate principal amount of the Bonds at the time outstanding, unless (i) the Trustee shall agree in writing to an extension

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of such time prior to its expiration, (ii) if the breach or failure be such that it cannot be corrected within the applicable period, corrective action is instituted by the Issuer, or by the Borrower if such action can be taken by the Borrower, within the applicable period and is being diligently pursued, or (iii) the breach or failure does not have an adverse impact on the exclusion of interest on the Bonds from gross income for federal income tax purposes and does not impair the validity or enforceability of the Bonds, the Indenture, the Financing Agreement, the Tax Certificate, any Regulatory Agreement, the Mortgage Loan or the GNMA Security.

Remedies

Upon the occurrence of an Event of Default, the Trustee may take whatever action at law or in equity appears necessary to protect the rights of the Bondowners.

No Bondowner will have the right to institute any suit, action or proceeding in equity or at law, for any remedy under or upon the Indenture, unless (a) an Event of Default has occurred of which the Trustee has been notified; (b) the Owners of not less than a majority of the aggregate principal amount of the Bonds then Outstanding have requested in writing and offered the Trustee reasonable opportunity either to exercise the powers granted under the Indenture or institute such action, suit or proceeding in its own name; (c) the Bondowners have offered to the Trustee indemnity satisfactory to the Trustee against the fees and expenses outlays and counsel fees and liabilities to be incurred in compliance with such request; and (d) the Trustee has refused or omitted to comply with such request for a period of 60 days after such written request has been received by, and such tender of indemnity has been made to, the Trustee.

Nothing in the Indenture will, however, affect or impair the right of any Bondowner to enforce the payment of the principal of and premium, if any, and interest on any Bond at or after the maturity thereof.

Removal of the Trustee; Resignation

The Issuer may, after consultation with the Borrower, remove the Trustee at any time, unless an Event of Default has occurred and is continuing, and shall remove the Trustee if requested to do so by an instrument or instruments signed by the Owners of a majority in aggregate principal amount of Bonds then Outstanding. The Trustee may resign at any time by giving written notice to the Issuer, the Borrower and the Mortgage Lender; whereupon the Issuer will appoint a successor and will cause notice thereof to be given by first class mail to the Owners of Bonds. If no successor has been appointed within 45 days, the resigning Trustee, the Mortgage Lender, the Borrower or any Bondowner may petition a court for the appointment of a successor Trustee.

Supplemental Indentures

The Issuer and the Trustee may, without the consent of or notice to any of the Bondowners, enter into supplemental indentures not inconsistent with the terms of the Indenture for any one or more of the following purposes:

(a) to add to the covenant and agreements of the Issuer contained in the Indenture other covenants and agreements thereafter to be observed, or to pledge or assign additional security for the Bonds, or to surrender any right or power reserved to or conferred upon the Issuer in the Indenture provided that no such covenant, agreement, pledge, assignment or surrender shall materially adversely affect the interests of the Bondowners;

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(b) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision contained in the Indenture, or in regard to matters or questions arising under the Indenture, as deemed necessary by the Issuer or desirable and not inconsistent with the Indenture and that will not materially adversely affect the interest of the Bondowners;

(c) to modify, amend or supplement the Indenture in such manner as to permit its qualification under the Trust Indenture Act of 1939, as amended, or any similar federal statute, in a manner that will not materially adversely affect the interests of the Bondowners;

(d) to modify, amend or supplement the Indenture in any other way that will not materially adversely affect the interests of the Bondowners;

(e) to provide for certificated bonds or additional bonds; or

(f) to comply with state or federal securities laws.

With the prior written consent of the Owners of 50% or more in aggregate principal amount of the Bonds Outstanding, the Issuer and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental to the Indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture; provided, however, that no such supplemental indenture will extend the fixed maturity of any Bonds or reduce the rate of interest thereon, extend the date of payment of interest, reduce the amount of the principal thereof or reduce any premium payable on the redemption thereof, or impair the lien of the Indenture and the Bonds on the Revenues (except as contemplated by the Indenture), in each case without the consent of each Bondowner so affected, or reduce the percentage of Bondowners required to consent to changes to the Indenture.

THE FINANCING AGREEMENT

General Terms of the Financing

(a) In order to provide moneys to fund the Mortgage Loan and for the funding of an additional loan from the Bond Proceeds Account of the Collateral Fund, (i) the Issuer will issue and deliver the Bonds upon the terms and subject to the conditions contained in the Financing Agreement and the Indenture, (ii) the Trustee will deposit the initial proceeds of the Bonds and all subsequent advances of proceeds thereafter, in accordance with the Indenture for the purpose of, among other things, of acquiring the GNMA Securities backed by the Mortgage Loan, and (iii) the Mortgage Lender will originate the Mortgage Loan and deliver the GNMA Securities to the Trustee.

(b) The Borrower promises:

(i) to repay the principal of the Mortgage Loan with interest thereon as provided in the Mortgage Note and the Mortgage Loan Documents;

(ii) to comply with the provisions of the Financing Agreement, the Regulatory Agreement and the HUD Regulatory Agreement as provided therein, subject to the provisions of the Financing Agreement;

(iii) to use its best efforts to cause the delivery of the PLC on or prior to the Final Delivery Date;

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(iv) to deposit or cause to be deposited to the Available Moneys Subaccount of the Collateral Account of the Collateral Fund on the Closing Date the amount specified in the Financing Agreement in Available Money, to the Interest Reserve Account the amount specified in the Financing Agreement in Available Money;

(v) to deposit or cause to be deposited in the Equity Fund and in the Costs of Issuance Fund on the Closing Date for the Bonds the amounts specified in the Financing Agreement; and

(vi) to deposit or cause to be deposited Available Moneys prior to any disbursement from the Bond Proceeds Account of the Collateral Fund.

Delivery of the GNMA Securities

The Borrower and the Mortgage Lender agree to use their respective best efforts to deliver the CLCs to the Trustee in connection with the funding of each construction advance by the Trustee from the Mortgage Loan Fund and to deliver the PLC in exchange for the CLCs as soon as practicable after Final Endorsement of the Mortgage Note and issuance of the Series 2008A Bonds. The Borrower and the Mortgage Lender expect to deliver the PLC to the Trustee on or before the Final Delivery Date. The Mortgage Lender shall immediately deliver to the Trustee any CLCs the Mortgage Lender holds with respect to the Bonds if (i) the PLC has not been delivered to the Trustee on or before the Final Delivery Date (or such later date as permitted under the Indenture) or (ii) if the Mortgage Lender knows that, for any reason, the PLC will not be delivered to the Trustee, provided that the Trustee shall purchase such CLCs in accordance with the Financing Agreement.

