Deutsche Bank Trust Company Americas, Trustee and Tender Agent

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1 NEW ISSUES In the opinion of Bond Counsel to the Agency, under existing statutes and court decisions and assuming continuing compliance with certain tax covenants described herein, (i) interest on the 2003 Series A Bonds is excluded from gross income for Federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the Code ), except that no opinion is expressed as to such exclusion of interest on any 2003 Series A Bond for any period during which such Bond is held by a person who, within the meaning of Section 147(a) of the Code, is a substantial user of the facilities financed with the proceeds of the 2003 Series A Bonds or a related person and (ii) interest on the 2003 Series A Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code, such interest, however, is included in adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. Bond Counsel is also of the opinion that interest on the 2003 Series B Bonds is included in gross income for Federal income tax purposes under existing laws. Bond Counsel is of the further opinion that interest on the 2003 Series A Bonds and the 2003 Series B Bonds is exempt under existing statutes from personal income taxes imposed by New York State or any political subdivision thereof (including The City of New York). See Tax Matters herein. $110,000,000 NEW YORK STATE HOUSING FINANCE AGENCY Related-Tribeca Green Housing Revenue Bonds, $109,200, Series A $800, Series B (Federally Taxable) 2003 Series A Bonds Due: November 1, 2036 Dated: Date of Delivery 2003 Series B Bonds Due: November 1, 2036 The 2003 Series A Bonds and the 2003 Series B Bonds (collectively, the 2003 Bonds ) are issuable only as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository of the 2003 Bonds. Individual purchases will be made in book-entry form, in denominations of $100,000 or any authorized multiple thereof, except that in the event of a conversion to the Fixed Interest Rate (as described herein), the 2003 Bonds shall be in the denominations of $5,000 or any integral multiple thereof. So long as Cede & Co. is the registered owner of the 2003 Bonds, as nominee for DTC, references herein to the Bondholders or registered owners (other than under the caption Tax Matters herein) shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners of the 2003 Bonds. So long as Cede & Co. is the registered owner of the 2003 Bonds, as aforesaid, principal and interest and, with respect to tendered 2003 Bonds, purchase price of the 2003 Bonds are payable by Deutsche Bank Trust Company Americas, New York, New York, as Trustee and Tender Agent, to Cede & Co., as nominee for DTC, which will, in turn, remit such principal and interest and purchase price to the DTC Participants for subsequent disbursement to the Beneficial Owners. (See Description of the 2003 Bonds Book-Entry-Only System herein.) The 2003 Bonds will bear interest from their dated date, and unless the interest rate on the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, shall have been converted to the Adjustable Interest Rate for such Series or all Series of Bonds are converted to the Fixed Interest Rate (as described herein), the rate of interest to be borne by the 2003 Series A Bonds and/or the 2003 Series B Bonds shall equal the Variable Interest Rate (as described herein) for each such Series determined weekly, except that for the period from their dated date through December 23, 2003 the rate to be borne by the 2003 Series A Bonds and the rate to be borne by the 2003 Series B Bonds will be set forth in a certificate of the Agency delivered on the date of delivery of the 2003 Bonds. Interest at the Variable Interest Rate will be payable on the first Business Day of each month commencing January 2, Subject to satisfaction of certain conditions described herein, the interest rate on the 2003 Series A Bonds and/or the 2003 Series B Bonds may be converted to the Adjustable Interest Rate for each such Series, or the 2003 Series A Bonds and the 2003 Series B Bonds may be converted to the Fixed Interest Rate. In the event the interest rate on the 2003 Series A Bonds and/or the 2003 Series B Bonds is converted to the Adjustable Interest Rate for such Series or all Series are converted to the Fixed Interest Rate, the interest on the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, will be paid semi-annually on May 1 and November 1 of each year. Deutsche Bank Trust Company Americas, Trustee and Tender Agent The 2003 Bonds are subject to redemption prior to maturity and mandatory tender for purchase, as described herein. The 2003 Bonds are issued pursuant to a General Resolution and Series Resolutions for the purpose of making a Mortgage Loan to the Mortgagor in order to provide funds which, together with other available funds, will be used to finance the construction and equipping of a housing development to pay capitalized interest and to pay legal, accounting, financing and other fees and expenses relating to the issuance of the 2003 Bonds, all as described herein. The 2003 Bonds are special revenue obligations of the New York State Housing Finance Agency and will be payable by the Agency solely from and be secured by Mortgage Repayments derived from the Mortgage Loan to the Mortgagor and other revenues pursuant to the provisions of the General Resolution, as described herein. The 2003 Bonds are also payable from funds drawn under an irrevocable, direct-pay Letter of Credit issued by LANDESBANK HESSEN-THÜRINGEN GIROZENTRALE. The Letter of Credit, which will expire on December 18, 2008 unless extended or earlier terminated, will entitle the Trustee to draw up to (a) the principal amount of the 2003 Bonds for payment of the principal of the 2003 Bonds when due by reason of maturity, redemption or acceleration, or the purchase price of the 2003 Bonds tendered to the Tender Agent and not remarketed equal to the principal of such 2003 Bonds, plus (b) an amount equal to interest on the 2003 Bonds for up to 34 days (computed at the Maximum Interest Rate), for payment of interest on the 2003 Series A Bonds when due, or as part of the purchase price of the 2003 