cannon street senior apartments, 2007 series a and b€¦ · cannon street senior apartments...

NEW ISSUES Moody’s: 2007 Series A: Aa1 2007 Series B: Aaa

(see “Ratings” herein)

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 2007 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 2007 Bond for any period during which such 2007 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 2007 Bonds or a “related person” and (ii) interest on the 2007 Bonds, however, is treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code. Bond Counsel is of the further opinion that interest on the 2007 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.

$3,350,000NEW YORK STATE HOUSING FINANCE AGENCY

Cannon Street Senior Apartments Multi-Family Housing Revenue Bonds, $1,860,000 2007 Series A $1,490,000 2007 Series B

Dated: August 1, 2007 Due: February 15 and August 15, as shown below

The 2007 Series A Bonds and the 2007 Series B Bonds (collectively, the “2007 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 2007 Bonds. Individual purchases will be made in book-entry form, in denominations of $5,000 or integral multiples thereof. So long as Cede & Co. is the registered owner of the 2007 Bonds, as nominee for DTC, references herein to the Bondholders or registered owners (other than under the captions “Tax Matters” and “Continuing Disclosure” herein) shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners of the 2007 Bonds.

So long as Cede & Co. is the registered owner of the 2007 Bonds, as aforesaid, principal and semi-annual interest (payable February 15 and August 15, commencing February 15, 2008) are payable by HSBC Bank USA, National Association, New York, New York, as Trustee, to Cede & Co., as nominee for DTC, which will, in turn, remit such principal and interest to the DTC Participants for subsequent disbursement to the Beneficial Owners. (See “Description of the 2007 Bonds—Book-Entry Only System” herein.)

HSBC Bank USA, National Association, Trustee

The 2007 Bonds are subject to redemption prior to maturity as described herein.

The 2007 Bonds are issued pursuant to a General Resolution and Series Resolutions for the purpose of financing a Mortgage Loan to the Mortgagor in order to provide funds which, together with other available funds, will be used to finance a housing project which includes funding the Debt Service Reserve Fund in an amount at least equal to the Debt Service Reserve Fund Requirement. During the construction period for such project and as a condition for the application of the 2007 Bond proceeds to finance such construction, The Bank of New York will issue a letter of credit to secure the Mortgagor’s obligations under the Mortgage Note. Upon satisfactory completion of such project and compliance with certain other requirements, the Mortgage Loan with respect to such project will be insured pursuant to a mortgage insurance policy issued by the State of New York Mortgage Agency (“SONYMA”), all as described herein.

The 2007 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 tothe provisions of the General Resolution, as described herein.

The Agency has no taxing power. Neither the State of New York nor SONYMA is liable on the 2007 Bonds and said Bonds are not a debt of the State of New York or SONYMA.

MATURITIES, AMOUNTS, RATES AND PRICES

$1,860,000 2007 Series A 5.30% Term Bonds due February 15, 2039

$1,490,000 2007 Series B Serial Bonds

Maturity Amount Interest Rate

August 15, 2010 $1,490,000 4.30%

Price of all Bonds 100% (Accrued interest to be added)

The 2007 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 Holland & Knight LLP, New York, New York, Bond Counsel to the Agency. Certain legal matters will be passed upon for the Mortgagor and the HDFC by Cannon Heyman & Weiss, LLP, Albany, New York,counsel to the Mortgagor and the HDFC. Certain legal matters will be passed upon for the Underwriter by Hiscock & Barclay, LLP, Albany, New York, counsel to the Underwriter. It is expected that the 2007 Bonds will be available for delivery in New York, New York on or about August 22, 2007.

George K. Baum & CompanyAugust 16, 2007

IN CONNECTION WITH THIS OFFERING OF THE 2007 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2007 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 2007 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 2007 Bonds shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency, the Mortgagor, the Letter of Credit Bank or SONYMA or the other matters described herein since the date hereof. This Official Statement is submitted in connection with the sale of the securities referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.

IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE TERMS OF THE OFFERING INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT.

THIS OFFICIAL STATEMENT CONTAINS STATEMENTS WHICH, TO THE EXTENT THEY ARE NOT RECITATIONS OF HISTORICAL FACT, CONSTITUTE “FORWARD LOOKING STATEMENTS”. IN THIS RESPECT, THE WORDS “ESTIMATE”, “PROJECT”, “ANTICIPATE”, “EXPECT”, “INTEND”, “BELIEVE” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD LOOKING STATEMENTS. A NUMBER OF IMPORTANT FACTORS AFFECTING THE AGENCY, THE MORTGAGOR, THE LETTER OF CREDIT BANK AND SONYMA COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN THE FORWARD LOOKING STATEMENTS.

TABLE OF CONTENTS

PageIntroductory Statement.................................................................................................................................. 1 Plan of Financing .......................................................................................................................................... 2 The Project .................................................................................................................................................... 5 Security for the Bonds .................................................................................................................................. 7 General....................................................................................................................................................... 7 Debt Service Reserve Fund ....................................................................................................................... 7 Letter of Credit .......................................................................................................................................... 8 Letter of Credit Bank .................................................................................................................................... 9 State of New York Mortgage Agency......................................................................................................... 10 General..................................................................................................................................................... 10 SONYMA Insurance ............................................................................................................................... 14 Description of the 2007 Bonds ................................................................................................................... 15 General..................................................................................................................................................... 15 Book-Entry-Only System ........................................................................................................................ 15 Tenders in Book-Entry-Only Form ......................................................................................................... 17 2007 Series A Bonds ............................................................................................................................... 18 Sinking Fund Redemption.................................................................................................................... 18 Optional Redemption ........................................................................................................................... 19 Extraordinary Redemption ................................................................................................................... 19 Special Mandatory Redemption ........................................................................................................... 19 2007 Series B Bonds................................................................................................................................ 20 Special Extraordinary Redemption....................................................................................................... 20 Extraordinary Redemption ................................................................................................................... 20 Special Mandatory Redemption ........................................................................................................... 20 Redemption Provisions Relating to Optional, Extraordinary and Special Extraordinary Redemptions.. 21 Notice of Redemption.............................................................................................................................. 21 Special Mandatory Tender....................................................................................................................... 22 Additional Bonds..................................................................................................................................... 22 Application of 2007 Bond Proceeds ........................................................................................................... 23 The Agency................................................................................................................................................. 23 Summary of Certain Provisions of the General Resolution ........................................................................ 25Summary of Certain Provisions of the Letter of Credit Agreement ........................................................... 40 State’s Right to Require Redemption of Bonds .......................................................................................... 42 Agreement of the State................................................................................................................................ 42 Legal Investments ....................................................................................................................................... 43 Security for Deposits................................................................................................................................... 43 Tax Matters ................................................................................................................................................. 43 Litigation..................................................................................................................................................... 45 Legal Matters .............................................................................................................................................. 46 Underwriting ............................................................................................................................................... 46 Ratings ........................................................................................................................................................ 46 Continuing Disclosure ................................................................................................................................ 46 Exhibits ....................................................................................................................................................... 48 Exhibit A—Glossary of Defined Terms ...................................................................................................A-1 Exhibit B—Description of Proposed Project ............................................................................................ B-1 Exhibit C—Form of Legal Opinion .......................................................................................................... C-1

NEW YORK STATE HOUSING FINANCE AGENCY ________________

OFFICIAL STATEMENT

Relating to

$3,350,000 Cannon Street Senior Apartments Multi-Family Housing Revenue Bonds,

$1,860,000 2007 Series A $1,490,000 2007 Series B

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 its Cannon Street Senior Apartments Multi-Family Housing Revenue Bonds, 2007 Series A (the “2007 Series A Bonds”) and 2007 Series B (the “2007 Series B Bonds”) (collectively, the “2007 Bonds”). The 2007 Bonds and any bonds hereafter issued under the General Resolution are sometimes referred to as the “Bonds”. Information set forth on the cover page hereof and in the Exhibits hereto is part of this Official Statement. The 2007 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 Cannon Street Senior Apartments Multi-Family Housing Revenue Bond Resolution (the “General Resolution”), adopted by the Agency on October 18, 2006, the Cannon Street Senior Apartments Multi-Family Housing Revenue Bond, 2007 Series A Resolution (the “2007 Series A Resolution”), adopted by the Agency on October 18, 2006 and the Cannon Street Senior Apartments Multi-Family Housing Revenue Bond, 2007 Series B Resolution (the “2007 Series B Resolution”), adopted by the Agency on October 18, 2006 (the 2007 Series A Resolution and the 2007 Series B Resolution are collectively referred to herein as the “Series Resolutions”) (the General Resolution and the Series Resolutions are sometimes collectively referred to as the “Resolution”). As provided under the General Resolution, the 2007 Bonds and any additional Series of Bonds hereafter issued under the General Resolution will be equally secured thereunder. (See “Summary of Certain Provisions of the General 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 2007 Bonds are being issued in order to finance a Mortgage Loan (as hereinafter defined) to Cannon Street Limited Partnership, a New York limited partnership (the “Mortgagor”) and the HDFC, as hereinafter defined. 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 or for the purpose of refunding Bonds. The 2007 Bonds constitute the 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. The scheduled amortization of the 2007 Bonds has been based upon certain assumptions with respect to such factors. While the Agency believes that such amortization schedule has been determined conservatively, any significant change in such factors could require the Agency to redeem the 2007 Bonds pursuant to the applicable provisions of the Series Resolutions (see “Description of the 2007 Bonds—2007 Series A Bonds—Extraordinary Redemption” and “—2007 Series B Bonds—Extraordinary Redemption”).

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PLAN OF FINANCING

The Agency will issue the 2007 Series A Bonds to provide financing for a portion of the costs of acquiring, constructing and equipping a multi-family rental housing project to be located at 132-136 Cannon Street in the City of Poughkeepsie, Dutchess County, New York (the “Project”), including the funding of a Debt Service Reserve Fund in an amount at least equal to the Series Debt Service Reserve Fund Requirement and the Agency will issue the 2007 Series B Bonds to provide financing for another portion of the costs of acquiring, constructing and equipping the Project. The 2007 Series A Bonds and 2007 Series B Bonds will be issued simultaneously and the issuance of one is a condition to the issuance of the other.

In connection with the financing of the Project, Cannon Street Housing Development Fund Company, Inc., a not-for-profit corporation (the “HDFC”), holds record title to the real property of the Project. The Agency anticipates entering into a mortgage, assignment of leases and rents and security agreement (the “Mortgage”) in connection with which the Agency will lend to the Mortgagor and the HDFC the proceeds of the 2007 Bonds to fund the mortgage loan (the “Mortgage Loan”) for the purpose of paying a portion of the costs of acquiring, constructing and equipping the Project, including the funding of a Debt Service Reserve Fund in an amount at least equal to the Series Debt Service Reserve Fund Requirement. The Mortgagor’s and the HDFC’s obligation to repay the Mortgage Loan will be evidenced by a mortgage note (the “Mortgage Note”). The Mortgage Note will have a term of approximately thirty-two (32) years. In order to secure their obligations under the Mortgage Note and the Mortgage, the Mortgagor and the HDFC will grant to the Agency a first mortgage lien on and security interest in the real property of the Project pursuant to the Mortgage. Concurrently with the making of the Mortgage Loan, the Mortgagor will, however, assume all of the HDFC’s obligations under the Mortgage Note pursuant to an Assignment and Assumption of Note (the “Assignment of Note”) and the Agency will release the HDFC from its obligations under the Mortgage Note pursuant to an Acknowledgment and Release by the Agency (the “Acknowledgment and Release”).

During the construction period for the Project and as a condition for the application of the proceeds of the 2007 Bonds to finance such construction, the Mortgagor’s obligations under the Mortgage Note will be secured by a letter of credit (the “Letter of Credit”) issued by The Bank of New York (the “LOC Bank” or “Bank”). Pursuant to the provisions of the General Resolution, such Letter of Credit will satisfy the definition of a Credit Facility (see “Exhibit A—Glossary of Defined Terms—Credit Facility”). For additional information relating to the LOC Bank, see “Letter of Credit Bank” herein. The Letter of Credit will be issued pursuant to a Letter of Credit and Reimbursement Agreement among the Mortgagor, the HDFC and the LOC Bank (the “Letter of Credit Agreement”). For a summary of the provisions of the Letter of Credit Agreement, see “Summary of Certain Provisions of the Letter of Credit Agreement” herein.

The Mortgage and the Mortgage Note will, pursuant to the provisions of the Resolution, be pledged to the payment of the 2007 Bonds (see “Security for the Bonds”). In addition, during the term of the Letter of Credit, the Mortgage and the Mortgage Note will also be pledged, on a subordinated basis, to the benefit of the LOC Bank, pursuant to the Series Resolutions. (See “Security for the Bonds—Letter of Credit” and “Summary of Certain Provisions of the Letter of Credit Agreement.”)

The Project is located within the Dutchess County Empire Zone, which makes it eligible for a tax abatement under Section 485-e of the Real Property Tax Law of the State of New York. (See “The Project.”) In addition, the Mortgagor expects to receive an allocation of low-income housing tax credits.

The Agency will provide to the Mortgagor a subsidy loan in the aggregate principal amount of $295,000 (the “Subsidy Loan”). All or a portion of the Subsidy Loan will be advanced during construction. Upon compliance with certain conditions imposed by the Agency, including satisfactory

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completion of the construction of the Project, the Agency will advance the balance, if any, of the Subsidy Loan (the “Subsidy Loan Balance”) to the Mortgagor. The Subsidy Loan will be secured by a lien on the Project (the “Subsidy Loan Mortgage”) that is subordinate to the lien securing the Mortgage Loan.

