GREATER NEW HAVEN COMMUNITY LOAN FUND, INC. FINANCIAL STATEMENTS

Transcription

1 FINANCIAL STATEMENTS

2 FINANCIAL STATEMENTS TABLE OF CONTENTS ITEM PAGE Independent Auditor s Report Statements of Financial Position Statements of Activities Statements of Cash Flows Notes to Financial Statements

3 New Haven, Connecticut March 28, 2007 JOHN J. SCHMITZ Certified Public Accountant I II PARK STREET, SUITE I J 2 NORTH MAIN STREET NEW HAVEN, CT CHESTER, CT (203) (860) FAX (203) INDEPENDENT AUDITOR'S REPORT Board of Directors Greater New Haven Community Loan Fund, Inc. New Haven, Connecticut I have audited the accompanying Statement of Financial Position of the Greater New Haven Community Loan Fund, Inc. as of December 31,2006 and 2005, and the related Statements of Activities and Cash Flows for the years then ended. These financial statements are the responsibility of the Fund's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards accepted in the United States of America. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Greater New Haven Community Loan Fund, Inc. at December 31,2006 and 2005, and the changes in its net assets and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

4 STATEMENTS OF FINANCIAL POSITION AND 2005 ASSETS Cash and Cash Equivalents $ 2,198,606 $ 1,038,734 Accounts Receivable 81,516 97,200 Grants Receivable 89,050 75,000 Interest Receivable 28,775 16,436 Notes Receivable-Community Pool Less: Loan Loss Reserve of $82,713 and $81,713 (Notes 2 & 3) 2,005,311 3,355,471 Notes Receivable-Bank Pool Less: Loan Loss Reserve of $40,058 and $37,046 (Notes 4 & 5) 2,978,174 2,050,725 Marketable Securities 1, Prepaid Expenses 16,022 12,631 Property and Equipment-Net of Accumulated Depreciation and Amortization of $27,327 and $27,446 9,396 15,135 TOTAL ASSETS $ 7,407,869 $ 6,662,219 LIABILITIES AND NET ASSETS LIABILITIES: Accounts Payable $ 12,736 $ 15,667 Accrued Expenses 954 1,158 Deposit Held in Custody for Others 5,721 6,616 Note Payable-Line of Credit (Note 6) 192, ,488 Notes Payable-Community Pool Lenders (Note 7) 2,597,425 2,596,425 Notes Payable-Bank Pool (Note 8) 3,018,156 2,087,770 Notes Payable-Connecticut Housing Finance Authority (Note 9) 75,000 75,000 Citizens Bank/Greater New Haven Community Loan Fund Partnership (Note 10) -Deferred Loan Fund 100, ,000 -Series 1 Fund 300, ,000 -Capital Certificate 100, ,000 Total Liabilities 6,402,457 5,720,124 NET ASSETS: Unrestricted: For Current Operations 522, ,312 Designated for Lending 70,736 57,320 Total Unrestricted 593, ,632 Temporarily Restricted 49,550 10,000 Permanently Restricted 362, ,463 Total Net Assets 1,005, ,095 TOTAL LIABILITIES AND NET ASSETS $ 7,407,869 $ 6,662,219 The accompanying notes are an integral part of the financial statements -2-