Sufficiency of Funds

Neither the Trustee, the Issuer nor the Mortgage Lender makes any warranty, either express or implied, that the moneys deposited in the Mortgage Loan Fund and/or the Bond Proceeds Account of the Collateral Fund under the Indenture and available for payment of the costs of acquiring the GNMA Securities or otherwise paying Project Costs will be sufficient to pay all the costs thereof. The Borrower agrees that if the Borrower should pay any costs relating to the acquisition of the GNMA Securities, the Borrower shall not be entitled to any reimbursement therefor from the Issuer, the Mortgage Lender, the Trustee or the Bondholders. Upon 30 days prior notice from the Trustee, the Borrower shall provide to the Trustee any additional funds necessary to acquire any GNMA Security.

Failure to Deliver The PLC by Date Required Under the Indenture

Any provisions in any other documents to the contrary notwithstanding, in the event that the PLC is not delivered to the Trustee by the Final Delivery Date (as such date may be extended pursuant to the Indenture), the remaining amounts held in the Mortgage Loan Fund and reserved for the Mortgage Loan, and the principal payments received by the Trustee upon maturity of the CLCs for the Mortgage Loan, shall be used to redeem the Series 2008A Bonds, and the Borrower shall not be entitled to any use of such amounts.

Acquisition of the GNMA Securities

The Trustee shall acquire the CLCs and the PLC from the Mortgage Lender, as provided in the Financing Agreement, on behalf of the Issuer, provided, however, that the Trustee’s obligation in such respect shall be limited to the moneys available for such purpose in the Mortgage Loan Fund and, with respect to accrued interest on the GNMA Securities, the Revenue Fund. The obligation of the Trustee to

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acquire and review the initial CLC, each subsequent CLC, and the PLC with respect to the Mortgage Loan is subject to the requirements under the Financing Agreement. Prior to delivery of each CLC and the PLC to the Trustee, the Borrower shall submit to the Trustee a certificate relative to the related Mortgage Loan advance in the form attached to the Financing Agreement (or with respect to proceeds of the Bonds, in the form attached to the Indenture). Receipt of such certificate shall not be a condition to acquisition of any CLC or PLC. Failure by the Borrower to deliver any such certificate shall constitute a default under the Financing Agreement.

The obligation of the Trustee to acquire each subsequent CLC after the initial CLC is subject to the receipt by the Trustee of the following items as they relate to such subsequent CLC and the Mortgage Loan advance represented by such CLC: (i) the CLC (in book-entry form); and (ii) a certificate of the Mortgage Lender showing the calculation of the purchase price of the CLC.

As a condition to the purchase of each GNMA Security, the Borrower is required to certify compliance with the respect to certain matters relating to the exclusion of interest on the Bonds from gross income, unless the Mortgage Lender provides to the Trustee evidence that HUD has determined that requiring such certification is in violation of or otherwise inconsistent with the applicable FHA, HUD or GNMA requirements.

Events of Default

Under the Financing Agreement, each of the following is an “Event of Default”:

(a) the Borrower shall fail to pay or cause to be paid amounts required to pay principal of, premium, if any, or interest on the Mortgage Note or the Bonds on the dates required under the Financing Agreement; or

(b) the Borrower shall fail to pay amounts required to be paid to the Trustee under the Financing Agreement and five Business Days have elapsed after notice of such event has been sent by fax with hard copy immediately following to the parties to the Financing Agreement; or

(c) the Borrower shall fail to perform or observe any of its other obligations, covenants or agreements contained in the Financing Agreement, including a failure to repay any amounts which have been previously paid but are recovered, attached or enjoined pursuant to any insolvency, receivership, liquidation or similar proceedings; or

(d) an Event of Default shall occur under any Financing Document other than the Financing Agreement; or

(e) any representation or warranty of the Borrower shall be determined by the Trustee or the Issuer to have been materially false when made, and the Trustee has received written notice from the Trustee or the Issuer, as appropriate, of such determination.

Whenever any Event of Default under the Financing Agreement has happened and is continuing, the Trustee and the Issuer, at the written request or consent of the Trustee, will take whatever action at law or in equity may appear necessary or desirable to collect the payments required to be made by the Borrower under the Financing Agreement, or to enforce performance and observance of any obligation or agreement of the Borrower under the Financing Documents, but in no event will the Issuer or the Trustee be obligated to take any such action that might cause it to expend time or money or otherwise incur liability unless and until satisfactory indemnity has been furnished to it.

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FHA Requirements

The provisions of the Financing Agreement are subject and subordinate to the National Housing Act, all applicable HUD insurance (and Section 8, if applicable) regulations and requirements, the Mortgage Loan Documents, all applicable GNMA regulations and requirements and the GNMA Documents; and in the event of any conflict between the provision of the Financing Agreement and the provisions of the National Housing Act, any applicable HUD regulations, HUD requirements, the Mortgage Loan Documents, any applicable GNMA regulations, GNMA requirements and/or the GNMA Documents, the said National Housing Act, HUD regulations, HUD requirements, Mortgage Loan Documents, GNMA regulations, GNMA requirements and GNMA Documents will be controlling in all respects.

THE REGULATORY AGREEMENT

Residential Rental Property

The Borrower has agreed in the Regulatory Agreement that the Project will be owned, managed and operated as a “qualified residential rental project” as such term is defined in Section 142(d) of the Code for a term equal to the Qualified Project Period. To that end, and for the Qualified Project Period, the Borrower has represented, warranted, covenanted and agreed therein as follows:

(a) The Project Facilities will be developed for the purpose of providing multifamily residential rental property, and the Borrower will own, manage and operate the Project Facilities as a project to provide multifamily residential rental property comprising a building or structure or several interrelated buildings or structures, together with any functionally related and subordinate facilities, and no other facilities in accordance with Section 142(d) of the Code and Section 1.103-8(b) of the Regulations, the Law and the Act, and in accordance with such requirements as may be imposed thereby on the Project from time to time.

