NEW ISSUE (BOOK-ENTRY ONLY) NOT RATED

Transcription

1 NEW ISSUE (BOOK-ENTRY ONLY) NOT RATED In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Series C Bonds (including any original issue discount properly allocable to the owner of a Series C Bond) is excluded from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. In addition, in the opinion of Bond Counsel, interest on the Series C Bonds is exempt from State of California personal income taxation. For a more complete description, see TAX MATTERS herein. $8,110,000 DALY CITY HOUSING DEVELOPMENT FINANCE AGENCY MOBILE HOME PARK THIRD TIER REVENUE REFUNDING BONDS (FRANCISCAN MOBILE HOME PARK ACQUISITION PROJECT) SERIES 2007C Dated: Date of Delivery Due: December 15, 2047 The above-captioned bonds (the Series C Bonds ) are being issued pursuant to an Amended and Restated Indenture of Trust, dated as of December 1, 2007 (the Indenture ), between the Daly City Housing Development Finance Agency (the Agency ) and Union Bank of California, N.A., as trustee (the Trustee ). The proceeds of the 2007 Bonds (defined below) will be used to fund a loan to Franciscan Park, LLC, a California limited liability company (the Borrower ), to (i) finance certain capital improvements to The Franciscan Country Club Mobile Home Park located in Daly City, California (the Property ), (ii) prepay a portion of a previous loan relating to the Property and defease related bonds of the Agency, (iii) fund the Senior Bonds Debt Service Reserve Fund, the Subordinate Bonds Debt Service Reserve Fund and the Third Tier Bonds Debt Service Reserve Fund established under the Indenture, and (iv) pay the costs of issuance of the 2007 Bonds. See PLAN OF FINANCING. The Series C Bonds will be delivered in fully registered form only and, when issued, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository of the Series C Bonds. Ownership interests in the Series C Bonds may be purchased, in denominations of $5,000, or any integral multiple thereof, in book-entry form only as described herein. Upon receipt of payments of principal of, premium, if any, and interest on the Series C Bonds, DTC will in turn remit such principal, premium, if any, and interest to the participants in DTC (as described herein) for subsequent disbursement to the beneficial owners of the Series C Bonds. Interest on the Series C Bonds is payable semiannually on June 15 and December 15 of each year, commencing June 15, The Series C Bonds are subject to optional, mandatory and special redemption prior to their respective maturity dates as described herein. The Series C Bonds are also subject to deemed mandatory redemption and discharge, in certain circumstances, whether or not there are sufficient funds available under the Indenture to pay the then outstanding principal of and accrued interest on the Series C Bonds. The Series C Bonds are being issued concurrently with the issuance of $45,725,000 aggregate principal amount of the Daly City Housing Development Finance Agency Mobile Home Park Senior Revenue Refunding Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2007A (the Series A Bonds ) and $5,175,000 aggregate principal amount of the Daly City Housing Development Finance Agency Mobile Home Park Subordinate Revenue Refunding Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2007B (the Series B Bonds and, together with the Series A Bonds and the Series C Bonds, the 2007 Bonds ). The Agency previously issued the Daly City Housing Development Finance Agency Mobile Home Park Fourth Tier Revenue Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2002D (the 2002D Bonds and, together with the 2007 Bonds and any additional bonds, the Bonds ). The proceeds of the 2002D Bonds were used to fund a loan to LINC Franciscan Limited Partnership ( Original Borrower ). The Series C Bonds are special limited obligations of the Agency, payable solely from Third Tier Residual Revenues, Third Tier Residual Net Proceeds and Third Tier Residual Prepayments (as such terms are hereinafter defined) and secured as to the payment of the interest on and the principal of and the redemption premiums, if any, on the Series C Bonds in accordance with their terms and the terms of the Indenture, on a basis fully subordinate to the Series A Bonds and the Series B Bonds (and any additional bonds issued on a parity with such bonds) and the Secured Investment Agreement (as defined herein). So long as any Senior or Subordinate Bonds (as defined herein) remain outstanding, the right of the owners of the Series C Bonds to cause the Trustee to exercise remedies under, or otherwise enforce the provisions of, the Indenture and the Loan Agreement in the event of a default under the Indenture or the Loan Agreement, including a default in the payment of the Series B Bonds, is severely restricted. In addition, upon a foreclosure of the Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing, executed by the Borrower on the date of issuance of the Bonds (the Deed of Trust ), which secures the Borrower s obligations under the Loan Agreement (as defined herein), payment will only be made on the Series C Bonds following payment in full of the Senior Bonds, the Subordinate Bonds and the Secured Investment Agreement. See RISK FACTORS herein. THE SERIES C BONDS ARE SECURED SOLELY BY A SUBORDINATE INTEREST IN CERTAIN AMOUNTS HELD UNDER THE INDENTURE FOR SUCH BONDS. THE PAYMENT OF DEBT SERVICE ON THE SERIES C BONDS IS SUBORDINATE TO THE PAYMENT OF DEBT SERVICE ON THE SENIOR BONDS AND THE SUBORDINATE BONDS TO THE EXTENT DESCRIBED HEREIN AND TO THE SECURED INVESTMENT AGREEMENT. THERE CAN BE NO ASSURANCE THAT THE OPERATING PERFORMANCE OF THE PROJECT WILL ASSURE THAT THERE WILL BE AVAILABLE TO THE TRUSTEE SUFFICIENT REVENUES TO PAY THE PRINCIPAL OF AND INTEREST ON THE SERIES C BONDS AND TO AVOID A DEFAULT ON THE SERIES C BONDS IN THE FUTURE. NEITHER THE AGENCY NOR THE UNDERWRITER HAS MADE ANY REPRESENTATION WHATSOEVER REGARDING THE FUTURE PERFORMANCE OF THE PROJECT. THE REMEDIES AVAILABLE TO THE TRUSTEE FOR THE SERIES C BONDS ARE SEVERELY LIMITED. SEE RISK FACTORS HEREIN. MATURITY SCHEDULE $8,110, % Term Bonds due December 15, 2047; Yield: 6.750%; Price: % This cover page contains certain information for general reference only. It is not intended as a summary of this transaction. Investors are advised to read the entire Official Statement to obtain information essential to making an informed investment decision with respect to the Series C Bonds. NEITHER THE AGENCY NOR ANY PERSON EXECUTING THE BONDS IS LIABLE PERSONALLY ON THE BONDS OR SUBJECT TO ANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THEIR ISSUANCE. THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AGENCY AND ARE NOT A DEBT OR GENERAL OBLIGATION, NOR A PLEDGE OF THE FAITH AND CREDIT, OF THE CITY OF DALY CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER ARE THEY LIABLE ON THE SERIES A BONDS, NOR ARE THE BONDS PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THE PLEDGED REVENUES AND FUNDS PLEDGED UNDER THE INDENTURE FOR THE PAYMENT THEREOF. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE ISSUANCE OF THE BONDS DOES NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE AGENCY, THE CITY OF DALY CITY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO PLEDGE ANY FORM OF TAXATION THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE AGENCY HAS NO TAXING POWER. The Series C Bonds are offered when, as and if issued and received by the Underwriter, subject to the approval as to their legality of Kutak Rock LLP, Denver, Colorado, Bond Counsel, and certain other conditions. Jones Hall, A Professional Law Corporation, San Francisco, California, is serving as Disclosure Counsel. Certain legal matters will be passed upon for the Agency by Agency Counsel and for the Borrower by Carle, Mackie, Power & Ross LLP, Santa Rosa, California. It is anticipated that the Series C Bonds will be available for delivery through the facilities of DTC in New York, New York on or about December 13, The date of this Official Statement is December 5, 2007.