The Mortgagor expects to receive a loan from the New York State Housing Trust Fund Corporation (“HTFC”) in the principal amount of $800,000 (the “Homes for Working Families Loan”). During construction, HTFC will advance all or a portion of the Homes for Working Families Loan to the Mortgagor. It is anticipated that, upon compliance with certain conditions imposed by HTFC, including satisfactory completion of construction of the Project, HTFC will advance to the Mortgagor the balance, if any, of the Homes for Working Families Loan (the “Homes for Working Families Loan Balance”). The Homes for Working Families Loan will be secured by a lien on the Project that will be subordinate to the lien securing the Mortgage Loan. The lien securing the Homes for Working Families Loan will be co-equal to the lien securing the Subsidy Loan.

The Mortgagor expects to receive a loan from Dutchess County (the “County”) in the principal amount of $80,000 (the “Home Loan”). During construction, the County will advance all or a portion of the Home Loan to the Mortgagor. It is anticipated that, upon compliance with certain conditions imposed by the County, including satisfactory completion of construction of the Project, the County will advance to the Mortgagor the balance, if any, of the Home Loan (the “Home Loan Balance”). The Home Loan will be secured by a lien on the Project that will be subordinate to the liens securing the Mortgage Loan, the Subsidy Loan and the Homes for Working Families Loan.

Hudson River Housing Inc. (“HRH”), the sole member of the sole shareholder of the general partner of the Mortgagor, has agreed to make a loan to the Mortgagor in the amount of $320,000 from grant funds disbursed by the Neighborworks America program operated by the Neighborhood Reinvestment Corporation (the “HRH Loan”). During construction, HRH will advance all of the HRH Loan to the Mortgagor. The HRH Loan will be secured by a lien on the Project that will be subordinate to the liens securing the Mortgage Loan, the Subsidy Loan, the Homes for Working Families Loan and the Home Loan.

In exchange for its 99.99% ownership interest in the Mortgagor, the Investor (as herein defined) has agreed to make equity contributions (the “Equity Contributions”) to the Mortgagor, in consideration of its receipt of anticipated low-income housing tax credits, in installments upon satisfaction of certain conditions, including the making of the Mortgage Loan, completion of construction of the Project, stabilized occupancy of the Project and compliance with certain covenants relating to the financial performance of the Project. (See “The Project.”)

As soon as reasonably practicable after the funding of the Subsidy Loan Balance, if any, the Homes for Working Families Loan Balance, if any, the Home Loan Balance, if any, and the designated installments of the Equity Contributions, the Mortgagor is expected to apply a portion of the proceeds thereof as a partial prepayment of the Mortgage Loan. A draw on the Letter of Credit in the amount of such prepayment will be applied to redeem all of the 2007 Series B Bonds (see “Description of the 2007 Bonds—2007 Series B Bonds—Special Extraordinary Redemption”) and such prepayment will be applied to reimburse the LOC Bank.

Although the Agency expects that the portion of the proceeds of the Equity Contributions, the Subsidy Loan Balance, if any, the Homes for Working Families Loan Balance, if any, and the Home Loan Balance, if any, applied to the partial prepayment of the Mortgage Loan will be sufficient to effect the redemption of all of the 2007 Series B Bonds, no assurance can be given that the expected amount of such funds will be available to the Mortgagor. In the event that the Mortgagor fails to receive the full anticipated amount of funds for application to the partial prepayment of the Mortgage Loan, the Agency would apply the lesser amount of such prepayment to redeem the 2007 Series B Bonds in part rather than

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in whole. In such event the Agency would retain the right thereafter to redeem 2007 Series B Bonds that remain Outstanding in whole or in part at any time or from time to time with monies received from the Mortgagor as prepayments of the Mortgage Loan. (See “Description of the 2007 Bonds—2007 Series B Bonds—Special Extraordinary Redemption.”)

In the event that all of the 2007 Series B Bonds are not redeemed as a result of the receipt of Equity Contributions or other monies available to the Mortgagor prior to the expiration date of the Letter of Credit and the Letter of Credit is not renewed, extended or appropriately replaced, or, if prior to the expiration date of the Letter of Credit, the LOC Bank has not directed the Trustee to redeem all of the 2007 Series B Bonds as a result of an event of default under the Letter of Credit Agreement, the Trustee shall draw on the Letter of Credit in an amount equal to the outstanding principal amount of the Mortgage Loan funded from the 2007 Series B Bonds plus applicable interest due thereon and apply the proceeds of such draw to the redemption of the 2007 Series B Bonds (see “Description of the 2007 Bonds—2007 Series B Bonds—Special Mandatory Redemption”).

It is anticipated that, upon compliance with certain conditions imposed by the State of New York Mortgage Agency (“SONYMA”), including satisfactory completion of the construction of the Project, the receipt of Equity Contributions and the satisfaction of certain rent achievement levels, SONYMA will issue a mortgage insurance policy (the “SONYMA Insurance”) with respect to the portion of the Mortgage Loan not funded from the proceeds of the 2007 Series B Bonds, which will insure such Mortgage Loan in accordance with the terms thereof (see “State of New York Mortgage Agency—SONYMA Insurance” herein).

Upon the issuance of the SONYMA Insurance, the Letter of Credit will be terminated. In the event that SONYMA Insurance is not issued prior to the expiration date of the Letter of Credit (August 22, 2010) and the Letter of Credit is not renewed, extended or appropriately replaced, or, if prior to the expiration date of the Letter of Credit, the LOC Bank has not directed the Trustee to redeem all of the 2007 Series A Bonds as a result of an event of default under the Letter of Credit Agreement, the Trustee shall draw on the Letter of Credit in an amount equal to the outstanding principal amount of the Mortgage Loan funded from the 2007 Series A Bonds plus applicable interest due thereon and apply the proceeds of such draw, together with other funds available under the General Resolution to the redemption of the 2007 Series A Bonds (see “Description of the 2007 Bonds—2007 Series A Bonds—Special Mandatory Redemption”).

In the event that the conditions imposed by SONYMA with respect to the Project are not satisfied, and SONYMA does not issue the SONYMA Insurance with respect to the Mortgage Loan, the Agency could be required to redeem the 2007 Series A Bonds and, in addition, to the extent the Mortgage Loan for the Project is not made or the Mortgage Loan is made in an amount less than the amount originally anticipated, the Agency could also be required to redeem all or a portion of the 2007 Bonds. In the event that the conditions imposed by SONYMA with respect to the Project are not satisfied, SONYMA may agree to insure the Mortgage Loan funded from the proceeds of the 2007 Series A Bonds in a reduced amount. The Agency could also be required to redeem a portion of the 2007 Series A Bonds applicable to the amount of the Mortgage Loan not so insured. (See “Description of the 2007 Bonds—2007 Series A Bonds—Extraordinary Redemption” and “—2007 Series B Bonds—Extraordinary Redemption.”)

Pending completion of the construction of the Project, receipt of Equity Contributions and the issuance of the SONYMA Insurance with respect to such Project, debt service on the 2007 Bonds is scheduled to be paid from payments under the Letter of Credit as they relate to Mortgage Repayments and other amounts due and owing during construction.

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Assuming timely completion of the construction of the Project, receipt of Equity Contributions and the issuance of the SONYMA Insurance with respect to such Project, debt service on the 2007 Series A Bonds is scheduled to be payable from a combination of (i) scheduled Mortgage Repayments, and (ii) certain investment income from other funds under the General Resolution.

A portion of the proceeds of the 2007 Series A Bonds and all of the proceeds of the 2007 Series B Bonds will be used to provide financing for the Project and will be initially deposited in the Bond Proceeds Account and the balance of the proceeds of the 2007 Series A Bonds will be deposited in the Debt Service Reserve Fund, as specified in the Series Resolutions. (See “Application of 2007 Bond Proceeds.”) Upon funding the Mortgage Loan in compliance with the provisions of the General Resolution, such portion of the proceeds of the 2007 Bonds on deposit in the Bond Proceeds Account will be transferred to the Construction Financing Account. It is anticipated that the construction financing for the Project will be funded from the proceeds of the 2007 Bonds, Equity Contributions and certain other monies available to the Mortgagor for such purpose including the Subsidy Loan, the Homes for Working Families Loan, the Home Loan and the HRH Loan.

Pending the disbursement of the proceeds of the 2007 Bonds, such proceeds will be invested pursuant to the General Resolution which provides that the proceeds may be invested in Investment Obligations, or in 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 General Resolution—Security for Deposits and Investment of Funds.”) In addition, monies in the Debt Service Reserve Fund will be invested in one of the foregoing types of investments.

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 any investment therewith equal to or higher than the rating category applicable to each Series of the 2007 Bonds. Similarly, 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. All of the 2007 Bond proceeds will be invested in Investment Obligations. 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 entity. If a rating agency rating each Series of the 2007 Bonds were to downgrade or withdraw the ratings on obligations issued by an entity providing investment arrangements for each Series of the 2007 Bonds, or any other Series of Bonds hereafter issued under the General Resolution, the rating on such Series of Bonds could be negatively affected. (See “Ratings.”)

THE PROJECT

The following is a brief description of the Project, the Mortgagor and the HDFC.

The Project

The 2007 Bonds are being issued to fund the Mortgage Loan (including the Debt Service Reserve Fund) to the Mortgagor for the purpose of paying a portion of the costs of acquiring, constructing and equipping a multi-family rental housing development for senior citizens of low-income to be located at 132-136 Cannon Street in the City of Poughkeepsie, Dutchess County, New York (the “Project”). The Project will consist of the new construction of a three-story building which will contain forty (40) one-bedroom units, including one non-revenue superintendent’s unit. It is anticipated that all of the revenue units (39 units) will be set aside for households in which at least one member is fifty-five (55) years of age or older and whose annual household incomes do not exceed sixty percent (60%) of the area median income (“AMI”) for Dutchess County, adjusted for family size. Twenty-nine (29) of the revenue units

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will be set aside for households in which at least one member is fifty-five (55) years of age or older and whose annual household incomes do not exceed fifty percent (50%) of AMI, adjusted for family size.

In addition to the residential rental apartments, it is anticipated that the Project will have an elevator and common areas consisting of a laundry facility, landscaped grounds with seating areas and 11 parking spaces which will be available on a first come, first serve basis.

The Project is located within the Dutchess County Empire Zone, which makes it eligible for a tax abatement under Section 485-e of the Real Property Tax Law of the State of New York. For the first seven (7) years including construction and stabilization, property taxes will be based on current pre-improvement assessed value. In year eight (8), the assessment will be based on 25% of the post-improvement value and will increase annually by 25% until year eleven (11) at 100%. Commencing in year eleven (11), property taxes will be based on an assessment of property value using the income approach pursuant to Section 581-a of the Real Property Tax Law.

Construction of the Project is expected to commence in August 2007 after the delivery of the 2007 Bonds and is expected to be completed in January 2009. Stabilized occupancy is expected to occur in June 2009. The Mortgage Loan is estimated to be $3,350,000 on a short-term construction basis, and $1,860,000 under a permanent loan with a term of approximately thirty (30) years.

The general contractor for the Project is Affordable Housing Concepts LLC, which has been involved in the construction or rehabilitation of over 130 units of multi-family rental housing and approximately 6,000 square feet of commercial space. The architect is Anthony J. Coppolla of A.J. Coppolla and Associates, who has extensive experience in the design and construction of multi-family apartment buildings. Hudson River Housing, Inc. will manage the Project upon completion of construction. Hudson River Housing, Inc. currently manages more than 400 multi-family housing units.

The Mortgagor and the HDFC

The Mortgagor is Cannon Street Limited Partnership, a New York limited partnership and single-purpose entity formed for the purpose of acquiring, developing, constructing and operating the Project. As such, the Mortgagor has not previously engaged in any other business operations, does not intend to engage in any other business operations, has no historical earnings and has no assets other than its interest in the Project. Accordingly, it is expected that, other than the anticipated repayment of the portion of the Mortgage Loan funded from the proceeds of the 2007 Series B Bonds from the receipt of the Equity Contributions and available proceeds of the Subsidy Loan Balance, if any, the Homes for Working Families Loan Balance, if any, and the Home Loan Balance, if any, the Mortgagor will not have any other sources of funds to make payments on the Mortgage Loan other than revenues generated by the Project (see “Plan of Financing”). The general partner of Cannon Street Limited Partnership, having a .01% ownership interest in the Mortgagor, is Cannon Street GP, Inc., a New York business corporation, the sole shareholder of which is Cannon Street Housing Development Fund Company, Inc., a not-for-profit corporation formed pursuant to Article XI of the Private Housing Finance Law (the “HDFC”), the sole member of which is Hudson River Housing, Inc., a 501(c)(3) not-for-profit corporation. The principal or board member of Hudson River Housing, Inc. is Gail V. Webster. Founded in 1982, Hudson River Housing, Inc. has to date developed over 400 property units serving low-income and homeless families and individuals in Dutchess County, including emergency and transitional shelters, rental apartments, senior housing, commercial space, and homeownership opportunities.

A private low-income housing tax credit investor, expected to be an affiliate or designee of WNC & Associates, Inc. (the “Investor”) will be the limited partner of the Mortgagor, with a 99.99% ownership interest in the Mortgagor.