(b) All of the dwelling units in the Project will be similarly constructed units, and each Low Income Unit in the Project will contain complete separate and distinct facilities for living, sleeping, eating, cooking and sanitation for a single person or a family, including a sleeping area, bathing and sanitation facilities and cooking facilities equipped with a cooking range, a sink and a refrigerator.

(c) None of the dwelling units in the Project will at any time be utilized on a transient basis or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, rest home or trailer court or park.

(d) No part of the Project will at any time be owned by a cooperative housing corporation, nor shall the Borrower take any steps in connection with a conversion to such ownership or uses. Other than filing a condominium map and a final subdivision map on the Project and obtaining a Final Subdivision Public Report from the California Department of Real Estate, the Borrower shall not take any steps in connection with a conversion of the Project to condominium ownership during the Qualified Project Period.

(e) All of the dwelling units will be available for rental on a continuous basis to members of the general public, and the Borrower will not give preference to any particular class or group in renting the dwelling units in the Project, except to the extent that dwelling units are required to be leased or rented to Low Income Tenants.

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(f) The Project Site consists of a parcel or parcels that are contiguous except for the interposition of a road, street or stream, and all of the Project Facilities comprise a single geographically and functionally integrated project for residential rental property, as evidenced by the ownership, management, accounting and operation of the Project.

(g) No dwelling unit in the Project shall be occupied by the Borrower; provided, however, that if the Project contains five or more dwelling units, this subsection (g) shall not be construed to prohibit occupancy of not more than one dwelling unit by one or more resident managers or maintenance personnel any of whom may be the Borrower.

(h) The Project shall be maintained in conformity with the habitability and fire codes of the City of Los Angeles.

(i) The Project shall be managed in a manner consistent with prudent property management standards and in compliance with all state and local laws, ordinances and regulations relating thereto.

Low Income Tenants; Records and Reports

Pursuant to the requirements of the Code and the Issuer, the Borrower has represented, warranted and covenanted in the Regulatory Agreement as follows:

(a) Within 30 days after each of (i) the date on which 10% of the dwelling units in the Project are occupied and (ii) the date on which 50% of dwelling units in the Project are occupied, the Borrower shall execute and deliver to the Issuer and the Trustee a certificate identifying such dates and the beginning date and earliest ending date of the Qualified Project Period. The Borrower shall use its best efforts to record a copy of such certificates in the Office of the County Recorder of the County of Los Angeles, California.

(b) Commencing on the first day of the Qualified Project Period, Low Income Tenants shall occupy at least 20% of all completed and occupied units in the Project (excluding units occupied by property managers) before any additional units are occupied by persons who are not Low Income Tenants; and for the Qualified Project Period no less than 20% of the total number of completed units of the Project shall at all times be rented to and occupied by Low Income Tenants. For the purposes of this paragraph (b), a vacant unit which was most recently occupied by a Low Income Tenant is treated as rented and occupied by a Low Income Tenant until reoccupied, other than for a temporary period of not more than 31 days, at which time the character of such unit shall be redetermined. In determining whether the requirements described in this paragraph (b) have been met, fractions of units shall be treated as entire units.

(c) No tenant qualifying as a Low Income Tenant shall be denied continued occupancy of a unit in the Project because, after admission, such tenant’s Adjusted Income increases to exceed the qualifying limit for Low Income Tenants; provided, however, that should a Low Income Tenant’s Adjusted Income, as of the most recent determination thereof, exceed 140% of the then applicable income limit for a Low Income Tenant of the same family size, the next available unit of comparable or smaller size must be rented to (or held vacant and available for immediate occupancy by) a Low Income Tenant; and provided further that, until such next available unit is rented to a tenant who is not a Low Income Tenant, the former Low Income Tenant who has ceased to qualify as such shall be deemed to continue to be a Low Income Tenant for purposes of the 20% requirement described in paragraph (b) above (if applicable).

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(d) The Borrower will obtain, complete and maintain on file Income Certifications from each Low Income Tenant, including (i) an Income Certification dated immediately prior to the initial occupancy of such Low Income Tenant in the Project and, in the case of tenants residing in the Project as of the date of acquisition thereof (if applicable), dated immediately prior to the disbursement of Bond proceeds to fund acquisition of the Project and (ii) thereafter, annual Income Certifications dated as of the anniversary date of each initial Income Certification. The Borrower will obtain such additional information as may be required in the future by the State of California, by the Issuer and by Section 142(d) of the Code, as the same may be amended from time to time, or in such other form and manner as may be required by applicable rules, rulings, policies, procedures, Regulations or other official statements promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service with respect to obligations which are Tax-exempt under Section 142(d) of the Code. A copy of the most recent Income Certification for Low Income Tenants commencing or continuing occupation of a Low Income Unit (and not previously filed with the Issuer) shall be attached to the Certificate of Continuing Program Compliance which is to be filed with the Issuer no later than the fifteenth day of the first month of each calendar quarter until the end of the Qualified Project Period. The Borrower shall make a good-faith effort to verify that the income information provided by an applicant in an Income Certification is accurate by obtaining the acceptable forms of verification enumerated in Chapter 3 of the most current, amended edition of HUD Handbook 4350.3, or such instruction by HUD that may supersede such handbook, and any additional documentation that the Issuer shall deem relevant, such as the two most recent years’ tax returns or other forms of independent verification satisfactory to the Issuer.

(e) The Borrower will use its best efforts to maintain complete and accurate records pertaining to the Low Income Units, and will with reasonable notice permit any duly authorized representative of the Issuer, the Trustee, the Department of the Treasury or the Internal Revenue Service to inspect the books and records of the Borrower pertaining to the Project during regular business hours, including those records pertaining to the occupancy of the Low Income Units.

(f) The Borrower will prepare and submit to the Issuer and the Trustee, no later than the fifteenth day of the first month of each calendar quarter following receipt by the Trustee of the Completion Certificate until the end of the Qualified Project Period, a Certificate of Continuing Program Compliance executed by the Borrower stating (i) the percentage of the dwelling units of the Project which were occupied or deemed occupied, pursuant to the requirements described in paragraph (b) above, by Low Income Tenants during such period; (ii) that either (A) no unremedied default has occurred under the Regulatory Agreement, or (B) a default has occurred, in which event the certificate shall describe the nature of the default in detail and set forth the measures being taken by the Borrower to remedy such default; and (iii) that, to the knowledge of the Borrower, no Determination of Taxability has occurred, or if a Determination of Taxability has occurred, setting forth all material facts relating thereto.