Bonds, all as described herein. The Letter of Credit may be replaced with a substitute Letter of Credit or an Alternate Security and the Letter of Credit may be terminated before its expiration date, all as described herein. The interest rates borne by the 2003 Series A Bonds and the 2003 Series B Bonds are subject to conversion to the Fixed Interest Rate for the remainder of the terms thereof, or to rates of interest subject to adjustment at intervals of one year or integral multiples thereof (an Adjustable Interest Rate ), at the option of the Mortgagor, subject to certain requirements, as described herein. The 2003 Series A Bonds and the 2003 Series B Bonds shall be subject to mandatory tender for purchase by the Tender Agent on any date on which the interest rate borne by each Series is changed from the Variable Interest Rate to the Adjustable Interest Rate, the Adjustable Interest Rate is changed to the Variable Interest Rate, the Adjustable Interest Rate Term is changed, the interest rates on the 2003 Series A Bonds and the 2003 Series B Bonds is fixed, the Mortgagor prepays the Mortgage Loan in full, or on the first day of each Adjustable Interest Rate Term, or any date specified by the Letter of Credit Bank following the occurrence of an event of default under the Letter of Credit Agreement, or on the date sixteen days prior to the expiration of the Letter of Credit, or the Letter of Credit is substituted or replaced except as described herein. While the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, bear interest at the Adjustable Interest Rate or while the 2003 Series A Bonds and 2003 Series B Bonds bear interest at the Fixed Interest Rate, the 2003 Series A Bonds and the 2003 Series B Bonds shall not be subject to purchase upon the demand of the respective Series A Bondholders and 2003 Series B Bondholders, as described below. So long as the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, bear interest at the Variable Interest Rate, the respective 2003 Series A Bondholders and 2003 Series B Bondholders shall have the option to tender their 2003 Series A Bonds or 2003 Series B Bonds to the Tender Agent, for purchase on any N

2 Business Day, upon seven days notice, as more fully described herein, at a purchase price equal to the principal amount thereof plus accrued and unpaid interest (unless a Tender Date is a scheduled interest payment date, in which case interest will be paid in the normal manner). The Agency has no taxing power. The State of New York is not liable on the 2003 Bonds and said Bonds are not a debt of the State. Price of all Bonds 100% The 2003 Bonds are offered when, as and if issued and received by the Underwriter, subject to prior sale, to withdrawal or modification of the offer without notice, and to the approval of legality by Hawkins, Delafield & Wood, New York, New York, Bond Counsel to the Agency. Certain legal matters will be passed upon for the Mortgagor by its counsel, Paul, Hastings, Janofsky & Walker LLP, New York, New York. Certain legal matters will be passed upon for Landesbank Hessen-Thüringen Girozentrale by its counsel, Sonnenschein, Nath & Rosenthal LLP, New York, New York. Certain legal matters will be passed upon for the Underwriter by Nixon Peabody LLP, New York, New York, counsel to the Underwriter. It is expected that the 2003 Bonds will be available for delivery in New York, New York on or about December 18, UBS Financial Services Inc. December 11, 2003

3 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2003 SERIES A BONDS AND THE 2003 SERIES B BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 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 2003 Series A Bonds or the 2003 Series B Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. No dealer, broker, salesperson or any other person has been authorized by the Agency or the Underwriter to give any information or to make any representations, 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. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor the sale of any of the 2003 Series A Bonds or the 2003 Series B Bonds shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency, the Mortgagor or the Letter of Credit Bank or the other matters described herein since the date hereof. TABLE OF CONTENTS Page Page Introductory Statement...1 Plan of Financing...2 The Project...3 Security for the Bonds...6 General...6 Letter of Credit...6 Replacement or Substitution of Letter of Credit...7 Debt Service Reserve Fund...9 Principal Reserve Fund...9 Additional Bonds...11 Letter of Credit Bank...11 Description of the 2003 Bonds...11 General...11 Book-Entry-Only System...12 Tenders in Book-Entry-Only Form...15 Variable Interest Rate...15 Variable Rate Optional Tender...16 Adjustable Interest Rate...17 Special Mandatory Tender...19 Extraordinary Mandatory Tender...20 Remarketing Agreements...20 Fixed Interest Rate...20 Notification of a Change in Interest Mode, Adjustable Interest Rate Term, Replacement or Substitution of the Letter of Credit or Prepayment of Mortgage Loan in Full...22 Mandatory Tender for Purchase of 2003 Bonds on Change Dates on or Prior to the Conversion Date...23 Optional Redemption...23 Principal Reserve Fund Redemption...24 Extraordinary Redemption...25 Special Redemption...26 Redemption Provisions Relating to Optional, Principal Reserve Fund and Extraordinary Redemptions...27 Priority of Redemption...27 Notice of Redemption...27 Application of 2003 Bond Proceeds...28 The Agency...28 Summary of Certain Provisions of the Resolution...43 Summary of Certain Provisions of the Letter of Credit Agreement...67 State s Right to Require Redemption of Bonds...69 Agreement of the State...70 Legal Investments...70 Security for Deposits...70 Tax Matters...70 Litigation...72 Legal Matters...74 Underwriting...74 Ratings...74 Exhibits...74 Exhibit A - Glossary of Defined Terms...A-1 Exhibit B - Form of Legal Opinion...B-1