5 STATEMENTS OF ACTIVITIES YEARS ENDED AND 2005 December 31, 2006 December 31 Temporarily Permanently 2005 Unrestricted Restricted Restricted Total Combined REVENUES: Contributions and Grants -Foundations $ 31,300 $ $ $ 31,300 $ 101,000 -Religious Organizations 4,575 4,575 7,750 -Banks 60,000 60,000 53,500 -Others 87,045 69, ,595 98,610 Total Contributions and Grants 182,920 69, , ,860 Interest on Community Pool Loans 131, , ,057 Interest on Bank Pool Loans 149, ,039 52,552 Loan Processing Fees 276, , ,298 Interest on Cash Balances 58,149 58,149 41,671 Consulting Fees - - 3,800 Special Event 21,107 21,107 21,278 Net Assets Released from Restrictions 30,000 ( 30,000 ) - - Total Revenues 848,682 ( 39,550 ) 0 888, ,516 EXPENDITURES: Salaries 413, , ,137 Payroll Taxes 31,247 31,247 30,290 Employee Health and Retirement Benefits 55,534 55,534 75,884 Total Salaries & Related Expenses 500, , ,311 Advertising 1,326 1,326 3,974 Bank Charges 1,958 1,958 2,103 Consultants ,631 Contributions Data Processing 1,133 1,133 1,462 Depreciation and Amortization 5,738 5,738 5,470 Development 7,634 7,634 5,039 Dues and Subscriptions 2,075 2,075 1,713 Equipment Repairs and Maintenance 3,630 3,630 2,415 Insurance 11,459 11,459 8,993 Interest-Community Pool Lenders 103, ,070 88,559 Interest and Fees-Bank Pool 109, ,876 20,705 Moving - - 1,591 Occupancy 29,519 29,519 25,440 Office Supplies and Expenses 11,163 11,163 10,673 Postage 3,288 3,288 3,295 Printing and Copying 5,110 5,110 9,907 Professional Fees 9,788 9,788 7,443 Provision for Loan Loss Reserve 4,012 4,012 8,375 Taxes-Property 1,015 1, Telephone 4,287 4,287 3,884 Travel, Conferences & Staff Training 8,237 8,237 5,937 Total Expenditures 824, , ,927 CHANGE IN NET ASSETS 23,767 39, ,317 28,589 NET ASSETS-Beginning of Year 569,632 10, , , ,506 NET ASSETS-End of Year $ 593,399 $ 49,550 $ 362,463 $ 1,005,412 $ 942,095 The accompanying notes are an integral part of the financial statements -3-

6 STATEMENTS OF CASH FLOWS YEARS ENDED AND CASH FLOWS FROM OPERATING ACTIVITIES: Change in Net Assets $ 63,317 $ 28,589 Adjustments to Reconcile Change in Net Assets to Net Cash Used by Operating Activities: Depreciation and Amortization 5,738 5,470 Provision for Loan Loss Reserve 4,012 8,375 Contribution of borrowed funds - (5,000) Gift of securities - (500) Unrealized Gain on Investment (131) (387) Proceeds from Repayments of Funds Loaned: Community Pool 2,062,651 1,454,439 Bank Pool 744, ,958 Proceeds from Funds Borrowed: Community Pool 31, ,000 Bank Pool 1,675,436 1,507,770 Connecticut Housing Finance Authority - 75,000 Citizens Bank/Greater New Haven Community Loan Fund Partnership - 150,000 Funds Loaned: Community Pool (713,491) (2,631,935) Bank Pool (1,675,438) (1,507,770) Borrowed Funds Repaid: Line of Credit (245,023) (20,169) Community Pool (30,000) (25,000) Bank Pool (745,050) (453,724) (Increase) Decrease in Accounts Receivable 15,684 (28,379) (Increase) Decrease in Grants Receivable (14,050) 25,000 (Increase) Decrease in Interest Receivable (12,339) 9,357 (Increase) Decrease in Prepaid Expenses (3,392) (2,111) Increase (Decrease) in Accounts Payable (2,931) 14,258 Increase (Decrease) in Accrued Expenses (204) 572 Increase (Decrease) in Deposits Held in Custody for Others (895) (16,166) Net Cash (Used) by Operating Activities: 1,159,871 20,647 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Fixed Assets - (12,381) Net Cash Used by Investing Activities 0 (12,381) (DECREASE) IN CASH AND CASH EQUIVALENTS 1,159,871 8,266 CASH AND CASH EQUIVALENTS-Beginning of Year 1,038,734 1,030,468 CASH AND CASH EQUIVALENTS-End of Year $ 2,198,605 $ 1,038,734 Supplementary Disclosure: Cash Paid for Interest $ 212,764 $ 108,796 The accompanying notes are an integral part of the financial statements. -4-

