$4,900,000 $215,000 California Affordable Housing Agency …cdiacdocs.sto.ca.gov/2011-0688.pdf ·...

New Issue Book-Entry Only Rating: Not Applied For

In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Tax-Exempt Bonds is excluded from gross income for federal income tax purposes, such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings, and the Tax-Exempt Bonds are "qualified tax-exempt obligations" within the meaning of section 265(b)(3) of the Internal Revenue Code of 1986, as amended. In the further opinion of Bond Counsel, interest on the Tax-Exempt Bonds and the Taxable Bonds is exempt from California personal income taxes. See "LEGAL AND TAX INFORMATION—Tax Matters."

$4,900,000 California Affordable Housing Agency Multifamily Housing Revenue Bonds

(Village Park Apartments) Series 2011A

(Bank Qualified)

$215,000 California Affordable Housing Agency

Taxable Multifamily Housing Revenue Bonds (Village Park Apartments)

Series 2011A-T

Dated: Date of Delivery Due: June 1, 2015

The above-captioned bonds (collectively, the “Bonds”) are being issued by the California Affordable Housing Agency (the “Issuer”), a joint exercise of powers agency organized and existing under the laws of the State of California. The Issuer is issuing the Bonds pursuant to an Indenture dated as of June 1, 2011 (the “Indenture”), between the Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), and a resolution adopted by the Issuer on May 9, 2011.

The Bonds will be issued in fully registered form only and, when issued, will be registered in the name of Cede & Co., as Bondowner and nominee for The Depository Trust Company, New York, New York ("DTC"). DTC will act as Securities Depository for the Bonds. The Bonds will be issued initially in book-entry form only. Purchasers will not receive certificates representing their interest in the Bonds.

The Bonds will be issued in denominations of $5,000 or any integral multiple thereof and will mature on the dates shown on the inside cover page hereof. Principal with respect to the Bonds is payable at maturity. Interest on the Bonds will accrue from the date of delivery and be paid semiannually on each June 1 and December 1, commencing December 1, 2011, to maturity or earlier redemption thereof. For so long as the Bonds remain in a book-entry only transfer system, the Trustee will make such payments only to DTC, which in turn is obligated to remit such principal and interest payments to the DTC participants for subsequent disbursement to Beneficial Owners of the Bonds, as described in “DESCRIPTION OF THE BONDS—Book-Entry Transfer System" and APPENDIX G.

MATURITY SCHEDULE LOCATED ON INSIDE COVER

The Bonds are subject to redemption prior to maturity as described herein under "DESCRIPTION OF THE BONDS—Redemption."

The Bonds are being issued by the Issuer and the proceeds thereof will be loaned (the “Loan”) to The Coldbrook Foundation, a California nonprofit public benefit corporation (the “Borrower”), to finance the acquisition of a multifamily housing project located in Brentwood, California known as the Village Park Apartments (the “Project”), as more particularly described herein. Bond proceeds will be used to finance the acquisition of the Project and for immediate repairs, fund a reserve account, and to pay the costs of issuance of the Bonds. See “THE BORRROWER AND THE PROJECT.” Interest on the Bonds will be payable from the Revenues of the Project and certain other resources and assets constituting the Trust Estate under the Indenture, all as described herein. The Loan will be made pursuant to a Loan Agreement, dated as of June 1, 2011 (the “Loan Agreement”), among the Issuer, the Borrower and the Trustee, evidenced by two promissory notes (collectively, the “Notes”) and secured by a deed of trust . See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and Appendices A, B and C.

The Borrower expects to pay the principal of the Bonds from proceeds of multifamily housing revenue bonds utilizing 4% low income housing tax credits, other financing utilizing 9% low income housing tax credits, or other financing sources as described herein. Revenues from the Project will not be sufficient to pay principal on the Bonds at maturity; therefore, investment in the Bonds contains a significant degree of risk. In the event that refinancing proceeds are not available to repay the principal of the Bonds on their maturity date, or other amounts sufficient to pay the principal on the Bonds on their maturity date are not available, the Trustee will be compelled to foreclose on the Project and to apply the proceeds of such foreclosure, to the extent available, to pay the principal of the Bonds at maturity. In the event that there are insufficient proceeds resulting from such foreclosure, no other amounts, other than amounts held by the Trustee under the Indenture, will be available to pay the principal of and interest on the Bonds. Potential investors should carefully review the section of this Official Statement entitled “BONDHOLDERS’ RISKS.”

THE BONDS ARE SPECIAL OBLIGATIONS OF THE ISSUER WHICH ARE PAYABLE SOLELY FROM THE TRUST ESTATE. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE ISSUER OR THE STATE OF CALIFORNIA (THE “STATE”). THE BONDS ARE NOT A DEBT OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF EXCEPT THE ISSUER TO THE EXTENT DESCRIBED HEREIN. THE BONDS ARE NOT PAYABLE FROM TAXES. THE ISSUER HAS NO TAXING POWER. NEITHER THE STATE NOR THE ISSUER SHALL BE LIABLE FOR THE PAYMENT OF THE BONDS.

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

The Bonds are offered when, as and if issued, subject to approval of legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and certain other conditions. Jones Hall, A Professional Law Corporation, San Francisco, California is also acting as disclosure counsel to the Issuer. Certain legal matters will be passed upon for the Borrower by Silveira, Mattos & Lewis, Merced, California. A form of Bond Counsel’s opinion is attached hereto as APPENDIX E. It is anticipated that the Bonds in book-entry form will be ready for delivery to the Trustee for Fast Automated Securities Transfer on behalf of DTC on or about June 14, 2011.

Dated: June 8, 2011.

MATURITY SCHEDULE

Base CUSIP†: 13005F

Series A Tax-Exempt Bonds

Maturity (June 1)

Principal Amount

Interest Rate

Yield

CUSIP†

2015 $4,900,000 5.5000% 6.2939% AA2

Series A-T Taxable Bonds

Maturity (June 1)

Principal Amount

Interest Rate

Yield

CUSIP†

2015 $215,000 7.7500% 8.5045% AB0

† Copyright 2011, American Bankers Association. CUSIP data herein are provided by Standard & Poor's CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the Issuer nor the Underwriter assumes any responsibility for the accuracy of these CUSIP data.

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the offer and

sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Bonds.

Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure

by the Issuer, in any press release and in any oral statement made with the approval of an authorized officer of the Issuer or any other entity described or referenced herein, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. 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, give rise to any implication that there has been no change in the affairs of the Issuer or any other entity described or referenced herein since the date hereof.

Limit of Offering. No dealer, broker, sales representative, or other person has been authorized

by the Issuer or Brandis Tallman LLC (the "Underwriter") to give any information or to make any representations with respect to the Bonds other than those contained herein 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.

Involvement of Underwriter. The information set forth herein has been obtained from the Issuer

and other sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Underwriter. 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 thereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer or any other person described herein since the date hereof.

THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE

COMMISSION UNDER THE SECURITIES ACT OF 1933 AND THE INDENTURE HAS NOT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED. A PURCHASER HAS NO RIGHT TO REQUIRE SUCH REGISTRATION AND THE BONDS ARE EXEMPT FROM SUCH REGISTRATION. IN ADDITION, THESE SECURITIES MAY BE SUBJECT TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF VARIOUS STATES, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH LAWS. THE REGISTRATION OR QUALIFICATION OF THE BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF THE SECURITIES LAWS OF THE STATES IN WHICH THE BONDS HAVE BEEN REGISTERED OR QUALIFIED, IF ANY, AND EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES SHALL NOT BE REGARDED AS A RECOMMENDATION THEREOF. NO STATE NOR ANY STATE OR FEDERAL ISSUER HAS PASSED UPON THE MERITS OF THE BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.

$4,900,000 California Affordable Housing Agency Multifamily Housing Revenue Bonds


$215,000

California Affordable Housing Agency Taxable Multifamily Housing Revenue Bonds

(Village Park Apartments) Series 2011A-T

___________________________

California Affordable Housing Agency Board of Directors

Ed Mayer, Chair

Douglas A. Tapking, Vice Chair Rennise Ferrario, Member Andrea D. Roark, Member

Linda Nichols, Member

___________________________

Special Services

Bond Counsel and Disclosure Counsel Jones Hall, A Professional Law Corporation

San Francisco, California

Trustee The Bank of New York Mellon Trust Company, N.A.

Seattle, Washington

Financial Advisor Cascadia Investor Services Group

Seattle, Washington

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TABLE OF CONTENTS Page

INTRODUCTION................................................................................................................................................................... 1 DESCRIPTION OF THE BONDS......................................................................................................................................... 3

General.............................................................................................................................................................................. 3 Registration and Trustee .................................................................................................................................................. 4 Book-Entry Transfer System............................................................................................................................................ 5 Redemption....................................................................................................................................................................... 5 Acceleration ...................................................................................................................................................................... 6

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS....................................................................................... 7 The Trust Estate ............................................................................................................................................................... 7 Issuer and Borrower Covenants ...................................................................................................................................... 9 Takeout of the Bonds on or Before Maturity ................................................................................................................. 11

USE OF PROCEEDS.......................................................................................................................................................... 13 Sources and Uses of Funds........................................................................................................................................... 13 Debt Service Schedule................................................................................................................................................... 13

BONDHOLDERS’ RISKS ................................................................................................................................................... 14 In General ....................................................................................................................................................................... 14 Revenue Projections ...................................................................................................................................................... 14 Takeout Risk ................................................................................................................................................................... 14 Risks of Real Estate Investment Generally................................................................................................................... 15 Uninsured Losses........................................................................................................................................................... 16 Certain Risks Associated with Deeds of Trust .............................................................................................................. 16 Antideficiency Legislation and Certain Other Limitations on Lenders ......................................................................... 18 State Foreclosure Laws.................................................................................................................................................. 18 Borrower Bankruptcy ...................................................................................................................................................... 19 Issuer Bankruptcy ........................................................................................................................................................... 19 Effects on Exemption of Interest From Federal Taxes ................................................................................................. 19 Absence of Rating .......................................................................................................................................................... 19 Seismic and Environmental Matters .............................................................................................................................. 19 Management Contract .................................................................................................................................................... 20 Project Feasibility............................................................................................................................................................ 20

THE ISSUER ....................................................................................................................................................................... 21 THE BORROWER AND THE PROJECT .......................................................................................................................... 26

The Borrower .................................................................................................................................................................. 26 The Project...................................................................................................................................................................... 26 Foreclosure Proceedings ............................................................................................................................................... 26 Environmental Assessment and Physical Needs Assessment.................................................................................... 27 Taxes and Assessments ................................................................................................................................................ 27 Project Summary ............................................................................................................................................................ 27 Summarized Operating Statements .............................................................................................................................. 28 Appraisal ......................................................................................................................................................................... 31 Property Management.................................................................................................................................................... 31

REGULATORY AGREEMENT ........................................................................................................................................... 32 LEGAL AND TAX INFORMATION..................................................................................................................................... 32

Litigation .......................................................................................................................................................................... 32 Approval of Counsel ....................................................................................................................................................... 32 Tax Matters ..................................................................................................................................................................... 33 Continuing Disclosure Agreement ................................................................................................................................. 34

OTHER BOND INFORMATION ......................................................................................................................................... 34 No Rating ........................................................................................................................................................................ 34 Trustee ............................................................................................................................................................................ 34 Underwriting .................................................................................................................................................................... 34 Interests of Certain Named Experts and Counsel ........................................................................................................ 35 Official Statement ........................................................................................................................................................... 35

Appendix A Summary of Certain Provisions of the Indenture Appendix B Summary of Certain Provisions of the Loan Agreement Appendix C Summary of Certain Provisions of the Regulatory Agreement Appendix D General Information About the City of Brentwood and the County of Contra Costa Appendix E Form of Opinion of Bond Counsel Appendix F Continuing Disclosure Agreement for the Borrower Appendix G DTC and the Book-Entry Only System Appendix H Low Income Housing Tax Credit Program

Address Brentwood, CA

©2011 Google - Map data ©2011 Google -

brentwood, CA map - Google Maps http://maps.google.com/maps?oe=UTF-8&q=brentwood,+CA+map&ie=...

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OFFICIAL STATEMENT

$4,980,000

California Affordable Housing Agency Multifamily Housing Revenue Bonds


$215,000 California Affordable Housing Agency

Taxable Multifamily Housing Revenue Bonds (Village Park Apartments)

Series 2011A-T

INTRODUCTION

The following introductory statement is subject in all respects to more complete information contained elsewhere in this Official Statement. The order and placement of materials in this Official Statement, which includes the cover page and appendices hereto, are not to be deemed to be a determination of relevance, materiality or relative importance, and this Official Statement, including the cover page and Appendices hereto, must be considered in its entirety. All capitalized terms used in this Official Statement that are not otherwise defined herein have the meanings ascribed to them in the Indenture, the Loan Agreement, the Regulatory Agreement, the Notes and the Deed of Trust (as each such term is hereinafter defined).

The purpose of this Official Statement, including the cover page and appendices hereto,

is to set forth certain information in connection with the sale by the California Affordable Housing Agency (the “Issuer”), a joint exercise of powers agency organized and existing under the laws of the State of California, of its $4,900,000 aggregate principal amount of Multifamily Housing Revenue Bonds (Village Park Apartments) Series 2011A (the “Tax-Exempt Bonds”) and its $215,000 aggregate principal amount of Taxable Multifamily Housing Revenue Bonds (Village Park Apartments) Series 2011A-T (the “Taxable Bonds” and, together with the Tax-Exempt Bonds, the “Bonds”).

The Bonds are issued pursuant to Chapter 5 of Division 7 of Title 1 of the Government

Code in accordance with Chapter 8 of Part 5 of Division 31 of the California Health and Safety Code (the "Act"), a Resolution of the Issuer as adopted by the Board of Directors on May 9, 2011, authorizing the issuance and sale of the Bonds (the “Bond Resolution”), and an Indenture, dated as of June 1, 2011 (the “Indenture”), by and between the Issuer, as issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee, paying agent and registrar (the “Trustee”).

The Bonds are being issued by the Issuer to provide funding for a loan (the “Loan”) to

The Coldbrook Foundation, a California nonprofit public benefit corporation (the “Borrower”) to finance the acquisition of a 52-unit multifamily housing project located at 100 Village Drive in Brentwood, California, known as the Village Park Apartments (the “Project”):

For a more detailed description of the Project, see “THE BOROWER AND THE

PROJECT.” The Loan will be made pursuant to a Loan Agreement, dated as of June 1, 2011 (the

“Loan Agreement”), among the Issuer, the Borrower and the Trustee. The Borrower’s obligations to repay the Loan attributable to the Tax-Exempt Bonds and the Taxable Bonds will

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be evidenced by separate promissory notes (collectively, the “Notes”), and secured by a First Deed of Trust, Absolute Assignment of Rents, Security Agreement and Fixture Filing (the “Deed of Trust”) on the Project. The principal amount and payment provisions of the Notes have been established and structured so that (i) the aggregate principal amount of the Notes will equal the aggregate principal amount of the Outstanding Bonds and (ii) the interest payable on the Notes will not be less than the interest payable on the Outstanding Bonds. The payments required to be made by the Borrower under the Notes are intended to be sufficient in amount to pay, when due, the principal of and interest on the Outstanding Bonds. See “APPENDIX B - Summary of Certain Provisions of the Loan Agreement.”

Payment of the principal and interest on the Bonds will be secured, to the extent

described herein, by the Revenues of the Project (consisting, among other things, of all payments with respect to the Loan Agreement, including, all Loan Repayments of the Borrower under the Loan Agreement) and by certain other resources and assets constituting the Trust Estate under the Indenture, all as described herein. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—The Trust Estate.”

While the Revenues of the Project secure the payment of principal and interest on

the Bonds, Revenues will not be sufficient to pay principal of the Bonds at maturity. The Borrower expects to refinance the Project from proceeds of a future series of multifamily housing bonds utilizing 4% low income housing tax credits, other financing utilizing 9% low income housing tax credits, or other financing sources as described herein. As a result, investment in the Bonds contains a significant degree of risk. In the event that refinancing proceeds are not available to repay the principal of the Bonds on their maturity date, or other amounts sufficient to pay the principal on the Bonds on their maturity date are not available, the Trustee will be compelled to foreclose on the Project and to apply the proceeds of such foreclosure, to the extent available, to pay the principal of the Bonds at maturity. In the event that there are insufficient proceeds resulting from such foreclosures, no other amounts, other than amounts held by the Trustee under the Indenture, will be available to pay the principal of and interest on the Bonds. Potential investors should carefully review the section of this Official Statement entitled “BONDHOLDERS’ RISKS.”

The Bonds are special obligations of the Issuer, payable solely from the Trust Estate. The Bonds are subject to redemption prior to maturity as described herein. See

“DESCRIPTION OF THE BONDS—Redemption.” THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE ISSUER OR THE STATE

OF CALIFORNIA (THE “STATE”). THE BONDS ARE NOT A DEBT OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF EXCEPT THE ISSUER TO THE EXTENT DESCRIBED HEREIN. THE BONDS ARE NOT PAYABLE FROM TAXES. THE ISSUER HAS NO TAXING POWER. NEITHER THE STATE NOR THE ISSUER SHALL BE LIABLE FOR THE PAYMENT OF THE BONDS.

In order to assure compliance with the applicable provisions of the Internal Revenue

Code of 1986, as amended (the “Code”) and the Act, the Borrower has entered into a Regulatory Agreement and Declaration of Restrictive Covenants, dated as of June 1, 2011 (the “Regulatory Agreement”), with the Issuer and the Trustee, with respect to the Project. The Regulatory Agreement requires that the residential rental units in the Project be occupied or be

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held for occupancy by tenants with incomes below the levels described herein at restricted rents. See “THE REGULATORY AGREEMENT.”

Brief descriptions of the Bonds, the sources of payment for the Bonds, the Issuer, the

Borrower and the Project are set forth in this Official Statement. Summaries of the Indenture, the Loan Agreement, the Regulatory Agreement, the Notes and Deed of Trust and forms of the Bond Counsel Opinion and the Continuing Disclosure Agreement of the Borrower are attached as appendices to this Official Statement. All references herein to the Indenture, the Loan Agreement, the Regulatory Agreement, the Notes and the Deed of Trust are qualified in their entirety by reference to each such document and all references to the Bonds are qualified by reference to the form thereof included in the Indenture, copies of which are available for inspection at the office of the Trustee in Seattle, Washington.

Appendices A, B and C to this Official Statement contain summaries of certain

definitions and provisions of the Indenture, the Loan Agreement and the Regulatory Agreement, respectively. Appendix D contains general information regarding the City of Brentwood and the County of Contra Costa. Appendix E is the form of legal opinion of Jones Hall, A Professional Law Corporation, San Francisco, California (“Bond Counsel”). Appendix F contains the form of the Continuing Disclosure Agreement for the Borrower. In Appendix G, there is a discussion of book-entry bonds supplied by The Depository Trust Company, New York, New York (“DTC”). All capitalized terms used in this Official Statement and not otherwise defined herein have the same meanings as in the Indenture.

DESCRIPTION OF THE BONDS General

The Tax-Exempt Bonds will be issued as a single maturity due June 1, 2015, and the Taxable Bonds will be issued as a single maturity due June 1, 2015, all under and in accordance with, the Indenture.

The Bonds will be dated and bear interest from their date of delivery. The Bonds will be

issued as fully registered bonds in denominations of $5,000 or any integral multiple thereof. Interest on the Bonds will be paid semiannually on each June 1 and December 1 (each, an “Interest Payment Date”), commencing December 1, 2011, at the rates set forth on the cover of this Official Statement.

Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day

months. The Bonds will mature on the dates and in the amounts set forth on the inside cover of this Official Statement.

Each Bond shall bear interest from the Interest Payment Date next preceding the date of

authentication thereof, unless (a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (b) unless it is authenticated on or before November 15, 2011, in which event it shall bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any Bond, interest thereon is in default, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.

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Interest on the Bonds shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Interest on the Bonds from their date or from the most recent date to which interest has been paid shall be payable on each Interest Payment Date until the Bonds mature or are duly called for redemption prior to maturity. Any principal or interest not punctually paid or duly provided for shall forthwith cease to be payable to the Owners on the applicable Record Date and shall be paid to the persons in whose names the Bonds are registered at the close of business on a Special Record Date for the payment of such defaulted principal or interest, such date to be fixed by the Trustee and notice thereof to be given by the Trustee to the Owners not less than 10 days prior to such Special Record Date. Interest on the Bonds shall be payable on each Interest Payment Date to the person whose name appears on the Registration Books as the Owner thereof as of the Record Date immediately preceding each such Interest Payment Date, such interest to be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owner at the address of such Owner as it appears on the Registration Books as of the preceding Record Date; provided however, that payment of interest may be by wire transfer to an account in the United States of America to any Owner of Bonds in the aggregate amount of $1,000,000 or more who shall furnish written instructions to the Trustee before the applicable Record Date. Any such written instructions shall remain in effect until rescinded in writing by the Owner.

Principal of and premium (if any) on any Bond shall be paid upon presentation and

surrender thereof, at maturity or the prior redemption thereof, at the Trust Office of the Trustee and shall be payable in lawful money of the United States of America.

Notwithstanding the foregoing, for so long as any Bond is subject to a book-entry only

system, principal and interest payments shall be paid on each payment date to the nominee of the Securities Depository. Initially such payments shall be made payable to the order of Cede & Co., as the nominee of DTC.

Registration and Trustee

The Bonds are issued only as fully registered Bonds and, when issued, will be registered

in the name of Cede & Co., as Bondowner and nominee for The Depository Trust Company ("DTC"). DTC will act as Securities Depository for the Bonds. Purchases of the Bonds will be made in book-entry form only, in denominations of $5,000 or any integral multiple thereof. Purchasers will not receive certificates representing their interest in the Bonds purchased. So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references herein to the registered Bondowners will mean Cede & Co. and will not mean the "Beneficial Owners" of the Bonds. In this Official Statement, the term "Beneficial Owner" will mean the person for which a DTC participant acquires an interest in the Bonds.

The principal of and interest on the Bonds are payable by the Trustee. For so long as

the Bonds remain in a "book-entry only" transfer system, the Trustee will make such payments to DTC, which in turn is obligated to remit such principal and interest to the DTC participants for subsequent disbursement to Beneficial Owners of the Bonds, as described herein under "DESCRIPTION OF THE BONDS -- Book-Entry Transfer System" and in APPENDIX G.

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Book-Entry Transfer System Book-Entry Bonds. DTC will act as Securities Depository for the Bonds. The

ownership of one fully registered Bond for each maturity of the Bonds, as set forth on the cover of this Official Statement, in an aggregate amount equal to the aggregate principal amount of the Bonds, will be registered in the name of Cede & Co., as nominee for DTC. See Appendix G for additional information on DTC. The Issuer makes no representation as to the accuracy or completeness of the information in Appendix G provided by DTC. Purchasers of the Bonds should confirm this information with DTC or its participants.

Termination of Book-Entry Transfer System. Upon the resignation of DTC or any

other institution acting as Securities Depository, or if the Issuer determines that continuation of any institution in the role of Securities Depository is not in the best interests of the Beneficial Owners, the Issuer will attempt to identify another institution qualified to act as Securities Depository or will continue the book-entry transfer system by resolution. If the Issuer is unable to identify such Securities Depository prior to the effective date of the resignation, the Issuer will discontinue the book-entry transfer system and will cause the Trustee to authenticate and deliver replacement Bonds in fully registered form in Authorized Denominations in the names of the Beneficial Owners or their nominees. Thereafter the provisions set forth in the Indenture regarding transfer of Bonds while not in book-entry form will apply.

Redemption

The Bonds are subject to redemption if and to the extent the Borrower is entitled to make

and makes, or is required to make, a Loan Principal Prepayment pursuant to the Loan Agreement, as follows:

Optional Redemption. The Bonds are subject to optional redemption prior to their

respective stated maturities, from any source of available moneys, at the option of the Issuer, in whole, or in part, on any date on or after June 1, 2012, upon notice of such optional redemption pursuant to the Indenture, at a Redemption Price equal to the principal amount of the Bonds being redeemed, without premium, plus accrued interest thereon to the date fixed for redemption.

Extraordinary Mandatory Redemption. The Bonds are subject to extraordinary

mandatory redemption as a whole or in part, on any date, at a redemption price equal to the principal amount thereof plus accrued interest to the date of redemption in the event of: (a) the receipt by the Borrower or the Trustee of Insurance Proceeds or a Condemnation Award with respect to the Project and a determination by the Borrower not to restore the Project (or that a portion of such Insurance Proceeds or Condemnation Award deposited with the Trustee is in excess of that which is needed to restore the Project).

Special Mandatory Redemption. The Bonds are subject to mandatory redemption in

whole at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon to the date fixed for redemption, without premium, following any Event of Default under the Loan Agreement, or upon an Acceleration Default. Any such redemption shall occur on the first Business Day for which notice of redemption may be given in accordance with the Indenture.

Mandatory Redemption to the Extent of Excess Proceeds. The Bonds are subject to

redemption in part on the earliest practicable Interest Payment Date for which notice of redemption may be given after the date three months after the Issue Date, at a price equal to

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the principal amount of Bonds redeemed plus interest accrued thereon to the date fixed for redemption, without premium, in a principal amount as nearly equal as possible to, but not more than, the amount transferred by the Trustee from the Project Fund to the Redemption Fund following the date three months (or such later date as provided in the Indenture) after the Issue Date.

Notice of Redemption. When Bonds are redeemed which are in book-entry form, the

Trustee shall give notice of redemption as required by the depository and no additional notice shall be required except for written notice to the Issuer of a Special Mandatory Redemption. When Bonds are redeemed which are not in book-entry form, the Trustee shall give notice of redemption by first class mail, postage prepaid, mailed not less than 15 days nor more than 45 days before such redemption date, to the registered owner of any Bond all or a portion of which is to be redeemed, at such owner's last address, if any, appearing upon the registry books.

In the event that a notice of redemption is being given for an optional redemption which

redemption is occurring due to a current refunding of the Bonds, such notice of redemption shall state, at the direction of the Issuer, that the redemption is conditioned on the issuance and delivery of such refunding bonds, and shall further state, at the direction of the Issuer, that in the event that such refunding bonds are not issued and delivered, such redemption notice shall be automatically rescinded and shall be null and void.

Effect of Redemption. The interest on the Bonds so called for redemption will cease to

accrue after the date fixed for redemption, and all such Bonds will be deemed not to be Outstanding under the Indenture, except that if the Issuer has not provided funds to the Trustee for such redemption, the Bonds will continue to accrue interest until the Trustee receives sufficient funds from the Issuer to pay the redemption price and all accrued interest on the Bonds called for redemption.