4 NEW YORK STATE HOUSING FINANCE AGENCY OFFICIAL STATEMENT Relating to $110,000,000 Related-Tribeca Green Housing Revenue Bonds, $109,200, Series A $800, Series B (Federally Taxable) INTRODUCTORY STATEMENT The purpose of this Official Statement is to set forth information concerning the New York State Housing Finance Agency (the Agency ) in connection with the sale of the Related-Tribeca Green Housing Revenue Bonds, 2003 Series A (the 2003 Series A Bonds ) and 2003 Series B Bonds (the 2003 Series B Bonds, together with the 2003 Series B Bonds, the 2003 Bonds ). Information set forth on the cover page hereof and in the Exhibits hereto is part of this Official Statement. The 2003 Bonds are authorized to be issued pursuant to the New York State Housing Finance Agency Act, Article III of the Private Housing Finance Law of the State of New York, as amended (the Act ), the Related-Tribeca Green Housing Revenue Bond Resolution (the General Resolution ), adopted by the Agency on August 7, 2002, the Related-Tribeca Green Housing Revenue Bond 2003 Series A Resolution, adopted by the Agency on August 7, 2002 (the 2003 Series A Resolution ) and the Related-Tribeca Green Housing Revenue Bond 2003 Series B Resolution, adopted by the Agency on August 7, 2002 (the 2003 Series B Resolution, collectively with the 2003 Series A Resolution, the Series Resolutions ). The General Resolution and Series Resolutions are sometimes collectively referred to as the Resolution. The 2003 Bonds, together with any other bonds hereafter issued under the General Resolution, are sometimes referred to herein as the Bonds. As provided under the General Resolution, the 2003 Bonds and any additional Series of Bonds hereafter issued under the General Resolution will be equally secured thereunder, except with respect to the Bank Repayment Fund, the Purchase Fund, the respective Letter of Credit (or portions thereof) and the respective subaccounts in the Debt Service Fund relating to each such Series of Bonds. (See Summary of Certain Provisions of the Resolution. ) All capitalized terms used in this Official Statement and not otherwise defined herein shall have the same meanings as in the Resolution, and certain capitalized terms used herein are set forth in the Glossary of Defined Terms contained in Exhibit A. The 2003 Bonds are being issued in order to finance a Mortgage Loan (as hereinafter defined) to BPC Green, L.L.C., a Delaware limited liability company (the Mortgagor ). The General Resolution authorizes the Agency to issue additional Series of Bonds thereunder from time to time for the purpose of financing Mortgage Loan increases to the Mortgagor. The 2003 Bonds constitute the Agency s first and second Series of Bonds under the General Resolution. Mortgage lending involves certain inherent risks. The ability of the Mortgagor to make the required Mortgage Repayments is affected by a variety of factors, including, among others, satisfactory timely completion of construction within cost constraints, the achievement and maintenance of a sufficient level of occupancy and the efficient management of operating expenses and collection of rental revenues. Any significant change in such factors could require the Agency to redeem the 2003 Bonds pursuant to the applicable provisions of the Series Resolutions. (See Description of the 2003 Bonds Extraordinary Redemption. )

5 The Project (as described below) has been approved for financing by the New York State Public Authorities Control Board ( PACB ). The PACB was created by the State for the purpose, among others, of approving the financing and construction of projects of the Agency and other State public authorities not deemed by PACB to be in progress on April 1, The PACB has been given authority to approve the financing and construction of any new or reactivated projects proposed by the Agency and other State public authorities. The PACB is authorized to approve proposed new projects only upon its determination that there are commitments sufficient to provide for the permanent financing of the projects. PLAN OF FINANCING The Agency will issue the 2003 Bonds (a) to finance a portion of the costs of construction and equipping of a multi-family housing development to be located in the Borough of Manhattan in the City of New York at the southwest corner of Warren Street and North End Avenue in Battery Park City (the Project ); (b) to pay capitalized interest; and (c) to pay certain legal, accounting, financing and other fees and expenses relating to the issuance of the 2003 Bonds. In connection with the financing of the Project, the Agency will lend to the Mortgagor the proceeds of the 2003 Bonds (the Mortgage Loan ), for the purpose of paying a portion of the costs of the Project and certain other related costs and expenses. The Mortgagor s obligation to repay the Mortgage Loan financed from the proceeds of the 2003 Bonds will be evidenced by a mortgage note (the Mortgage Note ). To secure repayment of the Mortgage Note, the Mortgagor will grant a mortgage lien on a leasehold interest in the real property of the Project to the Agency, subject to permitted encumbrances (the Mortgage ). A default by the Mortgagor under the Mortgage may result in a redemption of all or a portion of the 2003 Bonds or a special mandatory tender of all of the 2003 Bonds. (See Description of the 2003 Bonds Extraordinary Redemption and Special Mandatory Tender. ) The estimated portion of the $110,000,000 Mortgage Loan to be financed in connection with the 2003 Series A Bonds is $109,200,000 and the estimated portion of the Mortgage Loan to be financed in connection with the 2003 Series B Bonds is $800,000. The Mortgage Note will have a term of approximately 33 years. Except as described below, the Mortgage and Mortgage Note will, pursuant to the provisions of the Resolution, be pledged to the Trustee to secure the payment of the Bonds. (See Security for the Bonds. ) In addition, the Mortgage and Mortgage Note will also be pledged, on a subordinated basis, for the benefit of the LOC Bank, pursuant to the Resolution. To further secure the obligations of the Mortgagor to the LOC Bank under the Letter of Credit Agreement, the Mortgagor will cause to be provided letters of credit and/or cash collateral in the aggregate initial amount of $26,500,000 for the benefit of the LOC Bank (collectively, the Collateral Letter of Credit ). (See Security for the Bonds Letter of Credit and Summary of Certain Provisions of the Letter of Credit Agreement Issuance of the Letter of Credit. ) The Collateral Letter of Credit is not pledged to or available for the payment of the principal of, interest on, or purchase price of, the 2003 Bonds. The proceeds of the 2003 Bonds will be initially deposited in the Bond Proceeds Account and the Capitalized Interest Account. (See Application of 2003 Bond Proceeds. ) Upon funding the Mortgage Loan in compliance with the provisions of the Resolution, such portion of the proceeds of the 2003 Bonds on deposit in the Bond Proceeds Account relating to each such Series of 2003 Bonds will be transferred to the Construction Financing Account relating to each such Series and used to fund a portion of the cost of the Project. -2-