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The fee owner of the Project is the HDFC. Pursuant to a nominee agreement between the HDFC and the Mortgagor, the HDFC has assigned and transferred all beneficial and equitable interest in the Project to the Mortgagor, and the HDFC retains and holds legal title to the Project as nominee for and on behalf of the Mortgagor. The HDFC is the sole shareholder of the general partner of the Mortgagor and the HDFC is controlled, through membership, by Hudson River Housing, Inc.

SECURITY FOR THE BONDS

General

The Bonds will be special revenue obligations of the Agency, payable from and secured solely by a pledge of monies and investments held in all funds and accounts (except the Bank Repayment Fund, the Purchase Fund and the respective Credit Facilities (or portions thereof)) established by the Resolution, including the Bond Proceeds Account, Capitalized Interest Account, Construction Financing Account, Revenue Fund, Debt Service Fund and Debt Service Reserve Fund subject to the application thereof to the purposes and on the conditions authorized and permitted by the Resolution. All Mortgage Repayments received with respect to the Mortgage Loans, including draws under any applicable Credit Facility with respect thereto and all Recovery Payments including, but not limited to, payments by SONYMA pursuant to SONYMA Insurance, will also be pledged as security for the payment of the Bonds.

The General Resolution requires that the Mortgage Loan, in order to qualify for financing thereunder, must be insured by SONYMA, secured by a Credit Facility or secured by a combination of the foregoing. With respect to the Mortgage Loan, see “Plan of Financing” for information regarding the qualification of such Mortgage Loan for financing under the General Resolution.

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 Note, Mortgage Repayments and Recovery Payments with respect to the Mortgage Loan and all funds and accounts (except the Bank Repayment Fund, the Purchase Fund and the respective Credit Facilities (or portions thereof)) established under the Resolution, including the investments thereof and the 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 2007 Bonds are not a debt of the State of New York or SONYMA. Neither the State nor SONYMA is liable on such Bonds and neither the State nor SONYMA is under any legal or moral obligation to provide monies to make up any deficiency in any of the funds or accounts established by the Resolution.

Debt Service Reserve Fund

The General Resolution establishes a Debt Service Reserve Fund and provides for a Debt Service Reserve Fund Requirement, as of any date of calculation, equal to the sum of the amounts specified for each Series of Bonds, in the applicable Series Resolution for each Series of Bonds, as the Series Debt Service Reserve Fund Requirement; provided that the Series Debt Service Reserve Fund Requirement with respect to such Series of Bonds shall not be less than an amount (if any) sufficient, as of the date of issuance of such Series of Bonds, to enable the Rating Service to assign an investment-grade rating to the Bonds of such Series. With respect to the 2007 Series A Bonds, the Series Debt Service Reserve Fund Requirement shall be in an amount equal to one-third of the maximum amount of principal, whether at maturity or on mandatory redemption, and interest payable in any twelve (12) month period on all 2007 Series A Bonds then Outstanding; provided that the calculation of the maximum interest payable in any twelve (12) month period shall exclude the amount of interest payable on the 2007 Series A Bonds that is

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payable as a result of the first interest payment date for such Bonds being more than six (6) months after the date of such Bonds. It is anticipated that, with respect to the 2007 Series A Bonds, the Debt Service Reserve Fund Requirement shall be funded at the time of issuance from the proceeds of such Bonds; provided, however, that the General Resolution provides that in lieu of a deposit to the Debt Service Reserve Fund in order to meet all or a portion of the Debt Service Reserve Fund Requirement, the Agency may provide for a Credit Facility with an entity satisfying the provisions of the General Resolution which provides for the availability, at the times required thereunder (including, without limitation, on any Special Mandatory Tender Date), of an amount at least equal to such portion of the Debt Service Reserve Fund Requirement being so funded and such method of funding shall be deemed to satisfy all provisions of the General Resolution with respect to the Debt Service Reserve Fund Requirement and the amounts required to be on deposit in the Debt Service Reserve Fund. With respect to the 2007 Series B Bonds, the Series Debt Service Reserve Fund Requirement is zero. Monies in the Debt Service Reserve Fund are required to be used for the payment of the principal of and Sinking Fund Payments and interest on the Bonds to the extent that other funds are not available therefor. The General Resolution contains no provision requiring the Agency or the Mortgagor to replenish the Debt Service Reserve Fund in the event of such withdrawals. (See “Summary of Certain Provisions of the General Resolution—Debt Service Reserve Fund.”)

Letter of Credit

The Letter of Credit issued with respect to the 2007 Bonds is an irrevocable obligation of The Bank of New York. The Trustee will be entitled to draw on the Letter of Credit up to the principal amount of the Mortgage Loan to pay the principal thereof and up to 40 days’ interest thereon, to pay the accrued interest thereon, in connection with a redemption or acceleration of the allocable portion of the 2007 Bonds and the accrued interest thereon. The Letter of Credit will also be drawn to pay monthly Mortgage Repayments on the Mortgage Loan.

To the extent of draws made under the Letter of Credit for the purpose of paying the principal amount of the Mortgage Loan upon redemption or acceleration of the allocable portion of the 2007 Bonds, and interest thereon, the obligations of the LOC Bank under the Letter of Credit will be correspondingly reduced. With respect to draws under the Letter of Credit to pay interest only on such Mortgage Loan and not in connection with a 2007 Bond redemption or acceleration, the interest component of the Letter of Credit will be reinstated automatically on the tenth day following such drawing, unless the LOC Bank notifies the Trustee prior to such day that such interest amount will not be reinstated.

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 similar 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 ten (10) succeeding business days.

The Letter of Credit issued by the LOC Bank will expire on August 22, 2010. Unless the Letter of Credit is (i) renewed or extended in accordance with its terms, (ii) appropriately replaced, or (iii) terminated in connection with the issuance of the SONYMA Insurance for the Mortgage Loan, the Resolution provides that the 2007 Bonds will be redeemed in whole prior to such expiration date. (See “Description of the 2007 Bonds—2007 Series A Bonds—Special Mandatory Redemption” and “—2007 Series B Bonds—Special Mandatory Redemption.”)

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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 of the 2007 Bonds, the 2007 Bonds shall be subject to mandatory redemption in whole. (See “Description of the 2007 Bonds—2007 Series A Bonds—Special Mandatory Redemption” and “—2007 Series B Bonds—Special Mandatory Redemption.”)

LETTER OF CREDIT BANK

General

The following information is provided by the LOC Bank. The Agency and the Mortgagor make no representations as to its accuracy:

The Bank of New York (the “Bank”) is the principal subsidiary of The Bank of New York Company, Inc. (NYSE: BK), a financial holding company. The Bank was founded in 1784 by Alexander Hamilton and is the nation’s oldest bank. The Bank is a State chartered New York banking corporation and a member of the Federal Reserve System. Its business is subject to examination and regulation by federal and state banking authorities.

The Bank has long-term senior debt ratings of “AA-”/“Aaa” and short-term ratings of “A 1+”/“P1” from Standard & Poor’s Rating Services and Moody’s Investors Service, Inc., respectively. The Bank’s principal office is located at One Wall Street, New York, New York 10286. A copy of the most recent Annual Report and Form 10-K of The Bank of New York Company, Inc. may be obtained from the Public Relations Department, One Wall Street, 31st Floor, (212) 635-1569 or by visiting www.bankofny.com.

In December 2006, The Bank of New York Company, Inc. and Mellon Financial Corporation entered into a definitive agreement to merge, which would create one of the largest securities servicing and asset management firms globally. The new company, which will be called The Bank of New York Mellon Corporation, is expected to have $18 trillion in assets under custody, and $11 trillion in assets under trusteeship, and will rank among the top global asset managers with more than $1 trillion in assets under management. The merger closed as of July 1, 2007.

The Bank is responsible only for the information contained in this part of the Official Statement and did not participate in the preparation of or in any way verify the information contained in any other part of the Official Statement. Accordingly, the Bank assumes no responsibility for and makes no representation or warranty as to the accuracy or completeness of information contained in any other part of the Official Statement.

Delivery of this Official Statement shall not create any implication that there has been no change in the affairs of the Bank since the date hereof, or that the information contained or referenced under this heading is correct as of any time subsequent to the date of such information.

None of such information or any of the statements referred to in the preceding paragraphs is guaranteed as to accuracy or completeness by the Agency, or is to be construed as a representation by the Agency. Furthermore, the Agency makes no representation as to the financial condition or resources of The Bank of New York or as to the absence of material adverse changes subsequent to December 2006 in such information or in the information contained in the statements referred to above.

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STATE OF NEW YORK MORTGAGE AGENCY

General

The State of New York Mortgage Agency Act, Chapter 612 of the Laws of New York, 1970, as amended (the “SONYMA Act”), authorizes SONYMA, a public benefit corporation of the State, among other things, to enter into commitments to insure mortgages and contracts of mortgage insurance and to contract to facilitate the financial activities of the Convention Center Development Corporation (the “CCDC”), a subsidiary of the New York State Urban Development Corporation, and to fulfill SONYMA’s obligations and enforce its rights under any insurance or financial support so furnished. Part II of the SONYMA Act, authorizing, among other things, the mortgage insurance program, was adopted by the State Legislature in 1978 to encourage financial institutions to make mortgage loans in neighborhoods suffering from disinvestment by providing mortgage insurance to minimize the investment risk. In 1989, the SONYMA Act was amended to authorize SONYMA to provide insurance for a loan or pool of loans (a) when the property is located in an “economic development zone” as defined under State law, (b) when the property will provide affordable housing, (c) when the entity providing the mortgage financing was or is created by local, state or Federal legislation, and certifies to SONYMA that the project meets the program criteria applicable to such entity or (d) when the property will provide a retail or community service facility that would not otherwise be provided. The Mortgage Loan is eligible for insurance under the SONYMA Act.

In December 2004, the SONYMA Act was amended to authorize SONYMA to enter into agreements with CCDC to provide a source or potential source of financial support to bonds of the CCDC and, to the extent not otherwise provided in respect of the support of bonds, for its ancillary bond facilities.

The SONYMA Act authorizes SONYMA to create a mortgage insurance fund (the “Mortgage Insurance Fund”). The Mortgage Insurance Fund is used as a revolving fund for carrying out the provisions of the SONYMA Act with respect to mortgages insured thereunder and with respect to providing credit support for the CCDC bonds or ancillary bond facilities. The 2007 Bonds are not secured by monies held in the Mortgage Insurance Fund and SONYMA is not liable on the 2007 Bonds. The SONYMA Act provides that all monies held in the Mortgage Insurance Fund, with certain exceptions, shall be used solely for the payment of its liabilities arising from mortgages insured by SONYMA or for providing credit support for the CCDC bonds or ancillary bond facilities pursuant to the SONYMA Act. Only monies in the appropriate accounts of the Mortgage Insurance Fund will be available to SONYMA for payment of SONYMA’s liabilities under the SONYMA Insurance.

The SONYMA Act establishes within the Mortgage Insurance Fund a special account (the “Special Account”), a single family pool insurance account with respect to insurance related to one to four dwelling units (the “Single Family Pool Insurance Account”), a project pool insurance account with respect to insurance on other properties (the “Project Pool Insurance Account”), and a development corporation credit support account with respect to providing credit support for the bonds or ancillary bond facilities of the CCDC (the “Development Corporation Credit Support Account”). The Development Corporation Credit Support Account is a source or potential source of payment of the sum of the respective amounts (or percentages) of required or permissive funding by the CCDC of each reserve and financial support fund established by the CCDC for its bonds and, to the extent not otherwise provided in respect of the support of bonds, for its ancillary bond facilities for which SONYMA has determined that the Development Corporation Credit Support Account is or will be a source or potential source of funding. The Mortgage Loan, upon issuance of the SONYMA Insurance, will be insured under the Project Pool Insurance Account. The SONYMA Act provides that assets of the Special Account, the Single Family Pool Insurance Account, the Project Pool Insurance Account and the Development Corporation Credit Support Account shall be kept separate and shall not be commingled with each other

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or with any other accounts which may be established from time to time, except as authorized by the SONYMA Act. The claims-paying ability of the Project Pool Insurance Account and the Single Family Pool Insurance Account of the Mortgage Insurance Fund are rated “Aa1” and “Aaa,” respectively, by Moody’s Investors Service. The claims-paying ability of the Project Pool Insurance Account and the Single Family Pool Insurance Account of the Mortgage Insurance Fund are rated “AA-” and “AA+,” respectively, by Fitch, Inc. Such ratings were affirmed by each respective organization on September 22, 2005 and reflect only the views of such organizations; an explanation of the significance of such ratings may be obtained from the respective rating agencies. There is no assurance that such ratings will continue for any period of time or that they will not be revised downward or withdrawn entirely by such rating agencies if, in their judgment, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2007 Bonds. These ratings were established subsequent to SONYMA’s change in its procedures to now require that reserves established with respect to project primary insurance it provides be deposited to the Project Pool Insurance Account. The claims paying ability of the Development Corporation Credit Support Account has not been rated. The SONYMA Act provides that SONYMA may not execute a contract to provide credit support to the bonds or ancillary bond facilities of the CCDC if, at the time such contract is executed, such execution would impair any then existing credit rating of the Single Family Pool Insurance Account or the Project Pool Insurance Account. The payment of principal of and interest on the 2007 Bonds is not secured by or payable from monies held in the Project Pool Insurance Account. The SONYMA Act provides that all monies held in the Project Pool Insurance Account, with certain exceptions, shall be used solely for the payment of its liabilities arising from mortgages insured by SONYMA pursuant to the SONYMA Act.