7 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - The Greater New Haven Community Loan Fund, Inc. (Loan Fund) is a private non-stock, not-for-profit corporation created to provide resources for affordable housing and community development in the region. The Loan Fund serves as a bridge between socially concerned investors and community organizations in need of capital and technical assistance. BASIS OF ACCOUNTING - The financial statements of the Loan Fund have been prepared on the Accrual Basis of Accounting and, accordingly, reflect all significant receivables, payables, and other liabilities. BASIS OF PRESENTATION - The Greater New Haven Community Loan Fund, Inc. follows the recommendations of the Financial Accounting Standards Board in its Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-for-Profit Organizations. Under SFAS No. 117, the Loan Fund is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. The financial statements include certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Loan Fund s audited financial statements for the year ended December 31, 2005, from which the summarized information was derived. CASH AND CASH EQUIVALENTS - Cash and cash equivalents include all checking accounts and interest bearing cash from highly liquid investments with maturity dates of less than three months. CONTRIBUTIONS - All contributions are considered to be available for the general purposes of the Loan Fund unless specifically restricted by the donor. The Loan Fund reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished by expenditure of these restricted funds, temporarily restricted net assets are transferred to offset expenditures of funds in the unrestricted fund and are reported in the Statement of Activities as net assets released from restrictions. INCOME TAX STATUS - The Fund is exempt from income tax under section 501(c)(3) of the Internal Revenue Code, and contributions to it are tax deductible within the limitation prescribed by the Code. -5-

8 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) DONATED SERVICES - No amounts have been reflected in these statements for donated services inasmuch as no objective bases are available to measure their value. PROPERTY AND EQUIPMENT - Property, equipment consisting of office furniture, equipment, and leasehold improvements are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets - 5 years. Total depreciation and amortization expense for the year ended December 31, 2006 amounted to $5,738. MARKETABLE SECURITIES Marketable securities are reported at fair value in accordance with SFAS No. 124, Accounting for Certain Investments Held by Not-for-Profit Organizations. Fair value is determined by using quoted market price. ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE 2 - NOTES RECEIVABLE - COMMUNITY POOL Community Pool notes receivable outstanding at December 31, 2006 totaled $2,088,024. These notes, eighteen in total, range in amounts from $1,000 to $415,000. Interest on these notes varies from 5.25 % to 7.25% and principal repayments are due over the next ten years. The Loan Fund takes a position as a secured lender, or has obtained either the personal guarantees from representatives of the borrowers or guarantees from other sources on all notes. A recapitulation of Community Pool Notes Receivable for the year 2006 is as follows: Notes Receivable - January 1, 2006 $ 3, Funds Loaned Repayments Received Notes Receivable - December 31, 2006 $ In addition to the above, the Fund has committed to an additional $985,000 in Community Pool Loans at December 31,

9 NOTE 3 - LOAN LOSS RESERVE COMMUNITY POOL The Loan Fund maintains a loan loss reserve in an amount not less than 3% of the Community Pool Loans outstanding at year-end. At December 31, 2007, this loan loss reserve amounted to $82,712 or, 4.37% of these notes. Loans made from funds borrowed under the Bank of America Line of Credit which are included in Community Pool Loans are non recourse to the Loan Fund and therefore not included in the calculation of the amount required for Loan Loss Reserve. A recapitulation of changes in the Loan Loss Reserve for the Community Pool Loans for the year ended December 31, 2006 is as follows: Balance - January 1, 2006 $ Additional Provision Loan Write-offs - Balance-December 31, 2006 $ As of December 31, 2006, one Community Pool loan in the amount of $90,000 was past due and in non-accrual status. Two additional loans totaling $313,341 were also in non-accrual status. NOTE 4 - NOTES RECEIVABLE - BANK POOL The Loan Fund has an agreement with nine banks, operating in the greater New Haven Area, to create an Affordable Housing Bank Pool (AHBP) as a financial resource for low and moderate-income housing. These banks have earmarked a total of $6,850,000 for this purpose. This agreement is scheduled to expire on June 30, The expiration of this agreement does not affect the lender s obligation to fund any loans committed to prior to the expiration date. These funds are made available to the Loan Fund as borrowers applications are approved and will carry Federal Home Loan Bank rates for a loan of the same terms. The Loan Fund will charge up to an additional 250 basis points to qualified borrowers. The banks have reserved the right to disapprove applications for use of these funds, and have agreed to absorb any losses due to defaults by the borrowers. Security received from the borrowers of these funds is assigned to the banks at closing. Borrowings by the Loan Fund from the AHBP are repaid to the banks as payments are received from the end borrowers. Any loans outstanding at the termination of the Affordable Housing Bank Pool agreement will continue to be honored by the banks and the Loan Fund as governed by the participation agreement. -7-