Acceleration

Upon the occurrence of an Event of Default or Special Mandatory Redemption Event (in

the later case, at the end of the time periods set forth above under “Redemption — Special Mandatory Redemption”), the Trustee may, and shall, upon the direction of Owners of the majority of the Bonds Outstanding, declare the principal of all of the Outstanding Bonds, plus accrued interest thereon, immediately due and payable. See “APPENDIX A – Summary of Certain Provisions of the Indenture – Defaults and Remedies – Acceleration of Maturity and Special Mandatory Redemption.”

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SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

The following sets forth a summary of certain provisions of the Indenture and the Loan Agreement relating to the security and sources of payment for the Bonds. For information relating to the Project, including historical operating statements, see “THE BORROWER AND THE PROJECT” herein. The Trust Estate

The Bonds are special obligations of the Issuer, payable solely from the Trust Estate. The Trust Estate consists of Revenues of the Project and certain other resources and assets.

Revenues. “Revenues” are defined in the Indenture as all amounts due to or received

by the Issuer or by the Trustee for the account of the Issuer pursuant or with respect to the Project (other than refundable tenant deposits), including, without limitation, all lease payments, laundry and miscellaneous income, including proceeds of business interruption and/or rent loss insurance and proceeds of liability insurance) less Operation and Maintenance Costs for the Project, and all interest, profits or other income derived from the investment of amounts in any fund or account established pursuant to this Indenture, but not including any moneys paid for deposit into the Rebate Fund.

“Net Revenues” means the Revenues for the Project, excluding proceeds resulting from

foreclosure of a Deed of Trust, sales proceeds, Insurance Proceeds and condemnation Awards of the Borrower, but including proceeds of business interruption insurance and/or rent loss insurance and the proceeds of any liability insurance.

The following funds and accounts have been established by the Indenture, as part of the

Trust Estate securing the Bonds. Each fund will be maintained by the Trustee. Revenue Fund. Under the Loan Agreement, the Borrower has agreed that so long as

any amounts due under the Notes or any Additional Payments remain unpaid, it shall deposit all of the Revenues of the Project as soon as practicable upon receipt thereof in the Revenue Fund, which the Trustee shall establish and maintain, subject to the provisions of the Indenture. At least three Business Days prior to each Interest Payment Date, the Trustee will, out of any moneys in the Revenue Fund, credit the following accounts or make the following payments, but only to the extent moneys in the Revenue Fund are then available and only within the limitations indicated in the Indenture with respect thereto and only after the required payment within such limitation into every Fund prior in order in the following enumeration:

First: To the Fees Fund, an amount sufficient to pay one-half of the fees and

expenses of the Trustee or any Paying Agent next coming due and payable; Second: To the Bond Fund, an amount equal to (a) the Interest Requirement for

the Bonds then Outstanding and (b) the Principal Requirement for the Bonds then Outstanding;

Third: To the Debt Service Reserve Fund, an amount sufficient to increase the

amount of the Debt Service Reserve Fund to the initial deposit in the Debt Service Reserve Fund;

Fourth: To the Surplus Fund, all remaining amounts.

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Project Fund. Proceeds from the sale of the Bonds will be deposited into a separately

established Project Fund, as set forth in the Indenture. The Trustee shall make payments from the Project Fund to pay the Costs of the Project upon receipt by the Trustee of a Written Requisition of the Borrower (each, a “Funding Requisition”), in the form set forth as an exhibit to the Loan Agreement signed by an Authorized Borrower Representative, and approved in writing by the Issuer, conforming to the requirements of the Loan Agreement. Upon completion of the acquisition of the Project, but no more than three months after the Issue Date, subject to any extension authorized by the Indenture, the Trustee shall transfer any moneys remaining on deposit in the Project Fund to the Redemption Fund and redeem Bonds pursuant to the Indenture. When no moneys remain in the Project Fund, such Fund shall be closed.

If an Event of Default occurs and the maturity of the Bonds is accelerated, the Trustee

will, to the extent necessary, use moneys in the Project Fund to make payments on the Bonds. Bond Fund. The Trustee shall deposit in or transfer to the Bond Fund:

(a) all accrued interest, if any, required to be deposited therein from Bond proceeds pursuant to the Indenture;

(b) all amounts required to be transferred to the Bond Fund from the

Revenue Fund pursuant to the Indenture; (c) all amounts required to be transferred to the Bond Fund from the Debt

Service Reserve Fund pursuant to the Indenture; and (d) all amounts required to be transferred to the Bond Fund from the Surplus

Fund pursuant to the Indenture.

The Trustee shall charge the Bond Fund, not earlier than three days prior to each Interest Payment Date, an amount equal to the unpaid principal and interest due on the Bonds on such Interest Payment Date, and shall cause the same to be applied to the payment of such interest and principal when due.

When the amount in the Bond Fund is greater than the amount required therein, any

excess amount shall be credited to the Revenue Fund. In the event that the amount credited to the Bond Fund on or before any Interest

Payment Date is insufficient to pay the interest and principal on the Bonds due on such Interest Payment Date, the Trustee shall credit to the Bond Fund the amount of such deficiency after the charges and credits described above under “Revenue Fund,” by charging the following Funds in the following order of priority: (1) the Revenue Fund; (2) the Surplus Fund; (3) the Redemption Fund, except that no such charge to the Redemption Fund shall be made from moneys to be used to effect a redemption for which notice of redemption has been provided for with respect to Bonds which are no longer Outstanding under the Indenture; (4) the Fees Fund (but only to the extent of the Issuer's fee therein); and (5) the Debt Service Reserve Fund, subject to the limitations set forth in the Indenture.

Debt Service Reserve Fund. The Trustee shall deposit or transfer into the Debt

Service Reserve Fund:

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(a) all amounts derived from Bond proceeds and required to be deposited in the Debt Service Reserve Fund;

(b) all amounts required to be deposited in the Debt Service Reserve Fund to

increase the amount therein to the initial deposit to the Debt Service Reserve Fund; and (c) all investment earnings on the Debt Service Reserve Fund shall be

retained in the Debt Service Reserve Fund until the balance therein equals the Debt Service Reserve Requirement. If at any time there is not a sufficient amount credited to the Bond Fund to pay interest or

principal then becoming due on the Bonds, and in the event that the amount credited from any other Funds in accordance with “Bond Fund,” above, is not sufficient to make up such deficiency, the Trustee shall charge the Debt Service Reserve Fund and credit the Bond Fund the amount of the deficiency then remaining to the extent of funds available therefor in the Debt Service Reserve Fund. The Trustee shall immediately notify the Issuer in writing of any such charge to the Debt Service Reserve Fund.

When, on any June 1 or December 1, the amount in the Debt Service Reserve Fund is

greater than the Debt Service Reserve Requirement, any excess amount shall be credited to the Revenue Fund, unless notice is given by the Issuer to the Trustee that such amount shall be credited to the Redemption Fund.

No amount shall be charged against the Debt Service Reserve Fund except as

expressly provided in the Indenture or to pay interest or principal on the Bonds in accordance with their terms as the same become due.

Surplus Fund. If at any time there shall not be a sufficient amount credited to the Bond

Fund to pay interest or principal then becoming due on the Bonds, and in the event that the amount credited from any other Funds in accordance with “Bond Fund,” above, is not sufficient to make up such deficiency, the Trustee shall charge the Surplus Fund and credit the Bond Fund the amount of the deficiency then remaining to the extent of funds available therefor in the Surplus Fund. The Trustee shall immediately notify the Issuer and the Borrower in writing of any such charge to the Surplus Fund.

Upon the payment of interest and principal on each Interest Payment Date, amounts on

deposit in the Surplus Fund shall be transferred to the Borrower. Rebate Fund. The Rebate Fund is for the payment of any rebates to the United States

required pursuant to Section 148(f) of the Code, and is not pledged as security for the Bonds. The Rebatable Amount is calculated by the Issuer no later than 45 days after each Installment Computation Date or the Final Computation Date. No later than 55 days after each Installment Computation Date or the Final Computation Date, the Trustee will, at the written request of the Issuer, disburse money from the Rebate Fund to the United States for such payment. Issuer and Borrower Covenants

The Issuer and the Borrower have covenanted to perform all covenants and

undertakings described in the Indenture and Loan Agreement, as applicable. The following list of covenants is not inclusive.

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Debt Service Coverage Ratio. The Borrower covenants to establish and collect rents and revenues in connection with the Project at a level sufficient to meet the Coverage Ratio Requirement of not less than 1.20 to 1 with respect to the Project, in each Bond Year commencing with the Bond Year ending June 1, 2012, provided that the Coverage Ratio Requirement need not be met in the Bond Year ending June 1, 2015 due to the principal payment coming due on June 1, 2015. On or before August 1 of each year beginning August 1, 2012, the Borrower will deliver to the Trustee and the Issuer an Accountant’s Certificate stating the actual Coverage Ratio for the Project for the preceding Bond Year and stating whether or not the Borrower has met the Coverage Ratio Requirement.

The failure of the Borrower to achieve the Coverage Ratio Requirement during a Bond

Year is not an Event of Default under the Loan Agreement. If the Accountant’s Certificate shows that the actual Coverage Ratio for the immediately preceding Fiscal Year was less than 1.00 to 1, then the Borrower will employ a Housing Consultant to review the Borrower’s operation of the Project. The Housing Consultant will make a written recommendation to the Trustee within 90 days, and the Borrower covenants to follow such recommendations to the fullest extent possible. Failure to employ a Housing Consultant or follow its recommendations constitutes a covenant default. See “BONDHOLDERS’ RISKS—Revenue Projections” herein.

Condemnation Awards and Insurance Proceeds. If damage to or condemnation of

the Project is less than $100,000, the Borrower will restore the Project. If the damage to or condemnation of the Project is equal to or greater than $100,000, the Borrower will conduct a study to determine whether restoration of the Project will allow the Borrower to maintain the Coverage Ratio Requirement. If the Borrower determines to restore the Project, the Condemnation Award or Insurance Proceeds will be paid to the Trustee to be held in the account related to such Property and disbursed to the Borrower for restoration upon Trustee’s receipt of a disbursement certificate (with any excess amount not needed to restore the applicable Property to be used to redeem Bonds). If the Borrower determines not to restore the Project, then the Condemnation Award or Insurance Proceeds will be transferred to the Trustee for deposit in the Redemption Account and applied to the redemption of the Bonds, as a whole or in part. Any portion of Insurance Proceeds or a Condemnation Award which is in excess of that which is needed to restore the Project shall be transferred by the Borrower to the Trustee and the Trustee shall deposit such amount in the Principal and Interest Account in the Bond Fund and apply such amount to the redemption of Bonds.

Lien of Indenture. Except for Permitted Encumbrances, the Issuer will not create any

lien or encumbrance against the Trust Estate or any part of the Trust Estate that is equal or superior to the line created by the Indenture. The Issuer may create a lien against the Trust Estate or any part of the Trust Estate that is junior to the lien created by the Indenture.

Title to the Project. Except for Permitted Encumbrances and liens for nondelinquent

assessments and taxes not yet due or which are being contested in good faith by appropriate proceedings, the Borrower shall have fee title to the Project free and clear of any lien or encumbrance.

Tax-Exempt Status of the Tax-Exempt Bonds. The Issuer and the Borrower have

covenanted that they will not use the proceeds of the Tax-Exempt Bonds in any way that could impair the exclusion of interest on the Tax-Exempt Bonds from gross income for federal income tax purposes.

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Maintenance of the Project. The Borrower will maintain the Project in a reasonably safe condition and in good condition and repair at all times.

Insurance. So long as any Bonds remain Outstanding, the Borrower shall carry or

cause to be carried insurance with one or more responsible casualty and liability insurers. The Borrower will carry such insurance against the following risks, and will provide a certificate stating that it has obtained and is maintaining such coverage to the Trustee, in at least the following amounts:

(a) insurance against loss or damage by fire and lightning, upon a repair or

replacement basis if available, and otherwise to the full insurable value of the Project (less land), but in no event less than the outstanding principal amount of the Bonds, with deductible provisions not to exceed $25,000 for any one casualty, and with uniform standard extended coverage endorsement limited only as may be provided in the standard form of extended coverage endorsement at the time in use in the State;

(b) business interruption or use and occupancy insurance on the Project in

an amount equal to twelve months’ budgeted Revenues with respect to the Project; and (c) a comprehensive general public liability insurance policy or policies

against all direct or contingent loss or liability for damage to property, personal injury or death caused by the operation and control of or construction at the Project, with a maximum single limit liability of not less than $1,000,000 for personal injury or death arising from a single accident or event, and $1,000,000 for a single occurrence of property damage. Annual Financial Statements. The Borrower will provide audited annual financial

statements to the Trustee and to depositories, as provided for in the Borrower Continuing Disclosure Agreement. The financial statements will be provided on or before 180 days after the end of each Fiscal Year, commencing with the Fiscal Year ending December 31, 2011. See “APPENDIX F — Continuing Disclosure Agreement for the Borrower.”

Takeout of the Bonds on or Before Maturity

Revenues of the Project will not be sufficient to pay principal of the Bonds at

maturity. The Borrower expects to pay the principal of the Bonds from the proceeds of bonds utilizing 4% low income housing tax credits, other financing utilizing 9% low income housing tax credits or other financing sources. Additional funds may be obtained by the Borrower under the HUD 221(d)(4) loan program, HOME funds or other governmental loan programs. In the event that refinancing proceeds are not available to repay the principal of the Bonds on their maturity date, or other amounts sufficient to pay the principal on the Bonds on their maturity date are not available, the Trustee will be compelled to foreclose on the Project and to apply the proceeds of such foreclosure, to the extent available, to pay the principal of the Bonds at maturity. In the event that there are insufficient proceeds resulting from such foreclosures, no other amounts, other than amounts held by the Trustee under the Indenture, will be available to pay the principal of and interest on the Bonds. As a result, investment in the Bonds contains a significant degree of risk. Potential investors should carefully review the section of this Official Statement entitled “BONDHOLDERS’ RISKS- Takeout Risk” and “APPENDIX H – Low Income Housing Tax Credit Program.”

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Low Income Housing Tax Credits. The Borrower expects to refinance the Bonds from

the proceeds of bonds structured to take advantage of 4% or 9% Low Income Housing Tax Credits (“LIHTC”) under Section 42 of the Internal Revenue Code. The LIHTC Program was established to encourage the investment of private equity in the development of affordable rental housing. The program uses an indirect subsidy to promote investment by providing a dollar-for-dollar credit against tax liability. Since the economic downturn, the market for tax credits cooled considerably to approximately half the size it was at its peak in 2006. Recently, however, the tax credit market has rebounded, with available equity, more investors and active syndicators and higher credit prices for developers. For a detailed description of the LIHTC Program, see “APPENDIX H – Low Income Housing Tax Credit Program.”

HUD 221(d)(4) Loan Program. The U.S. Department of Housing and Urban

Development (“HUD”) 221(d)(4) program insures mortgage loans for the new construction or substantial rehabilitation of multifamily rental housing. Under the program, a nonprofit Borrower may receive an insured mortgage up to 100% of the HUD/FHA estimated replacement cost of the project with low debt service coverage requirements. Processing time for HUD 221(d)(4) loans is approximately nine months from application to closing.

Issuer Agreement to Purchase Project. Under certain circumstances, the Issuer has

agreed to purchase the Project for its own account if the refinancing has not occurred prior to the maturity of the Bonds. The Issuer would have to issue bonds to purchase the Project and would be subject to similar risks as the Borrower with respect to the availability of credit at favorable interest rates.

See “BONDHOLDER RISKS – Takeout Risks.”

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USE OF PROCEEDS The Bonds are being issued by the Issuer to pay the costs of acquiring the Project, to

undertake immediate repairs at the Project, to fund reserves and to pay the costs of issuance of the Bonds. The Project consists of a multifamily housing project located in Brentwood, California, comprised of 52 total units. For more information on the Project, see “THE BORROWER AND THE PROJECT.”

Sources and Uses of Funds

The proceeds from the Bonds are expected to be applied as follows: Sources of Funds Tax-Exempt Bond Proceeds $4,900,000.00 Less Original Issue Discount (134,750.00) Taxable Bond Proceeds 215,000.00 Less Original Issue Discount (5,375.00) Total Sources of Funds $4,974,875.00 Uses of Funds Project Fund[1] $4,403,050.00 Debt Service Reserve Fund[2] 286,162.50 Costs of Issuance[3] 285,662.50 Total Uses of Funds $4,974,875.00 [1] To be used to acquire the Project and fund immediate repairs to the Project. [2] Represents the Debt Service Reserve Requirement on the Bonds. [3] Funded from proceeds of the Taxable Bonds and not more than 2% of the Tax-Exempt Bonds.

Includes Issuer fees, Bond Counsel fees, Disclosure Counsel fees, Underwriter fees, initial fees of the Trustee and its counsel, Borrower’s Counsel fees, Official Statement printing and certain other costs for the Bonds.

Debt Service Schedule

The following table presents the annual debt service on the Bonds (including sinking

fund redemptions), assuming there are no optional redemptions.

Year Ending June 1

Principal

Tax-Exempt Bonds

Interest

Tax-Exempt Bonds

Principal Taxable Bonds

Interest Taxable Bonds

Total Debt Service

2012 $ - $259,768.06 $ - $16,060.80 $275,828.86 2013 - 269,500.00 - 16,662.50 286,162.50 2014 - 269,500.00 - 16,662.50 286,162.50 2015 4,900,000 269,500.00 215,000 16,662.50 5,401,162.50 Total: $4,900,000 $1,068,268.06 $215,000 $66,048.30 $6,249,316.36

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BONDHOLDERS’ RISKS

In General Prospective purchasers of the Bonds should consider carefully all possible

factors which may affect both the operations and the revenues of the Project and consequently create the possibility that payment on the Bonds will not be made, that the Bonds will be redeemed prior to maturity or that interest on the Tax-Exempt Bonds might be declared to be taxable from their date of issuance. The Bonds may not be a suitable investment for all prospective purchasers. Prospective purchasers should consult their investment advisors before making any decisions to purchase the Bonds. The following discussion, while not setting forth all the factors which must be considered, contains some of the factors which should be considered prior to purchasing the Bonds.

Revenue Projections

The primary source of repayment of the debt service payments comprised of interest on

the Bonds are the Revenues of the Project. Projected revenue levels are based upon certain assumptions regarding current and future rent and occupancy levels. The Borrower is not obligated to charge market rents for the Project, but only is obligated to charge rents sufficient to pay the payments due on the Bonds. The Project’s revenues could fall short of projections if vacancies are higher than projected or rental rates are lower than projected. Various conditions, including but not limited to a contraction in business growth or a downturn in the overall economy of the regions of the Project, inadequate property management or a significant number of competing projects built in the area of the Project, could cause actual rent and occupancy levels to be less favorable than current Issuer forecast levels. See “APPENDIX D — General Information About the City of Brentwood and the County of Contra Costa” herein for information regarding economic factors affecting the area of the Project.

Prospective purchasers of the Bonds should understand that it is the Borrower's

intention and expectation that the principal of the Bonds will not be repaid from the Revenues of the Project, however, the interest on the Bonds will be repaid from Revenues. As a basis for this, the Borrower, of necessity, is making projections of future rent, occupancy and expense levels based on historic and current operating information with respect to the Project. Although the Borrower believes that the assumptions made are prudent and reasonable, factors such as but not limited to those described above could cause these assumptions to be incorrect.

Takeout Risk

The Bonds are structured as interest-only bonds with a balloon payment at maturity on

June 1, 2015. While the Revenues of the Project secure the payment of principal and interest on the Bonds, the Revenues of the Project will not be sufficient to pay off the principal of the Bonds at maturity. Rather, the Borrower expects to pay the principal due with respect to the Bonds from proceeds obtained from multifamily housing revenue bonds to be issued to take advantage of 4% low income house tax credits, or alternately, through other financing utilizing 9% low income housing tax credits or other financing sources. As a result, investment in the Bonds contains a significant degree of risk. In the event that refinancing proceeds are not available to repay the principal of the Bonds on their maturity date, or other amounts sufficient to pay the principal on the Bonds on their maturity date are not available, the Trustee will be compelled to foreclose on the Project and to apply the proceeds of such foreclosure, to

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the extent available, to pay the principal of the Bonds at maturity. In the event that there are insufficient proceeds resulting from such foreclosure, no other amounts, other than amounts held by the Trustee under the Indenture, will be available to pay the principal of and interest on the Bonds.

Four percent or 9% Low Income Housing Tax Credits (“LIHTC’s”) are issued under

Section 42 of the Internal Revenue Code. The market for LIHTC’s eroded in the past three years, falling by half or more since 2006. With a glut of tax credits available, the price paid by investors of LIHTC’s dropped from over 90 cents per credit to lower than 70 cents. As a result, developers have had to finance project costs from multiple gap financing sources, thereby increasing financing and development timelines. Although in 2010 and 2011 the market for LIHTCs has improved, the Borrower may have difficulty finding an LIHTC investor or obtaining additional gap financing. There can be no assurance that the Borrower or another developer partner will have the ability to refinance the Project utilizing LIHTC’s or another form of financing in a timely fashion to repay the principal of the Bonds at maturity.

Although the Issuer has agreed under certain circumstances to purchase the Project for

its own account if the Project has not been refinanced prior to Bond maturity, the Issuer may face similar challenges as the Borrower in obtaining financing for the Project.

Risks of Real Estate Investment Generally

The owners of the Bonds will be subject to the risks generally incident to an investment

in real estate, including without limitation (i) the uncertainty that the Project will produce sufficient revenues to enable the Issuer to make timely payments pursuant to the terms of the Indenture; (ii) adverse changes in local market conditions, such as changes in the supply of or demand for competitive properties in the area; (iii) changes in interest rates and the availability of financing moneys that may render any refinancing or sale of the Project difficult, unattractive or even impossible; (iv) changes in real estate tax rates and other operating expenses, governmental laws (including, without limitation, zoning laws) and fiscal policies; and (v) natural disasters (including, without limitation, earthquakes and floods), which may result in uninsured losses.

The owners of the Bonds will be subject to the risk that the Project will be unable to

attract and retain tenants as a result of adverse changes affecting the Project, the local real estate market or other factors, including the restrictions on the Project imposed under the Regulatory Agreement. Such inability to attract and retain tenants would result in a decline in rental income and may affect the ability and willingness of the Issuer to make timely payments due pursuant to the Indenture. There can be no assurance that the Project will generate sufficient revenue to cover operating expenses and meet required payments under the Indenture.

Residential real estate, including the Project, can be subject to adverse housing pattern

changes and uses, vandalism (resulting in, among other things, extra security costs), vacancies, rent controls, rising operating costs, and adverse changes in local market conditions, such as a decrease in demand for residential housing due to a decline of the local economy and a decrease in employment. The success of the Project, to a great extent, is dependent upon the the economy of the City of Brentwood and the surrounding East Bay area known as the Oakland-Fremont-Hayward Metropolitan Division (the “Oakland MD”. In general, the Oakland MD has experienced slow population growth in the past year of 0.8% compared to the State’s

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population grown of 1.2% during the same period. Prior to the economic slowdown, the Oakland MD had been the fastest growing region in the San Francisco Bay Area since the mid-1980s. As with much of California and the nation, due to the subprime mortgage crisis and weakening economy, the Oakland MD experienced significant decreases in sales of new homes and median home prices in 2008 and 2009. The number of building permits issued for single and multi-family housing was down by half in 2008. The apartment market, however, has maintained stable vacancy amidst the volatility of the weak economy as high foreclosures displace many homeowners into the rental market.

Rationing or other restrictions with respect to the availability or use of utilities also could

have a significant effect on the profitability of operating the Project. Similarly, governmental or administrative entities may impose restrictions requiring structural alterations of or capital improvements to residential buildings, resulting in significant additional costs to the Issuer that the Issuer may be unable to afford, and which would have a significant impact on the cash flow of the Project. If the local regulatory bodies having jurisdiction over the Project restrict or limit rent increases imposed by the Issuer to offset increased costs, the cash flow of the Project may be reduced. Any future organization of the tenants of the Project could result in resistance against rent increases, in the form of rent strikes, litigation or other action. If rental receipts after Operating Expenses (other than debt service) are insufficient to service the debt with respect to the Indenture, foreclosure and sale of the Project is possible. Uninsured Losses

The Indenture requires that the Issuer obtain and keep in force certain types and

amounts of insurance on the Project so long as the Bonds are outstanding. However, there are certain types of losses (generally of a catastrophic nature) that are either uninsurable or not economically insurable. Such risks include, but may not be limited to, earthquakes, war and floods. Moreover, such insurance coverage is subject to certain upper limits, which may not be sufficient to pay the costs of remedying each and every event of casualty which may occur. In addition, the Issuer could allow the insurance on any of the Project to lapse. If an uninsured loss occurs, a default in payment of the Bonds could result and, if such loss is substantial, a non-payment of all or a portion of the Bonds almost certainly would occur.

Certain Risks Associated with the Deeds of Trust

The Borrower will execute a Deed of Trust with respect to the Project in favor of the

Trustee to secure its obligations pursuant to the Loan Agreement. The Trustee has the right to foreclose on the Project under certain circumstances. All amounts collected upon foreclosure of the Project pursuant to the Deed of Trust will be used to pay certain costs and expenses incurred by, or otherwise related to, the foreclosure, the performance of the Trustee and/or the beneficiary under the Deed of Trust, and then to pay amounts owing under the Loan with respect to the Project in accordance with the provisions of the Loan Agreement.

Any valuation of the Project is based on future projections of income, expenses,

capitalization rates, and the availability of the partial or total property tax exemption. Additionally, the value of the Project will be dependent at all times upon many factors beyond the control of the Issuer or the Borrower, such as changes in general and local economic conditions, changes in the supply of or demand for competing properties in the same locality and changes in real estate and zoning laws or other regulatory restrictions. A material change in any of these factors could change materially the value of the Project. Any reduction in the market value of the Project will adversely affect the security available to the owners of the

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Bonds. There is no assurance that the amount available upon foreclosure of the Project after the payment of foreclosure costs will be sufficient to pay the amounts owing by the Issuer on the Bonds.

In the event of foreclosure, a prospective purchaser of the Project may assign less value

to the Project than the value of the Project while owned by the Borrower since the purchaser may not enjoy the favorable financing rates associated with the Bonds, real estate tax exemption and other benefits. To the extent that a buyer whose income is not tax-exempt may be willing to pay less for the Project than a nonprofit buyer, then the resale of the Project after foreclosure may require more time to solicit nonprofit buyers interested in assuming the financing now applicable to the Project. In addition, there can be no assurance that the Project could be sold at 100 percent of its fair market value in the event of foreclosure. Although the owners of the Bonds will have available the remedy of foreclosure of the Deed of Trust in the event of a default (after giving effect to any applicable grace periods, and subject to any legal rights which may operate to delay or stay such foreclosure, such as may be applicable in the event of a Borrower’s bankruptcy), there are substantial risks that the exercise of such a remedy will not result in recovery of sufficient funds to pay amounts due on the Bonds.