6 Pending disbursement thereof, the proceeds of the 2003 Bonds shall be invested pursuant to the General Resolution which provides that the proceeds may be invested in Investment Obligations, or in repurchase agreements, reverse repurchase agreements, interest-bearing notes, time deposits or other similar investment arrangements of a qualifying bank or Bank Holding Company, qualifying surety, insurance company or any other public or private corporation or certain government bond dealers or invested in certain Federally-insured deposits. (See Summary of Certain Provisions of the Resolution Security for Deposits and Investment of Funds. ) As provided under the General Resolution, each of the above entities with which the foregoing investment arrangements are made is required to have a credit rating at the time of the making of any investment therewith equal to or higher than the rating category applicable to the 2003 Bonds. A subsequent change in the credit rating of any such entity would not, in itself, require the Agency to withdraw funds it has previously invested with such an entity. The proceeds of any other Series of Bonds that the Agency may hereafter issue pursuant to the General Resolution may be invested pursuant to similar investment arrangements. Concurrently with, and as a condition to, the issuance of the 2003 Bonds, the Mortgagor will cause to be delivered to the Trustee an irrevocable, direct-pay Letter of Credit issued by the LOC Bank. With respect to all 2003 Bonds, other than 2003 Bonds pledged to the LOC Bank, if any, the Trustee will be entitled under the Letter of Credit to draw up to (a) the principal amount of the 2003 Bonds to enable the Trustee to pay the principal amount of the 2003 Bonds when due by reason of maturity, redemption or acceleration, or to pay the purchase price of 2003 Bonds delivered to it as tender agent (in such capacity, the Tender Agent ) and not remarketed by the remarketing agent (the Remarketing Agent ) pursuant to the Remarketing Agreements (as described below) equal to the principal amount of such 2003 Bonds, plus (b) an amount equal to interest on the 2003 Bonds for up to 34 days (computed at the Maximum Interest Rate hereinafter described) to enable the Trustee to pay interest on the 2003 Bonds when due, or as part of the purchase price of 2003 Bonds. (See Security for the Bonds Letter of Credit. ) Pursuant to the Remarketing Agreements, by and among the Mortgagor, UBS Financial Services Inc. and the Tender Agent (the Remarketing Agreements ), UBS Financial Services Inc. has been appointed Remarketing Agent for the 2003 Series A Bonds and the 2003 Series B Bonds. Additionally, the LOC Bank has agreed to issue for the account of the Mortgagor a letter of credit, originally in the amount of $3,300,000, in favor of Battery Park City Authority (the Design/Construction Period LOC ), to secure the obligations of the Mortgagor under the Ground Lease. The reimbursement obligations of the Mortgagor with respect to the Design/Construction Period LOC will be secured by the Mortgage. If the cost of the Project is less than the amount originally anticipated to be paid from proceeds of the 2003 Bonds ($110,000,000), an allocable portion of the 2003 Series A Bonds and/or 2003 Series B, as the case may be, Bonds may be redeemed (see Description of the 2003 Bonds Extraordinary Redemption and Redemption Provisions Relating to Optional, Principal Reserve Fund and Extraordinary Redemptions ). THE PROJECT Following is a brief description of the Project and the Mortgagor. -3-

7 The Project The 2003 Bonds are being issued to finance the Mortgage Loan to the Mortgagor for the purpose of paying a portion of the costs of constructing and equipping a multi-family rental housing development to be located at in the Borough of Manhattan in the City of New York. The Project is expected to consist of a total of units ( studio, one-bedroom, two-bedroom and threebedroom units, including 1 two-bedroom unit to be occupied by the building superintendent and 1 onebedroom unit to be used as a leasing office). The Project will consist of a 24-story building which will also contain approximately 6,000 square feet of ground level retain space, a laundry room and a -car parking garage. Approximately five percent (5%) of the total units ( units) are expected to be occupied by households whose gross income will not exceed one hundred fifty percent (150%) of the area median income for New York City, adjusted for family size. The Mortgagor has executed a ground lease with the Battery Park City Authority, a public benefit corporation of the State of New York (the Ground Lease ), pursuant to which the Mortgagor has a leasehold interest in the real property upon which the Project is being constructed ( Land ). The Ground Lease provides that, subject to the terms of the Ground Lease, the Mortgagor shall be entitled to possession of the Land until,. The Ground Lease contains several covenants with which the Mortgagor must comply. In the event that the Mortgagor breaches any of the covenants in the Ground Lease, the LOC Bank may declare a default under the Letter of Credit Agreement and direct that the Trustee either immediately redeem all or a portion of the 2003 Bonds or cause the special mandatory tender of all of the 2003 Bonds. (See Description of the 2003 Bonds Extraordinary Redemption and Special Mandatory Tender. ) Although the Land is exempt from New York real property taxes, under the terms of the Ground Lease, the