10 NOTE 4 - NOTES RECEIVABLE - BANK POOL (continued) A recapitulation of funds loaned, to approved borrowers, through the AHBP of the year ended December 31, 2006 is as follows: Notes Receivable- January 1, 2006 $ Funds Loaned Repayments Received Notes Receivable - December 31, 2006 $ The balance outstanding at December 31, 2006 represents four loans with maturities of less than one year. In addition to the above, $800,000 has been committed as an additional loan from the AHBP at December 31, NOTE 5 LOAN LOSS RESERVE BANK POOL The Affordable Housing Bank Pool agreements require the Loan Fund to work to build a loan loss reserve for AHBP loans through a combination of fees on AHBP loans, grant requests and, budgeting. As of December 31, 2006, this reserve amounted to $40,058. A recapitulation of the Loan Loss Reserve for Bank Pool loans for the year ended December 31, 2006 is as follows: Balance January 1, 2006 $ Additional Provision Loan Write-Off 0 Balance December 31, 2006 $ NOTE 6 NOTE PAYABLE LINE OF CREDIT Bank of America, under a Master Loan Agreement dated December 23, 2003, has made available to the Loan Fund a line of credit in the amount of $1,000,000. This line of credit is available to the Loan Fund to re-loan in support of low and moderate income housing purposes, and will carry the Bank of America Cost of Funds rate, rounded up to the nearest quarter of a percent. The Loan Fund will charge up to an additional 250 basis points to qualified borrowers. This line of credit will expire on June 30, As of December 31, 2006, $192,465, with an interest rate of 2.50% remained outstanding on this line of credit. These funds have been reloaned to an approved borrower at 5.25% with a maturity date of September 30, 2007 and are included in Notes Receivable Community Pool in the Statement of Financial Position. -8-

11 NOTE 7 - NOTES PAYABLE - COMMUNITY POOL LENDERS This balance at December 31, 2006, represents 34 notes outstanding with individual, religious organizations, banks and other organizations. These notes carry interest at 0 to 4% with an average of 3.04% and are payable over a period of one to ten years. Required principal repayments are as follows: Years ended December 31: 2007 $ Thereafter Total $ A recap of borrowing activity for the year 2006 is as follows: Notes Payable - January 1, 2006 $ New Borrowings Funds Repaid Notes Payable - December 31, 2006 $ NOTE 8 - NOTES PAYABLE - BANK POOL Borrowings and repayments from the Affordable Housing Bank Pool Banks by the Loan Fund for the year ended December 31, 2006 were as follows: Amounts Outstanding January 1, 2006 $ Funds Borrowed Funds Repaid Amount Outstanding - December 31, 2006 $ The Bank Pool interest rates on this balance at December 31, 2006 range from 1.75% to 5.5% per annum. The Loan Fund paid a total of $ in interest cost on borrowing from the Bank Pool during the year ended December 31,