(g) On or before each February 15 during the Qualified Project Period, the Borrower will submit to the Issuer a draft of the completed Internal Revenue Code Form 8703 or such other annual certification required by the Code to be submitted to the Secretary of the Treasury as to whether the Project continues to meet the requirements of Section 142(d) of the Code. On or before each March 31 during the Qualified Project Period the Borrower will submit such completed form to the Secretary of the Treasury, regardless of whether or not the Issuer has responded to such draft.

(h) Subject to the requirements of any Section 8 Housing Assistance Payments Contract with respect to the Project, each lease or rental agreement pertaining to a Low Income Unit shall contain a provision to the effect that the Borrower has relied on the income certification and supporting information supplied by the Low Income Tenant in determining qualification for occupancy of the Low Income Unit and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease or rental agreement. Each such lease or rental agreement shall also

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provide that the tenant’s income is subject to annual certification in accordance with the Regulatory Agreement and to recertification if the number of occupants in the units changes for any reason (other than the birth of a child to an occupant of such unit) and that if upon any such certification such tenant’s Adjusted Income exceeds 140% of the then applicable income limit for a Low Income Tenant of the same family size, such tenant may cease to qualify as a Low Income Tenant, and such tenant’s rent is subject to increase. Notwithstanding anything described in this paragraph to the contrary, such tenant’s rent may be increased only pursuant to specified provisions in the Regulatory Agreement.

Tax-Exempt Status of the Bonds

The Borrower and the Issuer, as applicable, has represented, warranted and agreed in the Regulatory Agreement as follows:

(a) The Borrower and the Issuer will not knowingly take or permit actions within their control, or omit to take or cause to be taken, as is appropriate, any action that would adversely affect the tax-exempt nature of the interest on the Bonds and, if either should take or permit, or omit to take or cause to be taken, any such action, it will take all lawful actions necessary to rescind or correct such actions or omissions promptly upon obtaining knowledge thereof.

(b) The Borrower and the Issuer will take such action or actions as may be necessary, in the written opinion of Bond Counsel filed with the Issuer and the Trustee, with a copy to the Borrower, to comply fully with all applicable rules, rulings, policies, procedures, Regulations or other official statements promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service pertaining to obligations the interest on which is tax-exempt under Section 142(d) of the Code.

(c) The Borrower and the Issuer will file or record such documents and take such other steps as are necessary, in the written opinion of Bond Counsel filed with the Issuer and the Trustee, with a copy to the Borrower, in order to insure that the requirements and restrictions of the Regulatory Agreement will be binding upon all owners of the Project, including, but not limited to, the execution and recordation of the Regulatory Agreement in the real property records of the County of Los Angeles.

(d) The Borrower will not knowingly enter into any agreements which would result in the payment of principal or interest on the Bonds being “federally guaranteed” within the meaning of Section 149(b) of the Code.

(e) Subject to the Regulatory Agreement, the Borrower covenants to include the requirements and restrictions contained in the Regulatory Agreement in any documents transferring any interest in the Project prior to the expiration of the Qualified Project Period to another person to the end that such transferee has notice of, and is bound by, such restrictions, and to obtain the agreement from any transferee to abide by all requirements and restrictions of the Regulatory Agreement; provided, however, that so long as the Borrower has no remaining interest in the Project, the Borrower shall have no obligation to monitor such transferee’s compliance with such restrictions, and the Borrower shall incur liability if such transferee fails to comply with such restrictions only in proportion to the Borrower’s then remaining interest.

Additional Requirements of the Act

In addition to the requirements described above, and without limiting any additional requirements in the Regulatory Agreement, during the Qualified Project Period, the Borrower and the Issuer have agreed to comply with each of the requirements of the Act, and, without limiting the foregoing, the Borrower has specifically agreed to comply with each of the requirements described below:

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(a) As provided in Section 52097.5 of the Act, not less than 20% of the total number of units in the Project shall be reserved for occupancy by tenants whose adjusted gross income does not exceed 50% of the median adjusted gross income for the Area, adjusted for family size, as determined pursuant to Section 8 of the Housing Act.

(b) The rents paid by the tenant for the units reserved pursuant to paragraph (a) above shall not exceed the amount derived by multiplying 30% times 50% of the median adjusted gross income for the Area, adjusted for family size, as determined pursuant to Section 8 of the Housing Act, assuming a family of one person in the case of a studio unit, two persons in the case of a one-bedroom unit, three persons in the case of a two-bedroom unit, four persons in the case of a three-bedroom unit, and five persons in the case of a four-bedroom unit.

(c) During the Qualified Project Period the Borrower shall file Certificates of Continuing Program Compliance in the form and at the time required by the Regulatory Agreement that shall contain sufficient information to allow the Issuer to file the annual report required by the Act.

Additional Requirements of the Issuer and CDLAC

In addition to, and not in derogation of, the requirements set forth in the Regulatory Agreement, each of which is incorporated in the Regulatory Agreement as a specific requirement of the Issuer and CDLAC, whether or not required by California or federal law, the Borrower has represented, warranted, covenanted and agreed as follows:

(a) The Borrower shall promptly provide to the Issuer such information with respect to the Project or the Bonds as the Issuer shall from time to time request.

(b) The Low Income Units shall be of comparable quality to all other units in the Project, shall be dispersed throughout the Project, and shall offer a range of size and number of bedrooms comparable to those units which are available to other tenants; and Low Income Tenants shall have access to and enjoyment of all common areas and facilities of the Project on the same basis as tenants of other units.

(c) The Borrower agrees that it will not discriminate in the rental of units or in its employment practices against any employee or applicant for employment because of the applicant’s race, creed, religion, national origin or ancestry, sex, age, sexual orientation or preference, marital status, color, physical disability, familial status and disability, mental condition or medical condition, including pregnancy, childbirth or related condition. All contracts entered into by the Borrower which relate to the Project shall contain a like provision. The Borrower shall comply with the provisions of Section 10.8.4 of the Administrative Code of the Issuer, a copy of which is incorporated by reference into the Regulatory Agreement.