Mortgagor will make payments in lieu of taxes ( PILOT ) to the Battery Park City Authority in amounts equal to the taxes that would have been payable if the Project were subject to taxation and qualified for a 20-year phased exemption from real estate taxes in accordance with Section 421-a of the Real Property Tax Law of the State of New York. As a condition precedent to its receiving the PILOT benefits under the Ground Lease, the Mortgagor has agreed in the Ground Lease that all units in the Project be subject to rent regulation for 20 years in accordance with the New York City Rent Stabilization Code. In addition, the Mortgagor expects to receive an allocation of low-income housing tax credits for the Project. The estimated Mortgage Loan amount to be financed is $110,000,000. The Mortgage Loan for the Project will have a term of approximately thirty-three (33) years. The building architect for the Project is Schuman Lichtenstein Claman Efron Architects, New York, New York and the design architect for the Project is Cesar Pelli & Associates Architects, New York, New York. The construction manager for the construction of the Project is Turner Construction Company. -4-

8 Although the Land is exempt from New York real property taxes, under the terms of the Ground Lease, the Mortgagor will make payments in lieu of taxes ( PILOT ) to the Battery Park City Authority in amounts equal to the taxes that would have been payable if the Project were subject to taxation and qualified for a 20-year phased exemption from real estate taxes in accordance with Section 421-a of the Real Property Tax Law of the State of New York. As a condition precedent to its receiving the PILOT benefits under the Ground Lease, the Mortgagor has agreed in the Ground Lease that all units in the Project be subject to rent regulation for 20 years in accordance with the New York City Rent Stabilization Code. In addition, the Mortgagor expects to receive an allocation of low-income housing tax credits for the Project. Due to the inherent uncertainty of future events and conditions, including without limitation general interest rate levels, no assurance can be given that revenues generated by the Project will be sufficient to pay debt service on the Mortgage Loan, operating expenses of the Project, Letter of Credit fees, Remarketing Agent fees, and fees owed to the Agency. The ability of the Mortgagor to generate sufficient revenues will be affected by a variety of factors including, but not limited to, the completion of the Project, the achievement and maintenance of a sufficient level of occupancy, the level of rents prevailing in the market, the ability to achieve increases in rent to cover debt service and operating expenses, the level of operating expenses, Project management, adverse changes in applicable laws and regulations, general economic conditions and other factors in the surrounding metropolitan area of the Project. Adverse changes may occur from time to time with respect to any of these factors which may have a negative impact on the occupancy level and rental income of the Project. (See Description of the 2003 Bonds Extraordinary Redemption and Special Mandatory Tender. ) The Mortgagor [TO COME] General SECURITY FOR THE BONDS The Bonds will be special revenue obligations of the Agency, payable by the Agency solely from and secured by a pledge of monies and investments held in all funds and accounts (except the Bank Repayment Fund, the Purchase Fund, the respective Letters of Credit (or portions thereof) and the respective subaccounts in the Debt Service Fund relating to each Series of Bonds) established by the Resolution, including the Bond Proceeds Account, Construction Financing Account, Capitalized Interest Account, Revenue Fund, Debt Service Fund, Debt Service Reserve Fund and Principal Reserve Fund, subject to the application thereof to the purposes and on the conditions authorized and permitted by the Resolution. Each Series of Bonds is also payable from the proceeds of the Letter of Credit (or portions thereof) issued with respect to such Series. The Bonds will also be payable from and secured by a pledge of all Mortgage Repayments and Principal Reserve Payments received pursuant to the Mortgage Loan and by a pledge of the Mortgage and the Mortgage Note. The Resolution creates a continuing pledge and lien to secure the full and final payment of the principal and Redemption Price of and interest and Sinking Fund Payments on the Bonds. The Mortgage, the Mortgage Note, Mortgage Repayments and Principal Reserve Payments with respect to the Mortgage Loan and all funds and accounts (except the Bank Repayment Fund, the Purchase Fund, the respective Letters of Credit (or portions thereof) and the respective subaccounts in the Debt Service Fund relating to each Series of Bonds) established under the Resolution, including the investments thereof and the -5-

9 proceeds of such investments, subject to the application thereof to the purposes authorized and permitted by the Resolution, are so pledged and are not available for the purpose of securing any other obligations of the Agency. The Agency has no taxing power. The 2003 Bonds are not a debt of the State of New York. The State is not liable on such Bonds and the State is under no legal or moral obligation to provide monies to make up any deficiency in any of the funds or accounts established by the Resolution. Letter of Credit The Letter of Credit initially issued with respect to the 2003 Bonds is an irrevocable obligation of Landesbank Hessen-Thüringen Girozentrale, the LOC Bank. With respect to all 2003 Bonds, other than 2003 Bonds pledged to the LOC Bank, if any, as described below, the Letter of Credit will entitle the Trustee to draw up to the principal amount of the 2003 Bonds to pay the principal thereof when due by reason of maturity, redemption or acceleration, and up to 34 days interest thereon (computed at the Maximum Interest Rate) to pay the interest thereon when due by reason of maturity, redemption or acceleration. In addition, the Trustee will be entitled to draw on the Letter of Credit up to the principal amount of the 2003 Bonds and interest thereon at the Maximum Interest Rate for up to 