The Deed of Trust will be in the form of a deed of trust with power of sale and will be

governed by California law. Under California law, the beneficiary of a deed of trust with power of sale (e.g., the lienholder described above) may cause the instrument to be foreclosed either judicially (by a court proceeding) or nonjudicially by a trustee’s sale. In the event of a judicial foreclosure, California law also requires the beneficiary of a deed of trust to realize on the underlying security first before suing on the debt. Nonjudicial foreclosures under California law preclude suing on the debt in most circumstances.

In the event that the Deed of Trust is foreclosed, then, in addition to the customary costs

and expenses of operating and maintaining the Project, the party or parties succeeding to the interest of the Borrower in the Project (including the Issuer or the owner(s) of any of the Bonds, if such party or parties were to acquire the interest of the Issuer in the Project) could be required to bear certain associated costs and expenses, which could include: (i) the cost of complying with federal, state or other laws, ordinances and regulations related to the removal or remediation of certain hazardous or toxic substances; (ii) the cost of complying with laws, ordinances and regulations related to health and safety and the continued use and occupancy of the Project such as the Americans with Disabilities Act; and (iii) costs associated with the potential reconstruction or repair of the Project in the event of any casualty or condemnation.

In order to realize on a Borrower’s pledge under the Indenture and the Deed of Trust, the

Trustee will be required to conduct a foreclosure sale of the Project under the Indenture and Deed of Trust pursuant to Article 9 of the California Commercial Code. Such a foreclosure sale must be held in a “commercially reasonable” manner and is subject to subsequent claims that the sale was not “commercially reasonable” and therefore was invalid. Because there is no established market for deeds of trust comparable to the Deed of Trust, little guidance exists for conducting a “commercially reasonable” sale under these circumstances. Therefore, no assurance can be given that a foreclosure sale of the Trustee’s interest in the Indenture and the Deed of Trust will not subsequently be rendered invalid and set aside or that a purchaser could be found for such interests.

IN ORDER TO UNDERSTAND IN FULL THE RISKS AND PROCEDURES INVOLVED

IN FORECLOSURE OF THE DEED OF TRUST UNDER CALIFORNIA LAW, POTENTIAL

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OWNERS OF THE BONDS ARE ADVISED AND EXPECTED TO CONSULT WITH AN EXPERT IN THE FIELD BEFORE PURCHASING THE BONDS. Antideficiency Legislation and Certain Other Limitations on Lenders

California has four principal statutory prohibitions limiting the remedies of a beneficiary under a deed of trust: three antideficiency statutes and the “one-action rule” and its corollary, the “security first rule.”

Antideficiency Legislation. Two antideficiency statutes limit the beneficiary's right to

obtain a deficiency judgment, one being based on the method of foreclosure and the other on the type of debt secured. Under the former, a deficiency judgment is ordinarily barred when the foreclosure is accomplished by means of a nonjudicial trustee's sale, except in limited exceptions not applicable to the Deeds of Trust. Under the latter (not applicable in this situation), a deficiency judgment is barred when a foreclosed deed of trust secures certain purchase money obligations.

Another statutory provision limits any deficiency judgment obtained by a beneficiary

following a judicial sale to the excess of the outstanding debt above the fair market value of the property at the time of sale. This prevents a beneficiary from obtaining a large deficiency judgment against the debtor as the result of low bids at a judicial sale.

While the primary advantage of a lender proceeding under a judicial foreclosure is that it

would be entitled to a deficiency judgment, judicial foreclosures are subject to most of the delays and expenses of other lawsuits and may require several years to complete.

One-Action Rule and Security First Rule. The one-action rule prohibits a secured

creditor from initiating separate lawsuits against a debtor (i.e., one to foreclose on the security, a second to collect on the note). Under the statute, an “action” is a judicial proceeding, so a nonjudicial trustee's sale is not considered to be an action because it is not a court proceeding. Under a judicial foreclosure scenario, if a project is comprised of multiple properties securing a single debt, a lender would be required to foreclose on all of the projects comprising the project in one action, or lose its security interest in those projects not sold. However, since the Deed of Trust contains a power of sale, a lender could pursue a nonjudicial trustee’s sale of each one of the properties comprising a project without violating the one-action rule.

The security first rule is a corollary to the one-action rule and requires the beneficiary to

exhaust the security under a deed of trust by foreclosure before bringing a personal action against the trustor on the indebtedness. Under the one-action and security first rules, if the Trustee were to file suit or take other actions (including set off) to collect the debt secured by the Deed of Trust without first seeking to enforce the remedies under the Deed of Trust, the Trustee might forfeit its right to the security interest in the Project.

State Foreclosure Laws

Foreclosure laws permit a secured party to foreclose upon property subject to mortgages or a deed of trust such as the Deed of Trust relating to the Project. Although the Trustee will have the Deed of Trust on the Project, legal procedures connected with the exercise of remedies available may cause delays and otherwise limit the collection of funds available for payment of debt service on the Bonds. There can be no assurance that amounts realized from the foreclosure of the Project will be sufficient to pay the debt service on the Bonds. No

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deficiency may be available following a non-judicial foreclosure. Potential purchasers of Bonds should consult legal counsel or otherwise familiarize themselves with the relevant California laws.

Borrower Bankruptcy

The potential effects of a Borrower bankruptcy could be to significantly delay enforcement of remedies otherwise available to the Trustee and allow the bankruptcy court, under certain circumstances, to substitute other assets of the Borrower for collateral under the Loan Agreement without application of the proceeds to payment of the Bonds, or to subordinate the Indenture and the Deed of Trust by payment of an amount determined by the bankruptcy court to be the value of the collateral thereunder (even though less than the total principal amount of Bonds then outstanding). The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by state and federal laws, rulings and decisions affecting remedies, by bankruptcy, insolvency, reorganization, or other laws of general application affecting the enforcement of creditors’ rights and, with respect to the Borrower, by limitations potentially imposed on the basis of public policy.

Issuer Bankruptcy

The potential effects of bankruptcy of the Issuer could be to significantly delay

enforcement of remedies otherwise available to the Trustee and allow the bankruptcy court, under certain circumstances, to substitute other assets of the Issuer for collateral under the Indenture without application of the proceeds to payment of the Bonds, or to subordinate the Indenture and the Deed of Trust by payment of an amount determined by the bankruptcy court to be the value of the collateral thereunder (even though less than the total principal amount of Bonds then outstanding). The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by state and federal laws, rulings and decisions affecting remedies, by bankruptcy, insolvency, reorganization, or other laws of general application affecting the enforcement of creditors’ rights and, with respect to the Issuer, by limitations potentially imposed on the basis of public policy.

Effects on Exemption of Interest From Federal Taxes

The exemption of interest on the Tax-Exempt Bonds from federal income taxes is

dependent upon continuing compliance by the Issuer and the Borrower with the requirements of the Code.

Absence of Rating

The Bonds are not rated by any credit rating agency, no rating has been applied for and

the Issuer does not intend to apply for any rating.

Seismic and Environmental Matters Seismic Risk. The Project is located in Contra Costa County, which is in Seismic Zone

3 for building design and engineering purposes. Zone 3 is a medium risk area, but is the lowest rating in the State of California. The Project is not located in an Alquist-Priolo Study zone. The City of Brentwood, like most regions in California, is located in an area of seismic activity and,

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therefore, could be subject to potentially destructive earthquakes. The risk of seismic shaking from events in the region is considered high. The occurrence of severe seismic activity in the City of Brentwood could result in substantial damage to the Project, leading to temporary or permanent reductions in rental income, a reduction in the marketability and value of the Project and could affect the Issuer’s ability to pay debt service on the Bonds.

CEQA. Under the federal Comprehensive Environmental Response, Compensation and

Liability Act and under comparable California law, a secured party which takes a deed in lieu of foreclosure, purchases a mortgaged property at a foreclosure sale or operates a mortgaged property may become liable under certain circumstances for the cost of remedial action ("Remedial Action Costs") if hazardous waste or hazardous substances have been released or disposed of on the property. If incurred, such Remedial Action Costs could be incurred by the Issuer or a third party that foreclosed on the property and would subject the Project to a lien and reduce or eliminate the amounts otherwise available to pay the Bondowners.

Management Contract

The Lapham Company will act as property manager for the Project. The ability of the

Project to generate sufficient revenues to meet its operating expenses, working capital needs and its obligations on the Bonds is subject to many factors, including the capabilities of the property manager. No assurance can be given that the property manager will be able to successfully manage the Project. Moreover, there can be no assurances that the management contract with The Lapham Company will remain in place or that another qualified property manager could be found.

Project Feasibility

Other than appraisals of the Project, no independent feasibility study has been made of

the Project. See “THE BORROWER AND THE PROJECT – Appraisal” below. The list above of Bondholders’ Risks is not, and is not intended to be, all-inclusive.

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THE ISSUER

Organization of the Issuer The Issuer is a joint exercise of powers agency organized pursuant to a Joint Powers

Agreement, dated as of March 1, 2001, as amended May 31, 2001 and January 9, 2006 (the “Joint Powers Agreement”), among a number of California county and city housing authorities entered into pursuant to the provisions relating to the joint exercise of powers contained in Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code (the “JPA Act”). The Issuer is authorized to participate in financings to acquire, construct, manage and maintain real property, including multifamily housing rental projects. The Issuer is also authorized to operate the Projects pursuant to Articles 1 through 5 of Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code.

Pursuant to Government Code Section 6508.1 and the Joint Powers Agreement, the

debts, liabilities, and obligations of the Issuer do not constitute debts, liabilities or obligations of any party to the Joint Powers Agreement (the “Member Entities”), except as separately agreed to by a Member Entity. Currently, there are 16 Member Entities of the Issuer:

Housing Authority of the County of Butte

Consolidated Area Housing Authority of Sutter County Area Housing Authority of the County of Ventura

Imperial Valley Housing Authority Housing Authority of City of Vallejo City of Richmond Housing Authority

Housing Authority of the County of Merced City of Madera Housing Authority

Housing Authority of the County of Contra Costa Housing Authority of the County of Santa Clara

Housing Authority of the City of Oxnard Plumas County Community Development Commission

Housing Authority of the County of Tulare Housing Authority of the County of Stanislaus

Housing Authority of Kings County Housing Authority of Yolo County

The Member Entities of the Issuer shall not be directly or indirectly or contingently or

morally obligated to use any moneys or assets to pay all or any portion of debt service due on the Bonds. The Bonds and the obligation to pay principal of and interest thereon and any redemption, premium with respect thereto do not constitute an indebtedness or an obligation of the State of California or any political subdivision thereof, within the meaning of any constitutional or statutory debt limitation, or a charge against the general credit or taxing powers of any of them, but shall be payable solely from the revenues described herein. No owner of the Bonds shall have the right to compel the exercise of the taxing power of the State of California or any political subdivision thereof to pay any principal of, purchase price, premium, if any, or interest on the Bonds. The Issuer has no taxing power.

THE JOINT POWERS AGREEMENT CANNOT BE TERMINATED UNTIL SUCH TIME

AS ALL PRINCIPAL OF AND INTEREST ON THE BONDS AND OTHER EVIDENCES OF INDEBTEDNESS ISSUED BY THE ISSUER SHALL HAVE BEEN PAID IN FULL.

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Issuer Governance The Issuer is directed by a five-member executive committee of the Board of Directors,

designated by the Member Entities. Pursuant to the Joint Powers Agreement, Directors are not entitled to compensation. However, the Board may authorize reimbursement of expenses incurred by Directors. The name and occupation of each member of the five-member executive committee of the Board of Directors are listed below:

Name Occupation Ed Mayer, Chair Executive Director of the Housing Authority of the County of Butte Douglas A. Tapking, Vice Chair Executive Director of the Area Housing Authority of the County of Ventura Rennise Ferrario, Member Executive Director of the Housing Authority of the County of Merced Andrea D. Roark, Member Executive Director of the Imperial Valley Housing Authority Linda Nichols, Secretary Executive Director of the Consolidated

Area Housing Authority of Sutter County

The officers of the executive committee of the Board of Directors of the Issuer are appointed annually. The officers of the Issuer are appointed on an annual basis, except for the Executive Director, who is hired by the Executive Committee and the Secretary and Treasurer, who are permanent members of the Issuer.

Biographies of the Chair and Vice Chair follow: Ed Mayer, Chair of the Board of Directors, has 17 years of experience in administration,

financing, community relations and legislative action with housing authorities in California and Montana. He served nine years as Executive Director of the Missoula Housing Authority, Missoula, Montana (1991-2000), during which time he served two years as Chair of the Montana State Chapter of the National Association of Housing and Redevelopment Officials (NAHRO). Since August 2008 he has served as Executive Director of the Housing Authority of the County of Butte, in which position he manages 869 units (345 HUD Public Housing, 235 LIHTC-financed, 127 bond-financed, 130 USDA-RD Farm Labor, and 32 other). Mr. Mayer has a B.A. in Architecture from Yale University. Since 1980, Mr. Mayer has acted as owner’s authorized representative, and project development and operations manager for commercial, institutional, and residential projects and properties in Alaska, California, Montana, Indiana, and Colorado. In the course of his housing authority work, the agencies served received numerous HUD and industry awards for management and project development excellence and innovation.

Douglas A. Tapking, Vice-Chair of the Issuer Board of Directors, has 34 years of

experience in administration, financing, community relations and legislative action with housing authorities in Southern California and Utah. Since 1996, he has served as Executive Director of the Area Housing Authority of the County of Ventura California, in which position he has purchased $37,000,000 in property and added 403 units to the affordable housing inventory and

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18,000 square feet in public accessible office space. Mr. Tapking has a B.A. in Public Administration from San Diego State University and a Master of Science – Administration from California State University, Dominguez Hills.

Inquiries regarding the Issuer or the Bonds may be directed to the Issuer’s Counsel as

follows: California Affordable Housing Agency c/o Thomas Lewis, Esq. Silveira, Mattos & Lewis 530 West 21st Street Merced, California 95344-0287

Outstanding Debt of the Issuer The Issuer was created in March 2001. Descriptions of debt issued by the Issuer follow.

The Bonds are being issued pursuant to the Indenture and are not being issued pursuant to any other indenture or trust agreement described below. The Bonds are not issued on a parity with any other bonds, the pool bonds or certificates of participation described below.

Series 2001A Bonds. In August 2001, the Issuer issued its $24,870,000 Multifamily

Housing Revenue Bonds (Affordable Housing Pool) Series 2001A (Waterstone at Vallejo and Valley I-IV Apartments Project) (the “Series 2001A Bonds”) pursuant to an Indenture dated as of August 1, 2001, as amended and supplemented by a Series Indenture, dated as of August 1, 2001, by and between the Issuer, as issuer and Chase Manhattan Trust Company, National Association, as trustee, paying agent and registrar (collectively, the “Series 2001A Indenture”). The proceeds of the Series 2001A Bonds were used to fund loans to the Imperial Valley Housing Authority and the Housing Authority of the City of Vallejo. The multifamily housing project financed through the loan to the Housing Authority of the City of Vallejo, known as Waterstone at Vallejo Apartments (the “Vallejo Project”), was acquired just prior to September 11, 2001, and, due to the events of September 11th and the downturn in the economy in the San Francisco Bay Area, the Vallejo Project did not perform to expectation and did not generate enough revenue to pay its operating expenses and payments due under the loan. However, the Housing Authority of the City of Vallejo utilized its reserves to enable it to make timely loan repayments in full and, as a result, the Issuer paid debt service on the Series 2001A Bonds on a timely basis and in full. In July 2004, the Housing Authority of the City of Vallejo sold the Vallejo Project and the Series 2001A Bonds associated therewith were redeemed on July 30, 2004. The Series 2007A Bonds were issued to prepay the loan to the Imperial Valley Housing Authority and to refund on an advance basis the portion of the Series 2001A Bonds associated therewith. Upon the issuance of the Series 2007A Bonds, all of the outstanding Series 2001A Bonds and the lien of the Series 2001A Indenture was defeased.

Pool Bonds Issued Under Master Indenture. Pursuant to a Master Indenture, the

Issuer established a pool of bonds and issued its Series 2003A Bonds in March 2003, its Series 2003B Bonds in April 2003, its Series 2003C Bonds in July 2003, its Series 2004A Bonds in January 2004, its Series 2007A bonds in January 2007 and its Series 2007B Bonds in March 2007 (collectively, the “Pool Bonds”), to provide funding for a loan to the Housing Authority of the County of Merced, a loan to the Consolidated Area Housing Authority of Sutter County, a loan to the Housing Authority of the City of Madera, a loan to the Housing Authority of the County of Stanislaus, a refunding loan to the Imperial Valley Housing Authority and a loan to the Housing Authority of the County of Merced, respectively. Each series of Bonds issued under

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the Master Indenture were issued on a parity basis and are secured by the Trust Estate under the Master Indenture. In the future, the Issuer plans to issue Additional Bonds under the Master Indenture. All of the borrowers under the Pool Bonds has made timely principal and interest payments on its loans.

Agency Owned Property. In January 2004, the Issuer issued its $925,000 Multifamily

Housing Revenue Bonds (AHA Properties – Olive Tree Apartments), Series 2004A (the “Olive Tree Bonds”) pursuant to a Trust Indenture dated as of January 1, 2004 (the “Olive Tree Indenture”) between the Issuer and Wells Fargo Bank National Association. The proceeds of the Olive Tree Bonds were used to finance the acquisition and rehabilitation by the Issuer of a 44-unit multifamily housing development located in the unincorporated Olivehurst Area of Yuba County, California. The Issuer has made its principal and interest payments on the Olive Tree Bonds on a timely basis and in full.

In May 2009, the Issuer issued its $2,865,000 Multifamily Housing Revenue Bond

Anticipation Notes (the “Crosswood BANs”) in order to acquire the Crosswood Apartments, a 48-unit housing project located in the City of Woodland, California. The Issuer has made its interest payments on the Crosswood BANs on a timely basis and in full.

Certificates of Participation. In April 2004, the Issuer issued $10,370,000 Certificates

of Participation, Series 2004 (Oxnard-Santa Clara Projects) (the “Oxnard-Santa Clara Certificates”) pursuant to a Trust Agreement dated as of February 1, 2004 (the “Oxnard-Santa Clara Trust Agreement”) between the Issuer and Wells Fargo Bank, National Association. The proceeds of the Oxnard-Santa Clara Certificates were used to provide funds to the Housing Authority of the County of Santa Clara, California and the Housing Authority of the City of Oxnard, California (collectively, the “Oxnard-Santa Clara Authorities”) to finance certain capital projects, fund reserve accounts, pay capitalized interest, and pay costs of issuance. To date, no principal or interest payments have been due on the Oxnard-Santa Clara Certificates. Payments representing principal and interest on the Oxnard-Santa Clara Certificates have been made by the Oxnard-Santa Clara Authorities on a timely basis and in full.

2003 Senior and Subordinate Bond Financing. In 2003, the Issuer issued

$23,000,000 senior Multifamily Housing Revenue Bonds (“Senior Bonds”) and $12,000,000 subordinate Multifamily Housing Revenue Bonds (“Subordinate Bonds”) for the purpose of assisting the Housing Authority of the City of Richmond ("RHA") to acquire the Westridge at Hilltop Apartments. The Senior Bonds were credit enhanced by Fannie Mae. The Subordinate Bonds were not credit enhanced. In order to provide additional security for the Senior Bonds, RHA entered into a lease/lease-back arrangement with the City of Richmond. Under this arrangement, RHA leased the Project to the City under a lease (the "Prime Lease"), and the City then leased the Project back to RHA under a sublease (the "Sublease"). RHA’s payment under the Sublease was a nominal $1. Under the Prime Lease, the City is obligated to pay to the trustee for the Bonds, lease payments equal to the amount due under the Senior Bonds note, the Senior Bonds reimbursement agreement, the Senior Bonds deed of trust, the Subordinate Bonds loan agreement and the Subordinate Bonds deed of trust (collectively, the “RHA Agreements”). However, the City receives as a credit against the lease payments owing under the Prime Lease, amounts paid by RHA under the RHA Agreements. As a result, for as long as RHA makes payments due under the RHA Agreements, the City is not liable for amounts due under the Prime Lease. However, in the event that RHA does make payments due under the RHA Agreements, the City becomes liable for any shortfall. The RHA has made its loan repayments on a timely basis and in full.

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Private Activity Bonds. In addition to the above-described financings, the Issuer issued its (i) $1,802,744 Multifamily Housing Revenue Bonds (Colusa Avenue Apartments) 2004 Series A in order to provide a loan to Colusa Avenue Apartments, A California Limited Partnership, to finance the acquisition and rehabilitation of a 38-unit multifamily rental housing project located in the City of Chowchilla, California, (ii) $993,246 Multifamily Housing Revenue Bonds (Sunset Apartments) 2004 Series B in order to provide a loan to Kerman Sunset Partners, A California Limited Partnership to finance the acquisition and rehabilitation of a 36-unit multifamily rental housing project located in the City of Kerman, California, and (iii) $2,660,856 Multifamily Housing Revenue Bonds (Lado Del Rio Apartments) 2004 Series C in order to provide a loan to Lado Del Rio Apartments, A California Limited Partnership, to finance the acquisition and rehabilitation of a 42-unit multifamily rental housing project located in the City of Hollister, California. Debt Repayment Record

The Issuer has always met principal and interest payments on outstanding debt

obligations when due. Additionally, no refunding bonds have been issued for the purpose of preventing an impending default.

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THE BORROWER AND THE PROJECT

The Borrower The Borrower is The Coldbrook Foundation, a California nonprofit public benefit

corporation. Its Articles of Incorporation were filed January 23, 1998 and the IRS Determination Letter designating its charitable purpose as “affordable housing,” is dated February 6, 1998. The Borrower is a 501(c)(3) corporation as described in section 501(c)(3) of the Code, and is exempt from federal income taxation under section 501(a) of the Code. The Coldbrook Foundation currently owns two multifamily properties: a 56-unit project located in Ft. Bragg, California, and a 55-unit project located in Yreka, California. Both projects receive U.S.D.A. rent subsidies and both were financed with tax-exempt bonds. The Borrower is located in the City of Martinez, Contra Costa County, California.

The Project

Village Park Apartments is a 52-unit two-story multifamily apartment building constructed

in 1971, located in the City of Brentwood, County of Contra Costa, California. Building amenities include an elevator, one on-site laundry room and 36 covered off-street parking. All units have vinyl flooring in the entry, kitchens and bathrooms and carpeting in the living areas and bedrooms as well as standard appliances. Some units have ceiling fans and balconies or private patios.

On January 31, 2011, the occupancy of the Project was 100%. As of May 1, 2011, there

are two recent vacancies at the Project, making the current occupancy 96%. Historical vacancy rates at the Project have ranged from 0% to 5%. Average vacancies in the area are 4.7%.

The unit mix of the Project is as follows:

Unit Type Number of Units Average Size Total SF 1 BR/1 BA 42 537 s.f. 22,554 2 BR/1 BA 10 675 s.f. 6,750

Total 52 564 avg. s.f. 29,304

Hallways/Office/Laundry/Storage

7,754 Gross Building Area 37,058

The Borrower entered into a purchase contract with the current owner, dated December

24, 2010, indicating a purchase price of $4,160,000. An appraisal of the Project concludes that the as-is value of the Project is $4,160,000. See “- Appraisal” below.

Foreclosure Proceedings

First Deed of Trust. On January 14, 2011, JPMorgan Chase Bank (“JPMorgan”), the lender under a deed of trust currently encumbering the Project, recorded a Notice of Default and Election to Sell Under the Security Instrument against the Project. Subsequently, a Notice of Trustee’s Sale – Unified Sale was recorded against the Project in the Contra Costa County official records. The Notice of Trustee’s Sale indicates that the California Reconveyance Company, as deed of trust trustee, will proceed with a Trustee’s Sale of the Project to the highest bidder on May 27, 2011. Additionally, JPMorgan commenced a judicial foreclosure action in the Contra Costa County Superior Court, resulting in the appointment of a receiver to

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operate and manage the property, including the collection of rents on behalf of JPMorgan. In order to complete the sale of the property to the Borrower, the current owner has entered into a Forbearance Agreement with JPMorgan, whereby JPMorgan has agreed to temporarily refrain from exercising its foreclosure rights, thereby extending the date of the Trustee’s Sale to June 16, 2011. As of May 10, 2011, the payoff amount of the JPMorgan loan was approximately $3.4 million, with interest accruing at a daily rate of $763.37. The Borrower expects to close on the Bond financing and purchase the property prior to June 15, 2011, however, if the bond financing is not completed by June 15, 2011, there can be no assurance that JPMorgan will extend the Trustee’s Sale beyond June 16, 2011.

Second Deed of Trust. A notice of default on a second deed of trust in favor of

Lafayette Capital was recorded on February 14, 2011. The second deed of trust cross-collateralizes other properties owned by the current owner. Lafayette Capital has agreed to accept a payoff in the amount of $300,000 and will release the Project from the lien of the deed of trust at close of escrow. Environmental Assessment and Physical Needs Assessment

A Phase I Environmental Assessment was conducted by EVREN Northwest, Inc. on the

Project on February 14, 2011. The report concluded there was no evidence of recognized adverse environmental conditions at the Project or on adjacent properties and therefore no further regulatory review is required.

A Physical Needs Assessment was prepared by Basis Architecture & Consulting on

March 14, 2011. The PNA identified approximately $42,070 in minor immediate repairs which the Borrower intends to undertake at the Project upon acquisition. More comprehensive improvements will be completed in connection with a future refinancing.

Taxes and Assessments

A title report issued by Old Republic Title Company dated May 17, 2011 shows the first

and second installments of fiscal year 2010-11 property taxes as delinquent. The amount to redeem, including penalties, is $47,859.82. The title report additionally shows that the property has been declared tax defaulted for non-payment of delinquent taxes for fiscal year 2009-10. The amount to redeem for fiscal year 2009-10 taxes is $60,780.71. Property taxes and assessments will be paid current upon close of escrow.

The Borrower expects to obtain an abatement from property taxes due to nonprofit

ownership.

Project Summary The following table gives a summary of information about the Project.

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Summary of Village Park

BR/BA

Units

Rents*

Avg. Sq. Ft.

Rents/ Sq. Ft.

Monthly Rents

Annual Rents

1 BR/1 BA 42 $851 537 $1.58 $35,742 $428,904 2 BR/ 1 BA PH 10 $1,051 675 $1.56 $10,510 $126,120

Totals 52 Area Median Income (HUD, 2011)**: $90,300 Net Rentable Square Footage: 29,304

* Rents consist of average monthly rental income received from tenants. ** Provided by HUD, based on Oakland-Fremont-Hayward Metropolitan District (Alameda and

Contra Costa County, California). Summarized Operating Statements

Historical Operating Statement. The following table summarizes the historical

operating statements of the Project for 2009 and 2010. This information was provided by the current owner of the Project.