(d) The Borrower shall comply with the conditions set forth in Exhibit A to CDLAC Resolution No. 07-169, adopted on December 5, 2007 (the “CDLAC Conditions”), as they may be modified or amended from time to time, which conditions are incorporated in the Regulatory Agreement by reference and are attached thereto as an exhibit. The Borrower will prepare and submit to CDLAC, not later than each anniversary of the Closing Date, until the end of the Qualified Project Period, a Certificate of Continuing Program Compliance, in substantially the form attached to the Regulatory Agreement, executed by an authorized representative of the Borrower. The Issuer and the Trustee shall have no obligation to monitor the Borrower’s compliance with the CDLAC Conditions. Notwithstanding anything to the contrary in the Regulatory Agreement, the provisions described in this section shall

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remain effective for the period specified in the CDLAC Conditions, unless the Regulatory Agreement shall terminate as provided therein.

(e) For the Qualified Project Period, the Borrower will comply with the provisions of the Unruh Civil Rights Act, including, without limitation, Sections 51.2 and 51.3 of the California Civil Code, as amended, and Sections 45.50 et seq. of the Los Angeles Municipal Code, as amended.

(f) The lease to be utilized by the Borrower in renting any residential units in the Project to Low Income Tenants shall provide for termination of the lease and consent by such person to immediate eviction, subject to applicable provisions of California law, for any tenant who fails to qualify as a Low Income Tenant and who has made a material misrepresentation on the Income Certification as to such tenant’s qualification as a Low Income Tenant. All such leases shall contain clauses, among others, wherein each individual lessee (i) certifies the accuracy of the statements made in the Income Certification and (ii) agrees that the family income, family composition and other eligibility requirements shall be deemed substantial and material obligations of his tenancy; that he will comply promptly with all requests for information with respect thereto from the Borrower or the Issuer; and that his failure to provide accurate information in the Income Certification or refusal to comply with a request for information with respect thereto shall be deemed a violation of a substantial obligation of his tenancy and shall be a default thereunder. Additionally, such lease shall contain provisions informing any tenant of the possibility of rental payment increases in accordance with the terms of the Regulatory Agreement.

(g) All Income Certifications will be maintained on file at the Project or, with the prior written consent of the Issuer, at the principal place of business of the Borrower or the property manager of the Project, so long as the Regulatory Agreement is in effect and for five years thereafter with respect to each Low Income Tenant who occupied a residential unit in the Project during the Qualified Project Period.

(h) The Borrower will accept as tenants, on the same basis as all other prospective tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing program under Section 8 of the Housing Act, or its successor. The Borrower shall not apply selection criteria to Section 8 certificate or voucher holders that are more burdensome than criteria applied to all other prospective tenants.

(i) The Borrower shall submit to the Issuer (i) at the times specified in the Regulatory Agreement, a Certificate of Continuing Program Compliance, which shall include the information called for therein, including occupancy records for all units in the Project, and (ii) within 15 days after receipt of a written request, any other information or completed forms requested by the Issuer, in each case, in order to comply with reporting requirements of the Internal Revenue Service or the State of California, including, without limitation, information necessary for the Issuer to file any periodic report, or any other information concerning the Project as the Issuer may reasonably request.

(j) All workers performing construction work for the Project employed by the Borrower or by any contractor or subcontractor thereof shall be compensated in an amount no less than the greater of (i) general prevailing rate of per diem wages as determined pursuant to California Labor Code Sections 1770-1781 and implementing regulations of the Department of Industrial Relations, (ii) any applicable minimum wage requirements imposed by the laws of the State of California and (iii) the “Living Wage” as determined by the policies and procedures of the City of Los Angeles. The Borrower shall comply with all reporting and record keeping requirements of the applicable prevailing wage statutes and regulations. The Issuer shall have the right to appoint a third-party consultant to monitor compliance with this requirement, and the Borrower shall pay the fees and expenses of such third-party consultant. Following any such appointment, the Borrower shall comply with any request by the Issuer to deliver to

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such contractor, in addition to or instead of the Issuer, any reports, notices or other documents required to be delivered pursuant to the Regulatory Agreement, and upon reasonable notice to the Borrower to make the Project and the books and records with respect thereto available for inspection during regular business hours by such contractor as an agent of the Issuer.

(k) The Issuer may, at its option and at its expense, at any time appoint an administrator to administer the Regulatory Agreement and to monitor performance by the Borrower of the terms, provisions and requirements thereof. Following any such appointment, the Borrower shall comply with any request by the Issuer to deliver to such administrator, in addition to or instead of the Issuer, any reports, notices or other documents required to be delivered pursuant thereto, and upon reasonable notice to the Borrower to make the Project and the books and records with respect thereto available for inspection during regular business hours by such administrator as an agent of the Issuer.

(l) If upon the annual certification or recertification required in the Regulatory Agreement a tenant’s Adjusted Income exceeds 140% of the then applicable income limit for a Low Income Tenant of the same family size, all rental limits therein previously applicable to the unit occupied for such tenant shall continue to apply until the next available unit is rented to a tenant who is a Low Income Tenant.

(m) There are three points in time when the Borrower is required to give written notice to all tenants of Low-Income Units;

(i) Upon initial move-in/lease execution, Borrower shall give written notice, to all tenants of Low-Income Units of the duration of the rent restrictions under the Regulatory Agreement. Borrower must maintain, in its files a copy of each notice containing each tenant’s signed acknowledgment of the notice required hereunder. The notice shall, at the least, contain language that the rent restrictions under the Regulatory Agreement shall be for the term specified in the Regulatory Agreement. Upon termination of the rent restriction period under the Regulatory Agreement, rents may be set at a market rates unless otherwise restricted by some other legal, regulatory, or contractual requirement.

(ii) Twelve months prior to the termination of the rent restriction period under the Regulatory Agreement, Borrower must give written notice to its tenants of the termination of the restrictions on the Low-Income Units before their rents may be raised to market rent levels.

(iii) Ninety days prior to the termination of the rent restriction period under the Regulatory Agreement, Borrower must again give written notice to its tenants of the termination of the restrictions on the Low-Income Units before their rents may be raised to market rent levels.

Any of the foregoing requirements of the Issuer (except those described in paragraph (d) above, which may be expressly waived by CDLAC) may be expressly waived by the Issuer in writing in the Issuer’s sole discretion, but (a) no waiver by the Issuer of any requirement of the Regulatory Agreement shall, or shall be deemed to, extend to or affect any other provision of the Regulatory Agreement except to the extent the Issuer has received an opinion of Bond Counsel that any such provision is not required by the Act or the Law and may be waived without adversely affecting the exclusion from gross income of interest on the Bonds for federal income tax purposes; and (b) any requirement of the Regulatory Agreement shall be void and of no force and effect if the Issuer and the Borrower receive a written opinion of Bond Counsel to the effect that compliance with any such requirement would cause interest on the Bonds to become includable in gross income for federal income tax purposes, if such opinion is accompanied by a copy of a ruling from the Internal Revenue Service to the same effect, or to the effect that compliance with such requirement would be in conflict with the Act or the Law.