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3 No broker, dealer, salesman or other person has been authorized by the Agency or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Series C Bonds other than as set forth herein and, if given or made, such information or representation must not be relied upon as having been authorized by the Agency or the Underwriter. 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 Series C Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Series C Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. See RISK FACTORS Forward-Looking Statements. The information set forth in this Official Statement has been obtained from sources which are believed to be reliable, but it is not guaranteed as to the accuracy or completeness, and is not to be construed as a representation by the Underwriter or the Agency. The information and expressions of opinion stated herein are subject to change without notice. Neither the delivery of this Official Statement nor the sale of any of the Bonds implies that the information herein is correct as of any time subsequent to the date hereof. The delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the affairs of the Agency, the Borrower, or the major participants in the Project. All summaries of the Bonds, the resolution authorizing their issuance, the Indenture, the Loan Agreement and the other documents discussed herein are made subject to the provisions of such documents and do not purport to be complete statements of any or all of the provisions thereof. Reference is hereby made to the Bonds, said resolution, the Indenture, the Loan Agreement and such other documents on file with the Trustee for further information. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. The Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon an exemption contained in such Act. The Bonds have not been registered or qualified under the securities laws of any state. These securities have not been approved or disapproved by the Securities and Exchange Commission or any State Securities Commission nor has the Securities Exchange Commission or any State Securities Commission passed upon the accuracy or adequacy of this Official Statement. Any representation to the contrary is a criminal offense. SECURITIES PRODUCTS AND SERVICES ARE OFFERED THROUGH PIPER JAFFRAY & CO., MEMBER SIPC AND NYSE, INC. PIPER JAFFRAY & CO. SINCE MEMBER SIPC AND NYSE.

4 DALY CITY HOUSING DEVELOPMENT FINANCE AGENCY City Council/Agency Board of Directors Maggie Gomez, Mayor/Chair Carol Klatt, Vice Mayor/Vice Chair Judith Christensen, Councilmember/Director Michael Guingona, Councilmember/Director Gonzalo Sal Torres, Councilmember/Director City/Agency Staff Patricia E. Martel, City Manager/Executive Director Rose Zimmerman, City Attorney/Agency Counsel Donald W. McVey, Director of Finance Anthony J. Zidich, City Treasurer/Agency Treasurer Maria Cortes, City Clerk/Agency Secretary SPECIAL SERVICES Bond Counsel Kutak Rock LLP Denver, Colorado Disclosure Counsel Jones Hall, A Professional Law Corporation San Francisco, California Trustee Union Bank of California, N.A. Los Angeles, California Underwriter Piper Jaffray & Co. San Francisco, California Verification Agent Grant Thornton LLP Minneapolis, Minnesota