Historical Revenues and Expenses

Village Park Apartments For Year Ending December 31, 2009 and 2010

Unaudited Unaudited 2009[1] 2010[1] INCOME

Total Rental Income $457,175 $462,426 Miscellaneous Income 28,339 28,547 TOTAL INCOME 485,514 489,000 EXPENSES

Real Estate Taxes 23,132 1,367 Insurance 11,523 9,335 Utilities 75,349 84,089 Repairs & Maintenance 37,658 29,096 Landscaping 21,545 18,354 Turnover expenses 24,485 34,400 Off-Site management 28,073 17,939 On-Site Management 37,517 45,560 Payroll Taxes/Benefits 12,851 4,884 General Administrative 27,266 19,318 Capital Replacements 71,775 62,124

TOTAL EXPENSES 371,174 326,466 NET OPERATING INCOME $114,340 $162,534 [1] Source: 2009 and 2010 unaudited financial statements of Brentwood Apartment Partners, current

owner of Village Park.

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2009 and 2010 Revenues and Expenses. The current owner of the Project reported that in early 2009 the Project had 20 vacancies and at least five tenants that were not paying rent. Beginning in 2009, the current owner began addressing deferred maintenance issues and evicting problem tenants. The current owner’s efforts paid off and revenues rose consistently over the period of January through August 2009. In August 2009, the on-site manager of the Project resigned and the Project began losing tenants. The current on-site manager was hired in November 2009. From that point through 2010, the Project stabilized and revenue improved. The revenues in 2009 and 2010 reflect low income due to high vacancies and high expenses due to extraordinary repairs. For this reason, and because the Project has been self-managed by the current owner, both historical revenue and historical expenses were not relied upon by the Borrower in preparing the following operating proforma. The Borrower based revenue projections on the April 2011 rent roll and expense projections on estimated expenses in the Appraisal. Additionally, the Borrower received confirmation of the reasonableness of its expense projections in the operating proforma from The Lapham Company, which will manage the Project for the Borrower. See “-Property Management” below.

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Projected Operating Statement and Debt Service Coverage. The following table summarizes the projected operating statement and debt service coverage for the Project:

Proforma Revenues and Expenses

Village Park Apartments For Bond Years Ending June 1, 2012-2015

2011-12 2012-13 2013-14 2014-15 INCOME[1]

Total Rental Income $561,036 $577,867 595,203 613,059 Miscellaneous Income 23,200 23,896 24,613 25,351 Potential Gross Income 584,236 601,763 619,816 638,410 Vacancy & Credit Loss[2] (28,052) (28,893) (29,760) (30,653)

EFFECTIVE GROSS INCOME 556,184 572,870 590,056 607,757 EXPENSES[1]

Real Estate Taxes [3] 0 0 0 0 Insurance 9,475 9,854 10,248 10,658 Utilities 77,286 80,377 83,593 86,936 Repairs & Maintenance 32,500 33,800 35,152 36,558 Landscaping 11,788 12,260 12,750 13,260 Off-Site management 23,620 24,565 25,547 26,569 On-Site Management 15,880 16,515 17,176 17,863 Payroll Taxes/Benefits 9,006 9,366 9,741 10,131 General Administrative 8,459 8,797 9,149 9,515

TOTAL EXPENSES 188,014 195,535 203,356 211,490 NET OPERATING INCOME 368,170 377,335 386,700 396,267 Debt Service Payable, Series A[4] (259,768) (269,500) (269,500) (269,500) Debt Service Payable, Series A-T[4] (16,061) (16,663) (16,663) (16,663) Trustee Fee (1,545) (1,545) (1,545) (1,545) Interest Earnings[5] 3,572 3,572 3,572 3,572 Net Cash Flow[6] $94,368 $93,210 $102,575 $112,142 Debt Coverage Ratio[7] 1.31 1.33 1.36 1.39

[1] Income inflated at 3% per year; Expenses inflated at 4% per year. Income and expenses based on figures from Appraisal. Current net rental income annualized for 2011 reflects $554,016.

[2] Assumes economic vacancies of 5%. [3] Reflects expected property tax abatement due to nonprofit ownership. [4] Interest only. 2014-15 does not include principal payments for the Bonds due at maturity. [5] Interest earnings of 1% per annum calculated on Debt Service Reserve Fund balance only. [6] Net Cash Flow reflects surplus cash flow available for release to Borrower pursuant to the Indenture. [7] Debt Coverage Ratio calculated as follows: NOI/(Debt Service Payable + Trustee Fee + Interest Earnings).

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Appraisal An Appraisal Report dated January 31, 2011 (the “Appraisal”), prepared by Colliers

International Valuation and Advisory Services, Roseville, California showed an as-is market value of $4,160,000 for the Village Park Apartments. A copy of the Appraisal may be obtained from the Underwriter.

Market Area. Village Park is located in the central/eastern portion of the City of

Brentwood, approximately ½ mile north of the central business district and is situated approximately ½ mile northeast of Highway 4. It has a good location with respect to commercial services, thoroughfares, public transit and community services. Growth is expected to be steady over the next five years.

Supply. The existing supply in the market area in which the Village Park is located was

constructed in the 1970’s and 2000’s and the general area has average appeal. The market indicates an overall vacancy rate as of January 2011 of 4.7% for all rental properties within a 5-mile radius of the Project, and 2.3% for the six properties within a 5-mile radius that directly compete with the Project (the Project vacancy rate as of January 2011 was 0%). No multifamily developments are currently planned, proposed or under construction in the market area. The Appraisal concluded that given the area’s relatively low rents and relatively high construction costs, as well as the availability of distressed single-family homes, supply in the market area is unlikely to change.

Demand. According to the market analysis in the Appraisal, the market area in which

Village Park is located is anticipated to remain stable. While vacancies increased in the market area during the economic downturn, vacancy rates have remained stable since late 2009. Rents have increased slightly in the area since late 2009 and rent levels are anticipated to remain stable given the strong occupancy level in the area.

Property Management

After acquisition of Village Park, The Lapham Company will act as property manager.

The Lapham Company has been in business serving the greater San Francisco Bay Area since 1911. The Lapham Company customizes its management programs to meet the needs of each individual property and its ownership. The Lapham Company has nearly 100 employees managing 215 properties valued in excess of $1 billion, including 2,300 multifamily housing units. The Lapham Company manages office properties and retail, but 95% of its management portfolio is dedicated to multifamily projects.

The Borrower will act as asset manager of Village Park.

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REGULATORY AGREEMENT In order to assure compliance with the applicable provisions of the Act and the Code, the

Borrower has entered into a Regulatory Agreement with respect to the Project. The Regulatory Agreement requires that 40% of the residential units in the Project be occupied or held for occupancy by Low Income Tenants (defined as persons or families with Adjusted Income which does not exceed 60% of the Median Income for the Area, adjusted for household size) at restricted rents. The Borrower’s compliance with the requirements of the Regulatory Agreement will be monitored by the Issuer, as program administrator. See “APPENDIX C – Summary of Certain Provisions of the Regulatory Agreement.”

Under Federal tax law, the Borrower has one year to bring the Project into compliance

with the affordability covenants of the Regulatory Agreement. NONCOMPLIANCE BY THE BORROWER WITH THE TERMS OF THE REGULATORY

AGREEMENT WILL NOT, IN AND OF ITSELF, ADVERSELY AFFECT THE EXCLUSION FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES OF INTEREST ON THE TAX-EXEMPT BONDS OR THE EXEMPTION FROM STATE OF CALIFORNIA INCOME TAXES OF INTEREST ON THE TAX-EXEMPT BONDS OR THE TAXABLE BONDS.

LEGAL AND TAX INFORMATION

Litigation At the time of delivery of and payment for the Bonds, the Issuer will deliver a certificate

stating that there is no litigation then pending or threatened to restrain or enjoin the issuance, sale, execution, or delivery of the Bonds, application of the proceeds of the Bonds as contemplated by the Indenture, the acquisition of the Project by the Issuer, or in any way contesting or affecting the validity of the Bonds, any proceedings of the Issuer taken with respect to the issuance or sale thereof, the pledge or application of any money or security provided for the payment of the Bonds, the existence or powers of the Issuer, or the title of any officers of the Issuer to their respective positions.

Approval of Counsel

Legal matters incident to the authorization, issuance and sale of the Bonds by the Issuer

are subject to the unqualified approving legal opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. A copy of the opinion of Bond Counsel is attached to the Official Statement as Appendix E. Bond Counsel has reviewed this document only to confirm that the portions of it describing the Bonds, the Indenture and the Regulatory Agreement conform to those actual documents and the applicable laws under which they are issued.

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Tax Matters In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California,

Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Tax-Exempt Bonds is excluded from gross income for federal income tax purposes, such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings, and the Tax-Exempt Bonds are "qualified tax-exempt obligations" within the meaning of section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), such that, in the case of certain financial institutions (within the meaning of section 265(b)(5) of the Code), a deduction for federal income tax purposes is allowed for 80% of that portion of such financial institution's interest expense allocable to interest payable on the Bonds.

The opinions set forth in the preceding paragraph are subject to the condition that the

Issuer and the Borrower comply with all requirements of the Code, that must be satisfied subsequent to the issuance of the Tax-Exempt Bonds in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer and the Borrower have covenanted to comply with each such requirements. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Tax-Exempt Bonds.

If the initial offering price to the public (excluding bond houses and brokers) at which a

Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount is disregarded.

Under the Code, original issue discount is treated as interest excluded from federal

gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straightline interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual and corporate alternative minimum taxes.

In the further opinion of Bond Counsel, interest on the Tax-Exempt Bonds and the

Taxable Bonds is exempt from California personal income taxes. Owners of the Bonds also should be aware that the ownership or disposition of, or the

accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Bonds other than as expressly described above.

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Circular 230 Disclaimer. To ensure compliance with requirements imposed by the IRS,

Bond Counsel informs Owners of the Taxable Bonds that any U.S. federal tax advice contained in this Official Statement (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Continuing Disclosure Agreement

To assist the Underwriter in complying with Rule 15c2-12 of the federal Securities and

Exchange Commission (the “Rule”), the Borrower will covenant in a Continuing Disclosure Agreement (the form of which is attached hereto as APPENDIX F) to provide certain continuing disclosure with respect to its operations and the Project. The Borrower shall file or cause to be filed any information, reports or other documentation, including audited financial statements, to the extent deemed necessary pursuant to any federal securities law now or hereafter in effect. At closing, the Borrower will certify that they have not failed to comply with any prior undertaking under the Rule since July 3, 1995, the date on which the Rule became effective.

Under the terms of the Indenture, the Trustee has agreed to provide continuing

disclosure of certain material events on behalf of the Issuer and the Borrower.

OTHER BOND INFORMATION

No Rating As noted on the cover page of this Official Statement, the Issuer has not applied for, and

does not intend to apply for, a rating on the Bonds.

Trustee The Issuer has appointed The Bank of New York Mellon Trust Company, N.A., as

Trustee. The Trustee is to carry out such duties as are assigned to it under the Indenture, which provides that the Trustee is undertaking no duties except in accordance with the terms of the Indenture. Except for the contents of this section, the Trustee has not reviewed or participated in the preparation of this Official Statement and assumes no responsibility for the nature, contents, accuracy, or completeness of the information set forth in this Official Statement.

Underwriting

The Bonds were sold to Brandis Tallman LLC (the “Underwriter”) pursuant to a bond

purchase contract with respect to the Bonds. The Underwriter has agreed to purchase the Bonds at a price of $4,974,875.00,

consisting of the $5,115,000.00 principal amount of the Bonds, less original issue discount of $140,125.00.

The purchase contract relating to the Bonds provides that the Underwriter will purchase

all of the Bonds (if any are purchased), and provides that the Underwriter's obligation to

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purchase is subject to certain terms and conditions, including the approval of certain legal matters by counsel.

The Underwriter may offer and sell Bonds to certain dealers and others at prices lower

than the offering prices stated on the cover page hereof. The offering prices may be changed by the Underwriter.

Interests of Certain Named Experts and Counsel

The fees earned by Cascadia Investor Services Group, Financial Advisor, Jones Hall, A

Professional Law Corporation, Bond Counsel and Disclosure Counsel, and The Bank of New York Mellon Trust Company, N.A., Trustee, are contingent on the issuance and sale of the Bonds.

Official Statement

All forecasts, estimates and other statements in this Official Statement involving matters

of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not intended to be construed as a contract or agreement between the Issuer and the purchasers or holders of the Bonds. The information contained in this Official Statement is presented for the guidance of prospective purchasers of the Bonds described therein. The information has been compiled from official sources and, while not guaranteed by the Issuer, is believed to be correct.

At the time of the delivery of the Bonds, an official of the Issuer will furnish a certificate

stating that to the best of his or her knowledge and belief at the time of delivery of the Bonds and the signing of the Private Placement Agreement, this Official Statement and information furnished by the Issuer supplemental thereto, excluding the sections on the Trustee, DTC or tax exemption, did not and do not contain any untrue statements of material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in any material respect.

The descriptions in this Official Statement of certain provisions of the Indenture, the

Deed of Trust and other documents referred to in this Official Statement do not purport to be complete, and reference is made to the documents for the complete statements of their provisions. Copies of such documents are on file at the offices of the Issuer and are available, during the offering period, from the Underwriter upon request. Insofar as any statements made in this Official Statement involve matters of opinion, estimates or projections, whether or not expressly stated as such, they are not to be construed as representations of fact.

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The execution and delivery of this Official Statement has been duly authorized by the Issuer and the Borrower. This Official Statement is not to be construed as a contract or agreement between the Issuer, the Borrower and the purchasers or Bondowners.

CALIFORNIA AFFORDABLE HOUSING AGENCY By /s/ Edward S. Mayer

Chairman

THE COLDBROOK FOUNDATION, a California nonprofit public benefit corporation By /s/ Thomas Seaman

President

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APPENDIX A

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE The following is a brief summary of certain provisions of the Indenture. The summary

does not purport to be complete or definitive and its qualified in its entirety by reference to the Indenture, a copy of which is on file with the Trustee.

Definitions

The following are definitions set forth in the Indenture and used in this Official Statement: “Accountant’s Certificate” means a certificate from an independent certified public

accountant in the form attached to the Loan Agreement as Exhibit A. "Act" means the Chapter 5 of Division 7 of Title 1 of the Government Code of the State

in accordance with Chapter 8 of Part 5 of Division 31 of the Health and Safety Code of the State, and all laws supplementary thereto and amendatory thereof.

“Additional Payments” means the additional payments required to be made by the

Borrower pursuant to the Loan Agreement. “Annual Budget” means the annual budget as approved by the Borrower. "Authorized Borrower Representative" means an officer of the Borrower authorized by

resolution of the Borrower delivered to the Trustee as an Authorized Borrower Representative with respect hereto and the Loan Documents.

“Authorized Denominations” means $5,000 or any integral multiple thereof. "Authorized Officer" means the Chair, the Vice-Chair, the Executive Director or the

Treasurer of the Issuer, or any other person authorized by resolution of the Issuer to act as an Authorized Officer under the Indenture.

“Beneficial Owner” means, whenever used with respect to a Bond, the Person whose

name is recorded as the beneficial owner of such Bond pursuant to the arrangements for book-entry determination of ownership applicable to the Securities Depository so long as the Bonds are held only in book-entry form.

"Bond Fund" means the Fund so designated which is established and created by the

Indenture. "Bondholder" or the term "Holder" or "holder" or any similar term, shall mean the

person in whose name such Bond is registered. “Bonds” means, collectively, the Tax-Exempt Bonds and the Taxable Bonds. “Bond Year” means the period commencing with the Issue Date and ending on June 1,

2012, and each one-year period ending June 1 of every year thereafter for so long as any Bonds remain Outstanding.

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“Book-Entry System” means that system whereby the clearance and settlement of

securities transactions is made through electronic book-entry changes, thereby eliminating the need for physical movement of securities.

“Business Day” means any day other than a Saturday, a Sunday, a day on which

banking institutions in the State of California, or any state in which the Principal Office of the Trustee is located are closed for corporate trust business as authorized or obligated by law or administrative order, or a day on which the New York Stock Exchange is closed.

"Chair" means the Chair of the Board of Directors of the Issuer. "Condemnation Award" means the total condemnation proceeds actually paid by the

condemning party or as a result of the condemnation of all or any part of the Project less the actual costs and expenses, including attorneys' fees, incurred in obtaining such award.

"Continuing Disclosure Agreement" means the Continuing Disclosure Agreement by

the Issuer or the Borrower, as applicable, pursuant to which the Issuer or the Borrower, as applicable, agrees to provide continuing disclosure for the Bonds pursuant to Rule 15c2-12 of the Securities and Exchange Commission, or any amendment or successor rule or regulation.

"Costs of Issuance" means items of expense payable or reimbursable directly or

indirectly by the Borrower and related to the authorization, sale and issuance of Bonds. "Costs of Issuance Fund" means the Fund so designated which is established and

created by the Indenture. “Costs of the Project” means and shall be deemed to include all of the costs of

constructing, developing, and equipping the Project, to the extent permitted by the Act and the Code, incurred not earlier than 60 days prior to the date of a declaration of "official intent" to reimburse costs paid with respect to the Project (within the meaning of §1.150-2 of the United States Treasury Regulations) or the date of issue of the Bonds, including, if appropriate, but not limited to the payment or reimbursement to (or to the order of) the Borrower of the following:

(a) (i) the initial or acceptance fee and first year annual fee of the Trustee,

the Tender Agent and any paying agent and the fees and expenses (including reasonable counsel fees) of the Issuer, the Trustee and any paying agent during the construction period for the Project; (ii) legal, underwriting, financial consulting, rating agency and accounting fees and expenses and printing and engraving costs incurred in connection with the authorization, sale and issuance of the Bonds, the execution of the Indenture and the preparation of all other documents in connection therewith; and (iii) all fees, costs and expenses incurred with respect to the preparation of this Indenture, the Loan Agreement, the Bonds, the Regulatory Agreement, the Official Statement with respect to the Bonds and all other documents in connection therewith; provided that Bond proceeds used to pay or reimburse costs described in this paragraph (a) shall not exceed two percent (2%) of the face amount of the Bonds.

(b) such amounts, if any, as shall be necessary to reimburse the Borrower in

full for all advances and payments made by it in connection with (i) the preparation of plans and specifications for the Project (including any preliminary study or planning of the Project or any aspect thereof) and (ii) the construction of the Project.

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(d) labor, services, materials and supplies used by or furnished to the

Borrower to improve the site and to construct the Project, as provided in the plans, specifications and work orders therefor; payment of the costs of acquiring, constructing, and installing utility services or other related facilities; payment of the costs of acquiring all real and personal property deemed necessary to construct the Project; and payment of the miscellaneous expenses incidental to any of the foregoing items.

(e) the fees, if any, of architects, engineers, financial consultants, legal

counsel and supervisors expended in connection with the construction of the Project. (f) during the construction period for the Project, the premiums of all title

insurance and other insurance required to be taken out and maintained with respect to any part of the Project to the extent such amounts are not paid by any contractor which constructs or installs any portion of the Project.

(g) taxes, assessments and other charges, if any, that may become payable

during the construction period with respect to the Project, or reimbursement thereof, if paid by the Borrower.

(h) expenses incurred in seeking to enforce any remedy against any

contractor or subcontractor in respect of any default under a contract relating to the acquisition, construction and installation of the Project.

(i) interest required to be paid on the Bonds during the construction period

with respect to the Project. (j) any other costs permitted by the Act and the Code.

"Counsel's Opinion" means a written opinion acceptable to the Trustee, including

supplemental opinions thereto, signed by an attorney or firm of attorneys (who may be counsel for the Issuer).

“Coverage Ratio” means, with respect to the Bonds, the ratio for a Fiscal Year of Net

Revenues to Required Net Debt Service on the Bonds. "Coverage Ratio Requirement" means a Coverage Ratio of 1.20 to 1. "Debt Service Reserve Fund" means the Fund so designated which is established and

created by the Indenture, and within such fund shall be designated a Taxable Account and a Tax-Exempt Account.

"Debt Service Reserve Requirement" means, as of any particular date of calculation,

an amount equal to the lesser of: (i) Maximum Annual Debt Service on the Bonds; (ii) 125% of average amount of principal, interest and premium, if any, required to be paid on the Bonds during all Fiscal Years in which the Bonds will be Outstanding, calculated as of the Issue Date; or (iii) 10% of the proceeds of the Bonds, as “proceeds” is defined for purposes of Section 148(d) of the Code.

"Deed of Trust" means the First Deed of Trust, Absolute Assignment of Rents, Security

Agreement and Fixture Filing, dated as of June 1, 2011, given by the Borrower, as trustor, in

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favor of the Trustee, as beneficiary, which constitutes a lien on the Project and secures the obligation to repay the Loan.

"Defaulted Loan" means any Loan described in an Officer's Certificate and stated to be

in default in accordance with its terms. “Environmental Laws” shall mean:

(A) any federal statute, law, code, rule, regulation, ordinance, order, standard, permit, license or requirement (including consent decrees, judicial decisions and administrative orders) together with all related amendments, implementing preservation, conservation or regulation of the environment, regulations and reauthorizations, pertaining to the protection, preservation, conservation or regulation of the environment, including but not limited to: the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C §9601 et seq. (“CERCLA”); the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (“RCRA”); the Toxic Substances Control Act, 15 U.S.C. §2601 et seq. (“TOSCA”); the Clean Air Act, 42 U.S.C. §7401 et seq.; and the Clean Water Act, 33 U.S.C. §1251 et seq.;

(B) any state or local statute, law, code, rule, regulation, ordinance, order,

standard, permit, license or requirement (including consent decrees, judicial decisions and administrative orders) together with all reauthorizations, pertaining to the protection, preservation, conservation or regulation of the environment, including but not limited to the applicable provisions of the California Health and Safety Code;

(C) any federal, state or local legislation enacted in the future pertaining to

the protection, preservation, conservation or regulation of the environment, and all related amendments, implementing regulations and reauthorizations. "Escrow Payments" means any payments made with respect to any Loan in order to

obtain any subsidy, any fire or other hazard or casualty insurance and any payments required to be made with respect to any Loan for reserves or escrows for operating expenses or replacements or for taxes or other governmental charges or similar charges to be paid by the Borrower and required to be escrowed pending their application.

"Event of Default" means, with respect to the Bonds or the Indenture, an event of

default described in the Indenture, and with respect to a Loan Agreement, means an event of default described in the Loan Agreement.

"Executive Director" means the Executive Director of the Issuer or its equivalent officer. "Fair Market Value" means the price at which a willing buyer would purchase the

investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the

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Code, (iii) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the Issuer and related parties do not own more than a 10% beneficial interest therein if the return paid by the fund is without regard to the source of the investment.

"Fees Fund" means the Fund so designated which is established and created by the

Indenture. “Final Computation Date” means the date on which all amounts due with respect to the

Bonds are actually and unconditionally due, if cash is available at the place of payment, and no interest accrues with respect to the Bonds after such date. The Final Computation Date for the Bonds will be the earlier of: (a) the final maturity date for the Bonds or (b) the date on which the Bonds are redeemed in whole.

"Fiscal Year" means, with respect to the Issuer and the Projects, the period of twelve

consecutive months ending on December 31 in any year, or such other twelve month period selected by the Issuer, and with respect to the Borrower, such twelve month period selected by the Borrower.

"Fund" means a Fund created by or pursuant to this Indenture. “Government Certificates” means evidences of indebtedness of ownership of

proportionate interests in future principal and interest payments of Government Obligations, including depository receipts thereof, wherein (i) a bank or trust company acts as custodian and holds the underlying Government Obligations; (ii) the owner of the Government Certificate is a real party in interest with the right to proceed directly and individually against the obligor of the underlying Government Obligations; and (iii) the underlying Government Obligations are held in trust in a special account, segregated from the custodian’s general assets, and are not available to satisfy any claim of the custodian or any person claiming through the custodian, or any person to whom the custodian may be obligated.

“Government Obligations” means direct obligations of the United States of America

(including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America) or obligations, the timely payment of the principal of and interest on which are fully guaranteed by the United States of America, including instruments evidencing an ownership interest in securities described in this clause (1); and (2) obligations, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following: Federal Home Loan Bank System, Export-Import Bank of the United States, Federal Financing Bank, Federal Land Banks, Fannie Mae, Government National Mortgage Association, Federal Home Loan Mortgage Company or Federal Housing Administration.

"Gross Proceeds" shall mean, with respect to the Bonds, the sum of the following

amounts:

(i) original proceeds, namely, net amounts (after payment of all expenses of issuing the Bonds) received by or for the Issuer as a result of the sale of the Bonds, excluding original proceeds which become transferred proceeds (determined in accordance with the Code) of obligations issued to refund in whole or in part the Bonds;

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(ii) investment proceeds, namely, amounts received at any time by or for the Issuer, such as interest and dividends, resulting from the investment of any original proceeds (as referenced in clause (i) above) or investment proceeds (as referenced in this clause (ii)) in Nonpurpose Obligations, increased by any profits and decreased (if necessary, below zero) by any losses on such investments, excluding investment proceeds which become transferred proceeds (determined in accordance with the Code) of obligations issued to refund in whole or in part the Bonds;

(iii) sinking fund proceeds, namely, amounts, other than original proceeds,

investment proceeds or transferred proceeds (as referenced in clauses (i) and (ii) above) of the Bonds, which are held in the Bond Fund and any other fund to the extent that the Issuer reasonably expects to use such other fund to pay debt service on the Bonds;

(iv) amounts in any fund established as a reasonably required reserve or

replacement fund; (v) investment property, (within the meaning of the Code) pledged as security

for payment of debt service on the Bonds by the Issuer or a related person; (vi) amounts, other than as specified in this definition, used to pay debt

service on the Bonds; and (vii) amounts received as a result of investing amounts described in this

definition. “Hazardous Substances” means:

(A) “hazardous substances” as defined by CERCLA; (B) “hazardous wastes”, as defined by RCRA; (C) any pollutant or contaminant, or hazardous, dangerous or toxic chemical,

material, waste or substance (“pollutant”) within the meaning of Environmental Laws, which Environmental Laws prohibit, limit or otherwise regulate the use, exposure, release, generation, manufacture, sale, transport, handling, storage, treatment, reuse, presence, disposal or recycling of such pollutant;

(D) petroleum, crude oil or any fraction of petroleum or crude oil; (E) any radioactive material, including any source, special nuclear or by-

product material, as defined at 42 U.S.C. §2011 et seq., and amendments thereto and reauthorizations thereof;

(F) asbestos-containing materials in any form or condition (“ACM”); (G) polychlorinated biphenyls (“PCB”); and (H) methane gas or any related substance.

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"Housing Authority Law" means Articles 1 through 5 of Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code, and all laws supplementary thereto and amendatory thereof.