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Sale or Transfer of the Project

The Borrower has covenanted and agreed not to voluntarily (which term shall not be interpreted to include a foreclosure of, the granting by the Borrower of a deed in lieu of foreclosure of, or other comparable conversion of the Loan) sell, transfer or otherwise dispose of: the Project, or any portion thereof (other than for individual tenant use as contemplated under the Regulatory Agreement); equity interests in the Borrower aggregating 50% or more of the equity interests in the Borrower; any general partner interest in the Borrower, without obtaining the prior written consent of the Issuer, which consent shall not be unreasonably withheld by the Issuer and shall be given by the Issuer if (a) the Borrower is not in default under the Regulatory Agreement or under the Financing Agreement; (b) the purchaser or assignee is not in default under any obligations it may have to the Issuer and is not the subject of any legal or enforcement actions by the Issuer, and the purchaser or assignee certifies that the continued operation of the Project will comply with the provisions of the Regulatory Agreement; (c) evidence reasonably satisfactory to the Issuer is presented to establish that the purchaser or assignee is willing to comply and capable of complying with the terms and conditions of the Regulatory Agreement; (d) either (i) evidence satisfactory to the Issuer is presented to establish that the purchaser or assignee has at least three years’ experience in the ownership, operation and management of rental housing projects, without any record of material violations of discrimination restrictions or other state or federal laws or regulations applicable to such projects or (ii) the purchaser or assignee agrees to retain a property management firm which the Issuer determines has the experience and record described in subclause (i) above or (iii) the Issuer determines that it has no reason to believe that the purchaser or assignee is incapable, financially or otherwise, of complying with, or may be unwilling to comply with, the terms of all agreements binding on such purchaser or assignee and relating to the Project; (e) the Issuer and the Trustee shall have received (i) reasonable evidence satisfactory to the Issuer and the Trustee that the Borrower’s purchaser or transferee has assumed in writing and in full, the Borrower’s duties and obligations under the Regulatory Agreement and the Financing Agreement, (ii) an opinion of counsel to the transferee that the transferee has duly assumed the obligations of the Borrower under the Regulatory Agreement and that such obligations and the Regulatory Agreement are binding on the transferee, (iii) an opinion of Bond Counsel that such transfer will not adversely affect the Tax-exempt nature of the interest on the Bonds, (iv) from the Borrower, a Certificate of Continuing Program Compliance (and a “bring-down” certificate, if necessary) current as of the date of transfer and (v) evidence satisfactory to the Issuer that the purchaser or assignee does not have pending against it, nor does it have a history of, building or fire code violations as identified by Issuer, the State of California or federal regulatory agencies; (f) the purchaser or assignee files with the Issuer an affirmative action plan and other affirmative action documents required by the Issuer, each acceptable to the Issuer; (g) the Borrower or transferee pays all costs of the transfer of title, including, but not limited to, the cost of meeting the conditions described in this subsection; and (h) such other conditions are met as the Issuer and the Trustee may reasonably impose to assure compliance by the Project with the requirements of the Regulatory Agreement. Notwithstanding anything to the contrary contained in the Regulatory Agreement, the respective interests of the Borrower’s limited partners shall be transferable under the Regulatory Agreement to any affiliate of the limited partners of the Borrower without the consent of the Issuer, and/or the Trustee, but with written notice thereto. Except as provided in the Regulatory Agreement, it is thereby expressly stipulated and agreed that any sale, transfer or other disposition of the Project in violation of the Regulatory Agreement shall be null, void and without effect, shall cause a reversion of title to the Borrower, and shall be ineffective to relieve the Borrower of its obligations under the Regulatory Agreement. Upon any sale or other transfer which complies with the Regulatory Agreement, the Borrower shall be fully released from its obligations thereunder, but only to the extent such obligations have been assumed by the transferee of the Project, without the necessity of further documentation. Any transfer of the Project to any entity, whether or not affiliated with the Borrower, shall be subject to the provisions of described in this section. Notwithstanding the foregoing, if the Trustee acquires title to the Project by foreclosure or deed in lieu of foreclosure, no consent of the Issuer shall be required to such transfer under the Regulatory Agreement and no other conditions shall be

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required to be satisfied. However, if the Trustee acquires title to the Project by foreclosure or deed in lieu of foreclosure and the Regulatory Agreement has not been terminated pursuant to the provisions described in the “Term” section below, consent of the Issuer and delivery of items (a) through (h) above shall be required for any transfer of the Project subsequent to the Trustee’s acquisition of the Property by foreclosure or deed in lieu of foreclosure.

Term

The Regulatory Agreement and all and each of the provisions thereof shall become effective upon its execution and delivery, and shall remain in full force and effect for the periods provided therein and, except as otherwise provided in this subsection, shall, terminate in its entirety at the end of the Qualified Project Period (or in the case described in section (d) of the heading “Additional Requirements of the Issuer and CDLAC” above, at the times set forth in CDLAC Resolution No. 07-169), it being expressly agreed and understood that the provisions thereof are intended to survive the retirement of the Bonds, discharge of the Mortgage Loan and termination of the Indenture and the Financing Agreement.

Notwithstanding the foregoing, the indemnification provisions of the Regulatory Agreement shall, in the case of the Trustee, survive the term of the Regulatory Agreement or the replacement of the Trustee, but only as to claims arising from events occurring during the term of the Regulatory Agreement or the Trustee’s tenure as Trustee under the Indenture, and shall, in the case of the Issuer, survive the term of the Regulatory Agreement, but only as to claims arising from events occurring during the term of the Regulatory Agreement.