34 days in order to pay the Purchase Price of the 2003 Bonds tendered to it as Tender Agent and not remarketed pursuant to the applicable Remarketing Agreement. To the extent of draws made under the Letter of Credit for the purpose of paying the principal amount of the 2003 Bonds and interest thereon, whether at maturity, upon redemption or acceleration, the obligations of the LOC Bank under the Letter of Credit will be correspondingly reduced but with respect to draws under the Letter of Credit to pay interest on the 2003 Bonds not coming due by reason of maturity, redemption or acceleration, the interest component of the Letter of Credit will be automatically reinstated. With respect to draws under the Letter of Credit to pay the Purchase Price of tendered or deemed tendered 2003 Bonds, the Letter of Credit will be correspondingly reduced and will be reinstated to the extent such 2003 Bonds are subsequently remarketed and the LOC Bank is reimbursed for such draw. Outstanding 2003 Bonds purchased by the Tender Agent with funds provided by such draw will be pledged to the LOC Bank ( Pledged Bonds ). In computing the amount to be drawn under the Letter of Credit on account of the payment of the principal of or interest on the 2003 Bonds, the Trustee shall exclude any such amounts in respect of any 2003 Bonds that are Pledged Bonds on the date such payment is due, and amounts drawn by the Trustee under the Letter of Credit shall not be applied to the payment of the principal of or interest on any 2003 Bonds that are Pledged Bonds on the date such payment is due. To receive payment under the Letter of Credit, the Trustee must make a presentation of certain payment documents under the Letter of Credit on or prior to the expiration date of the Letter of Credit at the appropriate office of the LOC Bank. If on the expiration date of the Letter of Credit, the LOC Bank office is closed by reason of an act of God, riot, civil commotion, insurrection, war or any other cause beyond its control, or by reason of a strike or lockout, then timely presentation of such payment documents under the Letter of Credit may be made at such appropriate office on the day on which such office reopens, or on any of the next three succeeding Business Days. The Letter of Credit issued by Landesbank Hessen-Thüringen Girozentrale will expire on December 18, 2008 and unless earlier terminated as provided therein or extended or replaced by a substitute Letter of Credit or Alternate Security, the Resolution provides that the 2003 Bonds will be -6-

10 called for extraordinary mandatory tender prior to the expiration of such Letter of Credit and purchased with the proceeds of a draw thereon. (See Description of the 2003 Bonds Extraordinary Mandatory Tender. ) Pursuant to the Letter of Credit Agreement, the Mortgagor may, upon satisfaction of certain conditions described therein, request two one-year extensions of the expiration date of the Letter of Credit. If the LOC Bank notifies the Trustee that an event of default by the Mortgagor has occurred and is continuing under the Letter of Credit Agreement and directs the Trustee to redeem all or a portion of the 2003 Bonds or to purchase all of the 2003 Bonds, the 2003 Bonds shall be subject to mandatory redemption in whole or in part or to mandatory tender in whole. (See Description of the 2003 Bonds Extraordinary Redemption and Special Mandatory Tender. ) Replacement or Substitution of Letter of Credit The existing Letter of Credit issued with respect to the 2003 Bonds may be replaced or substituted pursuant to the Resolution by another Letter of Credit issued with respect to the 2003 Bonds in favor of the Trustee under the following circumstances: (1) The Mortgagor may, upon giving at least fifteen (15) days Notice if the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, are bearing interest at the Variable Interest Rate or upon giving at least thirty (30), but not more than ninety (90), days Notice if the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, are bearing interest at the Adjustable Interest Rate or both Series are bearing interest at the Fixed Interest Rate (a Credit Substitution Notice ) to the LOC Bank, the Trustee, the Tender Agent, the Agency and the Remarketing Agent, replace such Letter of Credit with another Letter of Credit on any Business Day occurring not later than forty-five (45) days prior to the expiration of the Letter of Credit then in effect (a Credit Substitution Date ), subject to the written approval of the Agency; provided that if, as of such Credit Substitution Date, the Adjustable Interest Rate Term will not be longer than three years or the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, will bear interest at a Variable Interest Rate, such Credit Substitution Notice must be accompanied by, and will be incomplete without, (i) a letter from each Rating Service then rating the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, confirming that as of such Credit Substitution Date the short-term rating assigned by such Rating Service to the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, will be in the highest short-term rating category of such Rating Service or stating that such rating will be withdrawn, and (ii) in case all such ratings are withdrawn (and not downgraded), a letter from at least one rating service not then rating the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, (a Substitute Rating Service ) assigning to the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, as of such Credit Substitution Date, a rating in the highest short-term rating category of such Substitute Rating Service; and provided, further, that if, as of such Credit Substitution Date, the Adjustable Interest Rate Term will be longer than three years or the Fixed Interest Rate is in effect, such Credit Substitution Date must also be an Adjustable Interest Rate Adjustment Date (if the Adjustable Interest Rate is in effect) and such Credit Substitution Notice must be accompanied by, and will be incomplete without, (i) a letter from each Rating Service then rating the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, confirming that as of such Credit Substitution Date the long-term rating assigned by such Rating Service to the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, will be in one of the three highest long-term rating categories of such Rating Service or stating that such rating will be withdrawn, and (ii) in case such ratings are withdrawn (and not downgraded), a letter from at least one Substitute Rating Service assigning to the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, as of such Credit Substitution Date, a rating in one of the three highest long-term rating categories of such Substitute Rating Service. -7-