The Mortgage Insurance Fund is funded primarily by a surtax on the State mortgage recording tax. Section 253(1-a) of the State Tax Law (the “State Tax Law”) imposes a surtax (the “Tax”) on recording mortgages of real property situated within the State. Excluded from the Tax are, among others, recordings of mortgages executed by voluntary nonprofit hospital corporations, mortgages executed by or granted to the Dormitory Authority of the State of New York and mortgages, wherein the mortgagee is a natural person, on mortgaged premises consisting of real property improved by a structure containing six or fewer residential dwelling units, each with separate cooking facilities. The Tax is equal to $0.25 for each $100 (and each remaining major fraction thereof) of principal debt which is secured by the mortgage. Section 261 of the State Tax Law requires the respective recording officers of each county of the State, on or before the tenth day of each month, after deducting certain administrative expenses incident to the maintenance of their respective recording offices, to pay SONYMA for deposit to the credit of the Mortgage Insurance Fund the portion of the Tax collected by such counties during the preceding month, except that: (i) with respect to mortgages recorded on and after May 1, 1987, the balance of the Tax paid during each month to the recording officers of the counties comprising the Metropolitan Commuter Transportation District on mortgages of any real property improved by a structure containing six residential dwelling units or less with separate cooking facilities, shall be paid over to the Metropolitan Transportation Authority; (ii) with respect to mortgages recorded on and after May 1, 1987, the balance of the Tax paid during each month to the recording officers of the County of Erie on mortgages of any real property improved by a structure containing six residential dwelling units or less with separate cooking facilities, shall be paid over to the State Comptroller for deposit into the Niagara Frontier Transportation Authority light rail rapid transit special assistance fund; and (iii) Taxes paid upon mortgages covering real property situated in two or more counties shall be apportioned by the State Tax Commission among SONYMA, the Metropolitan Transportation Authority and the Niagara Frontier Transportation Authority, as appropriate.

Mortgage recording taxes have been collected in the State for more than 75 years. SONYMA has been entitled to receive Tax receipts since December 1978. Under existing law, no further action on the part of the State legislature is necessary for the Mortgage Insurance Fund to continue to receive such monies. However, the State is not bound or obligated to impose, or to impose at current levels, the mortgage recording taxes described above or to direct the proceeds to SONYMA as currently provided.

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The Mortgage Insurance Fund’s receipt of Tax receipts is dependent upon the performance by the county recording officers of their collection and remittance obligations; the State Tax Commission is given general supervisory power over such officers. Tax receipts paid to the Mortgage Insurance Fund in calendar years 2002, 2003, 2004, 2005 and 2006 were approximately $83 million, $106 million, $131 million, $168 million and $184 million, respectively.

The SONYMA Act provides that SONYMA must credit the amount of money received from the recording officer of each county to the Special Account. The SONYMA Act provides that SONYMA may credit from the Special Account to the Single Family Pool Insurance Account, the Project Pool Insurance Account or the Development Corporation Credit Support Account, such moneys as are needed to satisfy the mortgage insurance fund requirement of the Single Family Pool Insurance Account, the Project Pool Insurance Account and the Development Corporation Credit Support Account, respectively, except that during any twelve-month period ending on March thirty-first the aggregate amount credited to the Development Corporation Credit Support Account (excluding investment earnings thereon) shall not exceed the lesser of (i) fifty million dollars or (ii) the aggregate of the amounts required under the contracts executed by SONYMA to provide credit support to the CCDC’s bonds or ancillary bond facilities. The SONYMA Act also provides that, if at any time the monies, investments and cash equivalents (valued as determined by SONYMA) of the Single Family Pool Insurance Account, the Project Pool Insurance Account or the Development Corporation Credit Support Account exceed the amount necessary to attain and maintain the credit rating or, with respect to credit support to the CCDC’s bonds or ancillary bond facilities, credit worthiness (as determined by SONYMA) required to accomplish the purposes of such Accounts, SONYMA shall transfer such excess to the Special Account. Any excess balance in the Special Account is required to be remitted to the State annually. The SONYMA Act provides that no monies shall be withdrawn from any account within the Mortgage Insurance Fund at any time in such amount as would reduce the amount in each account of such fund to less than its applicable mortgage insurance fund requirement, except for the purpose of paying liabilities as they become due and for the payment of which other monies are not available. There can be no assurance that the amounts on deposit in the Special Account, the Single Family Pool Insurance Account or the Project Pool Insurance Account will not be depleted through payment of liabilities arising with respect to insured mortgage loans other than the Mortgage Loan, or that the Development Corporation Credit Support Account will not be depleted through payment of liabilities arising with respect to providing credit support to the CCDC.

The Mortgage Insurance Fund Requirement as of any particular date of computation is equal to an amount of money or cash equivalents equal to (a) the aggregate of (i) the insured amounts of loans and such amount of credit support for the CCDC’s bonds or ancillary bond facilities that SONYMA has determined to be due and payable as of such date pursuant to its contracts to insure mortgages or provide credit support for the CCDC’s bonds or ancillary bond facilities plus (ii) an amount equal to twenty per centum of the amounts of loans insured under SONYMA’s insurance contracts plus twenty per centum of the amounts to be insured under SONYMA’s commitments to insure less the amounts payable pursuant to subparagraph (i) above; (provided, however, that if the board of directors of SONYMA shall have established a different per centum for a category of loans pursuant to the SONYMA Act, such per centum shall be substituted for twenty per centum in this paragraph as, for example, the March 2001 determination that the per centum for special needs facilities was forty per centum), plus (iii) an amount equal to the respective amounts established by contracts under which SONYMA has determined that the Development Corporation Credit Support Account will provide credit support for CCDC, less the amounts payable with respect to credit support for CCDC’s bonds or ancillary bond facilities pursuant to subparagraph (i) above less (b) the aggregate of the amount of each reinsurance contract procured in connection with obligations of SONYMA determined by SONYMA to be a reduction pursuant to this paragraph in calculating the Mortgage Insurance Fund Requirement. Pursuant to the SONYMA Act, the board of directors of SONYMA may, from time to time, establish a Mortgage Insurance Fund Requirement in an amount higher than the twenty per centum set forth above. In March 2001, the board of directors of SONYMA authorized a Mortgage Insurance Fund Requirement of forty per centum for

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special needs facilities. There can be no assurance that, in the future, there will not be additional changes in the Mortgage Insurance Fund Requirement for any category of loans.

The Mortgage Insurance Fund provides primary mortgage insurance for various types of properties including single and multi-family residences, special needs facilities and retail and community service facilities. Since 1989, the Mortgage Insurance Fund has been providing pool insurance (the “Single Family Pool Insurance”) for mortgages that SONYMA financed pursuant to its single family forward commitment programs. The Mortgage Insurance Fund currently provides pool insurance coverage on certain mortgage loans purchased with proceeds of certain of SONYMA’s bonds. The CCDC received authorization in December 2004 to issue the bonds and to enter into the ancillary bond facilities for which the SONYMA Act authorizes SONYMA to provide credit support.

As of March 31, 2007, the Mortgage Insurance Fund’s total liability against commitments and against policies in force was $2,252,583,927 of which $1,838,251,056 was against project mortgage insurance commitments and policies in force, the balance of $414,332,871 being against single family primary and pool insurance commitments and policies in force. As of March 31, 2007, the Mortgage Insurance Fund had a total loan amount on outstanding commitments and policies in force of $8,956,659,503 of which $1,999,455,229 represented the total loan amount on outstanding project mortgage insurance commitments and policies in force, the balance of $6,957,204,274 being the total loan amount on outstanding single family primary and pool insurance commitments and policies in force.

As of March 31, 2007, the Project Pool Insurance Account had paid 38 project mortgage insurance claims for loss in the aggregate amount of $84,288,197. As of March 31, 2007, the Mortgage Insurance Fund had 11 project mortgage insurance policies in force on which claims for loss had been submitted. SONYMA estimates that its total liability thereon is $64,306,938. As of March 31, 2007, the Mortgage Insurance Fund had paid 1,119 single family primary and pool mortgage insurance claims for loss in the aggregate amount of $23,003,595.

On September 28, 2005, the board of directors of SONYMA authorized SONYMA to enter into a credit support agreement with CCDC, pursuant to which SONYMA has agreed to provide credit support for the New York Convention Center Development Corporation Revenue Bonds (Hotel Unit Fee Secured) Series 2005 (the “CCDC Series 2005 Bonds”) issued by CCDC. SONYMA has made an initial deposit of $33.8 million into the Development Corporation Credit Support Account and, thereafter, will maintain a minimum balance of $25 million in such Account. These moneys will be used to support the payment of an amount equal to up to one-third of the scheduled principal and interest due on the CCDC Series 2005 Bonds.

In addition to the mortgage insurance program and the credit support program, the SONYMA Act authorizes SONYMA to purchase and make commitments to purchase mortgage loans on single-family (one-to-four unit) housing and home improvement loans from certain lenders in the State. The SONYMA Act also empowers SONYMA to make and purchase certain student loans. SONYMA may issue its bonds to finance purchases of loans.

Copies of SONYMA’s annual report for the fiscal year ended October 31, 2006 and audited financial statements for the fiscal year ended October 31, 2006 are available from the State of New York Mortgage Agency, 641 Lexington Avenue, New York, New York 10022, telephone (212) 688-4000.

SONYMA makes no representations as to the contents of this Official Statement (other than this section), the suitability of the 2007 Bonds for any investor, the feasibility of the Project or compliance with any securities or tax laws and regulations which may relate to the issuance and sale of the 2007 Bonds.

SONYMA’s role is limited to providing the coverage set forth in the SONYMA Insurance.

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SONYMA Insurance

It is anticipated that the Mortgage Loan will be insured by SONYMA Insurance upon compliance with certain conditions which include, but are not limited to, satisfactory completion of the construction of the Project and the satisfaction of certain rent achievement levels.

Pursuant to the SONYMA Insurance with respect to the Mortgage Loan, following certain defaults under the Mortgage securing the Mortgage Loan, the Agency shall file a claim for loss with SONYMA. Thereupon, SONYMA has the option to (i) make periodic payments of its obligation under the SONYMA Insurance in amounts equal to the Mortgage Repayments due with respect to the Mortgage Loan plus certain other amounts expended by the Agency (for which the Agency has not been reimbursed), (ii) make a lump sum payment under the SONYMA Insurance in an amount equal to the sum of the principal outstanding and interest accrued on the Mortgage Loan from the date of a covered default to the date of the redemption of Bonds and certain other amounts expended by the Agency (for which the Agency has not been reimbursed), (iii) make a partial lump sum payment under the SONYMA Insurance in an amount equal to all principal and interest accrued and unpaid on the insured Mortgage Loan, plus any additional amount to be applied to the principal of the Mortgage Loan, plus interest from the date of a covered default to the date of the redemption of Bonds and certain other amounts expended by the Agency (for which the Agency has not been reimbursed), or (iv) make a mandatory tender payment in an amount equal to the outstanding principal amount of the Mortgage Loan, plus interest to the mandatory tender date of the Bonds.

Periodic payments are to be made monthly. In addition, if SONYMA has chosen initially to make periodic payments it may nevertheless exercise its option to make a lump sum payment in the full amount of its then outstanding obligation under the SONYMA Insurance, a partial lump sum payment or a mandatory tender payment at any time.

Upon a lump sum payment by SONYMA, the Agency shall assign the Mortgage to SONYMA. Pursuant to the Resolution, a lump sum payment or a partial lump sum payment received from SONYMA constitutes a Recovery Payment and is to be applied to the redemption of the 2007 Series A Bonds. (See “Description of the 2007 Bonds—2007 Series A Bonds—Extraordinary Redemption.”)

Upon a mandatory tender payment by SONYMA, the Trustee shall give notice that the 2007 Series A Bonds are subject to special mandatory tender for purchase in whole pursuant to the Resolution. (See “Description of the 2007 Bonds—2007 Series A Bonds—Special Mandatory Tender.”)

For specific information on the coverage provided by the SONYMA Insurance, reference should be made to the “Special Terms and Conditions of SONYMA Insurance,” which is available at the Agency. SONYMA makes no representation as to the contents of this Official Statement (other than this section), the suitability of the 2007 Bonds for any investor, the feasibility of the Project or compliance with any securities or tax laws and regulations which may relate to the issuance and sale of the 2007 Bonds.

SONYMA’s role is limited to providing the coverage set forth in the SONYMA Insurance.

The SONYMA Insurance with respect to the Mortgage Loan may terminate pursuant to its terms upon the occurrence of certain events including the nonpayment of renewal premium, the modification of the Mortgage without the prior written approval of SONYMA, and the disposal of property or collateral securing the Mortgage Loan prior to the final settlement of a claim for loss. The Agency has covenanted not to take any action to conflict with SONYMA requirements or procedures so as to jeopardize the SONYMA Insurance. In addition, in the event of a default under the Mortgage Loan, the Agency has covenanted to undertake to assign the Mortgage Loan to SONYMA in a timely fashion so as to avoid any loss or diminution of benefits receivable as SONYMA Insurance and to make claims for SONYMA

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Insurance in cash (see “Summary of Certain Provisions of the General Resolution—Covenants Relating to Mortgages—Enforcement of Mortgage Loans, Credit Facilities and SONYMA Insurance” herein).