The terms of the Regulatory Agreement to the contrary notwithstanding, the Regulatory Agreement and all the requirements set forth therein (except the indemnification provisions as aforesaid) shall terminate and be of no further force and effect in the event of (a) involuntary noncompliance with the provisions of the Regulatory Agreement caused by fire, seizure, requisition, foreclosure, or change in a federal law or an action of a federal agency after the Closing Date which prevents the Issuer or the Trustee from enforcing the provisions thereof, or (b) condemnation, foreclosure or a similar event, but only if, within a reasonable period thereafter, either the portion of the Bonds attributable to the Project is retired or amounts received as a consequence of such event are used to provide a project which meets the requirements of the Code set forth in the Regulatory Agreement and provided that, in either case, an opinion of Bond Counsel (unless waived by the Issuer) is delivered to the Trustee to the effect that the exclusion from gross income for federal income tax purposes of interest on the Bonds will not be adversely affected thereby. The provisions of the preceding sentence shall cease to apply and the requirements referred to therein shall be reinstated if, at any time during the Qualified Project Period after the termination of such requirements as a result of involuntary noncompliance due to foreclosure, transfer of title by deed in lieu of foreclosure or similar event, the Borrower or any related person (within the meaning of Section 147(a)(2) of the Code) obtains an ownership interest in the Project for tax purposes. The Borrower has agreed that, following any foreclosure, transfer of title by deed in lieu of foreclosure or similar event, neither the Borrower nor any related person as described above will obtain an ownership interest in the Project for tax purposes.

Upon the termination of the terms of the Regulatory Agreement, the parties thereto agree to execute, deliver and record appropriate instruments of release and discharge of the terms thereof; provided, however, that the execution and delivery of such instruments shall not be necessary or a prerequisite to the termination of the Regulatory Agreement in accordance with its terms.

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Covenants To Run With the Land

The Borrower subjects the Project (including the Project Site) to the covenants, reservations and restrictions set forth in the Regulatory Agreement. The Issuer and the Borrower declare in the Regulatory Agreement their express intent that the covenants, reservations and restrictions set forth in the Regulatory Agreement will be deemed covenants running with the land and will pass to and be binding upon the Borrower’s successors in title to the Project; provided, however, that on the termination of the Regulatory Agreement said covenants, reservations and restrictions will expire. The Issuer and, if necessary, the Trustee, have agreed to execute a quitclaim deed or other documents required to remove the Regulatory Agreement from title after the covenants, agreements and restrictions therein have expired. Each and every contract, deed or other instrument thereafter executed covering or conveying the Project or any portion thereof will conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instrument.

No breach of any of the provisions in the Regulatory Agreement shall impair, defeat or render invalid the lien of any mortgage, deed of trust or like encumbrance made in good faith and for value encumbering the Project or any portion thereof.

Burden and Benefit

The Issuer and the Borrower declare in the Regulatory Agreement their understanding and intent that the burden of the covenants set forth in the Regulatory Agreement touch and concern the land in that the Borrower’s legal interest in the Project is rendered less valuable thereby. The Issuer and the Borrower further declare in the Regulatory Agreement their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Project by Low Income Tenants, the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the public purposes for which the Bonds were issued. Notwithstanding the foregoing or any other provision of the Regulatory Agreement, no person, other than the parties to the Regulatory Agreement, will have any rights of enforcement under the Regulatory Agreement.

Default; Enforcement

If the Borrower defaults in the performance or observance of any covenant, agreement or obligation of the Borrower set forth in the Regulatory Agreement and if such default remains uncured for a period of 60 days after notice thereof is given by the Issuer to the Borrower, then the Issuer shall declare an “Event of Default” to have occurred under the Regulatory Agreement; provided, however, that if the default is of such a nature that it cannot be corrected within 60 days, such default shall not constitute an Event of Default under the Regulatory Agreement so long as (i) the Borrower institutes corrective action within said 60 days and diligently pursues such action until the default is corrected; and (ii) in the opinion of Bond Counsel, the failure to cure said default within 60 days will not adversely affect the Tax-Exempt status of interest on the Bonds. Following the declaration of an Event of Default under the Regulatory Agreement, the Issuer or the Trustee may, at their respective option, take any one or more of the following steps:

(a) by mandamus or other suit, action or proceeding at law or in equity, including injunctive relief, require the Borrower to perform its obligations and covenants under the Regulatory Agreement, or enjoin any acts or things which may be unlawful or in violation of the rights of the Issuer or the Trustee under the Regulatory Agreement;

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(b) have access to, and inspect, examine and make copies of, all of the books and records of the Borrower pertaining to the Project; and

(c) take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of the Borrower under the Regulatory Agreement.

In the Regulatory Agreement, the Borrower grants to the Issuer the option, subject to the provisions of the Regulatory Agreement, upon either (a) the expiration of 60 days after the giving of the notice to the Borrower referred to above of the Borrower’s default under the Regulatory Agreement, or (b) the vacancy of a Low Income Unit for more than six months and the submission by the Issuer to the Borrower during such six month or longer period of at least five proposed tenants which meet the qualifications of Low Income Tenants and the qualifications of a reasonable landlord, to lease up to 20% of the units in the Project for a rental of $1.00 per unit per year for the sole purpose of subleasing such units to Low Income Tenants on a month to month basis, but only to the extent necessary to comply with the provisions of the Regulatory Agreement and to insure full occupancy of the Low Income Units. The option granted in the preceding sentence shall be effective only if the Borrower or the Trustee has not instituted corrective action before the end of such 60 day period referenced in (a) above, or the Borrower has not rented the unit during the six month or longer period referenced in (b) above, to a qualified Low Income Tenant. The option and any leases to the Issuer under the provision of the Regulatory Agreement described in this paragraph shall terminate with respect to each default upon the achievement, by the Borrower, the Trustee or the Issuer, of compliance with the requirements of the Regulatory Agreement, and any subleases entered into pursuant to the Issuer’s option shall be deemed to be leases from the Borrower. The Issuer shall make diligent effort, but shall not be required, to rent Low Income Units to Low Income Tenants at the highest rents practicable, subject to the limits of the Regulatory Agreement. Any rental paid under any such sublease shall be paid to the Borrower after the Issuer has been reimbursed for any reasonable expenses incurred in connection with such sublease, provided that, if the Borrower is in default under the Financing Agreement, such rental shall be paid to the Trustee for credit against payments due under the Financing Agreement. The Trustee shall have the right, as directed by the Issuer, in accordance with the Regulatory Agreement and the provisions of the Indenture, to exercise any or all of the rights or remedies of the Issuer under the Regulatory Agreement, provided that prior to taking any such action the Trustee shall give the Issuer written notice of its intended action. All reasonable fees, costs and expenses of the Issuer and the Trustee incurred in taking any action pursuant to the provisions of the Regulatory Agreement described in this paragraph shall be the sole responsibility of the Borrower.