5 TABLE OF CONTENTS INTRODUCTION... 1 THE PLAN OF FINANCING... 4 PLAN OF REFUNDING... 4 THE 2007 PROJECT... 5 ESTIMATED SOURCES AND USES OF FUNDS... 5 DEBT SERVICE REQUIREMENTS... 6 THE SERIES C BONDS... 7 GENERAL... 7 REDEMPTION... 8 PURCHASE OF SERIES C BONDS ADDITIONAL BONDS INVESTMENT AGREEMENTS SECURITY FOR THE SERIES C BONDS PLEDGE THIRD TIER RESIDUAL REVENUES PRIORITY OF PAYMENTS THE REGULATORY AGREEMENT THE LOAN AGREEMENT AND THE NOTES RATE COVENANT RESERVE FUND TITLE INSURANCE RENTAL INTERRUPTION INSURANCE EVENTS OF DEFAULT UNDER THE INDENTURE EVENTS OF DEFAULT UNDER THE LOAN AGREEMENT BORROWER OBLIGATIONS NON-RECOURSE FLOW OF FUNDS GENERAL DEPOSIT OF FUNDS IN THE DEPOSIT ACCOUNT WITHDRAWALS FROM THE REVENUE FUND WITHDRAWALS FROM THE SENIOR BONDS DEBT SERVICE FUND WITHDRAWALS FROM THE SUBORDINATE BONDS DEBT SERVICE FUND WITHDRAWALS FROM THE THIRD TIER BONDS DEBT SERVICE FUND OTHER DEPOSITS THE BORROWER ORGANIZATION OPERATING OFFICERS BOARD MEMBERS OPERATIONS COOPERATION AGREEMENT TRANSFER TO NEW ENTITY THE PROJECT MOBILE HOME PARK OVERVIEW THE PROJECT VICINITY DESCRIPTION THE PODESTA LEASEHOLD INTEREST RESIDENT LEASES RENT CONTROL ORDINANCE THE APPRAISAL ENVIRONMENTAL SITE ASSESSMENT PHYSICAL NEEDS ASSESSMENT LOCAL MARKET CHARACTERISTICS HISTORICAL AND ESTIMATED OPERATING RESULTS MANAGEMENT S DISCUSSION PROJECTED OPERATING REVENUES AND DEBT SERVICE COVERAGE OVERSIGHT AGENT/PROGRAM ADMINISTRATOR THE AGENCY RISK FACTORS SERIES C BONDS ARE LIMITED OBLIGATIONS OF THE AGENCY LIMITATIONS ON EXERCISE OF REMEDIES LOAN PAYMENTS NON-RECOURSE TERMINATION OF PODESTA LEASEHOLD INTEREST LOAN PAYMENTS NOT PREFERENCE PROOF LIMITATIONS ON RENT COLLECTIONS RISK OF TAXABILITY RISKS ASSOCIATED WITH INVESTMENT AGREEMENTS CONDITIONS WHICH MAY AFFECT BORROWER S ABILITY TO PAY VALUE OF PROJECT; ECONOMIC FEASIBILITY EXERCISE OF REMEDIES BY BONDOWNERS OF A LOWER TIER LIMITATIONS ON FORECLOSURE GOVERNMENTAL LIENS COMPETING FACILITIES RISKS ASSOCIATED WITH TITLE INSURANCE RISKS OF OWNERSHIP OF REAL PROPERTY ENVIRONMENTAL RISKS SEISMIC HAZARDS FLOOD HAZARDS INSUFFICIENT INSURANCE PROCEEDS ENFORCEABILITY AND BANKRUPTCY ANTI-DEFICIENCY LAWS OF THE STATE OF CALIFORNIA 75 FORWARD-LOOKING STATEMENTS TAX MATTERS IN GENERAL BACKUP WITHHOLDING CHANGES IN FEDERAL AND STATE TAX LAW ORINGINAL ISSUE DISCOUNT LEGAL OPINIONS VERIFICATION CONTINUING DISCLOSURE LITIGATION THE AGENCY THE BORROWER RATING UNDERWRITING MISCELLANEOUS APPENDIX A - GENERAL INFORMATION REGARDING THE CITY OF DALY CITY APPENDIX B - DEFINITIONS AND SUMMARY OF THE FINANCING DOCUMENTS APPENDIX C - FORM OF OPINION OF BOND COUNSEL APPENDIX D - FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX E - DTC AND THE BOOK ENTRY ONLY SYSTEM i