DESCRIPTION OF THE 2007 BONDS

General

The 2007 Bonds shall be dated August 1, 2007, subject to the provisions of the General Resolution, and shall bear interest from the date thereof payable semi-annually on February 15 and August 15 of each year commencing February 15, 2008 at the rates and shall mature on the dates and in the amounts as shown on the cover page hereof.

The 2007 Bonds will be issued as fully registered bonds in denominations of $5,000 or integral multiples thereof. The 2007 Bonds are exchangeable or transferable at the corporate trust office of the Trustee. For every such exchange or transfer of the 2007 Bonds, the Agency or the Trustee may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer, which sum or sums shall be paid by the person requesting such exchange or transfer as a condition precedent to the exercise of the privilege of making such exchange or transfer.

The principal or Redemption Price of and interest on the 2007 Bonds will be payable in legal tender of the United States of America at the corporate trust office of HSBC Bank USA, National Association, New York, New York, the Trustee.

Book-Entry-Only System

The Depository Trust Company (“DTC”), New York, New York, will act as the securities depository for the 2007 Bonds. The 2007 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered 2007 Series A Bond certificate and one fully-registered 2007 Series B Bond certificate will be issued for each maturity of the 2007 Bonds of such Series, each in the aggregate principal amount of such maturity of such Series, and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues and money market instruments from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (“NSCC”, “FICC” and “EMCC”, respectively, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either

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directly or indirectly (“Indirect Participants”, and together with Direct Participants, “Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission.

Purchases of the 2007 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2007 Bonds on DTC’s records. The ownership interest of each actual purchaser of each 2007 Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2007 Bonds are to be accomplished by entries made on the books of Direct or Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in a particular Series of 2007 Bonds, except in the event that use of the book-entry system for such Series of 2007 Bonds is discontinued.

To facilitate subsequent transfers, all 2007 Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the 2007 Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2007 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct or Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Redemption notices shall be sent to DTC. If less than all of the 2007 Bonds within a maturity of a particular Series are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the 2007 Bonds unless authorized by a Direct Participant in accordance with DTC’s procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Agency as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the 2007 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments on the 2007 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts, upon DTC’s receipt of funds and corresponding detail information from the Agency or the Trustee on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the Agency, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Agency or the Trustee, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.

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DTC may discontinue providing its services as securities depository with respect to the 2007 Series A Bonds and/or the 2007 Series B Bonds at any time by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, the 2007 Series A Bond certificates and/or the 2007 Series B Bond certificates, as the case may be, are required to be printed and delivered.

The Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, the 2007 Series A Bond certificates and/or the 2007 Series B Bond certificates, as the case may be, will be printed and delivered to DTC.

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

Each person for whom a Participant acquires an interest in the 2007 Bonds, as nominee, may desire to make arrangements with such Participant to receive a credit balance in the records of such Participant, and may desire to make arrangements with such Participant to have all notices of redemption or other communications to DTC, which may affect such persons, to be forwarded by such Participant and to have notification made of all interest payments. NEITHER THE AGENCY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO SUCH PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE 2007 BONDS.

So long as Cede & Co. is the registered owner of the 2007 Bonds, as nominee for DTC, references herein to the Bondholders or registered owners of the 2007 Bonds (other than under the captions “Tax Matters” and “Continuing Disclosure” herein) shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners of the 2007 Bonds.

When reference is made to any action which is required or permitted to be taken by the Beneficial Owners, such reference shall only relate to those permitted to act (by statute, regulation or otherwise) on behalf of such Beneficial Owners for such purposes. When notices are given, they shall be sent by the Trustee to DTC only.

For every transfer and exchange of the 2007 Bonds, the Beneficial Owner may be charged a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto.

The Agency, in its sole discretion and without the consent of any other person, may terminate the services of DTC with respect to a Series of the 2007 Bonds if the Agency determines that (i) DTC is unable to discharge its responsibilities with respect to the 2007 Bonds of such Series, or (ii) a continuation of the requirement that all of the Outstanding Bonds be registered in the registration books kept by the Trustee in the name of Cede & Co., as nominee of DTC, is not in the best interests of the Beneficial Owners. In the event that no substitute securities depository is found by the Agency or restricted registration is no longer in effect, the 2007 Series A Bond certificates and/or the 2007 Series B Bond certificates, as the case may be, will be delivered as described in the Resolution.

Tenders in Book-Entry-Only Form

During any period in which any of the 2007 Bonds are registered in book-entry-only form, such Bonds shall be tendered for purposes of any Special Mandatory Tender by means of a book-entry credit of such Bonds to the account of the Tender Agent. During any period in which any of the 2007 Bonds are registered in book-entry-only form, delivery of such Bonds for all purposes of such Bonds (other than for that purpose set forth in the preceding sentence) shall be made pursuant to a book-entry credit to the account of the Beneficial Owner of such Bonds or its Participant.

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2007 Series A Bonds

Sinking Fund Redemption

The 2007 Series A Term Bonds are subject to redemption prior to maturity through Sinking Fund Payments established by the 2007 Series A Resolution on the dates set forth below and in the respective principal amounts set forth opposite each such date (the particular 2007 Series A Term Bonds or portions thereof are to be selected by the Trustee as provided in the General Resolution), in each case at a Redemption Price of 100% of the principal amount of the 2007 Series A Term Bonds or portions thereof to be redeemed, plus accrued interest to the date of redemption:

2007 Series A Term Bonds Due February 15, 2039

Date Sinking Fund Payment Date

Sinking Fund Payment

Aug. 15, 2009 $ 10,000 Aug. 15, 2024 $30,000 Feb. 15, 2010 15,000 Feb. 15, 2025 30,000 Aug. 15, 2010 15,000 Aug. 15, 2025 30,000 Feb. 15, 2011 15,000 Feb. 15, 2026 30,000 Aug. 15, 2011 15,000 Aug. 15, 2026 30,000 Feb. 15, 2012 15,000 Feb. 15, 2027 35,000 Aug. 15, 2012 15,000 Aug. 15, 2027 30,000 Feb. 15, 2013 15,000 Feb. 15, 2028 35,000 Aug. 15, 2013 15,000 Aug. 15, 2028 35,000 Feb. 15, 2014 15,000 Feb. 15, 2029 35,000 Aug. 15, 2014 20,000 Aug. 15, 2029 40,000 Feb. 15, 2015 15,000 Feb. 15, 2030 35,000 Aug. 15, 2015 20,000 Aug. 15, 2030 40,000 Feb. 15, 2016 15,000 Feb. 15, 2031 40,000 Aug. 15, 2016 20,000 Aug. 15, 2031 40,000 Feb. 15, 2017 20,000 Feb. 15, 2032 45,000 Aug. 15, 2017 20,000 Aug. 15, 2032 40,000 Feb. 15, 2018 20,000 Feb. 15, 2033 45,000 Aug. 15, 2018 20,000 Aug. 15, 2033 50,000 Feb. 15, 2019 20,000 Feb. 15, 2034 45,000 Aug. 15, 2019 25,000 Aug. 15, 2034 50,000 Feb. 15, 2020 20,000 Feb. 15, 2035 45,000 Aug. 15, 2020 25,000 Aug. 15, 2035 55,000 Feb. 15, 2021 25,000 Feb. 15, 2036 50,000 Aug. 15, 2021 25,000 Aug. 15, 2036 55,000 Feb. 15, 2022 25,000 Feb. 15, 2037 55,000 Aug. 15, 2022 25,000 Aug. 15, 2037 55,000 Feb. 15, 2023 25,000 Feb. 15, 2038 55,000 Aug. 15, 2023 25,000 Aug. 15, 2038 60,000 Feb. 15, 2024 30,000 Feb. 15, 2039 55,000*

_____________ * Final maturity.

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The principal amount of 2007 Series A Term Bonds to be redeemed pursuant to the mandatory Sinking Fund Payments as set forth above may be reduced, at the option of the Mortgagor, in any year specified by the Mortgagor by the principal amount of any such 2007 Series A Term Bonds which at least forty-five (45) days prior to such redemption have been delivered by the Mortgagor to the Trustee for cancellation, or have been purchased or redeemed (other than through operation of the Sinking Fund Account) and cancelled by the Trustee and not theretofore applied as a credit against such mandatory redemption requirement.

Optional Redemption

The 2007 Series A Bonds maturing on or after February 15, 2018 are subject to redemption prior to maturity, at the option of the Agency, in whole or in part by lot within a maturity on August 15, 2017, or on any date thereafter, at a Redemption Price of 100% of the principal amount of the 2007 Series A Bonds or portions thereof to be redeemed plus accrued interest to the date of redemption.

Extraordinary Redemption

The 2007 Series A Bonds are subject to redemption at any time in whole or in part by lot within a maturity at a Redemption Price of 100% of the principal amount of the 2007 Series A Bonds or portions thereof to be redeemed plus accrued interest to the date of redemption as a result of (i) monies on deposit in the Bond Proceeds Account or the Construction Financing Account to the extent not used to make the portion of the Mortgage Loan funded with proceeds of the 2007 Series A Bonds, (ii) Recovery Payments due to (a) proceedings taken by the Agency in the event of a default by the Mortgagor or the Record Titleholder, including the sale, assignment or other disposition of the Mortgage Loan or Project in accordance with the terms of the SONYMA Insurance or applicable Credit Facility, or (b) condemnation of the Project or any part thereof or hazard insurance proceeds payable with respect to the damage or destruction of the Project and which are not applied to the repair or reconstruction of the Project or (iii) a reduction in the amount of the Mortgage Loan insured by SONYMA.

Special Mandatory Redemption

The 2007 Series A Bonds are also subject to redemption in whole at any time at a Redemption Price of 100% of the principal amount of the 2007 Series A Bonds plus accrued interest to the date of redemption as a result of the following events of special mandatory redemption:

(A) the LOC Bank shall not have wrongfully dishonored a draw under the Letter of Credit (or the LOC Bank shall have cured any such wrongful dishonor), and the Trustee shall have received from the LOC Bank written notice of an event of default under the Letter of Credit Agreement, which notice expressly states the LOC Bank’s intent that all of the 2007 Series A Bonds be redeemed in accordance with the Resolution;

(B) the Letter of Credit will, by its terms, expire within 15 days and the Letter of Credit has not been renewed, extended or replaced with SONYMA Insurance or another Credit Facility satisfying the requirements of the Resolution;

(C) the LOC Bank shall wrongfully fail to honor a draw by the Trustee upon the Letter of Credit, provided the 2007 Series A Bonds shall not be the subject of special mandatory redemption under this provision for a period of up to three months if on the day of such wrongfully dishonored draw the funds on deposit in the Debt Service Fund and the Debt Service Reserve Fund are at least equal to the amount of the wrongfully dishonored draw and no event of default has occurred and is continuing under the Mortgage. If after exercising its best efforts, the Agency fails to obtain a substitute Credit Facility, then the 2007 Series A Bonds shall be the subject of a special mandatory redemption;

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(D) if the Letter of Credit does not provide for automatic reinstatement, failure within the reinstatement period, as referred to in the Letter of Credit, to reinstate the Letter of Credit to an amount which would cause the Letter of Credit to satisfy the definition thereof set forth in the Resolution; or

(E) the Agency shall have given a written notice to the Trustee that an event of default has occurred under the Regulatory Agreement and that the Agency intends to have the 2007 Series A Bonds redeemed in accordance with the Resolution.

To the extent of any authorized substitute or confirming Credit Facility pursuant to the provisions of the 2007 Series A Resolution, the foregoing redemption provisions may be exercised by or in conformance with such substitute or confirming Credit Facility, as the case may be, in accordance with the applicable provisions of the 2007 Series A Resolution.

2007 Series B Bonds

Special Extraordinary Redemption

The 2007 Series B Bonds are subject to redemption prior to maturity, in whole or in part by lot within a maturity on February 15, 2009, or on any date thereafter at a Redemption Price of 100% of the principal amount of the 2007 Series B Bonds or portions thereof to be redeemed plus accrued interest to the date of redemption as a result of monies received by the Agency on behalf of the Mortgagor as a prepayment in whole or in part of the portion of the Mortgage Loan funded with proceeds of the 2007 Series B Bonds. (See “Plan of Financing.”)

Extraordinary Redemption

The 2007 Series B Bonds are subject to redemption at any time in whole or in part by lot within a maturity at a Redemption Price of 100% of the principal amount of the 2007 Series B Bonds or portions thereof to be redeemed plus accrued interest to the date of redemption as a result of (i) monies on deposit in the Bond Proceeds Account or the Construction Financing Account to the extent not used to make the portion of the Mortgage Loan funded with proceeds of the 2007 Series B Bonds, or (ii) Recovery Payments due to (a) proceedings taken by the Agency in the event of a default by the Mortgagor or the Record Titleholder, including the sale, assignment or other disposition of the Mortgage Loan or Project in accordance with the terms of the Credit Facility, or (b) condemnation of the Project or any part thereof or hazard insurance proceeds payable with respect to the damage or destruction of the Project and which are not applied to the repair or reconstruction of the Project.