“Housing Consultant” means any nationally recognized firm of consultants, any

nationally recognized firm of certified public accountants or any other financial advisor, underwriter or consultant appointed by the Issuer and with experience in the preparation of studies for use in connection with the financing of low-income housing or evaluation of low-income housing.

“Installment Computation Date” means the last day of the fifth Bond Year after the

Issue Date and each succeeding fifth Bond Year thereafter. "Insurance Proceeds" means the total proceeds of casualty insurance actually paid or

payable in respect of insurance on the Project, less the actual costs and expenses, including attorneys' fees, incurred in collecting such proceeds.

"Interest Payment Date" means each June 1 and December 1, commencing December

1, 2011. "Interest Requirement" means, as of any particular date of calculation and with respect

to any particular Bonds Outstanding on such date of calculation, an amount equal to the sum of (1) any previously unpaid interest then due on Outstanding Bonds, plus (2) an amount equal to the interest due and payable on Outstanding Bonds on the next succeeding Interest Payment Date.

"Investment Obligation" means if and to the extent permitted by law and by any policy

guidelines promulgated by the Issuer:

(a) Government Obligations or Government Certificates; (b) Bonds, debentures, notes or other evidence of indebtedness issued or

guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself):

(i) Farmers Home Administration (FmHA) - Certificates of beneficial ownership;

(ii) Federal Housing Administration Debentures (FHA); (iii) General Services Administration - Participation Certificates; (iv) Government National Mortgage Association (GNMA or “Ginnie

Mae”) - guaranteed mortgage-backed bonds and GNMA guaranteed pass-through obligations (participation certificates);

(v) U.S. Maritime Administration - Guaranteed Title XI financing; (vi) U.S. Department of Housing and Urban Project (HUD) - Project

notes and local authority bonds; and

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(vii) any other agency or instrumentality of the United States of

America;

(c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit United States of America government agencies (stripped securities are only permitted if they have been stripped by the agency itself):

(i) Federal Home Loan Bank System - Senior debt obligations (consolidated debt obligations);

(ii) Federal Home Loan Mortgage Corporation (FHLMC or “Freddie

Mac”) - Participation certificates (mortgage-backed securities) and senior debt obligations;

(iii) Fannie Mae - mortgage-backed securities and senior debt

obligations (excluding stripped mortgage securities which are valued greater than par on the portion of the unpaid principal);

(iv) Student Loan Marketing Association (SLMA or “Sallie Mae”) -

Senior debt obligations; (v) Resolution Funding Corp. (REFCORP) - Only the interest

component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book-entry form;

(vi) Federal Farm Credit System - Consolidated systemwide bonds

and notes; and

(vii) any other agency or instrumentality of the United States of America;

(d) Money market mutual funds registered under the Federal Investment

Company Act of 1940, whose shares are registered under the Securities Act of 1933, and having a rating by S&P of AAAm-G or AAAm and by Moody’s of Aaa, including, without limitation, and if otherwise qualified under the Indenture, the J. P. Morgan Funds or any other mutual fund for which the Trustee or an affiliate of the Trustee serves as investment manager, administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (a) the Trustee or an affiliate of the Trustee receives fees from such funds for services rendered, (b) the Trustee charges and collects fees for services rendered pursuant to the Indenture, which fees are, separate from the fees received from such funds, and (c) services performed for such funds and pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or its affiliates;

(e) Certificates of deposit issued by a state or national bank or a state or

federal savings and loan, including, without limitation, the Trustee or any affiliate of the Trustee, provided that such certificates of deposit shall be either (i) continuously and fully insured by the FDIC, or (ii) have a maturity of not greater than 365 days and have the highest short-term letter and numerical ratings of Moody’s and S&P;

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(f) Savings accounts or money market deposits, including, without limitation,

with the Trustee or any affiliate of the Trustee, that are fully insured by the FDIC;

(g) Investment agreements, including guaranteed investment contracts, collateralized repurchase agreements and similar forms of agreements, provided either (i) the long-term unsecured debt or claims ability of the issuer or guarantor thereof (which may include, without limitation, the Trustee or any affiliate of the Trustee) is rated in one of the two highest rating categories (without regard to numeric or other modifiers) by Moody’s and S&P, or (ii) such agreement is fully collateralized by Government Obligations or Government Certificates.

(h) Commercial paper of “prime” quality rated in the highest rating category

by Moody’s and S&P, which commercial paper is limited to issuing corporations that are organized and operating within the United States.

(i) Bonds or notes issued by any state or municipality which are rated by

Moody’s and S&P in one of the two highest long-term rating categories assigned by such agencies;

(j) Federal funds or banker’s acceptances which are eligible for purchases

by members of the Federal Reserve System, drawn on any bank the short-term obligations of which are rated in the highest rating category by Moody’s and S&P, provided that the maturity cannot exceed 270 days;

(k) Repurchase agreements with maturities of either (a) 30 days or less, or

(b) less than one year, provided that the collateral is marked-to-market daily, entered into with financial institutions such as banks or trust companies organized under state or federal law, including, without limitation, the Trustee or any affiliate of the Trustee, insurance companies, or government bond dealers reporting to, or trading with, and recognized as a primary dealer by, the Federal Reserve Bank of New York and a member of SPIC, or with a dealer or parent holding company that is rated A or better by Moody’s and S&P. The repurchase agreement must be in respect of Government Obligations or Government Certificates or obligations described in paragraph (b) herein, which, exclusive of accrued interest, shall be maintained at least 100% of par. In addition, repurchase agreements shall meet the following criteria: (i) a third party (who shall not be the provider of the collateral) has possession of the repurchase securities and the Government Obligations or Government Certificates; (ii) failure to maintain the requisite collateral levels shall require liquidation; and (iii) the third party having possession of the securities has a perfected, first priority security interest in the securities; and

(l) Any other debt or fixed income security specified by the Issuer (except

securities of the Issuer and any agency, department, commission or instrumentality thereof) and rated in the highest rating category by Moody’s and S&P, including “pre-funded” municipal obligations. The Trustee shall be entitled to rely on the advice of the Issuer or its designee as to the

lawfulness of investments and to the conformity of any such Investment Obligation to any Agency policies or guidelines.

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“Investment Property” means any security (as said term is defined in section 165(g)(2)(A) or (B) of the Code), obligation, annuity contract or investment-type property, excluding, however, obligations (other than specified private activity bonds as defined in section 57(e)(5)(6) of the Code) the interest on which is excluded from gross income, under section 103 of the Code, for federal income tax purposes.

"Issue Date" means the date the Bonds are delivered to the original purchasers thereof. "JPA Law" means Articles 1 through 4 of Chapter 5 of Division 7 of Title 1 of the

California Government Code, and all laws supplementary thereto and amendatory thereof. "Loan Documents" means the Loan Agreement, the Notes, the Deed of Trust, the

Regulatory Agreement and all other agreements executed by the Issuer or the Borrower relating to the Loan.

"Loan Expenses" means, with respect to the Project, the cost of real estate taxes,

appraisal fees, insurance fees, legal fees and any other expenses which may be required to maintain the priority of the Issuer's lien, to protect or enforce the Issuer's rights in the Loan, or to maintain in full force and effect or realize the benefits of any insurance or guarantee, on the Loan.

"Loan Principal Prepayments" means any amounts received by the Issuer or the

Trustee representing recovery of the Principal Amount of the Loan (exclusive of amounts representing regularly scheduled principal payments) as a result of (1) any voluntary prepayment of all or part of the Principal Amount of the Loan, including any prepayment, fee, premium or other such additional charge; (2) the sale, assignment or other disposition of the Loan (including assignment of the Loan to collect upon any insurance); (3) the acceleration of the Loan (for default or any other cause) or the foreclosure or sale under the Deed of Trust or other proceedings taken in the event of default of the Loan; and (4) compensation for losses incurred with respect to the Loan from a Condemnation Award, or Insurance Proceeds not otherwise used to repair or replace the Project.

“Loan Repayments” means the payments so designated and required to be made by

the Borrower pursuant to Section 4.2(a) of the Loan Agreement. "Manager" means the manager of a Project retained by or on behalf of the Borrower. "Maximum Annual Debt Service" means, as of any particular date of calculation, the

sum of (1) the interest falling due on then Outstanding Bonds (assuming that all then Outstanding Term Bonds are retired at the times of and in amounts provided for by the Sinking Fund Installments applicable to such Term Bonds), and (2) the aggregate amount of all Sinking Fund Installments required (except any Sinking Fund Installments due as part of a balloon payment on any Bonds); all as computed for the Fiscal Year during which such calculation is made.

"Moody's" means Moody's Investors Service Inc., a Delaware Corporation, and its

successors and assigns. “Net Revenues” means the Revenues for the Project, excluding proceeds resulting from

foreclosure of the Deed of Trust, sales proceeds, Insurance Proceeds and Condemnation

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Awards of the Borrower, but including proceeds of business interruption and/or rent loss insurance and proceeds of liability insurance.

"Nonpurpose Obligation" means any Investment Property which is acquired with the

Gross Proceeds of the Bonds other than the Projects. "Notes" means, collectively, the Tax-Exempt Note and the Taxable Note. "Officer's Certificate" means a certificate signed by an Authorized Officer. “Operation and Maintenance Costs” means all necessary costs to the Borrower of

operating and maintaining the Project, including but not limited to administrative, management fees and expenses and general expenses, consulting and technical services and repairs and replacements (to the extent not properly classifiable as capital costs), but excluding depreciation (or reserves therefor), insurance premiums, real property taxes, if any, amortization of intangibles or other bookkeeping entries of a similar nature and payments under the Loan including debt service on the Bonds, the fees and expenses of the Issuer and the fees and expenses of the Trustee, all determined in accordance with GAAP.

"Outstanding", when used with reference to Bonds and as of any particular date,

describes all Bonds theretofore and thereupon being delivered except (1) any Bond cancelled by the Trustee, or proved to the satisfaction of the Trustee to have been cancelled by the Issuer at or before said date, (2) any bond paid or deemed to be paid within the meaning of the defeasance provisions of the Indenture, and (3) any Bond in lieu of or in substitution for which another Bond shall have been delivered pursuant to the provisions of the Indenture relating to transfer and exchange of Bonds, temporary Bonds and mutilated, lost, destroyed or stolen Bonds.

"Paying Agent" means any paying agent for Bonds appointed pursuant to the Indenture,

and its successor or successors and any other corporation or association which may at any time be substituted in its place pursuant to this Indenture. The initial Paying Agent shall be the Trustee.

"Permitted Encumbrances" means, with respect to the Project, the following liens and

encumbrances:

(a) The lien of taxes and assessments which are not delinquent or which are being contested in good faith by the Borrower; and

(b) Minor defects, encroachments, irregularities and restrictions in the title to

the Project (including covenants, conditions and restrictions on use, operation or development of the Project) which in the aggregate do not materially impair the use of such Project for the purpose for which the affected Project is being operated, or if not currently operated, the purpose for which it was designed; and

(c) Easements, exceptions or reservations for the purpose of pipelines,

telephone lines, natural gas lines, cable lines, power lines and substations, water lines, roads, streets, alleys, highways, railroad purposes, drainage and sewerage purposes, dikes, canals, laterals, ditches, the removal of oil, gas, coal or other minerals, and other like purposes, or for the joint or common use of real property, facilities and equipment, which in the aggregate do not materially impair the use of the Project for the purpose for

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which it is being operated, or if not currently operated, the purpose for which it was designed; and

(d) Present or future valid zoning or land use laws and ordinances, including,

but not limited to, laws and ordinances requiring short-plat or subdivision of property upon hypothecation or sale; and

(e) The liens, encumbrances, security interests and claims securing, on a

parity basis, the Bonds; and (f) Lessors’ interests in equipment acquired for the Project by the Borrower

under operating leases, and bailors’ interests in equipment in the possession of the Borrower as a bailee; and

(g) Statutory liens arising in the ordinary course of business with respect to

obligations which are not delinquent or are being contested in good faith; and (h) Leases or licenses for the use of the Project (including leases or licenses

with laundry, cable and other service providers) in accordance with the provisions of the Deed of Trust; and

(i) Liens or encumbrances as permitted under the Deed of Trust; and (j) the Deed of Trust and the Regulatory Agreement relating to the Project;

and (k) any minor encumbrances, defects, encroachments, irregularities and

restrictions in the title listed in a title report with respect to the Project on the Issue Date of the Bonds. "Person" means an individual, corporation, limited liability company, firm, association,

partnership, trust or other legal entity or group of entities, including a governmental entity or any political subdivision thereof.

"Phase I Audits" means the environmental audits obtained in connection with the

Project. "Principal Amount," means, on any particular date of calculation with respect to any

particular Bonds, the principal amount on such date of calculation of such Bonds. "Principal Balance" means, with respect to the Loan, the unpaid principal balance

thereof. "Principal Office", means the corporate trust office of the Trustee designated in the

Indenture, or solely with respect to the surrender of Bonds for transfer, payment or exchange, the corporate trust operations office designated by the Trustee, or such other or additional office or address as is designated from time to time by the Trustee.

"Principal Requirement" means, as of any particular date of calculation, and with

respect to any Bonds Outstanding on such date of calculation, an amount equal to the sum of

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(1) any previously unpaid Principal Installment then due, and (2) any Principal Installment due on the next succeeding Interest Payment Date not more than twelve months from such date of calculation.

"Project Fund" means the fund so designated which is established and created

pursuant to the Indenture. "Project" means that certain 52-unit multifamily housing project located at 100 Village

Road in the City of Brentwood, California, known as Village Park Apartments. “Purchase Price” shall have the same meaning as the term ‘issue price’ in sections

1273(b) and 1274 of the Code, and, in general, means the initial offering price to the public (not including bond houses and brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Bonds are sold or, if the Bonds are privately placed, the price paid by the first buyer of the Bonds or the acquisition cost of the first buyer. The term “Purchase Price,” for the purpose of computation of the Yield of Nonpurpose Obligations, means the Fair Market Value of the Nonpurpose Obligations on the date of use of Gross Proceeds of the Bonds for acquisition thereof, or if later, on the date that Investment Property constituting a Nonpurpose Obligation becomes a Nonpurpose Obligation of the Bonds.

“Qualified Project Costs” means costs and expenses of the Project, including working

capital, but specifically excluding cost and expenses for portions of the Project to be used for activities constituting unrelated trades or businesses determined by applying section 513(a) of the Code; provided, however, that (i) costs or expenses do not constitute Qualified Project Costs unless such costs and expenses are (A) paid no earlier than sixty (60) days prior to the Official Action Date and (B) reimbursed no later than eighteen (18) months after the later of the date the expenditure was paid or the date the Project is placed in service (but no later than three (3) years after the expenditure is paid); (ii) Costs of Issuance shall not be deemed to be Qualified Project Costs; (iii) interest during the construction period shall be allocated between Qualified Project Costs and other costs and expenses to be paid from the proceeds of the Bonds; (iv) interest following the construction period shall not constitute a Qualified Project Cost; (v) letter of credit fees and municipal bond insurance premiums which represent a transfer of credit risk shall be allocated between Qualified Project Costs and other costs and expenses to be paid from the proceeds of the Bonds; and (vi) letter of credit fees and municipal bond insurance premiums which do not represent a transfer of the credit risk shall not constitute Qualified Project Costs.

“Rebateable Amount” means the amount, as of each Installment Computation Date and

as of the Final Computation Date, required to be paid to the United States pursuant to Section 148(f) of the Code within 60 days after such Installment Computation Date or Final Computation Date. In the case of a rebate calculation made pursuant to the Indenture with respect to any Fiscal Year other than an Installment Computation Date or the Final Computation Date, the rebateable amount shall be determined as though such calculation date were an Installment Computation Date.

“Rebate Fund” means the Fund so designated which is established and created by the

Indenture and further described therein. "Record Date" means, with respect to any particular Bond and for any particular Interest

Payment Date, the date upon which is established to whom interest payable on such Interest

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Payment Date on such Bond should be paid, which date shall be May 15 with respect to a June 1 Interest Payment Date and November 15 with respect to a December 1 Interest Payment Date, or if any such May 15 or November 15 is not a Business Day, then the next succeeding Business Day.

"Redemption Fund" means the Fund so designated which is established and created

by the Indenture. "Redemption Price", when used with respect to a particular Bond or portion thereof,

means the Principal Amount of such Bond or portion to be redeemed plus the applicable premium, if any, payable upon redemption thereof in accordance with its terms.

“Regularly Scheduled Debt Service” means, with respect to the Bonds, the amount of

principal and interest scheduled to be paid on the Bonds in a Fiscal Year. “Regulations” means the Income Tax Regulations promulgated or proposed by the

Department of Treasury pursuant to the Code from time to time or pursuant to any predecessor statute to the Code.

"Required Net Debt Service" means, with respect to the Bonds, for any Fiscal Year,

Regularly Scheduled Debt Service for that period net of any earnings on the Debt Service Reserve Fund.

"Resolution" means a resolution duly adopted by the Board of Directors of the Issuer. "Revenue Fund" means the Fund so designated which is established and created by

the Indenture. "Revenues" means all amounts due to or received by the Issuer or by the Trustee for

the account of the Issuer pursuant or with respect to the Project (other than refundable tenant deposits), including, without limitation, all lease payments, laundry and miscellaneous income, including proceeds of business interruption and/or rent loss insurance and proceeds of liability insurance) less Operation and Maintenance Costs for the Project, and all interest, profits or other income derived from the investment of amounts in any fund or account established pursuant to this Indenture, but not including any moneys paid for deposit into the Rebate Fund.

"S&P" means Standard & Poor's Rating Services, a division of the McGraw Hill

Companies, and its successors and assigns. “SEC” means the Securities and Exchange Commission. “Securities Depository” means, initially, The Depository Trust Company ("DTC") and its

successors and any replacement securities depository appointed under the Indenture. "Sinking Fund Installment" means the amount of money required by or pursuant to this

Indenture to be paid by the Issuer on any single date toward the retirement of any particular Term Bonds on or prior to their respective stated maturities.

“Special Record Date” means the date established by the Trustee pursuant to the

Indenture as a record date for the payment of defaulted principal of or interest on the Bonds.

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"State" means the State of California. "Supplemental Indenture" or "indenture supplemental hereto" means any indenture

entered into among the Issuer and the Trustee and amending or supplementing this Indenture in accordance with the provisions of this Indenture.

"Surplus Fund" means the Fund so designated which is established and created by the

Indenture. “Taxable Note” means that certain Promissory Note evidencing the Borrower’s

obligation to repay the portion of the Loan attributable to the Taxable Bonds, substantially in the form attached to the Loan Agreement as Exhibit A.

"Tax Certificate" means, collectively, the Certificate As To Arbitrage, dated the Issue

Date, executed and delivered by the Issuer, together with the Certificate Regarding Use of Proceeds, dated the Issue Date, executed and delivered by the Borrower.

“Tax-Exempt Note” means the Promissory Note evidencing the Borrower’s obligation to

repay the portion of the Loan attributable to the Tax-Exempt Bonds, substantially in the form attached to the Loan Agreement as Exhibit A.

"Term Bonds" shall mean any Bonds so designated for the retirement of which Sinking

Fund Installments have been established. "Treasurer" means the Treasurer of the Issuer. "Trustee" means The Bank of New York Mellon Trust Company, N.A., or any trust

company, banking corporation or national banking association which may be successor as Trustee under the Indenture.

“UCC” means the Uniform Commercial Code as adopted in California. "Vice-Chair" means the Vice-Chair of the Issuer. "Yield" means that yield which, when used in computing the present worth of all

payments of principal and interest (or other payments in the case of Nonpurpose Obligations which require payments in a form not characterized as principal and interest) on a Nonpurpose Obligation or on the Bonds produces an amount equal to the Purchase Price of such Nonpurpose Obligation or such Bonds, all computed as prescribed in applicable Regulations.

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Establishment of Funds The following Funds are created and established by the Issuer and held by the Trustee:

(1) Project Fund; (2) Revenue Fund; (3) Bond Fund; (4) Debt Service Reserve Fund; (5) Redemption Fund; (6) Fees Fund; (7) Surplus Fund; (8) Costs of Issuance Fund; and (9) Rebate Fund.

The Trustee shall hold and administer the Funds and accounts in accordance with the

Indenture.

Investment of Funds (A) The moneys held by the Trustee shall be a trust fund for the purposes hereof.

Moneys attributable to each of the Funds, on instructions confirmed in writing by an Authorized Officer, shall be invested and reinvested by the Trustee, to the extent practicable in Investment Obligations. The maturity date of any Investment Obligation credited to the Revenue Fund, the Bond Fund, the Redemption Fund, and the Project Fund shall be no later than the date the moneys credited to such accounts are needed to make the payments required hereby, and the maturity date of any Investment Obligation credited to the Debt Service Reserve Fund shall not be later than five years after such Investment Obligation is acquired.

(B) Investment Obligations representing an investment of moneys attributable to any

Fund shall be deemed at all times to be a part of said Fund. Such investments shall be sold at the price obtainable whenever it shall be necessary so to do in order to provide moneys to make any transfer, withdrawal, payment or disbursement from said Fund, or, in the case of any required transfer of moneys to another such Fund, may be transferred to that Fund in lieu of the required moneys if permitted hereby as an investment of moneys in that Fund, and the Trustee shall not be liable or responsible for any loss resulting from any investment made in accordance herewith. Investment earnings earned on any Investment Obligation from any Fund shall be credited to such Fund.

(C) In computing for any purpose under the Indenture the amount in any Fund (other

than the Debt Service Reserve Fund) on any date, obligations credited to such Fund shall be valued at the lower of cost or face value exclusive of accrued interest, and may be so valued as of any time within four days prior to such date. In computing for any purpose under the Indenture the amount of the Debt Service Reserve Fund obligations credited to such Fund shall

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be valued at par if purchased at par and shall be valued at Fair Market Value. Unless otherwise required by any other provision hereof, the Trustee shall value, to the extent necessary, the amounts on deposit in the Funds (and any subaccounts therein) under the Indenture semiannually on each June 1 and December 1.

(D) Pending application of the money in the Rebate Fund as required pursuant to the

Indenture, such money shall be invested and reinvested, to the extent practicable, in Government Obligations, as directed by the Issuer and confirmed in writing, maturing on or before the date the money invested therein is required to be paid to the United States pursuant to the Indenture.

(E) The Trustee may make investments permitted by this Section through or from its

own bond department, trust investment department or that of any affiliate. (F) The Issuer acknowledges that to the extent that regulations of any applicable

regulatory agency grant it the right to receive brokerage confirmation of security transactions, at no additional cost, the Issuer waives receipt of such confirmations. The Trustee shall furnish to the Issuer periodic statements of account which include detail of all investment transactions made by the Trustee.

(G) The Issuer covenants that all investments of amounts deposited in any fund or

account created by or pursuant to this Indenture, or otherwise containing gross proceeds of the Bonds (within the meaning of section 148 of the Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Indenture or the Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code and (unless valuation is undertaken at least annually) investments in the Debt Service Reserve Fund shall be valued at their present value (within the meaning of section 148 of the Code).

Defaults and Remedies

Events of Default. Each of the following shall constitute an event of default under the

Indenture:

(1) interest on any of the Bonds shall not be paid when due, or any Principal Installment or redemption premium, if any, of any of the Bonds shall not be paid when due, whether at maturity or upon call for redemption; or

(2) a default shall be made in the observance or performance of any

covenant, contract or other provision in the Bonds or Indenture and such default shall continue for a period of 90 days after written notice to the Issuer and the Trustee from the Bondholders of at least 66-2/3% of the Principal Amount of the Bonds Outstanding at such time or from the Trustee specifying such default and requiring the same to be remedied; or

(3) there shall have been entered an order or decree, by a court having

jurisdiction in the premises, for relief against the Issuer in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Issuer or of any substantial part of its property, or ordering the

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winding up or liquidation of its affairs, and such order or decree shall have continued unstayed and in effect for a period of 60 consecutive days; or

(4) there shall have been instituted or commenced by the Issuer a voluntary

case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or the Issuer shall have consented to the entry of an order for relief against it in any involuntary case under any such law, or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Issuer or of any substantial part of its property, or the Issuer shall have made any general assignment for the benefit of creditors, or (failed generally to pay its debts as they become due, or admitted in writing such failure, or shall have taken any action in the furtherance of any such action.

Enforcement by Trustee. Upon the happening and continuance of an Event of Default

described in the preceding Section of which the Trustee has actual notice in writing at its Principal Office (other than with respect to an Event of Default described in paragraph (1), above, for which written notice shall not be required), the Trustee shall give notice of such Event of Default to each Bondholder, and in its own name and as trustee of an express trust, on behalf and for the benefit and protection of the Holders of all Bonds may, after notice to the Issuer, and upon the written request of the Holders of not less than a majority in Principal Amount of the Bonds then Outstanding shall, proceed to protect and enforce any rights of the Trustee and, to the full extent that the Holders of such Bonds themselves might do, the rights of such Bondholders under the laws of the State or under this Indenture by such of the following remedies as the Trustee shall deem most effectual to protect and enforce such rights provided, however, except with respect to (6) below, that the Trustee shall have the right to decline to follow any direction if the Trustee shall be advised by counsel that the action or proceeding so directed may not lawfully be taken, or if the Trustee in good faith shall determine that the action or proceeding so directed would involve the Trustee in personal liability or be unjustly prejudicial to Bondholders not parties to such direction. Before the Holders may require the Trustee to take any action under the Indenture, the Trustee may require that it be furnished an indemnity bond satisfactory to it for the reimbursement of all expenses (including, without limitation, legal fees and expenses) to which it may be put and to protect it against all liability (except liability which is adjudicated to have resulted from the negligence or willful misconduct of the Trustee), by reason of any action so taken by the Holders:

(1) by mandamus or other suit, action or proceeding at law or in equity, to

enforce all rights of the Holders of Bonds, including the right to require the Issuer to receive and collect Revenues adequate to carry out the pledge, the assignments in trust and the covenants and agreements made in the Indenture, and to require the Issuer to carry out any other covenant or agreement with Bondholders and to perform its duties under the Act;

(2) by bringing suit upon the Bonds; (3) by action or suit in equity, to require the Issuer to account as if it were the

trustee of an express trust for the Holders of Bonds; (4) by realizing or causing to be realized through sale or otherwise upon the

security pledged under the Indenture, including through foreclosure of a deed of trust, or a deed in lieu of foreclosure;

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(5) by action or suit in equity, to enjoin any acts or things which may be unlawful or in violation of the rights of the Holders of Bonds; and

(6) by declaring all Bonds to be immediately due and payable and, if all

defaults shall be made good, then, with the written consent of the Holders of not less than a majority in Principal Amount of the Outstanding Bonds, to annul such declaration and its consequences. In the enforcement of any rights and remedies under the Indenture, the Trustee in its

own name and as trustee of an express trust on behalf of and for the benefit of the Holders of all Bonds, shall be entitled to sue for, enforce payment on and receive any and all amounts then or during any default becoming, and at any time remaining, due from the Issuer for principal, Redemption Price, interest or otherwise, under any provision hereof or of the Bonds, and unpaid, with interest on overdue payments at the rate or rates of interest specified in such Bonds, together with any and all costs and expenses of collection and of all proceedings under the Indenture and under such Bonds, without prejudice to any other right or remedy of the Trustee or of the Bondholders, and to recover and enforce a judgment or decree against the Issuer for any portion of such amounts remaining unpaid, with interest, costs and expenses, and to collect from any moneys available for such purpose, in any manner provided by law, the moneys adjudged or decreed to be payable.