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7 OFFICIAL STATEMENT $8,110,000 DALY CITY HOUSING DEVELOPMENT FINANCE AGENCY MOBILE HOME PARK THIRD TIER REVENUE REFUNDING BONDS (FRANCISCAN MOBILE HOME PARK ACQUISITION PROJECT) SERIES 2007C INTRODUCTION This Official Statement, including the cover page and Appendices hereto, provides certain information concerning the sale and delivery of the Daly City Housing Development Finance Agency Mobile Home Park Third Tier Revenue Refunding Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2007C in the aggregate principal amount of $8,110,000 (the Series C Bonds and, together with any bonds issued in the future on a parity with the Series C Bonds, the Third Tier Bonds ). THE SERIES C BONDS ARE SECURED SOLELY BY A SUBORDINATE INTEREST IN CERTAIN AMOUNTS HELD UNDER THE INDENTURE FOR SUCH BONDS. PAYMENT OF DEBT SERVICE ON THE SERIES C BONDS IS SUBORDINATE TO THE PAYMENT OF DEBT SERVICE ON THE SENIOR BONDS AND THE SUBORDINATE BONDS (EACH AS DEFINED HEREIN), TO THE EXTENT DESCRIBED HEREIN, AS WELL AS THE SECURED INVESTMENT AGREEMENT (AS DEFINED HEREIN). THERE CAN BE NO ASSURANCE THAT THE OPERATING PERFORMANCE OF THE PROJECT WILL ASSURE THAT THERE WILL BE AVAILABLE TO THE TRUSTEE SUFFICIENT REVENUES TO PAY THE PRINCIPAL OF AND INTEREST ON THE SERIES B BONDS AND TO AVOID A DEFAULT ON THE SERIES C BONDS IN THE FUTURE. NEITHER THE AGENCY NOR THE UNDERWRITER HAS MADE ANY REPRESENTATION WHATSOEVER REGARDING THE FUTURE PERFORMANCE OF THE PROJECT. THE REMEDIES AVAILABLE TO THE TRUSTEE FOR THE SERIES C BONDS ARE SEVERELY LIMITED. SEE RISK FACTORS HEREIN. The Series C Bonds are being issued concurrently with the issuance of $45,725,000 aggregate principal amount of the Daly City Housing Development Finance Agency Mobile Home Park Senior Revenue Refunding Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2007A (the Series A Bonds and, together with any bonds issued in the future on a parity with the Series A Bonds, the Senior Bonds ) and $5,175,000 aggregate principal amount of the Daly City Housing Development Finance Agency Mobile Home Park Subordinate Revenue Refunding Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2007B (the Series B Bonds and, together with any bonds issued in the future on a parity with the Series B Bonds, the Subordinate Bonds ). The Senior Bonds and the Subordinate Bonds will be secured on a basis fully senior to the Series C Bonds, as more fully described herein, except that the reserve fund created for the Third Tier Bonds shall be pledged solely to the repayment of the Third Tier Bonds. Neither the Series A Bonds nor the Series B Bonds are being offered by means of this Official Statement, which pertains only to the Series C Bonds. 1

8 Previously, the Agency issued $1,923,000 aggregate principal amount of the Daly City Housing Development Finance Agency Mobile Home Park Fourth Tier Revenue Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2002D (the 2002D Bonds and, together with any bonds issued in the future on a parity with the 2002D Bonds, the Fourth Tier Bonds ). The Senior Bonds, the Subordinate Bonds, the Third Tier Bonds and the Fourth Tier Bonds are referred to collectively herein as the Bonds. The 2002D Bonds constitute a term bond that is subject to mandatory sinking fund payments commencing on December 15, The 2002D Bonds bear interest at 9% per annum and are fully subordinate to the Senior Bonds, the Subordinate Bonds and the Third Tier Bonds. The 2007 Bonds will be issued by the Agency pursuant to an Amended and Restated Indenture of Trust, dated as of December 1, 2007 (the Indenture ), between the Agency and Union Bank of California, N.A., as trustee (the Trustee ). The proceeds of the sale of the 2007 Bonds will be used to fund a loan (the 2007 Loan ) to Franciscan Park, LLC, a California limited liability company (the Borrower ) pursuant to an Amended and Restated Loan Agreement, dated as of December 1, 2007 (the Loan Agreement ) between the Agency, LINC Franciscan Limited Partnership (the Original Borrower ), the Borrower and the Trustee. The Borrower will use the proceeds of the 2007 Loan to (i) finance certain capital improvements to real property located in Daly City, California known as The Franciscan Country Club Mobile Home Park (the Property ), (ii) prepay a portion of a previous loan relating to the Property and defease related bonds of the Agency, (iii) fund the Senior Bonds Debt Service Reserve Fund, the Subordinate Bonds Debt Service Reserve Fund and the Third Tier Bonds Debt Service Reserve Fund established under the Indenture, and (iv) pay the costs of issuance of the 2007 Bonds. See PLAN OF FINANCING and ESTIMATED SOURCES AND USES OF FUNDS. The Property and all structures (other than mobile homes and related improvements thereto not owned by Borrower), site improvements, facilities and fixtures located on the Property are referred to as the Project. The Borrower currently has no substantial assets other than its investment in the Project. See THE BORROWER - Operations. The Series C Bonds are special limited obligations of the Agency, payable primarily from and secured as to the payment of the interest on and the principal of and the redemption premium, if any, from Third Tier Residual Revenues (as hereinafter defined) and other funds and property as provided in the Indenture. See SECURITY FOR THE SERIES C BONDS herein. Third Tier Residual Revenues, in turn, consist primarily of the Operating Revenues (as defined in the Indenture) of the Project, the principal source of which is the monthly rental income for mobile home spaces (the Spaces ) within the Project remaining after payment of debt service on the Senior Bonds and the Subordinate Bonds, payments under the Secured Investment Agreement (as defined herein), if any, and certain other required deposits under the Indenture. See SECURITY FOR THE SERIES C BONDS and THE PROJECT herein. REPAYMENT OF THE SERIES C BONDS IS SUBJECT TO CERTAIN RISKS, INCLUDING THE RISK THAT THE PROJECT MAY NOT GENERATE NET OPERATING REVENUES SUFFICIENT FOR REPAYMENT OF THE SERIES C BONDS. SEE THE SECTION HEREIN ENTITLED RISK FACTORS FOR A DISCUSSION OF SPECIAL RISK FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING THE INVESTMENT QUALITY OF THE SERIES C BONDS. 2