11 (2) The Agency may require, upon notice to the Trustee, the LOC Bank, the Tender Agent, the Remarketing Agent and the Mortgagor, that the Mortgagor give a Credit Substitution Notice for replacement of the Letter of Credit with another Letter of Credit at any time (a Credit Substitution Date ) that (i) during an Adjustable Interest Rate Term not longer than three years, or while the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, are bearing interest at a Variable Interest Rate, 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, are not rated in the highest short-term rating category of each Rating Service then rating such Bonds, (ii) following the Conversion Date or during an Adjustable Interest Rate Term longer than three years, the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, are not rated in one of the three highest longterm rating categories of each Rating Service then rating such Bonds, (iii) the LOC Bank has wrongfully dishonored a draw on the Letter of Credit, or (iv) the LOC Bank has failed to reinstate the Letter of Credit and the Mortgagor is not in default under the Mortgage Note; provided, however, that if, as of such Credit Substitution Date, the Adjustable Interest Rate Term will not be longer than three years or the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, will bear interest at a Variable Interest Rate, the replacements referred to above may occur only if either (i) the short-term rating assigned by each Rating Service then rating the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, after the replacement will be in the highest short-term rating category of such Rating Service, or (ii) in case all such ratings are withdrawn (and not downgraded), a Substitute Rating Service assigns to the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, as of such Credit Substitution Date, a rating in the highest short-term rating category of such Substitute Rating Service; and provided, further, that if, as of such Credit Substitution Date, the Adjustable Interest Rate Term will be longer than three years or the Fixed Interest Rate is in effect, the replacements referred to above may occur only if such Credit Substitution Date is also an Adjustable Interest Rate Adjustment Date (if the Adjustable Interest Rate is in effect) and either (i) the long-term rating assigned by each Rating Service then rating the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, after the replacement will be in one of the three highest long-term categories of such Rating Service, or (ii) in case all such ratings are withdrawn (and not downgraded), at least one Substitute Rating Service assigns to the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, as of such Credit Substitution Date, a rating in one of the three highest long-term rating categories of such Substitute Rating Service. The Credit Substitution Notices referred to in paragraphs (1) and (2) above may not be given within ninety (90) days preceding the Conversion Date. In addition to the foregoing requirements, no substitution of one Letter of Credit for another Letter of Credit shall take effect unless the opinions of counsel and other document described in the following sentences have been delivered and unless the Agency shall consent to such substitution or replacement in writing. Upon giving a Credit Substitution Notice and on the Credit Substitution Date, the Mortgagor shall deliver to the Agency an opinion of Bond Counsel, which opinion shall be in form and substance satisfactory to the Agency and the Trustee, to the effect that the substitution of a new Letter of Credit for the existing Letter of Credit will not adversely affect the exclusion of interest on the 2003 Series A Bonds from gross income for Federal income tax purposes. In addition, concurrently with the Credit Substitution Notice, the Mortgagor shall deliver to the Agency a binding commitment of the substitute LOC Bank to issue the substitute Letter of Credit. Except in connection with a replacement or substitution of the existing Letter of Credit issued with respect to the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, in accordance with the Resolution, no application shall be made to a Rating Service for the assignment of a rating to the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, unless the Agency shall so direct or shall consent thereto in writing. -8-

12 Upon receipt of a Credit Substitution Notice, the Trustee shall, prior to the close of business on the Business Day next succeeding the date of receipt of such Credit Substitution Notice, give Notice to the Holders of the 2003 Series A Bonds and/or the 2003 Series B Bonds, as the case may be, of the Credit Substitution Date and that on such Credit Substitution Date (unless the 2003 Series A Bonds and 2003 Series B Bonds will bear interest at the Fixed Interest Rate on such Credit Substitution Date) all 2003 Series A Bonds and/or 2003 Series B Bonds, as the case may be, shall be subject to mandatory tender for purchase at the Purchase Price. If the proposed substitute Letter of Credit or any of the opinions described above are not delivered when due or any other condition to such substitution is not satisfied, (i) the substitution of a new Letter of Credit for the existing Letter of Credit shall not take place, (ii) all 2003 Series A Bonds and/or 2003 Series B Bonds, as the case may be, shall be deemed to have been tendered for purchase on the date that was to have been the Credit Substitution Date and (iii) the Trustee shall give Notice thereof to all Holders of all 2003 Series A Bonds and/or 2003 Series B Bonds, as the case may be. (See