12 NOTE 9 CONNECTICUT HOUSING FINANCE AUTHORITY The Connecticut Housing Finance Authority (CHFA) has made available to the Loan Fund a total of $1,575,000 for various loan programs as follows: a. Short-Term Construction Financing: A loan in the amount of $500,000 at an annual interest rate of 5% to be used to fund short-term construction financing for the rehabilitation or new construction of 1-4 unit properties for homeownership by low-tomoderate income buyers. CHFA will make an initial loan of $250,000 available to the Loan Fund under this agreement. The Loan Fund is required to secure a two-to-one investment matches, totaling $500,000 from other sources for the remaining $250,000 of CHFA funds to be available. As of December 31, 2006, the Loan Fund has secured this two-for-one required investment match. No funds have been drawn for short-term construction financing as of December 31, b. Long-Term Permanent Financing: A loan in the amount of $1,000,000 at an annual interest rate of 4.00% to be used to finance affordable rental housing developments of 20 units or less for a period of up to 20 years. CHFA will make an initial loan of $500,000 available to the Loan Fund under this agreement. The Loan Fund is required to secure a one-to-one investment matches totaling $500,000, in order to receive access to the additional $500,000 of the CHFA funds. As of December 31, 2006, the Loan Fund has raised $100,000 towards their $500,000 one-for-one investment match. No funds have been drawn for long-term permanent financing as of December 31, c. Predevelopment Loans: A loan in the amount of $75,000 at an annual interest rate of 3.00% to finance predevelopment loans, provided the Loan Fund obtains matching funds at $75,000. The Loan Fund has secured the $75,000 matching funds requirement for the Predevelopment Loan Fund and has drawn the $75,000 for use. -10-

13 NOTE 10 - CITIZENS BANK/GREATER NEW HAVEN COMMUNITY LOAN FUND PARTNERSHIP Citizens Bank of Connecticut has advanced to the Loan Fund a total of $500,000, fully subordinate to all other Loan Fund liabilities, for the purpose of establishing two separate lending pools as follows: Deferred Loan Fund - This Fund, established with an interest free advance of $100,000, shall be used, by itself or combined with other funds, for the purpose of making loans and recoverable grants to low and moderate-income families and individuals, community-based non-profit developers and for-profit developers meeting affordable housing or neighborhood revitalization needs. Loans from this Fund may be assumed by a qualified end-buyer, and would not exceed the term of the first mortgage. Series 1 Fund - This Fund, established with $300,000 carries an interest rate of 3% to Citizens Bank of Connecticut, or such lesser amount as may have been earned by this Fund. Funds loaned from the Series 1 Funds are made for the same purposes as funds loaned from the Deferred Loan Fund. However, loans from this Fund shall not exceed a 24-month term. These funds would share or absorb loss in the event of failure of repayment of loans or recoverable grants, but such risk sharing would be limited to the Fund s pro-rata share of the particular loan/recoverable grant. At any time after April 29, 2010, Citizens Bank of Connecticut may, upon six months written notice, request repayment of these funds in full, provided that the investments and earnings therefrom are adequate to do so, at the discretion of the Board of Directors of the Loan Fund. In the event earnings are inadequate, or the Board deems that the Greater New Haven Community Loan Fund, Inc. has reason not to make repayment at the time requested, such repayment shall be made as funds from such sources thereafter become available. From and after such notice, no new loans shall be advanced from these funds. As of December 31, 2006, a total of $235,112 had been loaned out from these two funds and is carried with Notes Receivable - Community Pool in the Statement of Financial Position. -11-