9 THE BONDS ARE NOT A DEBT OR GENERAL OBLIGATION OF THE AGENCY, THE CITY OF DALY CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS FOR PURPOSES OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION, NOR IN ANY EVENT SHALL THE BONDS BE PAYABLE OUT OF FUNDS OR PROPERTIES OTHER THAN AS PLEDGED PURSUANT TO THE INDENTURE. Pursuant to the Loan Agreement, the Agency will make the 2007 Loan to the Borrower by causing such proceeds to be deposited with the Trustee and applied in accordance with the Indenture. Under the Loan Agreement, the Borrower is obligated to make payments to the Trustee at such times and in such amounts as are required to enable the Trustee to pay the principal of and premium, if any, and interest on the Bonds. The obligations of the Borrower under the Loan Agreement and the Notes (as defined herein) are limited recourse obligations of the Borrower secured by a Deed of Trust on the Project. See APPENDIX B DEFINITIONS AND SUMMARY OF THE FINANCING DOCUMENTS and SECURITY FOR THE SERIES C BONDS herein. The Agency, the Original Borrower and the Trustee have entered into a Regulatory Agreement and Declaration of Restrictive Covenants dated as of April 1, 2002 with respect to the operation of the Project. The Borrower will assume the obligations of the Original Borrower under the Regulatory Agreement by executing an Amended and Restated Regulatory Agreement and Declaration of Restrictive Covenants dated as of December 1, 2007 (the Regulatory Agreement ) among the Agency, the Trustee, the Original Borrower and the Borrower. The Regulatory Agreement will encumber the Project and will require the Borrower to rent not less than 20% of the Spaces in the Project to Very Low Income Residents (all as defined in the Regulatory Agreement). The monthly rental rate that the Borrower may charge the Very Low Income Residents is also restricted by the Regulatory Agreement, and, to some extent, may be restricted by the City rent control ordinance. See APPENDIX B DEFINITIONS AND SUMMARY OF THE FINANCING DOCUMENTS The Regulatory Agreement, THE PROJECT Rent Control Ordinance and RISK FACTORS Value of Project; Economic Feasibility herein. The summaries and references to documents, statutes, reports and other instruments referred to herein do not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by reference to each document, statute, report or instrument. Capitalized terms not defined elsewhere in this Official Statement or in Appendix B hereto have the meanings assigned to such terms in the Indenture. 3

10 PLAN OF FINANCING Plan of Refunding The Agency has previously issued (i) $34,545,000 aggregate principal amount of the Daly City Housing Development Finance Agency Mobile Home Park Senior Revenue Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2002A (the 2002A Bonds ), (ii) $2,590,000 aggregate principal amount of the Daly City Housing Development Finance Agency Mobile Home Park Senior Revenue Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2002A-T (Federally Taxable) (the 2002A-T Bonds ), (iii) $2,865,000 aggregate principal amount of the Daly City Housing Development Finance Agency Mobile Home Park Subordinate Revenue Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2002B (the 2002B Bonds ), (iv) $11,535,000 aggregate principal amount of the Daly City Housing Development Finance Agency Mobile Home Park Third Tier Revenue Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2002C (the 2002C Bonds ), and (v) the 2002D Bonds (together with the 2002A Bonds, 2002A-T Bonds, 2002B Bonds, and 2002C Bonds, the Prior Bonds ). The 2002A-T Bonds matured on December 15, 2005, and are no longer outstanding. The proceeds of the Prior Bonds were used to fund a loan (the Original Loan ) to Original Borrower pursuant to a Loan Agreement dated as of April 1, 2002 (the Original Loan Agreement ), between the Agency, the Original Borrower and the Trustee. The Original Loan Agreement is amended and restated in its entirety by the Loan Agreement. The proceeds of the Original Loan were used by the Original Borrower to finance the acquisition and improvement of the Project. A portion of the proceeds of the Bonds will be loaned to the Borrower to refinance a portion of the Original Loan and to redeem and defease all of the outstanding 2002A Bonds, 2002B Bonds and 2002C Bonds. The 2002D Bonds are not being refinanced and will remain outstanding in the principal amount of $1,923,000. The Borrower will assume the obligations of the Original Borrower with respect to the obligations outstanding on the Original Loan. The Original Loan and the 2007 Loan are collectively referred to herein as the Loan. Payments on the Loan are the source of payment of the Bonds, and the Series C Bonds have a subordinate payment priority to the Series A Bonds and Series B Bonds, but a senior payment priority over the 2002D Bonds in annual moneys available from the Loan. Under an Escrow Agreement, dated as of December 1, 2007, between the Agency, the Borrower, the Original Borrower and Union Bank of California, N.A., as Trustee and Escrow Bank, the Escrow Bank will invest a portion of the proceeds of the 2007 Bonds, together with certain amounts transferred from the Original Indenture, in open market securities. Under the Escrow Agreement, the Escrow Agent will redeem the 2002A Bonds maturing on and after December 15, 2014 on December 15, 2013 at the outstanding amount thereof plus a premium of 2%, the 2002B Bonds maturing on and after December 15, 2013 on December 15, 2012 at the outstanding amount thereof plus a premium of 2%, and the 2002C Bonds maturing on and after December 15, 2008 on December 15, 2007 at the outstanding amount thereof plus a premium of 2%. The Prior Bonds to be refunded are referred to herein as the Refunded Bonds. As a result of refunding of the Refunded Bonds, the Borrower will use a portion of the amounts currently held for payment of debt service on the Refunded Bonds to instead (i) pay property taxes and related penalties and (ii) make a payment to the lessor under the Podesta 4