Representation of Bondholders by Trustee. The Trustee is hereby irrevocably appointed

(and the Bondholders by accepting and holding the same, shall be conclusively deemed to have so appointed the Trustee and to have mutually covenanted and agreed, each with the other, not to revoke such appointment) the true and lawful attorney-in-fact of the Bondholders with power and authority, in addition to any other powers and rights heretofore granted the Trustee, at any time in its discretion to make and file in any proceeding in bankruptcy or judicial proceedings for reorganization or liquidation of the affairs of the Issuer either in the respective names of the Bondholders or on behalf of all the Bondholders as a class, any proof of debt, amendment of proof of debt, petition or other document, to receive payment of any sums becoming distributable to the Bondholders, and to execute any other papers and documents and do and perform any and all such acts and things as may be necessary or advisable in the opinion of counsel to the Trustee in order to have the respective claims of the Bondholders against the Issuer allowed in any bankruptcy or other proceeding.

Restriction on Bondholder's Action. (A) Upon the occurrence and continuance of any Event of Default under the

Indenture, no Holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of any provision hereof or for the execution of any trust under the Indenture or for any other remedy under the Indenture, unless (1)(a) such Holder previously shall have given to the Issuer and the Trustee written notice of the Event of Default on account of which such suit, action or proceeding is to be instituted, (b) after the occurrence of such Event of Default, written request shall have been made of the Trustee to institute such suit, action or proceeding by any Holders of not less than twenty-five percent (25%) in Principal Amount of the Bonds then Outstanding and there shall have been offered to the Trustee security and indemnity satisfactory to it against the costs and liabilities to be incurred therein or thereby, and (c) the Trustee shall have refused or neglected to comply with such request within a reasonable time; or (2)(a) such Holders previously shall have obtained the written consent of the Trustee to the institution of such suit, action or proceeding, and (b) such suit, action or proceeding is brought for the ratable benefit of all Holders of all Bonds subject to the provisions

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hereof. Before the Holders may take any action under the Indenture, the Trustee may require that it be furnished an indemnity bond satisfactory to it for the reimbursement of all expenses to which it may be put and to protect it against all liability (except liability which is adjudicated to have resulted from the negligence or willful misconduct of the Trustee), by reason of any action so taken by the Holders. Such notification, request, tender of indemnity and refusal or failure of the Trustee under this Section are hereby declared, in every case, to be conditions precedent to the exercise by any Holder of Bonds of any remedy under the Indenture or under law; it being understood and intended that no one or more Holders shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the rights of any other Holders, or to enforce any right under this Indenture or applicable law with respect to the Bonds, except in the manner provided in the Indenture, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner provided in the Indenture, and for the benefit and protection of all Holders of Outstanding Bonds, subject to the provisions of this Indenture.

(B) No Holder of any Bond shall have any right in any manner whatever by his or her

action to affect, disturb or prejudice the pledge of Revenues and other assets under the Indenture, or, except in the manner and on the conditions in this Section provided, to enforce any right or duty under the Indenture.

Application of Moneys after Default. (A) All moneys collected by the Trustee at any time pursuant to the default and

remedies provisions of the Indenture shall, subject to limitations described under Section 10.06(B) and except to the extent, if any, otherwise directed by the court, be credited by the Trustee to the Revenue Fund. Such moneys so credited to the Revenue Fund, and all other moneys from time to time credited to such Revenue Fund, shall at all times be held, transferred, withdrawn and applied as prescribed by the provisions of the provisions of the Indenture relating to the application of Revenues.

(B) Subject in all instances to the subordination provisions of the Indenture, in the

event that at any time the moneys credited to the Bond Fund and any other funds held by the Issuer or the Trustee available for the payment of interest or principal or Redemption Price then due with respect to Bonds shall be insufficient for such payment, such moneys and funds (other than funds held for the payment or redemption of canceled Bonds) shall be applied as follows:

(i) Unless the principal of all of the Bonds shall have become or have been

declared due and payable:

First: To the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment, then to the payment thereof ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or preference; and

Second: To the payment to the persons entitled thereto of the unpaid

principal or Redemption Price of any Bonds which shall have become due, whether at maturity or by call for redemption, in the order in which they become due and payable, and, if the amount available shall not be sufficient to pay in full all the Bonds so due on any date, then to the payment thereof ratably, according

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to the amounts of principal or Redemption Price due on such date, to the persons entitled thereto, without any discrimination or preference.

(ii) If the principal of all of the Bonds shall have become or have been

declared due and payable, to the payment of the principal or Redemption Price of and interest then due and unpaid upon the Bonds without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond ratably, according to the amounts due respectively for principal and interest, to the persons entitled thereto without any discrimination or preference except as to any difference in the respective rates of interest specified in the Bonds. Remedies Not Exclusive. No remedy by the terms of the Indenture conferred upon or

reserved to the Trustee (or to Bondholders) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given under the Indenture or now or hereafter existing at law or in equity or by statute.

Control of Proceedings. In the case of an Event of Default under this Indenture, the

Holders of a majority in Principal Amount of the Bonds then Outstanding, shall have the right, subject to the provisions of this Section, by an instrument in writing executed and delivered to the Trustee, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee; provided, however, that the Trustee shall have the right to decline to follow any direction if the Trustee shall be advised by counsel that the action or proceeding so directed may not lawfully be taken, or if the Trustee in good faith shall determine that the action or proceeding so directed would involve the Trustee in personal liability or be unjustly prejudicial to Bondholders not parties to such direction. Before the Holders may take any action under the Indenture, the Trustee may require that it be furnished an indemnity bond satisfactory to it for the reimbursement of all expenses to which it may be put and to protect it against all liability (except liability which is adjudicated to have resulted from the negligence or willful misconduct of the Trustee), by reason of any action so taken by the Holders.

Effect of Waiver and Other Circumstances. No delay or omission of the Trustee or of

any Holders of Bonds to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default, or acquiescence therein, and every right, power and remedy granted or provided in the Indenture to them or any of them may be exercised from time to time and as often as may be deemed expedient by the Trustee or, in an appropriate case, by the Bondholders. The Trustee

Removal of Trustee. The Issuer may remove the Trustee at any time unless an Event of Default under this Indenture shall have occurred and then be continuing, and shall remove the Trustee if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Holders of not less than a majority in aggregate Principal Amount of all of the Bonds then Outstanding (or their attorneys duly authorized in writing) or if at any time the Trustee shall cease to be eligible in accordance with the Indenture, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case

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by giving written notice of such removal to the Trustee, and thereupon shall appoint a successor Trustee by Supplemental Indenture.

Resignation of Trustee. The Trustee may at any time resign and be discharged from the

trusts created by this Indenture by giving at least 60 days advance written notice of such resignation to the Issuer and by giving each Bondholder notice of such resignation by mail. Such resignation shall take affect on the day specified in such notice, but the Trustee shall not be discharged from the trusts hereby created until a successor trustee has been approved and appointed. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor Trustee by Supplemental Indenture. Subsequent to the date of acceptance of its appointment by the successor trustee, the Trustee shall have no further duties and obligations under this Indenture.

Appointment of Successor Trustee. Any removal or resignation of the Trustee and

appointment of a successor Trustee shall not become effective until acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed and have accepted appointment within 45 days of giving notice of removal or notice of resignation as aforesaid, the Issuer, the retiring Trustee or any Bondholder (on behalf of himself and all other Bondholders) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture, shall signify its acceptance of such appointment by executing and delivering to the Issuer and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee in the Indenture; but, nevertheless on the Request of the Issuer or request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture, and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions in the Indenture set forth. Upon request of the successor Trustee, the Issuer shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Any such successor Trustee shall promptly notify each Paying Agent of its appointment as Trustee. Upon acceptance of appointment by a successor Trustee as provided in the Indenture, the Issuer shall mail to each Bondholder a notice of the succession of such Trustee to the trusts under the Indenture.

Qualifications of Trustee. There shall at all times be a Trustee under the Indenture which

shall be an association or a corporation organized and doing business under the laws of the United States of America or any state thereof, authorized under such laws to exercise corporate trust powers, having (or its parent corporation having) a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this Section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the

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Indenture, the Trustee shall resign immediately in the manner and with the effect specified in this Section.

Supplemental Indentures; Amendments

Supplemental Indentures. For any one or more of the following purposes and at any time

or from time to time, a Supplemental Indenture may be entered into by the Issuer and the Trustee, which Supplemental Indenture, upon the execution and delivery thereof by an Authorized Officer of the Issuer and by the Trustee, and without the consent of any Bond Insurer or of the Bondholders, shall be fully effective in accordance with its terms:

(A) To close this Indenture against, or provide limitations and restrictions in addition

to the limitations and restrictions contained in the Indenture on the issuance of future Bonds, or of other notes, bonds, obligations or evidences of indebtedness pursuant hereto;

(B) To add to the covenants or agreements of the Issuer in the Indenture contained

other covenants or agreements to be observed by the Issuer which are not materially adverse to the interests of the Bondholders;

(C) To add to the limitations or restrictions in the Indenture contained other

limitations or restrictions to be observed by the Issuer which are not contrary to or inconsistent with the provisions hereof as theretofore in effect;

(D) To surrender any right, power or privilege reserved to or conferred upon the

Issuer in the Indenture, provided that the surrender of such right, power or privilege is not contrary to or inconsistent with the covenants and agreements of the Issuer contained in the Indenture;

(E) To confirm, as further assurance, any pledge under, and the subjection to any

lien or pledge created or to be created by, the Indenture, of the Revenues or any other moneys, securities or funds;

(F) To appoint a successor Trustee; (G) To cure any ambiguity, supply any omission, or cure or correct any defect or

inconsistent provision in the Indenture; (H) To insert such provisions clarifying matters or questions arising under the

Indenture as are necessary or desirable and are not materially adverse to the interests of the Bondholders, as evidenced by the opinion of counsel delivered to the Trustee to the effect that the execution of such Supplemental Indenture is authorized or permitted under the Indenture, and that all conditions precedent to the execution of such Supplemental Indenture have been satisfied; or

(I) To comply with any future federal law, regulation or interpretation to preserve the

tax exempt status of interest on the Bonds. Powers of Amendment. In addition to those amendments to the Indenture which are

authorized by Article VIII hereof, any modification or amendment of the Indenture and of the rights and obligations of the Issuer and of the Holders of the Bonds under the Indenture, in any particular, may be made by a Supplemental Indenture with the written consent of the written

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consent, given as provided below under “Consent of Bondholders,” of the Holders of at least 60% in Principal Amount of the Bonds Outstanding at the time such consent is given; provided, however, that if such modification or amendment will, by its terms, not take effect so long as any Bonds of any specified like maturity and tenor remain Outstanding, the consent of the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Outstanding Bonds under this Section; and, provided, further, that no such modification or amendment shall permit a change in the terms of redemption or maturity of the principal of any Outstanding Bonds or of any installment of interest thereon or a reduction in the Principal Amount or the Redemption Price thereof or the rate of interest thereon without the consent of the Holder of such Bond, or shall reduce the percentages of Bonds the consent of the Holders of which is required to effect any such modification or amendment, or permit the creation of a lien on the Revenues and other assets pledged under this Indenture prior to or on a parity with the lien of this Indenture, or deprive the Holders of the Bonds of the lien created by this Indenture upon such Revenues and other assets (except as expressly provided in this Indenture), without the consent of the Holders of all Bonds then Outstanding.

Consent of Bondholders. The Issuer and the Trustee may at any time, in accordance

with the provisions of the Indenture relating to the effectiveness of Supplemental Indentures with the consent of Bondholders, execute and deliver a Supplemental Indenture making a modification or amendment permitted by the provisions described above under “Powers of Amendment,” to take effect when and as provided in this Section. A copy of such Supplemental Indenture (or brief summary thereof or reference thereto in form approved by the Issuer), together with a request to Bondholders for their consent thereto in form satisfactory to the Issuer, shall be mailed by the Issuer to Bondholders (but failure to mail such copy and request shall not affect the validity of such Supplemental Indenture when consented to as in this Section provided). Such Supplemental Indenture shall not be effective unless and until, and shall take effect in accordance with its terms when, (1) there shall have been filed with the Trustee (a) the written consents of Holders of the percentage of Outstanding Bonds specified in “Powers of Amendment”, above, and (b) a Counsel's Opinion or opinion of counsel to the Issuer stating that such Supplemental Indenture has been duly and lawfully entered into by the Issuer in accordance with the provisions of the Indenture, is authorized or permitted by the provisions of the Indenture, and, when effective, will be valid and binding upon the Issuer, and that such Supplemental Indenture will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes, and (2) a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of the holding, at the date of such consent, of the Bonds with respect to which such consent is given, which proof shall be such as is permitted by the Indenture. Any such consent shall be binding upon the Holder of the Bonds giving such consent and upon any subsequent Holder of such Bonds and of any Bonds issued in exchange therefor (whether or not such subsequent Holder thereof has notice thereof), but, notwithstanding the provisions of Section 12.02, such consent may be revoked in writing by the Holder of such Bonds giving such consent or a subsequent Holder thereof by filing with the Trustee such a revocation and, if such Bonds are transferable by delivery, proof that such Bonds are held by the signer of such revocation in the manner permitted by Section 12.02. At any time thereafter notice, stating in substance that such Supplemental Indenture (which may be referred to as a Supplemental Indenture executed by the Issuer on a stated date a copy of which is on file with the Trustee) has been consented to by the Holders of the required percentages of Bonds and will be effective as provided in this Section, may be given to Bondholders by the Issuer by mailing such notice to Bondholders (but failure to mail such notice shall not prevent such Supplemental Indenture from becoming effective and binding as in this Section provided). A record, consisting of the papers required or permitted by this Section to be filed with the Trustee, shall be proof of the matters therein stated.

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Such Supplemental Indenture making such modification or amendment shall be deemed conclusively binding upon the Issuer, the Trustee and the Holders of all Bonds at the expiration of 40 days after the filing with the Trustee of proof of the first publication of such last-mentioned notice, except in the event of a final decree of a court of competent jurisdiction setting aside such Supplemental Indenture in a legal action or equitable proceeding for such purpose commenced within such 40-day period; provided, however, that the Trustee and the Issuer during such 40-day period and any further period during which any such action or proceeding may be pending shall be entitled in their absolute discretion to take such action, or to refrain from taking such action, with respect to such Supplemental Indenture as they may deem expedient.

Modification by Unanimous Consent. Notwithstanding anything contained in Article VIII

or in the foregoing provisions of this Article, the terms and provisions hereof and the rights and obligations of the Issuer, the Trustee and the Holders of the Bonds thereunder, in any particular, may be modified or amended in any respect upon execution and delivery of such Supplemental Indenture by the Issuer and the Trustee making such modification or amendment and the consent to such Supplemental Indenture of the Holders of all of the Bonds then Outstanding, such consent to be given and proved as provided in the “Consent of Bondholders” section, above, except that no notice to Bondholders either by mailing or publication shall be required.

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APPENDIX B

SUMMARY OF CERTAIN PROVISIONS OF THE LOAN AGREEMENT

The following is a brief summary of certain provisions of the Loan Agreement. The summary does not purport to be complete or definitive and its qualified in its entirety by reference to the Loan Agreement, a copy of which is on file with the Trustee. Loan of Bond Proceeds

The Issuer has agreed in the Loan Agreement to make the Loan to the Borrower in the

amount of $5,115,000 for the purpose of financing the acquisition of the Project. Loan Repayment and Payment of Other Amounts

(a) In consideration of the issuance of the Bonds by the Issuer and the loan of the

proceeds thereof to the Borrower, the Borrower has agreed to make all monthly payments due on the Notes relating to the Loan on a timely basis and in accordance with the Schedule of Loan Repayments set forth in the Notes (the "Loan Repayments"). The Loan Repayments are to be paid to the Trustee at its Principal Office, and held, invested, disbursed and applied as provided in the Indenture.

(b) In addition to Loan Repayments, the Borrower shall also pay to the Issuer, the

Trustee or such other applicable entity, "Additional Payments" as follows: (i) All taxes and assessments of any type or character charged to the Issuer

or to the Trustee affecting the amount available to the Issuer or the Trustee from payments to be received under the Loan Agreement or in any way arising due to the transactions contemplated in the Loan Agreement.

(ii) The ordinary fees and expenses of the Trustee relating to the Bonds, the

Loan, the Loan Documents and the Project, and all fees, charges and expenses of the Trustee, including, without limitation, attorneys' fees and expenses, for any extraordinary services rendered by the Trustee under the Indenture with respect to the Bonds, the Loan, the Loan Documents and the Project.

(iii) The reasonable fees and expenses of such accountants, consultants,

attorneys and other experts as may be engaged by the Issuer or the Trustee to prepare audits, financial statements, reports, opinions or to provide such other services relating to the Loan, the Loan Documents or the Project required under the Loan Documents, or the Indenture.

(iv) The reasonable fees and expenses of the Issuer, including, but not limited

to, an annual fee equal to .20% of the outstanding balance of the Loan, and all expenses incurred in connection with the authorization, issuance, sale and delivery of the Bonds.

(c) The Borrower also agrees to pay all reasonable expenses of the Issuer and

reasonable compensation for any services rendered by the Trustee and not otherwise required to be paid under the Loan Agreement and not paid from the Costs of Issuance Fund, including, legal fees and expenses incurred in connection with the amendment, interpretation and

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enforcement of any of the Loan Documents and the Regulatory Agreement and reimbursement for all expenses reasonably incurred by it in connection therewith.

(d) Any fees and other costs required to be incurred in connection with the

calculation of the any rebate amounts due and payable.

Revenue Fund

The Borrower agrees that, so long as any amounts due under the Notes or any Additional Payments remain unpaid, it shall deposit all of the Revenues of the Project as soon as practicable upon receipt in the Revenue Fund held by the Trustee, subject to the provisions of the Indenture. Subject only to the provisions of the Loan Documents permitting the application thereof for the purposes and on the terms and conditions set forth therein and in the Loan Agreement, the Borrower has pledged and granted a security interest to the Issuer in the Revenue Fund and all of the Revenues of the Project to secure the payment of Loan Repayments and Additional Payments and the performance by the Borrower of its other obligations under the Loan Agreement. Amounts deposited by the Borrower in the Revenue Fund shall be applied pursuant to the provisions of the Indenture. Unconditional Obligation

Subject to the provisions of the Loan Documents, the obligation of the Borrower to make

the payments required by the Loan Agreement and to perform and observe the other agreements on its part contained therein are absolute and unconditional, irrespective of any defense or any rights of set-off, recoupment or counterclaim it might otherwise have against the Issuer or the Trustee, and during the term of the Loan Agreement, the Borrower shall pay absolutely net the payments required under the Loan Agreement, free of any deductions and without abatement, diminution or set-off. Until such time as the Notes have been duly paid, the Borrower has covenanted that it (i) will not suspend or discontinue any payments provided for in the Loan Agreement; (ii) will perform and observe all of its other covenants contained in the Loan Agreement; and (iii) except as provided in the Loan Agreement, will not terminate the Loan Agreement for any cause, including, without limitation, the occurrence of any act or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of California or any political subdivision or either of these, or any failure of the Issuer or the Trustee to perform and observe any covenant, whether express or implied, or any duty, liability or obligation arising out of or connected with the Loan Agreement, the other Loan Documents or the Indenture, except to the extent permitted by the Loan Agreement.

Assignment of Issuer's Rights

As security for the payment of the Bonds, and subject to the Indenture with respect to

the rights, duties and obligations of the Trustee, the Issuer assigns to the Trustee certain of the Issuer's rights under the Loan Agreement and the Loan Documents, including the right to receive payments thereunder (except for the right of the Issuer to receive certain payments, if any, with respect to fees, expenses and indemnification and certain rights of enforcement under the Loan Agreement). By virtue of such assignment, the Trustee has the right to enforce the obligations of the Borrower under the Loan Agreement.

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Debt Service Coverage Ratios The Borrower has covenanted in the Loan Agreement to establish and collect rents and

revenues in connection with the Project sufficient to produce, in each Bond Year commencing with the Bond Year ending June 1, 2012, an amount not less than the Coverage Ratio Requirement for the Bonds. The Borrower shall deliver to the Trustee an Accountant’s Certificate stating the actual Coverage Ratio achieved during the Bond Year ended on the June 1 immediately preceding each September 1 and stating whether or not the Borrower has met the Coverage Ratio Requirement.

The failure of the Borrower to achieve the Coverage Ratio Requirement during a Bond

Year shall not constitute an Event of Default under the Loan Agreement. However, if the Accountant’s Certificate shows the actual Coverage Ratio for the immediately preceding Bond Year was less than 1.00 to 1, the Borrower shall within 30 days after the receipt of the Accountant's Certificate, employ a Housing Consultant to review and analyze the Borrower's operation of the Project. Within 90 days after its appointment, the Housing Consultant shall make written recommendation as to revisions of methods of operations to the Borrower, the Issuer and the Trustee. The Borrower agrees to follow such recommendations to the fullest extent possible and within 90 days after its receipt of the Housing Consultant’s recommendation shall provide written certifications to the Issuer and the Trustee of the steps it has taken to comply with the Housing consultant's recommendation.

Indemnification

To the fullest extent permitted by law, the Borrower agrees to indemnify, hold harmless and defend the Issuer, the members of the Issuer and the Trustee, and each of their respective officers, governing members, directors, officials, employees, attorneys and agents (collectively, the "Indemnified Parties"), against any and all losses, damages, claims, actions, liabilities, costs and expenses of any conceivable nature, kind or character (including, without limitation, reasonable attorneys' fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject under federal or state securities laws or any other statutory law or at common law or otherwise, arising out of or based upon or in any way relating to:

(i) the Indenture, the Loan Agreement, the Regulatory Agreement, the Deed of

Trust the other Loan Documents, any offering materials or bond purchase agreements (the "Issuer Documents") or the execution or amendment thereof or in connection with transactions contemplated thereby, including the issuance, sale or delivery of the Bonds;

(ii) any act or omission of the Borrower or any of its agents, contractors, servants,

employees or licensees in connection with the Loan or the Project, the operation of the Project, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation or construction of, the Project or any part thereof;

(iii) any lien or charge upon payments by the Borrower to the Issuer and the Trustee

hereunder, or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges imposed on the Issuer or the Trustee in respect of any portion of the Project;

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(iv) any violation of any environmental law, rule or regulation with respect to, or the release of any toxic substance from, the Project or any part thereof;

(v) the defeasance or redemption prior to the maturity date of the Bonds (including

the Bonds), in whole or in part, of the Bonds; (vi) any untrue statement or misleading statement or alleged untrue statement or

alleged misleading statement of a material fact by the Borrower contained in any offering statement or document for the Bonds or any of the documents relating to the Bonds to which the Borrower is a party, or any omission or alleged omission from any offering statement or documents for the Bonds of any material fact necessary to be stated therein in order to make the statements made therein by the Borrower, in the light of the circumstances under which they were made, not misleading;

(vii) the Trustee's acceptance or administration of the trust of the Indenture, or the

exercise or performance of any of its powers or duties thereunder or under any of the documents relating to the Bonds to which it is a party or under any of the Loan Documents;

except (a) in the case of the foregoing indemnification of the Trustee or any of their respective officers, members, directors, officials, employees, attorneys and agents, to the extent such damages are adjudicated to have resulted from the gross negligence or willful misconduct of such Indemnified Party; or (b) in the case of the foregoing indemnification of the Issuer or any of its officers, members, directors, officials, employees, attorneys and agents, to the extent such damages are caused by the gross negligence or willful misconduct of such Indemnified Party. In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the Indemnified Party, shall assume the investigation and defense thereof, including the employment of counsel reasonably acceptable to the Indemnified Party, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in its sole discretion; provided that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement. Each Indemnified party shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the Borrower shall pay the reasonable fees and expenses of such separate counsel; provided, however, that such Indemnified party may only employ separate counsel at the expense of the Borrower if in its reasonable judgment a conflict of interest exists by reason of common representation or if all parties commonly represented do not agree as to the action (or inaction) of counsel.

The Borrower releases the Trustee from, and covenants and agrees that the Trustee

shall not be liable for, and covenants and agrees, to the extent permitted by law, to indemnify and hold harmless the Trustee and its directors, officers, employees, attorneys and agents from and against any and all losses, claims, damages, liabilities or expenses, of every conceivable kind, character and nature whatsoever arising out of, resulting from or in any way connected with (1) the Project, or the conditions, occupancy, use, possession, conduct or management of, or work done in or about, or from the acquisition of the Project or any part thereof; (2) the issuance of the Bonds or any certifications or representations made by the Borrower in connection therewith and the carrying out by the Borrower of any of the transactions contemplated by the Bonds and the Loan Agreement; (3) the Trustee’s acceptance or administration of the trusts under the Indenture, or the exercise or performance of any of its powers or duties hereunder or under the Indenture; or (4) with respect to the Borrower or the Project, any untrue statement or alleged untrue statement of any material fact or omission or

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alleged omission to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading, in any official statement or other offering circular utilized by the Issuer or any underwriter or Underwriter in connection with the sale of the Bonds; provided that such indemnity shall not be required for damages that are adjudicated to have resulted from gross negligence or willful misconduct on the part of the party seeking such indemnity. The Borrower further covenants and agrees, to the extent permitted by law, to pay or to reimburse the Trustee and its directors, officers, employees, attorneys and agents for any and all costs, reasonable attorneys’ fees, liabilities or expenses incurred in connection with investigating, defending against or otherwise in connection with any such losses, claims, damages, liabilities, expenses or actions, except to the extent that the same arise out of the gross negligence or willful misconduct of the party claiming such payment or reimbursement. The indemnification provisions of the Loan Agreement shall survive the retirement of the Bonds and the resignation or removal of the Trustee.

Notwithstanding any transfer of the Project to another owner in accordance with the

provisions of the Loan Agreement, the Borrower shall remain obligated to indemnify each Indemnified Party pursuant to the Loan Agreement if such subsequent owner fails to indemnify any party entitled to be indemnified hereunder, unless such Indemnified Party has consented to such transfer and to the assignment of the rights and obligations of the Borrower hereunder.

The rights of any persons to indemnity under the Loan Agreement and rights to payment

of fees and reimbursement of expenses pursuant to the Loan Agreement shall survive the final payment or defeasance of the Bonds and in the case of the Trustee any resignation or removal. The indemnification provisions shall survive the termination of the Loan Agreement.