Description of the 2003 Bonds Mandatory Tender for Purchase of 2003 Bonds on Change Dates on or Prior to the Conversion Date. ) Debt Service Reserve Fund The Resolution provides for the establishment of a Debt Service Reserve Fund and provides for a Debt Service Reserve Fund Requirement with respect to the 2003 Bonds. With respect to the 2003 Bonds, the Debt Service Reserve Fund Requirement is zero. Principal Reserve Fund The Mortgagor will make periodic payments into the Principal Reserve Fund in accordance with the Mortgage Note. The Resolution establishes a Principal Reserve Amount, which is defined as the sum of all Series Principal Reserve Amounts established pursuant to the Series Resolutions less the amount (initially $ ) on deposit in any collateral or sinking fund held by the Trustee or certified by the LOC Bank or the Mortgagor as being held by the LOC Bank or any other bank as security for, or to pay, the obligations of the Mortgagor. The Series Principal Reserve Amount for the 2003 Series A Bonds is equal to (i) twenty percent (20%) of the initial principal amount of the 2003 Series A Bonds ($21,580,000) or such other amount as shall be specified in writing to the Trustee by the Agency and the Mortgagor with the consent of the LOC Bank, or (ii) $0 on and after the Conversion Date; provided that such other amount shall only constitute the Series Principal Reserve Amount if there shall also be filed with the Trustee and the Agency an opinion of Bond Counsel to the effect that such change in the Series Principal Reserve Amount will not adversely affect the exclusion of interest on the 2003 Series A Bonds from gross income for Federal income tax purposes. The Series Principal Reserve Amount for the 2003 Series B Bonds is $0. The Principal Reserve Amount calculated as described above shall initially be $21,580,000. Pursuant to the Series Resolutions, the monies in the Principal Reserve Fund shall be applied as follows: (1) While the 2003 Series A Bonds and/or 2003 Series B Bonds bear interest at the Variable Interest Rate or the Adjustable Interest Rate, on September 15 of each year and on a Special Mandatory Tender Date, all monies in the Principal Reserve Fund in excess of the Principal Reserve Amount (rounded up to the nearest integral multiple of $100,000) shall be transferred by the Trustee to the Revenue Fund to be applied to reimburse the LOC Bank for amounts drawn on the Letter of Credit to effect the redemption of 2003 Series A Bonds and/or 2003 Series B Bonds (or, if the LOC Bank fails to honor a draw on the Letter of Credit, to be applied to pay the redemption price of 2003 Series A Bonds -9-

13 and/or 2003 Series B Bonds) on the next succeeding November 1 or on such Special Mandatory Tender Date, as the case may be, pursuant to the General Resolution and the Series Resolutions for such 2003 Series A Bonds and/or 2003 Series B Bonds (on such dates, the Principal Reserve Fund shall be valued pursuant to the General Resolution). (2) On the Conversion Date, all monies in the Principal Reserve Fund in excess of the Principal Reserve Amount shall be transferred by the Trustee to the Revenue Fund to be applied to reimburse the LOC Bank for amounts drawn on the Letter of Credit to effect the redemption of 2003 Series A Bonds and/or 2003 Series B Bonds (or, if the LOC Bank fails to honor a draw on the Letter of Credit, to be applied to pay the redemption price of 2003 Series A Bonds and/or 2003 Series B Bonds) on the Conversion Date pursuant to the General Resolution and the Series Resolutions for such 2003 Series A Bonds and/or 2003 Series B Bonds. (3) During a Restriction Period, amounts in the Principal Reserve Fund may be applied to redeem 2003 Bonds held by the Restriction Period Pledgee. Notwithstanding the foregoing, upon the written direction of the Mortgagor or upon the written direction of the LOC Bank (with the written consent of the Mortgagor so long as the Mortgagor is not in default under the Letter of Credit Agreement), the Trustee shall transfer the amounts so directed from the Principal Reserve Fund to the Revenue Fund to be applied to reimburse the LOC Bank for amounts drawn on the Letter of Credit to effect the redemption of 2003 Series A Bonds and/or 2003 Series B Bonds (or, if the LOC Bank fails to honor a draw on the Letter of Credit, to be applied to pay the redemption price of 2003 Series A Bonds and/or 2003 Series B Bonds) on the next succeeding November 1 or on any Change Date, or at the direction of the LOC Bank following an event of default under the Letter of Credit Agreement pursuant to the General Resolution and the Series Resolutions for such 2003 Series A Bonds and/or 2003 Series B Bonds. All amounts so transferred from the Principal Reserve Fund to the Revenue Fund to effect the redemption of the 2003 Series A Bonds and/or 2003 Series B Bonds shall be applied such that all Bonds on which the interest is included in gross income for Federal income tax purposes shall be redeemed before all Bonds on which the interest is excluded from gross income for Federal income tax purposes. See Description of the 2003 Bonds Principal Reserve Fund Redemption and Summary of Certain Provisions of the Resolution Principal Reserve Fund. Additional Bonds Additional Series of Bonds on a parity with the 2003 Bonds (except with respect to the Bank Repayment Fund, the Purchase Fund, the respective Letters of Credit (or portions thereof) and the respective subaccounts in the Debt Service Fund relating to each additional Series of Bonds) may be issued under the General Resolution. (See Summary of Certain Provisions of the Resolution Issuance of Additional Obligations. ) LETTER OF CREDIT BANK The letter of credit provider is the New York Branch of Landesbank Hessen-Thüringen Girozentrale ( Helaba ). Helaba took its present name on July 1, 1992 upon the effectiveness of the Treaty on the Formation of a Joint Savings Banks Organization (the State Treaty ) between the federal states of Hesse and Thuringia. The former Hessische Landesbank was formed in 1953 by the merger of Hessische Landesbank Darmstadt (founded 1940), Nassauische Landesbank Wiesbaden (founded 1840) and Landeskreditkasse zu Kassel (founded 1832). -10-