Special Mandatory Redemption

The 2007 Series B Bonds are also subject to redemption in whole at any time at a Redemption Price of 100% of the principal amount of the 2007 Series B Bonds plus accrued interest to the date of redemption as a result of the following events of special mandatory redemption:

(A) the LOC Bank shall not have wrongfully dishonored a draw under the Letter of Credit (or the LOC Bank shall have cured any such wrongful dishonor), and the Trustee shall have received from the LOC Bank written notice of an event of default under the Letter of Credit Agreement, which notice expressly states the LOC Bank’s intent that all of the 2007 Series B Bonds be redeemed in accordance with the Resolution;

(B) the Letter of Credit will, by its terms, expire within 15 days and the Letter of Credit has not been renewed, extended or replaced with another Credit Facility satisfying the requirements of the Resolution;

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(C) the LOC Bank shall wrongfully fail to honor a draw by the Trustee upon the Letter of Credit, provided the 2007 Series B Bonds shall not be the subject of special mandatory redemption under this provision for a period of up to three months if on the day of such wrongfully dishonored draw the funds on deposit in the Debt Service Fund and the Debt Service Reserve Fund are at least equal to the amount of the wrongfully dishonored draw and no event of default has occurred and is continuing under the Mortgage. If after exercising its best efforts, the Agency fails to obtain a substitute Credit Facility, then the 2007 Series B Bonds shall be the subject of a special mandatory redemption;

(D) if the Letter of Credit does not provide for automatic reinstatement, failure within the reinstatement period, as referred to in the Letter of Credit, to reinstate the Letter of Credit to an amount which would cause the Letter of Credit to satisfy the definition thereof set forth in the Resolution; or

(E) the Agency shall have given a written notice to the Trustee that an event of default has occurred under the Regulatory Agreement and that the Agency intends to have the 2007 Series B Bonds redeemed in accordance with the Resolution.

To the extent of any authorized substitute or confirming Credit Facility pursuant to the provisions of the 2007 Series B Resolution, the foregoing redemption provisions may be exercised by or in conformance with such substitute or confirming Credit Facility, as the case may be, in accordance with the applicable provisions of the 2007 Series B Resolution.

Redemption Provisions Relating to Optional, Extraordinary and Special Extraordinary Redemptions

In the case of the application of monies to the redemption, in part, of the 2007 Series A Bonds and 2007 Series B Bonds, respectively, as described under “—2007 Series A Bonds—Optional Redemption” or “—2007 Series A Bonds—Extraordinary Redemption”, and “—2007 Series B Bonds—Extraordinary Redemption”, or “—2007 Series B Bonds—Special Extraordinary Redemption” the principal amount and maturities of the 2007 Series A Bonds and 2007 Series B Bonds, respectively, to be redeemed shall be specified by the Agency; provided, however, that the application of such monies to the principal amount of the 2007 Series A Bonds and 2007 Series B Bonds, respectively, so specified by the Agency to be redeemed shall not have an adverse effect on the ability of the Agency to pay the principal of and interest on the 2007 Series A Bonds and 2007 Series B Bonds, respectively, remaining Outstanding.

Notice of Redemption

Notice of redemption, when required to be given pursuant to the General Resolution, shall be mailed, postage prepaid, not less than thirty (30) days nor more than sixty (60) days prior to the redemption date (except that in the event the 2007 Series A Bonds and the 2007 Series B Bonds, respectively, are subject to extraordinary redemption upon the occurrence of the events referred to in clauses (ii) and (iii) under “—2007 Series A Bonds—Extraordinary Redemption” and in clause (ii) under “—2007 Series B Bonds—Extraordinary Redemption”, or are subject to special mandatory redemption upon the occurrence of the events referred to under “—2007 Series A Bonds—Special Mandatory Redemption” and “—2007 Series B Bonds—Special Mandatory Redemption”, respectively, or the 2007 Series B Bonds are subject to special extraordinary redemption upon the occurrence of the event referred to under “—2007 Series B Bonds—Special Extraordinary Redemption”, the Trustee shall give the maximum notice possible, which may be no notice but in no event more than thirty (30) days notice), to the Holders of any 2007 Series A Bonds and 2007 Series B Bonds, respectively, or respective portions thereof to be redeemed, but such mailing shall not be a condition precedent to such redemption and failure so to mail any such notice shall not affect the validity of the proceedings for redemption of such Bonds.

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In the event that any 2007 Bonds are to be redeemed on a date on which all of the Bonds of such Series are subject to mandatory tender, no notice of such redemption need be given to Bondholders. Failure to receive such notice or any defect in such notice to the Holders of any 2007 Series A Bonds and 2007 Series B Bonds, respectively, or respective portions thereof to be redeemed shall not affect the validity of such proceedings for redemption of such Bonds or portions thereof. If, on the redemption date, monies for the redemption of the 2007 Series A Bonds and 2007 Series B Bonds, respectively, or respective portions thereof to be redeemed, together with interest to the redemption date, shall be held by the Trustee so as to be available therefor on said date and if notice of redemption shall have been given as aforesaid, then, from and after the redemption date, interest on the 2007 Series A Bonds and 2007 Series B Bonds, respectively, or respective portions thereof so called for redemption shall cease to accrue and become payable.

Special Mandatory Tender

The 2007 Series A Bonds are subject to special mandatory tender for purchase at the Purchase Price following the occurrence of a Special Tender Event on a Special Mandatory Tender Date. A Special Tender Event shall mean receipt by the Trustee of written notice from SONYMA that a “covered default” has occurred under the SONYMA Insurance relating to the Project together with (a) a written direction from SONYMA to the Trustee to purchase all of the 2007 Series A Bonds (other than 2007 Series A Bonds to be redeemed pursuant to clause (ii)(a) of “—2007 Series A Bonds—Extraordinary Redemption” above) on a date specified in such direction by SONYMA, which date shall not be later than eight (8) days following receipt by the Trustee of such direction, and also together with (b) an amount of money from SONYMA equal to the Purchase Price that will be due for such 2007 Series A Bonds to be purchased pursuant to such written direction from SONYMA, which money shall be deposited upon receipt by the Trustee in the Purchase Fund.

2007 Series A Bonds to be tendered for mandatory purchase which are not delivered by the Holders thereof on the Special Mandatory Tender Date will be deemed to have been tendered for mandatory purchase on such Special Mandatory Tender Date. If monies sufficient to pay the Purchase Price are held in the Purchase Fund on the Special Mandatory Tender Date, interest on such Bonds shall cease to accrue, and the former Holders of such Bonds will thereafter have no rights with respect to such Bonds except to receive payment from the Purchase Fund of the Purchase Price therefor upon surrender of such Bonds.

At its option, SONYMA may surrender any Constructively Tendered Bonds to the Trustee for cancellation on any business day after a Special Mandatory Tender Date. Any Constructively Tendered Bonds so surrendered by SONYMA shall be deemed redeemed. (See “State of New York Mortgage Agency—SONYMA Insurance.”)

Additional Bonds

Additional Series of Bonds on a parity with the 2007 Bonds may be issued under the General Resolution. (See “Summary of Certain Provisions of the General Resolution—Issuance of Additional Obligations.”)

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APPLICATION OF 2007 BOND PROCEEDS

The proceeds of the sale of the 2007 Series A Bonds, exclusive of accrued interest and premium, if any, shall be applied as follows:

For deposit in the Bonds Proceeds Account ..................................... $1,815,000 For deposit in Debt Service Reserve Fund ....................................... 45,000 Principal amount of 2007 Series A Bonds1....................................... $1,860,000

1 The underwriting fee ($36,284.07) and certain costs of issuance will be paid by the Mortgagor.

The proceeds of the sale of the 2007 Series B Bonds, exclusive of accrued interest and premium, if any, shall be applied as follows:

For deposit in the Bonds Proceeds Account ..................................... $1,490,000 Principal amount of 2007 Series B Bonds1 ....................................... $1,490,000

1 The underwriting fee ($25,367.93) and certain costs of issuance will be paid by the Mortgagor.

THE AGENCY

The Agency was created in 1960 by the Act and is a corporate governmental agency, constituting a public benefit corporation. The legislation creating the Agency determined the purpose thereof to be, in part, the providing of safe and sanitary housing accommodations, at rentals which families and persons of low income can afford, and which the ordinary operations of private enterprise cannot provide. To accomplish such purpose, the Agency is authorized to issue its bonds and notes to the investing public in order to encourage the investment of private capital through the Agency in mortgage loans to housing companies and eligible borrowers which, subject to State or Federal regulations as to rents, profits, dividends and disposition of their property, supply housing accommodations, and other facilities incidental or appurtenant thereto, to such families and persons.

The membership of the Agency consists of the Commissioner of Housing and Community Renewal, the Director of the Budget and the Commissioner of Taxation and Finance of the State of New York and four additional members appointed by the Governor, with the advice and consent of the Senate. The Governor designates from among the members appointed by him a Chairman, who serves as such during his term as a member. The Chairman of the Agency is also the chairman of the State of New York Mortgage Agency, the State of New York Municipal Bond Bank Agency, the Tobacco Settlement Financing Corporation and the New York State Affordable Housing Corporation. The members appointed by the Governor serve for the full or unexpired portions of six-year terms. The Agency’s present members and its principal officers are:

Judd S. Levy—Chairman

Paul Jones—Vice Chairman

John L. DiMarco—Member

Herbert E. Berman—Member

Deborah VanAmerongen—Commissioner, New York State Division of Housing and Community Renewal

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Barbara Billet—Acting Commissioner, New York State Department of Taxation and Finance

Paul E. Francis—Director, New York State Division of the Budget

Priscilla Almodovar—President and Chief Executive Officer

Marian A. Zucker—Executive Vice President

Charles Rosenwald—Senior Vice President, Chief Financial Officer and Chief Operating Officer

Justin E. Driscoll—Senior Vice President and Counsel

Michael Dalley—Senior Vice President

Charles Fischetti—Senior Vice President

Joanne Hounsell—Senior Vice President

Edwin Bonilla—Senior Vice President

Michael Friedman—Senior Vice President

Arlo Chase— Senior Vice President

Philip Lentz—Senior Vice President

The Agency’s officers currently also serve in the same capacities for the State of New York Municipal Bond Bank Agency, the New York State Affordable Housing Corporation, the State of New York Mortgage Agency and the Tobacco Settlement Financing Corporation.

First Albany Capital Inc. acted as financial advisor to the Agency in connection with the sale and issuance of the 2007 Bonds.

The Agency and its corporate existence shall continue until terminated by law; provided, however, that no such law shall take effect so long as the Agency has bonds, notes or other obligations outstanding. The powers of the Agency, as defined in the Act, are vested in and exercised by no less than four of the members thereof then in office. The Agency may delegate to one or more of its members, or its officers, agents and employees, such powers and duties as it may deem proper.

The Agency is authorized to issue bonds and notes to provide funds for the purpose of making mortgage loans to limited-profit housing companies, non-profit housing companies, urban rental housing companies, owners of multi-family Federally-aided projects, owners of multi-family housing accommodations, nursing home companies, non-profit hospital and medical corporations, community development corporations, community mental health services and community mental retardation services companies, non-profit corporations authorized to provide youth facilities projects, and community senior citizens centers and services companies; for the purpose of making loans to lending institutions to finance mortgage loans for multi-family housing accommodations; for the purpose of making equity loans to mutual housing companies, and certain other corporations, organized in accordance with the provisions of the Private Housing Finance Law; for the purpose of financing health facilities for municipalities constituting social service districts; and for the purpose of making payments to certain public benefit corporations of the State to provide funds to repay the State for amounts advanced to finance the cost of various housing assistance programs administered by such public benefit corporations. The Agency was previously authorized to issue bonds and notes for the purpose of financing State University facilities and

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mental hygiene facilities. The Agency is also authorized to issue bonds and notes to provide funds for the purpose of making mortgage loans to projects combining non-profit housing and health facilities.

As of May 31, 2007, to provide funds for the aforementioned purposes the Agency had issued bonds in the aggregate principal amount of $19,551,746,000, of which $7,391,646,000 was outstanding. The bonds issued and to be issued for the aforementioned purposes (other than the 2007 Bonds and any Additional Bonds that may be issued under the General Resolution) are not and will not be secured by the Mortgage Repayments or by any funds or accounts established under the General Resolution for the purpose of securing the Bonds. The 2007 Bonds and any such Additional Bonds are not and will not be secured by the property pledged by the Agency for the purpose of securing other bonds issued by the Agency.

From time to time, legislation is introduced on the Federal and State levels which, if enacted into law, could affect the Agency and its operations. The Agency is not able to represent whether such bills will be introduced in the future or become law. In addition, the State undertakes periodic studies of public authorities in the State (including the Agency) and their financing programs. Any of such periodic studies could result in proposed legislation which, if adopted, could affect the Agency and its operations.

The Project 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, 1976. 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.

SUMMARY OF CERTAIN PROVISIONS OF THE GENERAL RESOLUTION

The General Resolution contains terms and conditions relating to the issuance and sale of Bonds, including various covenants and security provisions, certain of which are summarized below. This summary does not purport to be comprehensive or definitive and is subject to all of the provisions of the General Resolution, to which reference is hereby made, copies of which are available from the Agency or the Trustee. This summary uses various terms defined in the General Resolution and such terms as used herein shall have the same meanings as so defined.