11 Lease (as defined herein). See ESTIMATED SOURCES AND USES OF FUNDS and THE PROJECT Management s Discussion and - The Podesta Leasehold Interest. The 2007 Project A portion of the proceeds of the 2007 Loan will be used by the Borrower for the acquisition and construction of certain capital improvements to the Property. See THE PROJECT Physical Needs Assessment. ESTIMATED SOURCES AND USES OF FUNDS Following are the estimated sources and uses of the proceeds from the sale of the Series A Bonds, the Series B Bonds and the Series C Bonds. Sources Principal Amount of Series A Bonds $45,725, Principal Amount of Series B Bonds 5,175, Principal Amount of Series C Bonds 8,110, Less Net Original Issue Discount (1,770,170.05) Available Funds From the Prior Bonds Proceeds 4,313, Available Project Revenue Funds (1) 2,654, Total Sources of Funds $64,207, Uses Escrow Funds $53,835, Series A Debt Service Reserve Fund 2,676, Series B Debt Service Reserve Fund 340, Series C Debt Service Reserve Fund 585, Cost of Issuance 1,386, Ad Valorem Taxes Fund (1) 1,543, Repair, Replacement and Capital Improvement Fund (2) 3,340,190.64* Payment to Lessor under Podesta Lease (3) 500, Total Uses of Funds $64,207, (1) A portion of the Debt Service Funds for the Refunded Bonds will be deposited in the Ad Valorem Taxes Fund and used to pay property taxes and penalties owed with respect to the Property. See THE PROJECT Management s Discussion. (2) To be used for various capital improvements to the Property. See THE PROJECT Physical Needs Assessment. (3) See THE PROJECT The Podesta Leasehold Interest herein. * Estimated amount subject to variation based on settlement cost of termination of certain investment agreements. 5

12 DEBT SERVICE REQUIREMENTS The following table sets forth the annual debt service requirements for the Series C Bonds, assuming no redemptions other than sinking fund redemptions. TABLE 1 Series C Bonds Debt Service Schedule Year Ended December 15 Principal Interest Total Debt Service 2008 $45,000 $530, $575, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 98, , ,000 67, , ,000 35, , Total $8,110,000 $14,811, $22,921, Source: Underwriter 6

13 THE SERIES C BONDS General The Series C Bonds will be delivered in fully registered form only and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Series C Bonds. Ownership interests in the Series C Bonds may be purchased, in denominations of $5,000, or any integral multiple thereof, in book-entry form only. So long as the Series C Bonds are held in book-entry only form, all references herein to the holders or owners of the Series C Bonds shall mean DTC, and shall not mean beneficial owners of the Series C Bonds. See Appendix E DTC AND THE BOOK ENTRY ONLY SYSTEM. The Series C Bonds will mature on the date and in the principal amount, and will bear interest at the rate, all as set forth on the cover page of this Official Statement. The Series C Bonds will be dated their date of delivery. Interest on the Series A Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months and will be payable semiannually on June 15 and December 15 of each year, commencing June 15, 2008 (each such date an Interest Payment Date ), by check or draft mailed on such Interest Payment Date to the registered owners of Series C Bonds as they appear on the registration books of the Trustee, or, upon the written request of a registered owner of the applicable Bond (a Bondowner ) of at least $1,000,000 in principal amount of Bonds received by the Trustee not later than fifteen days prior to the first day of the calendar month in which such Interest Payment Date occurs (the Record Date ), by wire transfer to an account in the United States designated by such Bondowner. Each Series C Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof to which interest has been duly paid or provided for, unless a Series C Bond is authenticated before the first Record Date, in which case interest will accrue from the date of delivery, or unless authenticated as of a date during the period from the Record Date to and including the next Interest Payment Date, in which case it shall bear interest from such Interest Payment Date. Each Series C Bond shall bear interest on overdue principal at the rate then in effect on such Series C Bond. In the event of any default in the payment of interest, such defaulted interest shall be payable to the Bondowner of such Bond on a special Record Date for the payment of such defaulted interest, which date shall be established by the Trustee, in accordance with the Indenture. Principal and premium, if any, due on the Series C Bonds shall be paid only upon surrender of such Series C Bond at the office designated by the Trustee. If there is a failure to pay the interest due on a Series C Bond on an Interest Payment Date or the principal of a Series C Bond on a Principal Payment Date from the Third Tier Bonds Trust Estate, such principal and interest shall continue to accrue at the stated rate of interest with respect to the Series C Bonds and shall, to the extent Third Tier Residual Revenues are payable, be paid to the registered owner in whose name such Series C Bonds is registered at the close of business on the next succeeding Interest Payment Date from Third Tier Residual Revenues. However, no interest will be paid on overdue interest. Any interest or deferred principal not paid on an Interest Payment Date or Principal Payment Date, respectively, shall continue to accrue, and shall continue to bear interest at the stated rate of interest with respect to the Series C Bonds, respectively, from such Interest Payment Date or Principal Payment Date until such Interest Payment Date on which such amounts are paid from Third Tier Residual 7