The Borrower agrees in the Regulatory Agreement that specific enforcement of the Borrower’s agreements described therein is the only means by which the Issuer may fully obtain the benefits of such agreements made by the Borrower therein and the Borrower therefore agrees to the imposition of the remedy of specific performance against it in the case of any Event of Default by the Borrower under the Regulatory Agreement.

The Trustee shall have the right, in accordance with the Regulatory Agreement and the provisions of the Indenture, as directed by the Issuer, to exercise any or all of the rights or remedies of the Issuer under the Regulatory Agreement, provided that prior to taking any such action the Trustee shall give the Issuer written notice of its intended action. After the Indenture has been discharged, the Issuer may act on its own behalf to declare an “Event of Default” to have occurred and to take any one or more of the steps described above to the same extent and with the same effect as if taken by the Trustee.

The Trustee

The Trustee shall act as specifically provided in the Regulatory Agreement and in the Indenture. The Trustee is entering into the Regulatory Agreement solely in its capacity as Trustee under the

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Indenture, and the duties, powers, rights and liabilities of the Trustee in acting thereunder shall be subject to the provisions of the Indenture.

The Issuer shall be responsible for the monitoring and verifying of compliance by the Borrower with the terms of the Regulatory Agreement. The Trustee may at all times assume compliance with the Regulatory Agreement unless otherwise notified in writing by the Issuer, or unless it has actual knowledge of noncompliance.

After the date on which no Bonds remain outstanding as provided in the Indenture, the Trustee shall no longer have any duties or responsibilities under the Regulatory Agreement and all references to the Trustee in the Regulatory Agreement shall be deemed references to the Issuer.

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APPENDIX B

FORM OF LEGAL OPINION OF BOND COUNSEL

April 10, 2008

City of Los Angeles Los Angeles Housing Department 1200 West 7th Street, 8th Floor Los Angeles, CA 90017 Attn: Director, Major Projects U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, CA 90071 Attention: Corporate Trust

$7,000,000 City of Los Angeles

Multifamily Housing Revenue Bonds (GNMA Mortgage-Backed Securities Program—

Broadway Plaza Project) Series 2008A

Ladies and Gentlemen:

We have acted as bond counsel in connection with the issuance by the City of Los Angeles, California (the “Issuer”) of its Multifamily Housing Revenue Bonds (GNMA Mortgage Backed Securities Program Broadway Plaza Project) Series 2008A in the original aggregate principal amount of $7,000,000 (the “Bonds”). The Bonds are being issued pursuant to Section 248 of the Los Angeles City Charter and Article 6.3 of Chapter 1 of Division 11 of the Los Angeles Administrative Code (the “Law”) and, to the extent applicable, Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code (collectively, the “Act”), a resolution adopted by the Council of the Issuer on February 27, 2008 and concurred with by the Mayor of the Issuer (the “Resolution”) and pursuant to an Indenture of Trust, dated as of April 1, 2008 (the “Indenture”), between the Issuer and U.S. Bank National Association, as trustee (the “Trustee”). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture.

In such connection, we have reviewed the Indenture, the Resolution, the Financing Agreement, the Regulatory Agreement, the Tax Certificate, certificates of the Issuer, the Borrower, the Trustee and others, certified copies of the Act and the Law, opinions of counsel to the Issuer, the Borrower, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. We have assumed, without undertaking to verify, the genuineness of such documents, certificates and opinions presented to us (whether as originals or as copies) and of the signatures thereon, the accuracy of the factual matters represented, warranted or certified in such documents and certificates, the correctness of the legal conclusions contained in such opinions, and the due and legal execution of such documents and certificates by, and validity thereof against, any parties other than the Issuer.

From an examination of the foregoing, we are of the opinion that:

(a) The Issuer is a municipal corporation and chartered city duly organized and existing under the Constitution and laws of the State of California and has the power and authority, under the Constitution and laws of the State of California, including the Law and the Act, to carry out and consummate all transactions contemplated by the Indenture and to pledge the revenues and other amounts out of which the Bonds are payable.

(b) The Bonds have been validly authorized and issued in accordance with the laws of the State of California now in force and constitute the valid, legal and binding limited obligations of the Issuer payable solely from revenues and amounts pledged under the Indenture.

(c) The Indenture has been duly authorized, executed and delivered by the Issuer and, assuming due authorization, execution and delivery by the Trustee, represents the valid, legal and binding agreement of the Issuer enforceable in accordance with its terms.

(d) Under existing laws, regulations, rulings and judicial decisions, the interest on the Bonds is excludable from gross income for federal income tax purposes, except during any period when a Bond is held by a “substantial user” of the facilities financed by the Bonds or a “related person” within the meaning of Section 147(a) of the Internal Revenue Code of 1986 (the “Code”). In rendering the opinion in this paragraph (d), we have assumed continuing compliance by the parties thereto with respect to certain covenants in the Financing Agreement, the Regulatory Agreement and the Tax Certificate as to Arbitrage and the Provisions of Sections 103 and 141-150 of the Internal Revenue Code of 1986 and the Indenture concerning the continuing excludability of interest on the Bonds from gross income for federal income tax purposes.

(e) Interest on the Bonds will be included as a specific item of tax preference for purposes of computing the federal alternative minimum tax imposed on individuals and corporations by the Code.

(f) Interest on the Bonds is exempt from State of California taxation, excepting inheritance and gift taxes.

The accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend on the recipient’s particular status or other items of income or deduction. We express no opinion regarding such consequences. The purchaser of the Bonds should consult its tax advisors as to the consequences of purchasing, holding or selling the Bonds.

The obligations of the parties, and the enforceability thereof, with respect to the documents described above are subject to the provisions of the bankruptcy laws of the United States of America and other applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect. Certain of the obligations, and the enforcement thereof, contained in the documents described above are also subject to general principles of equity, which may limit the specific enforcement of certain remedies but which do not affect the validity of such documents.

Certain requirements and procedures contained or referred to in the Indenture, the Financing Agreement, the Regulatory Agreement and other relevant documents may be changed, and certain actions may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of nationally recognized bond counsel. No

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opinion is expressed as to the Bonds or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than ourselves.

We express no opinion as to title to, or the sufficiency of the description of, the Project in the Indenture or any other document or instrument or the priority of any liens, charges or encumbrances on the Project.

Very truly yours,

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