14 NOTE 10 - CITIZENS BANK/GREATER NEW HAVEN COMMUNITY LOAN FUND PARTNERSHIP (continued) Capital Certificate - This Fund, established with $100,000 carries an interest rate of 3% to Citizens Bank of Connecticut, or such lesser amount as may have been earned from loans made from this Fund. These funds shall be used, by itself or in combination with other available sources, to fund a revolving loan fund. This Loan Fund will be used to finance affordable housing in New Haven. At any time after April 20, 2015, Citizens Bank of Connecticut may, upon six month written notice, submit this Certificate for repayment from the principal of this fund. As of December 31, 2006, no loans have been made from this fund. NOTE 11 - CONCENTRATIONS OF CREDIT RISK Financial instruments that potentially subject the Loan Fund to concentrations of credit risk consist principally of cash balances. The Loan Fund maintains its cash balances with eight financial institutions servicing the Greater New Haven Area. These balances are insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000 per financial institution. At various times during the year, the Loan Fund s cash balances exceeded the FDIC insurance limits. At December 31, 2006, the balance in excess of the FDIC insurance limits was $1,738,455. The Loan Fund places its excess cash in a money market fund, which invests wholly in government securities, thereby limiting the amount of credit exposure. Financial instruments that potentially subject the Loan Fund to concentrations of credit risk also include Community Pool Notes Receivable amounting to $1,852,912 at December 31, 2006, which were received in exchange for funds loaned in accordance with the Loan Fund Mission Statement. These notes are collateralized by real property or guarantees. NOTE 12 - RETIREMENT PLAN The Loan Fund maintains a Simplified Employee Pension Plan for all employees over the age of 21 who have performed services for the Loan Fund for at least two years. The Loan Fund contributes 5% of the employees gross wages to the plan. Plan contributions, for the year ended December 31, 2006, amounted to $13,647. The Loan Fund also provides its employees the opportunity to contribute to a tax deferred annuity plan. -12-

15 NOTE 13 MARKETABLE SECURITIES Investment in marketable securities is presented in the financial statement at fair value. A comparison of cost and fair value at December 31, 2006 is as follows: Cost Fair Value 75 Shares The Community Development Trust, Inc. $ 500 $ NOTE 14 - LEASE OF OFFICES The Greater New Haven Community Loan Fund, Inc. has entered into an agreement for the sub-leasing of office space with another not-for-profit organization. Under the terms of this sub-lease agreement the Loan Fund contributes 25.76% of the total rental payments. The Loan Fund occupies their premises on a month-to-month basis with a monthly rental in the amount of $2,092. In addition, these organizations join together in sharing telephone, copying, parking, secretarial help, and other administrative costs on a usage basis. NOTE 15 - RESTRICTIONS ON NET ASSETS Permanently restricted net assets consist of the following at December 31, 2006: Gifts and Grants restricted to Permanent Loan Capital $ 362,463 Temporarily restricted net assets consist of the following at December 31, 2006: Grants restricted to: For operating support for Community Rehabilitation Projects $ Consulting to conduct a Market Analysis Purchase of Computer Hardware and Software Total $

16 NOTE 16 - NET ASSETS RELEASED FROM RESTRICTIONS Net assets were released from donor restrictions by incurring expenses satisfying the restrictions or by occurrence of other events specified by donors. Purposes, restrictions accomplished: Operating support for Community Rehabilitation Projects $ Supportive Housing Pilots Initiative Total $ NOTE 17 - LOAN PROCESSING FEES In addition to changing loan-processing fees on loans made, the Fund has entered into contracts with the City of New Haven to assist the City with the intake, origination, processing and underwriting services for the City s four residential loan programs. Fees earned during 2006 from these contracts amounted to $230,000. The current contract, which runs from July 1, 2006 to June 30, 2007, provides for the maximum compensation to the Loan Fund in the amount of $215,000. As of December 31, 2006, the Loan Fund had earned a total of $107,500 from the current contract and expects to earn the remaining balance by June 30, NOTE 18 - FUNCTIONAL EXPENSES Total expenses incurred by the Greater New Haven Community Loan Fund, Inc. categorized on a functional basis for the year ended December 31, 2006 are as follows: Programs $ Management and General Fund Raising $ NOTE 19 - RELATED PARTY TRANSACTIONS One member of the Board of Directors is an officer of a bank that has committed a total of $2,250,000 to the Loan Fund thru the AHBP and a line of credit. Borrowing from this bank at December 31, 2006 amounted to $756,

17 NOTE 20 SUBSEQUENT EVENT On February 8, 2007, the Loan Fund entered into a five year lease for new office space at its present location. This lease, effective February 15, 2007, calls for an annual rent of $43,030 for the first year and increases by the greatest of 3%, or the percentage of increase in the Consumer Price Index for All Urban Consumers for each of the remaining four years. In addition, the Loan Fund shall reimburse the Landlord for its pro-rata share of any increase in property taxes during the term of this lease. -15-