14 Revenues. The payment of interest on and principal of the Series C Bonds is secured solely to the extent of Third Tier Residual Revenues and the failure to make any payments on the Series C Bonds because of insufficient Third Tier Residual Revenues (other than nonpayment on the maturity date) shall not constitute a Third Tier Bonds Event of Default while any Senior Bonds and/or Subordinate Bonds are outstanding. See APPENDIX B DEFINITIONS AND SUMMARY OF THE FINANCING DOCUMENTS Indenture Third Tier Bonds Events of Default. Redemption Optional Redemption. The Series C Bonds maturing on or before December 15, 2017 are not subject to optional redemption prior to the stated maturities thereof. The Series C Bonds maturing on or after December 15, 2018 are subject to optional redemption as may be directed by the Agency, at the request of the Borrower, in whole, or in part in such order of maturity as directed by the Borrower and by lot within a maturity, on any date on or after December 15, 2017, subject to the availability of funds for such purpose on the redemption date. The redemption price of the Series C Bonds will be 100% of the principal amount to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. Such redemption will be effective only if, on the date of redemption, the Trustee holds money sufficient to pay the principal of, accrued interest on and any premium due on all outstanding Series C Bonds to be redeemed. [Remainder of page intentionally left blank.] 8

15 Mandatory Sinking Fund Redemption. The Series C Bonds are also subject to mandatory sinking fund redemption on December 15 in each year beginning December 15, 2008 at a redemption price equal to 100% of the principal amount to be redeemed, together with accrued interest thereon to the redemption date, without premium, but only to the extent of Third Tier Residual Revenues on deposit in the Series C Bonds Redemption Fund and available for such purpose, on the respective dates and in the amounts as follows: Sinking Fund Redemption Date (December 15) Principal Amount to be Redeemed 2008 $45, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , (maturity) 540,000 9

16 In the event that the Third Tier Residual Revenues are not sufficient to pay any mandatory sinking fund redemption amount set forth above, any unpaid mandatory sinking fund redemption amount shall be deferred for payment on the following mandatory sinking fund payment date and interest shall continue to accrue at the stated rate of interest on such Series C Bonds on the amount so deferred until paid. Non-payment of a mandatory sinking fund redemption amount due to insufficient Third Tier Residual Revenues (other than nonpayment on December 15, 2047) is not an Event of Default under and as defined in the Indenture. On December 15, 2047, all such deferred mandatory sinking fund redemption amount, together with any deferred interest, if any, shall be due and payable and the nonpayment of such amount on December 15, 2047 shall be a Third Tier Bonds Event of Default, all as set forth in the Indenture. Upon any purchase or redemption of Series C Bonds (other than by application of the above-listed sinking fund installments, referred to herein as Sinking Fund Installments ) an amount equal to the applicable Redemption Prices thereof shall be credited towards a part of all of any one or more of the above-listed Sinking Fund Installments, as directed by a certificate of a Borrower Representative, with a copy to the Agency or, failing such direction by October 1 of each year, toward such Sinking Fund Installments pro rata. Such applicable Redemption Prices shall be the respective Redemption Prices that would be applicable upon the redemption of such Bonds from the respective Sinking Fund Installments on the due dates thereof. The portion of any such Sinking Fund Installment remaining after the deduction of any such amounts credited toward the same (or the original amount of any such Sinking Fund Installment if no such amounts shall have been credited toward the same) shall constitute the unsatisfied balance of such Sinking Fund Installment for the purpose of the calculation of Principal Installments (as defined in the Indenture) due on a future date. Special Redemption Generally. In accordance with and for purposes of the Indenture, the Series C Bonds shall be subject to redemption, at the option of the Agency, at the request of the Borrower, prior to the stated maturities thereof on a pro rata basis, in whole or in part at any time, on the earliest practicable date for which notice of redemption can be given as provided in the Indenture at a Redemption Price equal to 100% of the principal amount of such Series C Bonds or portions thereof to be redeemed, together with accrued interest thereon to the date of redemption, without premium, in a principal amount having an aggregate Redemption Price equal to the amount of moneys which are deposited in or transferred to the Redemption Fund (as defined in the Indenture), to the extent of any amounts in the Series C Bonds Redemption Fund constituting Third Tier Net Proceeds or Third Tier Residual Prepayments. The Trustee shall apply any such amounts described above in accordance with applicable provisions of the Indenture from time to time as directed by a certificate of a person or persons designated by Borrower to act on behalf of the Borrower by written certificate (the Borrower s Representative ), with notice to the Agency; provided, however, that such amount to be applied to such redemption or purchase shall be rounded to the next lower authorized denomination. Extraordinary Redemption. If upon the receipt of notice by the Trustee of an opinion of Bond Counsel that in order to preserve the tax-exempt status of the interest on the Bonds it is necessary to redeem Bonds, the Trustee shall call for redemption, prior to the stated maturities thereof, in whole or such portion thereof in order to maintain such tax-exempt status, on any date after notice is provided as required by the Indenture, the Bonds to be redeemed at a Redemption Price equal to 100% of the Principal Amount thereof together with accrued interest to the date of redemption, without premium. See RISK FACTORS Risk of Taxability herein. 10