Resolution Constitutes Contract

The Resolution shall be deemed to be and shall constitute a contract between the Agency and the Holders of the Bonds, and the pledges made in the Resolution and the covenants and agreements therein set forth to be performed by the Agency shall be for the equal benefit, protection and security of the Holders of any and all of the Bonds and such additional Bonds as may be issued under the Resolution from time to time, as described below. All such Bonds will be of equal rank, without preference, priority or distinction over any other, regardless of the time of issue or maturity, unless otherwise expressly provided in the Resolution.

Authorization and Issuance of Bonds

Bonds of the Agency to be known and designated as “Cannon Street Senior Apartments Multi-Family Housing Revenue Bonds” may be issued from time to time under the Resolution pursuant to Series Resolutions to provide funds for the financing of the Project. The Bonds will be special revenue obligations of the Agency payable only from the funds and accounts (excluding the Bank Repayment Fund, the Purchase Fund, and the respective Credit Facilities (or portions thereof)) established under the

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Resolution. The State of New York will not be liable on the Bonds and the Bonds will not be a debt of the State of New York.

Pledge of Security

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 all Bonds. The Mortgage Repayments, Mortgage Advance Amortization Payments, Recovery Payments, and all funds and accounts established under the Resolution (excluding the Bank Repayment Fund and the Purchase Fund) including the investments thereof and the proceeds of such investments, are so pledged. The pledge is subject only to the application of such monies for the purposes of the Resolution and is valid and binding as against all parties having claims against the Agency from and after the date of the Resolution, to the extent permitted by law; provided, however, that the pledge created thereby shall be subject to any required application of the earnings on investments to comply with the tax covenants set forth pursuant to any applicable Series Resolution authorized thereunder.

Custody and Application of Bond Proceeds

Each Series Resolution authorizing the issuance of a Series of Bonds is required to specify the purposes for which such Series of Bonds is being issued and to provide for the disposition of the proceeds thereof. Purposes for which Bonds may be issued are (i) the crediting of monies to the Bond Proceeds Account and the establishing of a Capitalized Interest Account and a Cost of Issuance Account if required by the Series Resolution authorizing the Bonds and depositing therein the monies required by such Series Resolution, (ii) payments into the Debt Service Reserve Fund of an amount equal to the Debt Service Reserve Fund Requirement, (iii) the funding of Notes, bonds or other obligations, which may include interest thereon, theretofore issued by the Agency to provide funds to make the Mortgage Loan on the Project which comply with the terms, conditions, provisions and limitations set forth in the Resolution, (iv) the refunding or redemption of Bonds, (v) provision for any Bond discount, and (vi) any combination of the foregoing.

Funds and Accounts

The Resolution establishes, or requires and provides for the establishment of, the funds and accounts to be held by the Trustee listed below:

(1) Bond Proceeds Account (2) Construction Financing Account (3) Revenue Fund (4) Debt Service Fund comprised of: (a) Interest Account (b) Principal Account (c) Sinking Fund Account (d) Redemption Account (5) Debt Service Reserve Fund (6) General Reserve Fund (7) Bank Repayment Fund (8) Capitalized Interest Accounts*(9) Cost of Issuance Accounts*

_______________* In connection with the 2007 Bonds, no deposits are being made to the Capitalized Interest Accounts or the Cost of Issuance Accounts.

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Bond Proceeds Account

As promptly as practicable after the issuance, sale and delivery of any Series of Bonds, the Agency shall pay into the Bond Proceeds Account established for such Series the amount of the proceeds derived from the sale of such Series, if any, and other amounts, if any, all as shall be designated in the applicable Series Resolution. Subject to the Resolution and the applicable Series Resolution, monies so deposited in such Bond Proceeds Account shall be applied by the Trustee (i) to fund the Mortgage Loan for the Project through deposits to the Construction Financing Account, (ii) to fund the Mortgage Loan in connection with the refinancing of outstanding mortgage loans for the Project, (iii) to fund the Mortgage Loan for the Project through the funding of bonds theretofore issued by the Agency, (iv) to fund disbursements for the Project, which disbursements are secured by Credit Facilities, but only to the extent such disbursements do not exceed the Cost of Issuance and underwriter’s discount for such Series of Bonds, (v) to fund the payment of Notes, bonds or other obligations, which may include interest thereon, theretofore issued by the Agency for the Project or (vi) to pay a portion of the purchase price of Investment Obligations to be held by the Trustee pursuant to the provisions of the Resolution. The amounts withdrawn pursuant to (vi) above shall be redeposited to the Bond Proceeds Account upon receipt by the Trustee of the first interest payment on the Investment Obligations so purchased.

Construction Financing Account

Upon compliance with certain conditions, including the execution of the Mortgage Note relating to the Mortgage Loan, the Agency may requisition the Trustee and the Trustee shall pay from the Bond Proceeds Account into the Construction Financing Account the amount designated in said requisition. Subject to the terms and conditions of the Resolution, monies so deposited in the Construction Financing Account shall be used by the Agency for funding the Mortgage Loan with respect to the Project specified in said requisition. In addition to the withdrawals for the purpose of funding the Mortgage Loan, the Agency may direct the Trustee to apply such amounts to the payment of a portion of the purchase price of Investment Obligations, which Investment Obligations are to be held by the Trustee pursuant to the provisions of the Resolution. The amounts withdrawn for the payment of a portion of the purchase price of Investment Obligations shall be redeposited to the Construction Financing Account upon receipt by the Trustee of the first interest payment on the Investment Obligations so purchased.

The Trustee shall, from time to time, pay out or permit the withdrawal of monies in the Construction Financing Account for the purpose of funding the Mortgage Loan upon receipt of:

(a) a written requisition of the Agency signed by an Authorized Officer or its duly authorized agent identifying the Mortgage Loan with respect to which the payment is to be made, the Mortgagor and the Project with respect to which the payment is to be made and the amount to be paid;

(b) a certificate signed by an Authorized Officer or the Agency’s duly authorized agent to the effect that the amount being paid from the Construction Financing Account, together with all prior withdrawals and all prior advances made by the Agency on account of the Mortgage Loan, is covered by SONYMA Insurance or a Credit Facility, will not exceed in the aggregate the amount of the Mortgage Loan for the Project and that, under the terms and provisions of the Mortgage, the Mortgagor is obligated to make Mortgage Repayments in accordance with the Resolution;

(c) upon the initial withdrawal of monies, a Counsel’s Opinion to the effect that the Mortgage Loan complies with the terms, conditions, provisions and limitations relating to Mortgage Loans contained in the Resolution; and

(d) a certificate signed by an Authorized Officer or the Agency’s duly authorized agent to the effect that the title insurance company (or lead company if there is more than one title insurance company) insuring the title to the Project has authorized the insurance of the amount of the Mortgage

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Loan advance and that a title insurance endorsement by such company will be received by the Agency in due course or has been received by the Agency.

Payment of Certain Costs from Bond Proceeds Account

The Trustee shall from time to time pay out, or permit the withdrawal of monies, from the Bond Proceeds Account for the purpose of making disbursements for Projects for which the Agency anticipates making or funding the Mortgage Loan upon receipt by the Trustee of:

(a) a written requisition of the Agency signed by an Authorized Officer stating:

(i) the Project with respect to which such transfer is to be made;

(ii) the amount to be transferred; and

(iii) that the Agency has entered into an agreement or has received a Credit Facility with respect to each Project for which a transfer is to be made, providing for the payment to the Agency for transfer to the Revenue Fund of interest on such sums advanced; and

(b) a Credit Facility or Facilities equal to the amount requisitioned together with any Credit Facility referred to in (a)(iii) above.

Upon the direction of the Agency, any Credit Facility delivered pursuant to (a) or (b) above shall be credited to the Bond Proceeds Account. Upon receipt of each such requisition and accompanying Credit Facility or Facilities, the Trustee shall make arrangements for the transfer of the amount, as the Agency shall request. Such Credit Facility delivered for the purposes of complying with (a)(iii) above shall be drawn upon by the Agency or at the direction of the Agency unless cash equal to such Credit Facility is received for deposit in the Revenue Fund in which case such Credit Facility shall be released. Credit Facilities which relate to the amount requisitioned shall be drawn upon and the proceeds deposited in the Bond Proceeds Account or released upon evidence that (x) the Mortgagor is obligated to make Mortgage Repayments as required by Section 812(f) of the Resolution or (y) with respect to a refinancing, the Agency has made the appropriate certifications.

Payment of Notes or Other Obligations from Bond Proceeds Account*

Upon compliance with certain conditions of the Resolution, the Agency may requisition the Trustee and the Trustee shall apply monies in the Bond Proceeds Account to pay the principal of the Notes, bonds or other obligations of the Agency issued for the Project.

The Trustee shall from time to time pay out, or permit the withdrawal of monies from the Bond Proceeds Account for the purpose of funding the payment of Notes, bonds or other obligations, which may include interest thereon, theretofore issued by the Agency for the Project upon receipt by the Trustee of:

(a) a written requisition of the Agency signed by an Authorized Officer identifying the issue of the Notes, bonds or other obligations with respect to which the payment is to be made, the Project with respect to which such payment is to be made and the amount of the payment;

(b) a certificate signed by an Authorized Officer and attached to the requisition certifying that (i) the Mortgagor of the Project is not in default under any of the terms of the Mortgage and (ii) if such requisition is being made with respect to Notes, the Mortgagor has received applications to rent the

_______________* With respect to the 2007 Bonds, no Notes will be issued in connection with the financing of the Mortgage Loan.

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units in the Project. Such certificate shall also state that under the terms and provisions of the Mortgage, the Mortgagor is obligated to make Mortgage Repayments in accordance with the Resolution;

(c) upon initial withdrawal of monies to fund such Notes, bonds or other obligations, a Counsel’s Opinion to the effect that the Mortgage Loan financed with the proceeds of such Notes, bonds or other obligations and with respect to which such payment is being made complies with the covenants relating to the Mortgage Loan contained in the Resolution; and

(d) a certificate signed by an Authorized Officer to the effect that a title insurance endorsement by the title insurance company or companies insuring the title to the Project financed with the proceeds of such Notes, bonds or other obligations in the amount of the Mortgage Loan will be received by the Agency in due course or has been received by the Agency.

On or before the date established therefor by the Series Resolution, the Agency, if so required, shall cause to be delivered to the Trustee (i) a certificate of an Authorized Officer certifying the amount of the proceeds of, and other amounts received in respect of, such Series then on deposit in the Bond Proceeds Account and the amount, if any, required to be deposited into the Redemption Account pursuant to Section 818 of the Resolution, and (ii) an irrevocable written direction of an Authorized Officer (a) to promptly transfer the amounts so specified to the Redemption Account, (b) to redeem on the applicable Redemption Date such amount of Bonds of such Series subject to redemption as is equal to the amount of the proceeds of such Series of Bonds so transferred to the Redemption Account from the Bond Proceeds Account together with an amount equal to the amount of the proceeds of such Series (or so much thereof as specified in such certificate) used to pay capitalized interest, costs of issuance or bond discount and specifying the maturities and principal amount of Bonds within each maturity to be so paid or redeemed, and (c) to give notice of such redemption pursuant to the Resolution, which shall in all cases be deemed provisions therefor satisfactory to the Trustee.

Upon the application of monies in the Bond Proceeds Account to the payment of Notes in the manner described above, the Agency shall pay over for transfer to the Trustee for deposit into the Construction Financing Account, any unexpended Note proceeds then remaining in the Note account of the Agency relating to the Project. Subject to the provisions of Section 818 of the Resolution, Note investment earnings relating to the Project shall, as directed by the Agency, be transferred to the Revenue Fund.

Revenue Fund

All Mortgage Repayments shall be deposited upon receipt in the Revenue Fund. Except as otherwise provided in the Resolution, there shall also be transferred to and deposited in the Revenue Fund all draws on the Credit Facility securing the Mortgage Loan and any monies in the Capitalized Interest Accounts not used to pay interest on the Bonds during the period of construction and certain excess funds available in the Debt Service Reserve Fund in excess of the Debt Service Reserve Fund Requirement, as well as the investment income derived from the funds and accounts established by the Resolution and not required to be retained therein. Monies and the proceeds of sale of securities from time to time in the Revenue Fund shall be paid out and applied for the uses and purposes for which the same are pledged by the provisions of the Resolution on or before each interest payment date on the Bonds in the following manner:

1. Bank Repayment Fund. To the extent required pursuant to the General Resolution or an applicable Series Resolution, the Agency or the Trustee, as the case may be, shall draw on the applicable Credit Facility at the times and in the manner set forth in the Resolution or in such Series Resolution and, unless otherwise provided in the General Resolution or in such Series Resolution, shall deposit the amount so drawn in the Revenue Fund. Unless otherwise provided in the applicable Series Resolution, on each date on which such a draw is made, the Trustee shall withdraw from the Revenue Fund and deposit

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in the Bank Repayment Fund an amount equal to the amount of said draw in order to reimburse the appropriate Credit Facility Provider for said draw, provided that such amount to be withdrawn from the Revenue Fund is on deposit therein as a result of a Mortgage Repayment from the Mortgagor of the Mortgage Loan secured by such Credit Facility.

2. Debt Service Fund. (a) On or before each interest payment date on the Bonds, the Trustee shall withdraw from the Revenue Fund (first, unless otherwise provided in an applicable Series Resolution, from amounts representing draws on a Credit Facility securing the Mortgage Loan, or otherwise, from amounts representing Mortgage Repayments) and deposit to the credit of the Interest Account an amount which, when added to the amount then on deposit therein, will on such interest payment date be equal to the installment of the interest on the Bonds then falling due.