Limited Recourse Obligation

The Borrower shall be fully liable for the payment of the Loan and any obligations due

under the Loan Documents. The obligation to repay the Loan and the other obligations of the Borrower under the

Loan Agreement and the other Loan Documents shall be on a non-recourse basis to the Borrower and to the respective officers, directors, managers, agents and employees of the Borrower, except as otherwise provided herein; provided that, notwithstanding the foregoing and notwithstanding the funding of the Fees Account from Project Revenues, the payment or reimbursement to the Issuer and the Trustee of any Additional Payments or reimbursements shall be a general obligation of the Borrower payable from and enforceable against any assets of the Borrower and shall not be limited to payment from Project Revenues. The Borrower and the respective officers, directors, managers, agents and employees of the Borrower (each of whom is an "Exculpated Party") shall be exculpated from all personal liability for the repayment of the Loan and for the performance of any of the terms and conditions contained in any of the Loan Documents and shall have no liability thereunder; except that the Borrower, but not the respective officers, directors, managers, agents and employees of the Borrower, shall be liable for the following:

(i) a willful breach by the Borrower of the provisions of the Loan Documents limiting

payments or distributions to partners or affiliates to the extent the Borrower receives such payments or distributions;

(ii) any liability, damage, cost or expense incurred by the Issuer or the Trustee as a

result of fraud, waste, willful misconduct or bad faith by the Borrower; and

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(iii) payments of Additional Payments or reimbursements to be made by the

Borrower to the Issuer and the Trustee pursuant to the Loan Agreement and any payments or reimbursements owing to the Trustee under the Regulatory Agreement or the Deed of Trust.

In addition, each individual, other than any representative of the Issuer, signing the Loan

Agreement, or any other Loan Document, in a representative capacity, shall be liable for (a) the warranty and representation hereby or thereby made that such person has legal capacity and is authorized to sign this Loan Agreement or such Loan Document, as the case may be, and (b) intentional fraud by such person in connection therewith. Events of Default

The occurrence of any one of the following shall constitute an Event of Default under the

Loan Agreement:

(a) Failure to pay when due and payable any installment of interest or principal on the indebtedness evidenced hereby, or any other sum which is payable under the Loan Agreement, as and when the same shall become due and payable; or

(b) If any warranty, representation, certification, financial statement or other

information made or furnished to induce the issuance of the Bonds or the lending of the proceeds thereof, or made or furnished, at any time, in or pursuant to the terms of any Loan Document or otherwise by the Borrower, shall prove to have been false or misleading in any material respect when made; or

(c) The occurrence of an Event of Default under the Deed of Trust; or (d) The Borrower shall have applied for or consented to the appointment of a

receiver, trustee or liquidator of all or a substantial part of its assets; admitted in writing the inability to pay its debts as they mature; made a general assignment for the benefit of creditors; been the subject of an order for relief under the federal Bankruptcy Code, or been adjudicated a bankrupt, or filed a petition or an answer seeking reorganization, liquidation or an arrangement with creditors or taken advantage of any insolvency law, or submitted an answer admitting the material allegations of a petition in bankruptcy, reorganization, liquidation or insolvency proceeding; or an order, judgment or decree shall have been entered, without the application, approval or consent of the Borrower, by any Court of competent jurisdiction approving a petition seeking reorganization of the Borrower or appointing a receiver, trustee or liquidator of a substantial part of its assets and such order, judgment or decree shall continue unstayed and in effect for any period of 60 consecutive days; or filed a voluntary petition in bankruptcy or failed to remove an involuntary petition in bankruptcy filed against it within 60 days of the filing thereof; or

(e) If the Borrower shall default in the due observance or performance of or

compliance with any of the provisions, warranties, covenants, promises, agreements, terms or conditions to be observed, performed, or complied with by the Borrower, as contained in the Loan Agreement, other than those referred above, and such default shall continue for a period of 15 days after notice thereof to the Borrower, except that in the case of a default under this paragraph (e) which cannot with due diligence be cured within such period of 15 days, the time within which Borrower may cure the same shall be extended for such period as may be reasonably necessary in the Trustee's discretion

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to cure the same with due diligence (but in no event more than 90 days), provided the Borrower commences within such 15 days and proceeds diligently to cure the same.

Remedies

Upon the occurrence of an Event of Default, and at any time thereafter during the

continuation of such Event of Default, the Issuer or the Trustee, as assignee of the Issuer, may:

(a) Declare the entire principal amount of the indebtedness evidenced by the Notes and the Loan Agreement and any other sums which the Borrower is obligated to pay hereunder, to be due and payable forthwith, whereupon the indebtedness evidenced by the Loan Agreement and any such other sums shall become forthwith due and payable, both as to principal, premium, if any, and interest, without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived, anything contained herein or elsewhere to the contrary notwithstanding;

(b) Take any action at law or in equity to collect the payments then due and

thereafter to become due hereunder or to enforce performance and observance of any obligation, agreement or covenant of the Borrower under the Loan Agreement;

(c) Exercise all rights and remedies provided for hereunder and in the Deed

of Trust and the other Loan Documents; (d) After prior written notice to the Borrower, unless the giving of such notice

would prejudice the Trustee (as determined in its sole discretion), perform for the account of the Borrower any covenant in the performance of which the Borrower is in default or make any payment for which the Borrower is in default. The Borrower shall pay to the Trustee upon demand any amount paid by the Trustee in the performance of such covenant. Any amounts which shall have been paid by reason of failure of the Borrower to comply with any covenant or provision of the Loan Agreement, including reasonable counsel fees, incurred in connection with prosecution or defense of any proceedings instituted by reason of default of the Borrower, shall bear interest at four percentage points over the rate of interest from time to time applicable to the indebtedness evidenced by the Loan Agreement or the highest rate permitted by law, whichever is less, from the date of payment by the Trustee until paid by the Borrower and shall be secured by other collateral pledged hereunder;

(e) Have a receiver appointed to enter into possession of the Project, collect

the revenues, rents, issues and profits therefrom and apply the same as required under the Loan Agreement, the Indenture and the Deed of Trust; or

(f) Exercise any other remedy available at law or in equity.

Additionally, the Issuer and the Trustee may exercise any right or remedy available to them in law or equity to enforce its right to payment of their expenses and indemnification.

If any party shall have proceeded to enforce the Loan Agreement by suit or action in equity or in law and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to such party, then the Borrower, the Issuer and the Trustee shall be restored respectively to their several positions and rights hereunder,

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and all rights, remedies and powers of the Borrower, Issuer and the Trustee shall continue as though no such proceedings had taken place.

Additional Remedies

In addition to the above rights and remedies, if an Event of Default occurs, or the

Borrower threatens to commit an Event of Default, the Trustee shall have the right and remedy, without posting bond or other security, to have the provisions of the Loan Agreement specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such Event of Default will cause irreparable injury to the Issuer or the Trustee and that money damages will not provide an adequate remedy therefor.

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APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE REGULATORY AGREEMENT

The following is a brief summary of certain provisions of the Regulatory Agreement. The summary does not purport to be complete or definitive and is qualified in its entirety by reference to the Regulatory Agreement, a copy of which is on file with the Trustee.

Definitions

“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 in the manner prescribed under the Act.

“Area” means the Primary Metropolitan Statistical Area for Contra Costa County,

California. “Certificate of Continuing Program Compliance” means the Certificate to be filed

quarterly by the Borrower with the Issuer which shall be substantially in the form attached to the Regulatory Agreement as Exhibit C.

“Completion Certificate” means a certificate of the Borrower delivered to the Trustee

to the effect that the rehabilitation of the Project to be accomplished from the proceeds of the Bonds has been completed.

“County” means the County of Contra Costa, California. “Income Certification” or “Income Recertifications” means an Income Computation

and Certification to be provided with respect to each Low Income Tenant as set forth herein, which shall be substantially in the form attached to the Regulatory Agreement as Exhibit B.

“Low Income Tenants” means persons or families with Adjusted Income which does

not exceed eighty percent (80%) of the Median Income for the Area, adjusted for household size. In no event will the occupants of a unit be considered to be Low Income Tenants if all of such occupants are students (as defined in Section 151(a)(4) of the Code), no one of whom is entitled to file a joint return under Section 6013 of the Code.

“Low Income Units” means the dwelling units in the Project designated for occupancy

by Low Income Tenants pursuant to the Regulatory Agreement. “Median Income for the Area” means the median income for the Area as determined

by the Secretary of Housing and Urban Project under Section 8 of the United States Housing Act of 1937, as amended, or if programs under Section 8 are terminated, median income for the Area determined under the method used by the Secretary prior to such termination.

“Program Administrator” means initially the Issuer, or a governmental entity, financial

institution, certified public accountant, apartment management firm, mortgage insurance company or other business entity performing similar duties, selected by the Issuer, who, if other than the Issuer, shall enter into an administration agreement satisfactory to the Issuer; provided,

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however, in the absence of the appointment of a Program Administrator by the Issuer, the Program Administrator shall be the Issuer.

"Qualified Project Costs" means costs paid with respect to the Project that meet each

of the following requirements: (i) the costs are properly chargeable to capital account (or would be so chargeable with a proper election by the Borrower or but for a proper election by the Borrower to deduct such costs) in accordance with general Federal income tax principles and in accordance with United States Treasury Regulations §1.103-8(a)(1), provided, however, that only such portion of interest accrued during rehabilitation or construction of the Project (in the case of rehabilitation, with respect to vacated units only) shall be eligible to be a Qualified Project Cost as bears the same ratio to all such interest as the Qualified Project Costs bear to all Project Costs; and provided further that interest accruing after the date of completion of the Project shall not be a Qualified Project Cost; and provided still further that if any portion of the Project is being constructed or rehabilitated by an Affiliate (whether as a general contractor or a subcontractor), Qualified Project Costs shall include only (A) the actual out-of-pocket costs incurred by such Affiliate in constructing or rehabilitating the Project (or any portion thereof), (B) any reasonable fees for supervisory services actually rendered by the Affiliate, and (C) any overhead expenses incurred by the Affiliate which are directly attributable to the work performed on the Project, and shall not include, for example, intercompany profits resulting from members of an affiliated group (within the meaning of Section 1504 of the Code) participating in the rehabilitation or construction of the Project or payments received by such Affiliate due to early completion of the Project (or any portion thereof); (ii) the costs are paid with respect to a qualified residential rental project or projects within the meaning of Section 142(d) of the Code, (iii) the costs are paid after the earlier of 60 days prior to the date of a declaration of "official intent" to reimburse costs paid with respect to the Project (within the meaning of §1.150-2 of the United States Treasury Regulations) or the date of issue of the Bonds, and (iv) if the Project Costs were previously paid and are to be reimbursed with proceeds of the Bonds such costs were (A) costs of issuance of the Bonds, (B) preliminary capital expenditures (within the meaning of United States Treasury Regulations §1.150-2(f)(2)) with respect to the Project (such as architectural, engineering and soil testing services) incurred before commencement of acquisition or construction of the Project that do not exceed twenty percent (20%) of the issue price of the Bonds (as defined in United States Treasury Regulations §1.148-1), or (C) were capital expenditures with respect to the Project that are reimbursed no later than eighteen (18) months after the later of the date the expenditure was paid or the date the Project is placed in service (but no later than three (3) years after the expenditure is paid).

“Qualified Project Period” means the period beginning on the Bond Issuance Date,

and ending on the later of 30 years after the Bond Issuance Date or the final maturity date or redemption date of the outstanding principal amount of the Bonds.

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Residential Rental Property In the Regulatory Agreement, the Borrower has agreed that the Project is to be owned,

managed and operated as required by the Act for the Qualified Project Period. To that end, and for the term of the Regulatory Agreement, the Borrower represents, covenants, warrants, and agrees as follows:

(a) The Project will be acquired for the purpose of providing multifamily

residential rental property, and the Borrower shall own, manage and operate the Project to provide multifamily residential rental property.

(b) All of the dwelling units in the Project are similarly constructed units

separate and distinct from other units in the Project, and each dwelling unit in the Project will contain separate and complete facilities for living, sleeping, eating, cooking, and sanitation for a single person or a family.

(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, retirement 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 use, other than filing a condominium map and final tract map on the Project and obtaining a Final Subdivision Public Report from the California Department of Real Estate, the Borrower will not take any steps in connection with a conversion of the Project to a 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 (defined as persons or families with Adjusted Income which does not exceed 60% of the Median Income for the Area, adjusted for household size).

(f) The units reserved for Low Income Tenants shall have substantially the

same equipment and amenities and shall be substantially the same size as the other dwelling units in the Project and shall not be geographically segregated from such other units.

(g) For the term of the Regulatory Agreement, the Borrower will not discriminate on the basis of race, creed, color, sex, national origin or ancestry, religion, marital status, disability or receipt of public assistance or housing assistance in connection with the rental of units in the Project or in connection with the employment or application for employment of persons for operation and management of the Project, and all contracts, applications and leases entered into for such purposes shall contain a nondiscrimination clause to such effect.

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Low-Income Tenants

Pursuant to the requirements of the Act, the Borrower represents, warrants and covenants in the Regulatory Agreement as follows:

(i) Throughout the Qualified Project Period (which commences on the Issue

Date and ends on the later of 30 years after the Issue Date or the final maturity or redemption date of the outstanding principal amount of the Bonds), not less than 40% of the units in the Project shall be continuously occupied (or held vacant for occupancy) by Low-Income Tenants (defined as persons or families with Adjusted Income which does not exceed 60% of the Median Income for the Area, adjusted for household size), which units shall be rented at Affordable Rents.

For purposes of satisfying the Low-Income Tenant occupancy requirements set forth above, a unit occupied by a person or family who at the commencement of their occupancy qualified as a Low-Income Tenant, as applicable, shall be treated as occupied by a Low-Income Tenant until such time as any recertification of such tenant’s income in accordance with the Regulatory Agreement demonstrates that such tenant’s income exceeds 60% of the Median Income for the Area for the same size family. Should a Low-Income Tenant’s Adjusted Income, as of the most recent determination thereof, exceed 60% of the Median Income for the Area of the same size family, the next available unit of comparable size must, if necessary to comply with the preceding paragraph, be rented to 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 preceding paragraph if the next available unit of comparable or smaller size is rented to a qualifying Low-Income Tenant.

A unit occupied by a Low-Income Tenant shall be deemed, upon the termination of such tenant’s occupancy, to be continuously occupied by a Low-Income Tenant until reoccupied, other than for a temporary period, at which time the character of the unit shall be redetermined. In no event shall such temporary period exceed thirty-one (31) days.

The Low-Income Units will be intermingled reasonably with all other dwelling

units and on all floors in the Project and shall be of a quality, and offer a range of sizes and number of bedrooms, comparable to those units which are available to other tenants. Tenants in the Low-Income Units shall have equal access and enjoyment to all common facilities of the Project.

(ii) 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 is more burdensome than criteria applied to all other prospective tenants.

Term

The Regulatory Agreement shall become effective upon its execution and delivery and shall remain in full force and effect for a term and period equal to the Qualified Project Period, it being expressly agreed and understood that the provisions thereof are intended to survive the retirement of the Bonds and expiration of the Indenture, if the Qualified Project Period has not

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been completed at the time of such retirement and expiration; provided, however, in the event that the Bonds are paid in full on or prior to their maturity date, the Regulatory Agreement shall terminate if tax-exempt obligations are issued to pay or refund the Bonds and in connection with such issuance of tax-exempt obligations, the Borrower or any successor thereto executes and delivers, and causes to be recorded, a regulatory agreement and declaration of restrictive covenants which has provisions included therein requiring occupancy and rents similar to those included herein and meets the requirement of the laws of the State of California and the Code. Notwithstanding any other provisions of the Regulatory Agreement, the Regulatory Agreement or any of the provisions or sections thereof may be terminated upon agreement by the Borrower, the Issuer and the Trustee if there shall have been received an opinion of Bond Counsel that such termination will not adversely affect the exclusion from federal gross income or the exemption from State income taxation of the interest on the Bonds, and is otherwise permitted under the Act.

The terms of the Regulatory Agreement to the contrary notwithstanding, the Regulatory

Agreement shall terminate and be of no further force and effect in the event of (i) a foreclosure or delivery of a deed in lieu of foreclosure whereby a third party shall take possession of the Project or involuntary non-compliance with the provisions of the Regulatory Agreement caused by fire, seizure, requisition, change in a federal law, or an action of a federal agency after the date of the Regulatory Agreement which prevents the Issuer, the Borrower and the Trustee from enforcing the provisions thereof or condemnation or a similar event and (ii) the payment in full and retirement of the Bonds within a reasonable period thereafter; provided, however, that the preceding provisions of this sentence shall cease to apply and the restrictions contained herein shall be reinstated if, at any time subsequent to the termination of such provisions as the result of the foreclosure or the delivery of a deed in lieu of foreclosure or a similar event, the Issuer obtains an ownership interest in the Project for federal income tax purposes. Enforcement

If the Borrower defaults in the performance or observance of any covenant, agreement

or obligation set forth in the Regulatory Agreement, and if such default remains uncured for a period of 60 days after written notice thereof shall have been given by any Program Administrator (if other than the Borrower) to the Borrower and the Trustee or the Trustee to the Borrower, then the Trustee for so long as the Bonds are outstanding, acting on its own behalf, shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take any one or more of the following steps:

(i) by mandamus or other suit, action or proceeding at law or in equity,

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 Borrower or the Trustee under the Regulatory Agreement;

(ii) have access to and inspect, examine and make copies of all of the books

and records of the Borrower pertaining to the Project; or (iii) 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;

provided, however, that if the default stated in the notice is of such a nature that it cannot be cured within 60 days, such default shall not constitute an Event of Default under the Regulatory

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Agreement as 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 to the Issuer, the failure to cure such default within 60 days will not adversely affect the exclusion of interest on the Tax-Exempt Bonds from gross income for federal income tax purposes.

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APPENDIX D

GENERAL INFORMATION ABOUT THE CITY OF BRENTWOOD AND THE COUNTY OF CONTRA COSTA

The following information concerning the City of Brentwood and surrounding areas are

included only for the purpose of supplying general information regarding the area in which the Village Park Apartments is located. The Bonds are not a debt of the City, the County, the State or any of its political subdivisions, and neither the City, the County, the State nor any of its political subdivisions is liable therefor.

The City of Brentwood. The City of Brentwood (the “City”) is located in eastern Contra

Costa County (the “County”) across the San Francisco Bay approximately 45 miles northeast of San Francisco, 65 miles southwest of Sacramento and 10 miles east of the City of Antioch. The City contains approximately 8.65 square miles in total area and has a population which has increased significantly in recent years. Certain demographic information on the County is presented below under the subcaption “Contra Costa County.”

The City was first settled by farmers in 1878 and was incorporated in 1948. Until the

past decade, the City had retained its agricultural orientation. In recent years, new residential subdivisions and substantial commercial growth have transformed the City into a more suburban environment, as evidenced by its rapid population growth. Land uses in and around the City are characterized by older farming districts known as the “agricultural core” and an original downtown area, contrasted with rapidly expanding residential neighborhoods in the peripheral areas of the City.

The City enjoys close proximity to major regional employment areas, including San

Francisco and the northern Bay Area, Walnut Creek and the San Ramon corridor (Tri-Valley) in Contra Costa County and the Stockton and central San Joaquin Valley area to the east. The City also enjoys close proximity to major regional recreation areas, including Mt. Diablo State Park approximately 25 miles to the west, the Sierra Nevada Mountains 90 miles to the east and the Sacramento Delta waterway to the north. Interstate Highway 680, a 30-minute drive from the City's downtown area, and California Highway 4, which runs through the City, provide convenient access to the City. The City is also served by the Southern Pacific Railroad.

Municipal Government

The City was incorporated in 1948 as a general law city. The City government provides

for four council members elected at large to serve four-year overlapping terms, at elections held every two years. The mayor is directly elected to serve a two-year term which will change to a 4-year term in election year 2008. A city manager is appointed by the council and mayor to administer daily affairs of the City and to implement policies established by the council.

Municipal functions include police protection, water service, sewer service, highways

and streets, sanitation, youth services, public improvements, parks and recreation services, community development and general administrative services. The City has approximately 295 full-time employees.

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Population The following chart indicates historic population estimates of the City, County and the

State of California for the past five years.

HISTORICAL CITY, COUNTY AND STATE POPULATION DATA

Year

City of Brentwood

Contra Costa County

State of California

2004 38,395 1,008,178 36,245,016 2005 42,050 1,019,101 36,728,196 2006 45,892 1,029,377 37,172,015 2007 48,677 1,037,580 37,559,440 2008 50,614 1,051,674 38,049,462 2009 51,950 1,061,325 38,255,508 2010 52,492 1,073,055 38,648,090

Sources: State of California, Department of Finance, as of January 1.

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Effective Buying Income “Effective Buying Income” is defined as personal income less personal tax and nontax

payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”

The following table summarizes the total effective buying income for the County, the

State and the United States for the period 2003 through 2009.

Effective Buying Income As of January 1, 2003 through 2009

Year

Area

Total Effective Buying Income (000’s Omitted)

Median Household Effective Buying

Income

2003 Contra Costa County $25,962,828 $54,862 California 674,721,020 42,924 United States 5,466,880,008 38,201







Source: Sales & Marketing Management Survey of Buying Power for 2003 and 2004; Claritas Demographics thereafter.

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Commercial Activity

In 2009 the State Board of Equalization converted the business codes of sales and use tax permit holders to North American Industry Classification System codes. As a result of the coding change, data for 2009 are not comparable to that of prior years. A summary of historic taxable sales within the City and County during the past five years in which data is available are shown in the following tables. Figures are not yet available for 2010.

CITY OF BRENTWOOD Taxable Retail Sales

Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)

Retail Stores Total All Outlets

Number

of Permits

Taxable

Transactions

Number

of Permits

Taxable

Transactions

2005 426 $348,694 828 $388,536 2006 456 362,644 893 409,480 2007 473 380,461 927 424,934 2008 516 383,626 975 434,761

2009(1) 631 388,890 906 444,070 (1) Data not comparable to prior years. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).

CONTRA COSTA COUNTY Taxable Retail Sales

Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)

Retail Stores Total All Outlets

Number

of Permits

Taxable

Transactions

Number

of Permits

Taxable

Transactions

2005 11,776 $10,072,084 23,692 $13,480,075 2006 11,467 10,275,907 23,249 13,867,661 2007 11,131 10,109,704 23,181 14,086,295 2008 11,577 9,484,307 23,149 13,307,681

2009(1) 14,045 8,473,578 21,395 11,883,049 (1) Data not comparable to prior years. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).

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Employment and Industry The unemployment rate in the Oakland-Fremont-Hayward MD (which includes Contra

Costa and Alameda Counties) was 11.0% in March 2011, below the year-ago estimate of 11.5%. This compares with an unadjusted unemployment rate of 10.8% for Alameda County, 11.2% for Contra Costa County, 12.3% for California and 9.2% for the nation during the same time period.

The following table summarizes the annual average civilian labor force, employment

and unemployment in the County for the calendar years 2006 through 2010.

OAKLAND-FREMONT-HAYWARD METROPOLITAN DIVISION (CONTRA COSTA AND ALAMEDA COUNTIES)

Civilian Labor Force, Employment and Unemployment (Annual Averages)

2006 2007 2008 2009 2010

Civilian Labor Force (1) 1,265,200 1,281,500 1,280,300 1,285,300 1,277,400 Employment 1,209,700 1,220,600 1,202,600 1,151,800 1,333,200 Unemployment 55,500 60,900 78,700 133,500 144,200 Unemployment Rate 4.4% 4.8% 6.1% 10.4% 11.3% Wage and Salary Employment: (2) Agriculture 1,500 1,500 1,400 1,400 1,500 Natural Resources and Mining 1,200 1,200 1,200 1,200 1,200 Construction 73,300 72,400 64,900 53,500 47,600 Manufacturing 95,800 93,700 93,100 82,800 78,600 Wholesale Trade 48,800 48,800 47,600 43,700 42,100 Retail Trade 113,300 113,100 109,400 102,100 99,900 Transportation, Warehousing, Utilities 35,000 36,100 35,900 33,200 31,900 Information 30,100 29,400 27,800 25,300 23,900 Finance and Insurance 49,400 45,400 36,200 32,500 33,100 Real Estate and Rental and Leasing 18,200 16,900 16,500 15,500 15,300 Professional and Business Services 154,900 155,500 162,400 148,700 148,000 Educational and Health Services 121,800 124,700 133,000 137,200 139,700 Leisure and Hospitality 85,600 87,500 89,100 85,100 85,600 Other Services 35,900 36,200 36,100 34,700 34,600 Federal Government 17,300 17,100 17,100 16,700 15,700 State Government 45,800 46,400 39,100 39,000 38,000 Local Government 118,900 123,400 121,100 116,900 113,300 Total, All Industries (3) 1,046,900 1,049,100 1,031,800 969,400 949,800 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers,

household domestic workers, and workers on strike. (2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers,

household domestic workers, and workers on strike. (3) Totals may not add due to rounding. Source: Labor Division of the California State Employment Development Department.

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Major Employers

The following table lists the largest employers within the County.

COUNTY OF CONTRA COSTA Major Employers

(As of January 2011)

Employer Name Location Industry BAYER HEALTH CARE PHRMCTCLS Richmond LABORATORIES-PHARMACEUTICAL (MFRS) BIO-RAD LABORATORIES INC Hercules LABORATORY ANALYTICAL INSTRUMENTS (MFRS) CHEVRON CORP San Ramon PETROLEUM PRODUCTS-MANUFACTURERS CHEVRON GLOBAL DOWNSTREAM LLC San Ramon PETROLEUM PRODUCTS (WHLS) CONCORD NAVAL WEAPONS STN Concord FEDERAL GOVERNMENT-NATIONAL SECURITY CONTRA-COSTA REGIONAL MED CTR Martinez HOSPITALS DEPT OF VETERANS AFFAIRS Martinez PHYSICIANS & SURGEONS DOCTOR'S MEDICAL CTR San Pablo HOSPITALS JOHN MUIR MEDICAL CTR Walnut Creek HOSPITALS JOHN MUIR MEDICAL CTR Concord HOSPITALS JOHN MUIR PHYSICAL REHAB Concord REHABILITATION SERVICES KAISER PERMANENTE Walnut Creek HOSPITALS KAISER PERMANENTE MEDICAL CTR Martinez CLINICS LA RAZA MARKET Richmond GROCERS-RETAIL MUIRLAB Walnut Creek LABORATORIES-MEDICAL PMI GROUP INC Walnut Creek INSURANCE-BONDS RICHMOND CITY OFFICES Richmond GOVERNMENT OFFICES-CITY, VILLAGE & TWP SAN RAMON REGIONAL MED CTR San Ramon HOSPITALS SHELL OIL PRODUCTS CO Martinez OIL REFINERS (MFRS) ST MARY'S Moraga SCHOOLS-UNIVERSITIES & COLLEGES ACADEMIC ST MARY'S COLLEGE OF CA Moraga SCHOOLS-UNIVERSITIES & COLLEGES ACADEMIC SUTTER DELTA MEDICAL CTR Antioch HOSPITALS TESORO GOLDEN EAGLE REFINERY Pacheco OIL REFINERS (MFRS) USS-POSCO INDUSTRIES Pittsburg STEEL MILLS (MFRS) VA OUTPATIENT CLINIC Martinez PHYSICIANS & SURGEONS

Source: California Employment Development Department, extracted from The America's Labor Market Information System (ALMIS) Employer Database.