17 Deemed Redemption of Series C Bonds. The Series C Bonds are subject to deemed mandatory redemption upon the occurrence of a Senior Bonds Event of Default or a Subordinate Bonds Event of Default resulting in a foreclosure or other sale of the Project pursuant to the Deed of Trust and application of such proceeds and other moneys under the Indenture as provided in the default sections of the Indenture (see Priority of Payments After Senior Bonds Event of Default and Priority of Payments After Subordinate Bonds Event of Default herein), such deemed redemption to be in the amount of any principal of and interest remaining unpaid on the Series C Bonds following such foreclosure or other sale of the Project pursuant to the Deed of Trust. In such event, Series C Bonds remaining unpaid shall be surrendered to the Trustee for cancellation without any further payment being made on such Series C Bonds. Notice of such deemed redemption of the Series C Bonds shall be promptly sent by the Trustee to the registered owners of outstanding Series C Bonds upon the occurrence of the deemed redemption pursuant to the Indenture. By purchase and acceptance of the Series C Bonds, the registered owners thereof consent to the aforesaid provisions of the Indenture. Selection of Series C Bonds to be Redeemed. In the event of redemption of less than all of the outstanding Series C Bonds of a like maturity, outstanding Series C Bonds shall be redeemed by lot in the manner set forth in the Indenture. Notice of Redemption. When the Trustee receives notice from the Agency of its election or direction to redeem Series C Bonds pursuant to the Indenture, and when redemption of Series C Bonds is required pursuant to the Indenture, the Trustee shall give notice, which notice shall specify the maturities of the Series C Bonds to be redeemed, the redemption date and the place or places where amounts due upon such redemption will be payable, whether such redemption is conditioned upon the availability of funds for such purpose on the redemption date (in the case of optional redemption and special redemption pursuant to the Indenture) and, if less than all of the Series C Bonds of any maturity are to be redeemed, the letters and numbers or other distinguishing marks of such Series C Bonds so to be redeemed, and, in the case of Series C Bonds to be redeemed in part only, such notice shall also specify the respective portions of the principal amount thereof to be redeemed. Such notice shall further state that on such date there shall become due and payable upon each Series B Bond to be redeemed the Redemption Price thereof, or the Redemption Price of the specified portion of the principal amount thereof in the case of Series C Bonds to be redeemed in part only, together with interest accrued on such Series C Bonds to the redemption date, and that from and after such date interest on such Series C Bonds shall cease to accrue and be payable; provided, that, if the redemption is conditioned upon funds being available therefor no later than the opening of business on the Business Day prior to the redemption date, the notice shall so state. The Trustee shall mail a copy of such notice, by first class mail, postage prepaid, not less than thirty (30) days (provided, however, in the case of special redemption, such notice shall be given not less than ten (10) days) nor more than forty-five (45) days before the redemption date, to the Owners of any Series C Bonds or portions of Series C Bonds which are to be redeemed, at their last addresses, if any, appearing upon the registration book. Failure to give such notice with respect to any Series C Bonds, or any defect therein, shall not affect the validity of the proceedings for redemption of any other Series C Bonds. 11

18 Purchase of Series C Bonds In lieu of redemption of Series C Bonds, amounts held by the Trustee for such redemption will, at the written request of the Borrower set forth in a certificate of a Borrower Representative, with a copy to the Agency, received by the Trustee prior to the selection of Series C Bonds for redemption, be applied by the Trustee to the purchase of Series C Bonds at public or private sale as and when and at such prices (including brokerage, accrued interest and other charges) as the Borrower may in its discretion direct, but not to exceed the redemption price which would be payable if such Series C Bonds were redeemed. The aggregate principal amount of Series C Bonds of the same maturity purchased in lieu of redemption may not exceed the aggregate principal amount of Series C Bonds of such maturity that would otherwise be subject to such redemption. Additional Bonds At the request of the Borrower, the Agency may (but shall not be required to) issue additional revenue bonds of the Agency (the Additional Bonds ) on behalf of the Borrower from time to time but solely (i) to purchase the Podesta Parcel (as defined herein), (ii) to make capital improvements to the Project and (iii) to refund all or any portion of one or more series of the Bonds then outstanding. The Borrower currently has no plans to purchase the Podesta Parcel. See THE PROJECT The Podesta Leasehold Interest. Additional Bonds may be issued on a parity with the Series A Bonds, the Series B Bonds, the Series C Bonds or the 2002D Bonds. The Series A Bonds and all Additional Bonds issued on a parity with the Series A Bonds shall be designated as Senior Bonds. The Series B Bonds and all Additional Bonds issued on a parity with the Series B Bonds shall be designated as Subordinate Bonds. The Series C Bonds and all Additional Bonds issued on a parity with the Series C Bonds shall be designated as Third Tier Bonds. The 2002D Bonds and all Additional Bonds issued on a parity with the 2002D Bonds shall be designated as Fourth Tier Bonds. Additional Bonds designated as Senior Bonds shall be authenticated and delivered by the Trustee only upon receipt by the Trustee (in addition to other documents required under the Indenture) of written evidence from each Rating Agency then rating any of the Bonds then outstanding that the issuance of such Additional Bonds shall not result in a reduction on such rating and a certificate or opinion signed by an independent certified public accountant of recognized national standing or a firm of accountants of recognized national standing (the Accountant s Certificate ) to the effect that the Coverage Ratio for the immediately preceding fiscal year, taking into account all outstanding Bonds and the Additional Bonds proposed to be issued, for the Senior Bonds is not less than 1.40, for the Senior Bonds and the Subordinate Bonds is not less than 1.25, for the Senior Bonds, the Subordinate Bonds and the Third Tier Bonds is not less than 1.10, and for all Bonds is not less than Additional Bonds designated as Subordinate Bonds shall be authenticated and delivered by the Trustee only upon receipt by the Trustee (in addition to other documents) of written evidence from each Rating Agency then rating any of the Bonds then outstanding that the issuance of such Additional Bonds shall not result in a reduction on such rating and an Accountant s Certificate to the effect that the Coverage Ratio for the immediately preceding fiscal year, taking into account all outstanding Bonds and the Additional Bonds proposed to be issued, for the Senior Bonds and the Subordinate Bonds is not less than 1.25, for the Senior 12