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Construction Activity

The following tables show a summary of the valuation of building permits issued in the City and the County for the last five years.

CITY OF BRENTWOOD

Building Permit Valuation (Valuation in Thousands of Dollars)

2005 2006 2007 2008 2009 Permit Valuation New Single-family $301,457.8 $113,336.8 $77,461.3 $7512.4 $18,696.4 New Multi-family 4,089.8 977.5 0.0 0.0 0.0 Res. Alterations/Additions 2,926.1 2,522.4 2,039.1 1,087.2 1,091.6

Total Residential 308,473.7 116,836.7 79,500.4 8,599.6 19,788.0 New Commercial 13,319.3 26,706.0 26,986.3 10,373.4 3,771.6 New Industrial 7,453.0 1,858.2 614.9 0.0 0.0 New Other 21,133.3 9,306.5 6,448.5 2,597.2 1,168.4 Com. Alterations/Additions 6,502.3 5,507.9 6,783.3 7,268.0 2,426.1

Total Nonresidential $48,407.9 $43,378.6 $40,833.0 20,238.6 7,366.1 New Dwelling Units Single Family 1,413 482 357 37 87 Multiple Family 82 20 0 0 0 TOTAL 1,495 502 357 37 87

Source: Construction Industry Research Board, Building Permit Summary.

According to the Brentwood 2001-2021 General Plan, 26,653 dwelling units are planned

in the City by the year 2021. Of the planned units, there are 2,899 high density multi-family units with 5,296 medium density units.

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CONTRA COSTA COUNTY Building Permit Valuation

(Valuation in Thousands of Dollars)

2005 2006 2007 2008 2009 Permit Valuation New Single-family $1,525,515.3 $986,694.1 $832,053.1 $300,088.7 $300,363.3 New Multi-family 106,511.5 157,971.5 94,504.9 132,824.8 34,119.3 Res. Alterations/Additions 293,394.4 307,152.6 290,107.5 229,023.3 170,149.7

Total Residential 1,925,421.2 1,451,818.2 1,216,665.5 661,936.8 504,632.3 New Commercial 87,900.5 101,785.9 148,838.2 108,228.4 49,992.0 New Industrial 21,155.9 14,529.4 17,504.1 60,376.2 11,530.0 New Other 122,625.7 122,628.4 95,442.0 66,511.1 39,878.8 Com. Alterations/Additions 161,187.6 173,556.4 229,530.2 224,816.8 212,900.7

Total Nonresidential $392,869.7 $412,500.1 $491,314.5 $459,932.5 314,301.4 New Dwelling Units Single Family 5,452 3,310 2,698 985 1,038 Multiple Family 860 1,178 909 909 163 TOTAL 6,312 4,488 3,607 1,894 1,201

Source: Construction Industry Research Board, Building Permit Summary.

Utilities

Gas and electric service in the City is provided by Pacific Gas & Electric. Telephone service is provided by AT&T. Water is supplied by City wells and the Contra Costa Water District. Sewer service and solid waste is supplied by the City.

Education

The City is part of the Brentwood and Liberty Union School District which provide K-12 public education needs. There are three high schools, three junior high schools and seven elementary schools located in the City.

Near the City are four colleges: Los Medanos Community College in Pittsburg, Diablo

Valley Community College in Concord and San Joaquin Delta Community College and University of the Pacific in Stockton. The City of Brentwood has partnered with Los Medanos Community College to establish a Brentwood Center within the City.

Transportation

The City, located near the cities of Antioch and Stockton, is in close proximity to a highly

developed transportation network. State Highway 4 runs in an east/west direction through the City, intersecting Interstate 680 near Martinez and Interstate 80 in Hercules. To the east, Highway 4 leads to Stockton where it intersects with Interstate 5. A Highway 4 Bypass is currently under construction that will allow for “quick” access to surrounding communities, regional employment locations and recreation areas. The City is close to both regional and international airports — Concord Airport, Stockton Airport and Oakland International Airport.

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Proximity to Major Urban Centers

Proximity Distance Time

Antioch to Brentwood 10 miles 15 minutes Concord to Brentwood 26 miles 30 minutes Oakland to Brentwood 46 miles 50 minutes Stockton to Brentwood 37 miles 30 minutes San Francisco to Brentwood 54 miles 80 minutes Sacramento to Brentwood 75 miles 90 minutes _______________ Source: City of Brentwood

The City is also served by bus lines and railroads. Bay Area Rapid Transit (“BART”)

provides a bus service to Brentwood’s “park and ride” connecting to Antioch and the existing Pittsburg BART station.

Contra Costa County

Situated northeast of San Francisco, Contra Costa County (the “County”) is bounded by

San Francisco and San Pablo Bays, the Sacramento River Delta, and by Alameda County on the south. Ranges of hills effectively divide the County into three distinct regions. The western portion, with its access to water, contains much of the County’s heavy industry. The central section is rapidly developing from a suburban area into a major commercial and financial headquarters center. The eastern part is also undergoing substantial change, from a rural, agricultural area, to a suburban region. The County has extensive and varied transportation facilities-ports accessible to ocean-going vessels, railroads, freeways, and rapid transit lines connecting the area with Alameda County and San Francisco.

The County is home to more than 1,000,000 people and thousands of businesses who

are served by 18 cities, 201 special districts and the County. The County also provides municipal services for residents of the unincorporated areas.

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APPENDIX E

FORM OF BOND COUNSEL OPINION

June 14, 2011

California Affordable Housing Agency c/o Silveira Mattos & Lewis 530 West 21st Street Merced, California 95344

OPINION: $4,900,000 California Affordable Housing Agency Multifamily Housing Revenue Bonds (Village Park Apartments) Series 2011A

$215,000 California Affordable Housing Agency Taxable Multifamily Housing

Revenue Bonds (Village Park Apartments) Series 2011A-T

Ladies and Gentlemen:

We have acted as bond counsel in connection with the issuance by the California Affordable Housing Agency (the “Issuer”) of its $4,900,000 California Affordable Housing Agency Multifamily Housing Revenue Bonds (Village Park Apartments) Series 2011A (the “Tax-Exempt Bonds”) and its $215,000 California Affordable Housing Agency Taxable Multifamily Housing Revenue Bonds (Village Park Apartments) Series 2011A-T (together with the Tax-Exempt Bonds, the “Bonds”), pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California in accordance with Chapter 8 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the “Act”), an Indenture, dated as of June 1, 2011 (the “Indenture”), by and between the Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), and a resolution adopted by the Issuer on May 9, 2011. The proceeds of the Bonds are being loaned to The Coldbrook Foundation, a California nonprofit public benefit corporation (the "Borrower"), pursuant to a Loan Agreement, dated as of June 1, 2011 (the "Loan Agreement"), by and among the Issuer, the Trustee and the Borrower, to finance the acquisition of a 52-unit rental housing project located in the City of Brentwood and the City of California, California (the "Project"). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon representations of

the Issuer contained in the Indenture, of the Borrower contained in the Loan Agreement and the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of June 1, 2011, among the Issuer, the Trustee and the Borrower, and in the certified proceedings and other

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certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. In addition, in rendering the following opinion we have relied upon the opinion of Robert L. Lewis of San Jose, California, that, among other things, the Borrower is as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 (the "Code"), the Borrower does not have “unrelated business taxable income” within the meaning of section 512 of the Internal Revenue Code of 1986 (the "Code"), and the Project will be used in furtherance of the Borrower’s “exempt purpose” as defined in Section 501(c)(3) of the Code.

Based upon the foregoing, we are of the opinion, under existing law, that:

1. The Issuer is a joint exercise of powers agency, duly organized and validly

existing under the laws of the State of California with the power to enter into the Indenture, perform the agreements on its part contained therein and issue the Bonds.

2. The Indenture has been duly approved, executed and delivered by the Issuer

and constitutes a valid and binding obligation of the Issuer enforceable upon the Issuer. 3. Pursuant to the Act, the Indenture creates a valid lien on the funds pledged by

the Indenture for the security of the Bonds, subject to no prior lien granted under the Act. 4. The Issuer is authorized to issue the Bonds under the terms of the Act and the

Indenture, and the Bonds have been duly authorized, executed and delivered by the Issuer and are valid and binding limited obligations of the Issuer, payable solely from the sources provided therefor in the Indenture and subject to the lien of the Trust Estate (as defined in the Indenture).

5. Interest on the Tax-Exempt Bonds is excluded from gross income for federal

income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The Tax-Exempt Bonds are "qualified tax-exempt obligations" within the meaning of section 265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of section 265(b)(5) of the Code), a deduction is allowed for 80 percent of that portion of such financial institutions' interest expense allocable to interest payable on the Tax-Exempt Bonds. The opinions set forth in the preceding sentences are subject to the condition that the Issuer and the Borrower comply with all requirements of the Code that must be satisfied subsequent to the date hereof in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer and the Borrower have covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Tax-Exempt Bonds in gross income for federal income tax purposes to be retroactive to the date hereof. We express no opinion regarding other federal tax consequences arising with respect to the Tax-Exempt Bonds.

6. The interest on the Bonds is exempt from personal income taxation imposed by

the State of California.

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The rights of the owners of the Bonds and the enforceability of the Bonds, the Indenture and the Loan Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases.

Additionally, to ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this opinion with respect to the Taxable Bonds is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Respectfully submitted, Jones Hall, A Professional Law Corporation

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APPENDIX F

CONTINUING DISCLOSURE AGREEMENT OF THE BORROWER

$4,900,000 CALIFORNIA AFFORDABLE HOUSING AGENCY

MULTIFAMILY HOUSING REVENUE BONDS (VILLAGE PARK APARTMENTS)

SERIES 2011A

$215,000 CALIFORNIA AFFORDABLE HOUSING AGENCY

TAXABLE MULTIFAMILY HOUSING REVENUE BONDS (VILLAGE PARK APARTMENTS)

SERIES 2011A-T

CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Disclosure Agreement") is executed and

delivered by The Coldbrook Foundation, a California nonprofit corporation (the "Borrower"), and The Bank of New York Mellon Trust Company, N.A., in its capacity as dissemination agent hereunder (the "Dissemination Agent") and in its capacity as trustee under the hereinafter mentioned Indenture (the "Trustee") in connection with the issuance of $4,900,000 California Affordable Housing Agency Multifamily Housing Revenue Bonds (Village Park Apartments) Series 2011A and $215,000 California Affordable Housing Agency Multifamily Housing Revenue Bonds (Village Park Apartments) Series 2011A-T (collectively, the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of June 1, 2011 (the "Indenture"), between the Agency and the Trustee. Proceeds of the Bonds are being used by the Agency to make a loan to the Borrower to finance the acquisition of a 52-unit multifamily housing development located in the City of Brentwood, California (the "Project").

Pursuant to the Indenture, the Borrower, the Trustee and the Dissemination Agent

covenant and agree as follows: Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is

being executed and delivered by the Borrower, Dissemination Agent and the Trustee for the benefit of the holders of the Bonds and in order to assist Brandis Tallman LLC (the "Participating Underwriter") in complying with the Rule (defined below).

Section 2. Definitions. In addition to the definitions set forth in the Indenture, which

apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this section, the following capitalized terms shall have the following meanings:

"Annual Report" shall mean any Annual Report provided by the Borrower pursuant to,

and as described in, Sections 3 and 4 of this Disclosure Agreement.

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“Annual Report Date” means the date that is six months after the end of the Borrower’s fiscal year (currently June 30 based on the Borrower’s fiscal year end of December 31).

"Disclosure Representative" shall mean any Authorized Representative of the Borrower

or his or her designee, or such other person as the Borrower shall designate in writing to the Trustee from time to time.

"Dissemination Agent" shall mean The Bank of New York Mellon Trust Company, N.A.,

acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Borrower and which has filed with the Trustee a written acceptance of such designation.

"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure

Agreement. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated

by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule.

"Participating Underwriter" shall mean Brandis Tallman LLC, the original underwriter of

the Bonds required to comply with the Rule in connection with offering of the Bonds. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange

Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

Section 3. Provision of Annual Reports. (a) The Borrower shall, or shall cause the Dissemination Agent to, not later than

June 30 of each year, commencing in 2012, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. Not later than fifteen (15) Business Days prior to said date, the Borrower shall provide the Annual Report to the Dissemination Agent. If by 15 Business Days prior to the Annual Report Date the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Borrower to determine if the Borrower is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Borrower may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. The Borrower shall provide a written certification with the Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the Borrower hereunder. The Dissemination Agent may conclusively rely upon such certification of the Borrower.

(b) If the Borrower does not provide (or cause the Dissemination Agent to provide)

an annual Report by the Annual Report Date, the Borrower shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A.

(d) The Dissemination Agent shall:

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(i) determine each year prior to the Annual Report Date the then-

applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and

(ii) to the extent the Borrower has provided the Annual Report to the

Dissemination Agent, file a report with the Borrower and (if the Dissemination Agent is not the Trustee) the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided, and listing all the Repositories to which it was provided.

Section 4. Content of Annual Reports. The Annual Report shall contain or

incorporate by reference the following: 1. Borrower's Audited Financial Statements. 2. To the extent not included in those annual financial statements, information

generally of the type included in the Official Statement for the Bonds under the heading "THE BORROWER AND THE PROJECT."

3. Information relating to the Project for the immediately prior Fiscal Year of the

Borrower in form and substance similar to the operating statements relating to the Project set forth in the Official Statement for the Bonds, including the occupancy rate for the Project and Debt Service Coverage ratio with respect to the Bonds.

4. Any or all of the items listed above may be included by specific reference to other

documents, including official statements which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission.

Section 5. Reporting of Significant Events. (a) The Borrower shall give, or cause to be given, notice of the occurrence of any of

the following Listed Events with respect to the Bonds: (1) Principal and interest payment delinquencies. (2) Non-payment related defaults, if material. (3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed

or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax-exempt status of the security.

(7) Modifications to rights of security holders, if material.

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(8) Bond calls, if material, and tender offers. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities, if

material. (11) Rating changes. (12) Bankruptcy, insolvency, receivership or similar event of the obligated person.

(13) The consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.

(14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.

(b) Whenever the Borrower obtains knowledge of the occurrence of a Listed Event,

and, if the Listed Event is described in sections (a)(2), (a)(6), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13) or (a)(14) above, the Borrower determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Borrower shall, or shall cause the Dissemination Agent to file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the governing legal documents.

Section 6. Termination of Reporting Obligation. The Borrower's, Trustee's and

Dissemination Agent's obligations under this Disclosure Agreement shall terminate upon the defeasance, prior redemption or payment in full of all of the Bonds. If the Borrower's obligations under the Loan Agreement are assumed in full by some other entity, such person shall be responsible for compliance with this Disclosure Agreement in the same manner as if it were the Borrower and the original Borrower shall have no further responsibility hereunder.

Section 7. Dissemination Agent. The Borrower may, from time to time, appoint or

engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agreement. The Dissemination Agent may resign at any time by providing thirty days' written notice to the Borrower.

Section 8. Amendment; Waiver. Notwithstanding any other provision of this

Disclosure Agreement, the Borrower, Dissemination Agent and the Trustee may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so requested by the Borrower) and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to both the Borrower and the Trustee to the effect that such amendment or

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waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule, provided, neither the Trustee nor the Dissemination Agent shall be obligated to agree to any amendment affecting their respective duties or obligations.

Section 9. Additional Information. Nothing in this Disclosure Agreement shall be

deemed to prevent the Borrower from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Borrower chooses to include any information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is specifically required by this Disclosure Agreement, the Borrower shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 10. Default. In the event of a failure of the Borrower or the Trustee to comply

with any provision of this Disclosure Agreement, the Trustee, at the written direction of the Participating Underwriter or the holders of at least 25% aggregate principal amount of Outstanding Bonds, shall solely to the extent indemnified to its satisfaction, or any owner of Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Borrower or the Trustee, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Borrower or the Trustee to comply with this Disclosure Agreement shall be an action to compel performance.

Section 11. Duties, Immunities and Liabilities of Dissemination Agent. Article 8 of the

Indenture is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Borrower agrees to indemnify and save the Dissemination Agent and the Trustee and their officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Trustee's or Dissemination Agent's respective negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Borrower for its services provided hereunder and all expenses, legal fees and advances made or incurred by the Dissemination Agent hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the Borrower and shall not be deemed to be acting in any fiduciary capacity for the Borrower, owners of the Bonds or any other party. The obligations of the Borrower under this section are non-recourse obligations and shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit

of the Borrower, the Trustee, the Dissemination Agent, the Participating Underwriter, and holders from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 13. Counterparts. This Disclosure Agreement may be executed in several

counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

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Section 14. Governing Law. This Disclosure Agreement shall be governed by the

laws of the State of California.

Dated as of June 14, 2011 THE COLDBROOK FOUNDATION, a California nonprofit public benefit corporation, as Borrower By:

Authorized Representative

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee and Dissemination Agent By:

Assistant Vice President

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EXHIBIT A

NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT

Name of Borrower: The Coldbrook Foundation (the "Borrower")

Name of Bond Issue: Multifamily Housing Revenue Bonds (Village Park Apartments) Series 2011A and Taxable Multifamily Housing Revenue Bonds (Village Park Apartments Series 2011A-T

Date of Issuance: June 14, 2011

NOTICE IS HEREBY GIVEN that the Borrower has not provided an Annual Report with

respect to the above-named Bonds as required by Section 6.16 of the Indenture dated as of June 1, 2011, between the California Affordable Housing Agency and The Bank of New York Mellon Trust Company, N.A. The Borrower anticipates that the Annual Report will be filed by __________.

Dated:

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Dissemination Agent on behalf of Borrower By: Authorized Signatory

cc: Borrower

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APPENDIX G

DTC AND THE BOOK-ENTRY ONLY SYSTEM

The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

Neither the issuer of the Bonds (the “Issuer”) nor the trustee, fiscal agent or paying agent

appointed with respect to the Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.

No assurances can be given that DTC, DTC Participants or Indirect Participants will

distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC.

1. The Depository Trust Company (“DTC”), New York, NY, will act as securities

depository for the securities (the “Securities”). The Securities 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 Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.

2. DTC, the world’s largest securities 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 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 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

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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 is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. 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 and www.dtc.org.

3. Purchases of Securities under the DTC system must be made by or through Direct

Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“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 through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities 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 Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities 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 Securities 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 Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities 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.

5. 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 Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities 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.

6. Redemption notices shall be sent to DTC. If less than all of the Securities 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.

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7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities 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 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, Agent, or 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 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.

9. DTC may discontinue providing its services as depository with respect to the

Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

10. Issuer may decide to discontinue use of the system of book-entry-only transfers

through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

11. 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.

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APPENDIX H

LOW INCOME HOUSING TAX CREDIT PROGRAM The following information is a description of the Low Income Housing Tax Credit

Program as administered in California. The inclusion of this information in the Official Statement is for informational purposes only and is not to be construed as a guarantee that the Borrower will be able to refinance the Project utilizing low income housing tax credits prior to the maturity of the Bonds. See “BONDHOLDER RISKS.”

The California Tax Credit Allocation Committee (“Committee” or “TCAC”) administers

two low-income housing tax credit programs – a federal program and a state program. Both programs were authorized to encourage private investment in affordable rental housing for households meeting certain income requirements.

Congress created the federal Low Income Housing Tax Credit Program in 1986. It

replaced traditional housing tax incentives, such as accelerated depreciation, with a tax credit that enables low-income housing sponsors and developers to raise project equity through the sale of tax benefits to investors. Two types of federal tax credits are available and are generally referred to as nine percent (9%) and four percent (4%) credits. These terms refer to the approximate percentage of a project’s “qualified basis” a taxpayer may deduct from their annual federal tax liability in each of ten years.

The program is regulated through Internal Revenue Code Section 42, and is

administered by the Internal Revenue Service, which is part of the U.S. Treasury Department. Section 42 specifies that each state must designate a “housing credit agency” to administer the Credit program. In California, responsibility for administering the program was assigned to the California Tax Credit Allocation Committee (TCAC).

For 2011, each state has an annual housing credit ceiling of $2.15 per capita for 9% Low

Income Housing Tax Credits. In addition, States may qualify for a pro rata share of credits available annually in a national pool comprised of states' unused credits. Also, any credits returned to a state from a credit recipient may be allocated to new projects. From the total ceiling amount available to California, the Committee allocates credit amounts based upon assessments of eligible project costs, as defined by IRC Section 42. The housing sponsor uses or sells ten times the allocation amount, since investors can take the annual credit each year for a ten-year period. Although the credit is taken over a ten-year period, the Internal Revenue Code requires that the project remain in compliance for at least 30 years.

Recognizing the extremely high cost of developing housing in California, the state

legislature authorized a state low income housing tax credit program to augment the federal tax credit program. Authorized by Chapter 1138, Statutes of 1987, the state credit is only available to a project which has previously received, or is concurrently receiving, an allocation of federal credits. Thus the state program does not stand alone, but instead, supplements the federal tax credit program. The annual state credit ceiling for 2011 is approximately $124 million and would be increased by any unused or returned credits from previous years. Investors claim the state credit over a four-year period, rather than the ten-year federal allocation period. The full four-year state credit allocated to a project is deducted from the $124 million state ceiling, while only the annual federal credit allocated to a project is deducted from the federal ceiling.

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Developments financed with the proceeds of tax-exempt bonds may also receive federal tax credit. In this instance, the developer/owner of a tax-exempt development must apply to the Committee and must meet both the federal and state statutory and regulatory requirements. The tax credits available are tied to the private activity bond cap limits, but are not deducted from the state’s annual tax credit ceiling. The annual credit available is based on approximately 4% (instead of 9%) of the “qualified basis” of the development. Qualified basis consists of the costs attributable to the units that will be income and rent restricted for a minimum of 30 years.

Only rental housing projects are eligible for tax credits in both the federal and state

programs. Credits can be allocated to new construction projects or existing properties undergoing rehabilitation. Nine percent credits are allocated on a competitive basis so that those meeting the highest housing priorities and public policy objectives, as determined by the Committee, have first access to credits. Those utilizing tax credits must own the project for which the credits are awarded.

The programs have both rent and income restrictions. Rents on tax credit units cannot

exceed 30% of an imputed income based on 1.5 persons per bedroom (i.e., in a two-bedroom unit, the income of a three-person household is used to calculate rent, regardless of the actual family size of the household). Federal law requires that the initial incomes of households in tax credit units not exceed either 60% or 50% of the area median income, adjusted for household size. When a project developer or sponsor applies for tax credits, he or she irrevocably elects one of the following minimum federal set-aside requirements:

• a minimum of 40% of the units must be both rent-restricted and occupied by

households whose incomes are 60% or less of the area median gross income, adjusted for family size, or

• 20% of the units must be both rent-restricted and occupied by households

whose incomes are 50% or less of the area median gross income, adjusted for family size. In determining the amount of credit for which a project may be eligible, first, total project

cost is calculated. Secondly, “eligible basis” is determined by subtracting non-depreciable costs, such as land, permanent financing costs, rent reserves and marketing costs. The project developer may also voluntarily reduce the requested eligible basis in order to gain a competitive advantage. If the development is located in a HUD-designated Difficult to Develop Area (DDA) or Qualified Census Tract (QCT), the eligible basis receives a 130% adjustment. Next, the eligible basis is multiplied by the “applicable fraction”, which is the smaller of (1) the percentage of low-income units to total units, or, (2) the percentage of square footage of the low-income units to the square footage of the total units. This figure is known as the “qualified basis” of the project.

The qualified basis is multiplied by the federal tax credit rate, published monthly by the

IRS, to determine the maximum allowable tax credit allocation. For projects that are new construction or rehabilitation, which are not financed with a federal subsidy, the rate is nine percent (9%). For projects involving a federal subsidy (including projects financed more than 50% with tax exempt bonds), the rate is summarized as four percent (4%); however, due to the fluctuating federal tax credit rate published monthly by the IRS, TCAC currently uses a 3.4% rate to determine a project's initial tax credit reservation. A project's final (placed-in-service) tax credit allocation is based on actual project sources and uses of funds, the financing shortfall and the actual applicable federal rate. The rate applicable to a project is the rate published for the

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month each building is placed in service or in an earlier month elected by the sponsor. The allocation cannot exceed the initial reservation amount and may be reduced if an analysis determines that the maximum allowable amount would generate excess equity proceeds to the project.

Most credits are sold to corporate or individual investors through public or private

syndication. Investors benefit from the tax credit by purchasing an ownership interest in one or more tax credit housing projects. In turn, investors claim a dollar-for-dollar credit against their tax liability over a ten-year period. Partnership equity contributed to the project in exchange for the credit typically finances 30-60% of the capital costs of project construction.

The net amount of equity proceeds contributed to a project is based on investor

contributions (the present value of the ten-year credit) less syndicator overhead and fees and other syndication-related costs. The Committee uses the net tax credit factor (net proceeds divided by the total 10-year tax credit allocation) to determine the credit amount needed.

Threshold criteria require that the applicant show the following: (a) the type of housing proposed is needed and affordable to the targeted population

within the community in which it is to be located; (b) enforceable financing commitments of at least 50% of the total estimated financing

need; (c) control of the site; (d) compliance with all applicable local land use and zoning ordinances; (e) development team experience and financial capacity to ensure project completion

and operation for the extended use period; (f) financial viability throughout the compliance period of the project; (g) minimum construction standards; (h) all deferred-payment financing, grants, and subsidies be “committed” at application;

and (i) new construction projects using 9% tax credits are limited to no more than 150 units

for non-rural set-aside applications, and 80 units for rural set-aside applications. State law requires the Committee to hold two or more application cycles each year for

awarding 9% tax credits, unless circumstances warrant a reduction in the number of cycles. The 2011 funding schedule is as follows:

Round Application Due Date Committee Awards First March 23, 2011 June 8, 2011

Second July 6, 2011 September 21, 2011 The application review process generally takes about sixty days to complete. TCAC has

established progress requirements that ensure California is in compliance with federal law.

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Before the tax forms are issued, the applicant must enter into a regulatory agreement with TCAC. This agreement is recorded against the land and holds the project owner to the specifications and characteristics of the project on which the tax credit reservation was awarded (rent and income restrictions, selection criteria, preference points and other requirements).

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