(b) On or before each principal payment date on the Bonds, the Trustee shall withdraw from the Revenue Fund (first, unless otherwise provided in an applicable Series Resolution, from amounts representing draws on a Credit Facility securing the Mortgage Loan, or otherwise, from amounts representing Mortgage Repayments) and deposit to the credit of the following Accounts in the Debt Service Fund the following amounts in the following order:

First, to the Principal Account an amount which, when added to the amount then on deposit therein, will on such date be equal to the amount of the principal of the Bonds then falling due.

Second, to the Sinking Fund Account an amount which, when added to the amount then on deposit therein, will on such date be equal to the amount of the unpaid Sinking Fund Payments then falling due.

3. Debt Service Reserve Fund. On or before each interest payment date, after providing for all payments in 2(a) and (b) above, the Trustee shall withdraw from the Revenue Fund and deposit in the Debt Service Reserve Fund such amount (or the balance of the monies so remaining in the Revenue Fund if less than the required amount) as shall be required to bring the Debt Service Reserve Fund up to the Debt Service Reserve Fund Requirement.

4. General Reserve Fund. On or before each interest payment date, after providing for all payments and transfers required in (1), (2) and (3) above, the Trustee shall withdraw from the Revenue Fund and deposit in the General Reserve Fund the balance of the monies on deposit in the Revenue Fund, which monies, upon deposit to the credit of the General Reserve Fund, may be used by the Agency for any lawful purpose, subject to the provisions of the following paragraph; provided, however, that the monies, if any, required to be deposited or maintained in the Revenue Fund pursuant to the applicable Series Resolution shall be maintained in the Revenue Fund until applied for the purposes provided in such Series Resolution.

Monies at any time held in the General Reserve Fund shall be applied at the direction of the Agency, first, to the payment of the fees and expenses of the Trustee, second, to the payment of the fees of qualified banks providing investment arrangements for the Bond Proceeds Account, the Construction Financing Account or the Debt Service Reserve Fund, and, third, to any lawful use by the Agency. Any income or interest earned by, or increment to, the General Reserve Fund due to the investment thereof shall be retained in such Fund.

Debt Service Fund

All monies deposited in the Debt Service Fund shall be disbursed and applied by the Trustee at the times and in the manner provided below.

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1. Interest, Principal and Sinking Fund Accounts. Monies are required to be transferred to these Accounts from the Revenue Fund and Debt Service Reserve Fund at the times and in the manner described herein under “Revenue Fund” and “Debt Service Reserve Fund,” respectively.

Monies held for the credit of the Interest Account, Principal Account and Sinking Fund Account, respectively, are required to be paid by the Trustee to itself for the purpose of paying interest and Sinking Fund Payments on and the principal of the Bonds as the same become due and payable. There is also required to be paid out of the Interest Account the interest on Bonds to be redeemed to the extent not otherwise provided.

2. Redemption Account. Monies transferred from the Revenue Fund pursuant to the applicable Series Resolution, surplus monies transferred from the Bond Proceeds Account and the Construction Financing Account for deposit in the Redemption Account, and monies deposited in the Redemption Account as a result of Recovery Payments or prepayments, respectively, shall be applied to the purchase or retirement of the Bonds of the Series in respect of which such monies were directly or indirectly derived, as designated by a certificate of an Authorized Officer, at the times and in the manner provided in the Resolution or in the applicable Series Resolution.

Debt Service Reserve Fund

The Resolution also establishes a Debt Service Reserve Fund and provides a Debt Service Reserve Fund Requirement.

Monies and securities held for the credit of the Debt Service Reserve Fund shall be transferred by the Trustee to the Debt Service Fund at the times and in the amounts required to comply with the provisions of paragraph (6) of Section 504 of the Resolution.

Whenever a transfer of monies to the Redemption Account is made requiring or permitting the purchase or redemption of Bonds which would result in the reduction of the Debt Service Reserve Fund Requirement upon the purchase or redemption of such Bonds, including the purchase or redemption of all Bonds of a Series other than Bonds issued for the purpose of making a deposit to the Debt Service Reserve Fund, the Trustee, upon the written request of the Agency, shall, in connection with each such purchase or redemption, withdraw from the Debt Service Reserve Fund and deposit in the Redemption Account an amount of monies equal to the reduction of the Debt Service Reserve Fund Requirement which is to result from the purchase or the redemption of such Bonds.

Any income or interest earned by, or increment to, the Debt Service Reserve Fund due to the investment thereof shall, upon written direction of an Authorized Officer, be transferred as earned to the Revenue Fund, but only to the extent that any such transfer will not reduce the amount of the Debt Service Reserve Fund below the Debt Service Reserve Fund Requirement.

At the close of business of the Trustee on a Special Mandatory Tender Date, all amounts in the Debt Service Reserve Fund shall be paid to or upon the order of SONYMA.

Bank Repayment Fund

The Resolution also establishes a Bank Repayment Fund which is held by the Trustee for the exclusive benefit of each Credit Facility Provider designated as a beneficiary thereof in an applicable Series Resolution and into which there shall be deposited, to the extent set forth in an applicable Series Resolution, amounts from the Revenue Fund representing Mortgage Repayments with respect to the Mortgage Loan secured by the applicable Credit Facilities and such other monies as specified in the Resolution. Amounts deposited in the Bank Repayment Fund shall be paid out to the applicable Credit Facility Provider, with written notice to the Mortgagor, promptly upon receipt by the Trustee. Any

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income or interest earned by, or increment to, the Bank Repayment Fund due to the investment thereof shall be retained in said Fund until paid out as provided in this paragraph.

Credit Facilities Generally

The Trustee shall hold the Credit Facility for the benefit of the Holders of Bonds of the Series of Bonds to which such Credit Facility relates, until such Credit Facility expires in accordance with its terms or, if earlier, until the final payment of principal or interest on Bonds of such Series of Bonds has been made within the meaning of the Resolution. The proceeds of the Credit Facility shall be applied only to the amounts owing to the Holders of the Series of Bonds in respect of which the Credit Facility was issued, and the payment of annual fees of the Agency, and such proceeds shall not be applied or used for any other purpose, including, without limitation, any fees or expenses of the Trustee. In the event that at any time during the term of the Credit Facility, any successor Trustee shall be appointed and qualified under the Resolution, the resigning Trustee shall request that the Credit Facility Provider transfer such Credit Facility to the successor Trustee and shall take appropriate steps to accomplish such transfer, all as provided in such Credit Facility. If the resigning Trustee fails to make this request, the successor Trustee shall do so before accepting assignment. The Trustee shall notify the Agency ninety (90) days prior to the expiration date of the Credit Facility held by it and shall draw on the Credit Facility pursuant to the Resolution or three (3) days prior to the expiration date of such Credit Facility, whichever occurs first, unless directed otherwise by an Authorized Officer.

Draw upon Credit Facilities

The Trustee shall draw upon the Credit Facility relating to a Series of Bonds in the circumstances and amounts and at the times specified in the Resolution. The Trustee shall also draw upon the Credit Facility issued with respect to a Series of Bonds and apply the proceeds thereof as and when specified in the Series Resolution authorizing the issuance of such Series of Bonds.

Security for Deposits and Investment of Funds

All monies held by the Trustee shall be continuously and fully secured for the benefit of the Agency and the Holders of the Bonds by Investment Obligations of a market value equal at all times to the amount of the deposit so held by the Trustee; provided, however, that it shall not be necessary for the Trustee to give security for the deposit of any monies held with it in trust for the payment of the principal, Sinking Fund Payments or Redemption Price of, or interest on, Bonds, or such amount of monies as is insured by Federal deposit insurance, or for any monies which shall be represented by obligations purchased as an investment of such monies.

At the direction of the Agency, the Trustee shall invest or reinvest monies in the Funds and Accounts established pursuant to the Resolution in Investment Obligations, or under certain conditions make other investments specified in the Resolution, so that the maturity date or date of redemption at par at the option of the holder of such obligations shall coincide, as nearly as practicable, with the times at which the monies in said Funds or Accounts are needed. The obligations purchased shall be held by the Trustee and shall be deemed at all times to be part of such Funds and Accounts. Income or interest earned on the investment of monies in the Bond Proceeds Account, the Construction Financing Account, Capitalized Interest Accounts, Revenue Fund, Debt Service Reserve Fund, and Cost of Issuance Accounts shall be deposited in the Revenue Fund. Income or interest earned on the investment of monies in the General Reserve Fund shall be retained in such Fund.

Under certain conditions and upon direction of the Agency, the Trustee may, in lieu of investing in Investment Obligations, deposit monies held by it under the Resolution in interest-bearing time deposits, or interest-bearing notes, make repurchase agreements, reverse repurchase agreements or investment agreements or make other similar banking arrangements or make such other investment

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arrangements involving Investment Obligations or other obligations which permit the Trustee to make the certification required by (i) below with itself or with any other bank, trust company, national banking association or Bank Holding Company in the United States, or with any surety or insurance company, or any other public or private corporation or make repurchase or reverse repurchase agreements involving Investment Obligations, with any government bond dealer reporting to, trading with and recognized as a primary dealer by the Federal Reserve Bank of New York and having capital aggregating at least seventy-five million dollars ($75,000,000); provided that upon the making of such deposit, agreement or arrangement the Trustee shall certify in writing to the Agency (i) that each such interest-bearing time deposit, interest-bearing note, repurchase agreement, reverse repurchase agreement, investment agreement or other similar banking arrangement or other investment arrangement involving Investment Obligations or other obligations shall permit the full principal amount of the monies so placed together with the investment income agreed to be paid to be available, without penalty, for use at the times provided with respect to the investment or reinvestment of such monies and (ii) that (A) the entity with which such interest-bearing time deposit, interest-bearing note, repurchase agreement, reverse repurchase agreement or investment agreement, or other similar banking arrangement or other investment arrangement involving Investment Obligations or other obligations is made must be an entity certain of whose unsecured or uncollateralized long-term debt obligations are assigned to a rating category which is equal to or higher than the rating category which the Bonds are assigned by Moody’s Investors Service at the time of the making of such investment, or, certain of whose letters of credit which have been issued in support of certain debt obligations of persons, which debt obligations are assigned to a rating category equal to or higher than the rating category to which the Bonds are assigned by Moody’s Investors Service at the time of the making of such investment or, to the extent applicable, if such entity is the lead bank of a Bank Holding Company, such Bank Holding Company’s unsecured or uncollateralized long-term debt obligations are assigned to a rating category which is equal to or higher than the rating category which the Bonds are assigned by Moody’s Investors Service or, (B) to the extent approved by Moody’s Investors Service, the performance of the entity with which such interest-bearing time deposit, or interest-bearing notes, repurchase agreement, reverse repurchase agreement or investment agreement or other similar banking arrangement or other investment arrangement involving Investment Obligations or other obligations is made must be guaranteed by an entity referred to in (A) above or (C) such interest-bearing time deposit, interest-bearing note, repurchase agreement, reverse repurchase agreement, investment agreement, or other similar banking arrangement or other investment arrangement is secured by contracts, agreements or surety bonds with or from an entity certain of whose unsecured or uncollateralized long-term debt obligations are assigned to rating categories which are equal to or higher than the rating category which the Bonds are assigned by Moody’s Investors Service at the time of the making of such investment. In addition, the applicable short-term (rather than long-term) rating category of an entity described above may be utilized in satisfying the requirements of this section if an Authorized Officer of the Agency certifies to the Trustee in connection with an investment, as to which certificate the Trustee may conclusively rely in making such investment, that (i) the use of such short-term rating category has been approved by Moody’s Investors Service and such short-term rating category is at least equivalent to the rating category which the Bonds are assigned by Moody’s Investors Service, (ii) any such investment made with such entity shall be made in accordance with the terms and conditions, including length thereof, specified in the approval of Moody’s Investors Service (which may, to the extent applicable, mean that there is with respect to such entity a long-term rating which is equal to or higher than the rating category which the Bonds are assigned by such rating agency at the time of the making of such investment) and (iii) the investment made with such entity would not cause, either directly or indirectly, Moody’s Investors Service to lower the rating category which the Bonds are assigned immediately prior to such proposed investment. Notwithstanding the above, at the direction of the Agency, the Trustee may also deposit monies held by it with entities not described in clauses (A), (B) or (C) above, provided such deposit is fully insured as to principal and interest by Federal deposit insurance and provided that the Trustee shall certify in writing to the Agency that each investment shall permit monies so placed and investment income to be paid to be available for use at the times provided. The Agency shall require the valuation of the obligations (which may be performed by the Trustee), if any, securing such interest-

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bearing deposits, repurchase or reverse repurchase agreements or other similar banking arrangements not less than once each week.

In computing the amount in any fund or account held by the Trustee under the provisions of the Resolution, including the Debt Service Reserve Fund, obligations purchased as an investment of monies therein shall be valued (on each interest payment date) at the lower of cost or market value.

The Trustee shall sell at the best price obtainable, or present for redemption, any obligation purchased by it as an investment whenever it shall be necessary in order to provide monies to meet any payment or transfer from the Fund or Account for which such investment was made except that in the case of investment arrangements involving Investment Obligations or other obligations the Trustee shall sell such obligations in accordance with the terms of said investment arrangements. The Trustee shall advise the Agency in writing, on or before the twentieth day of each calendar month, of the details of all investments held for the credit of each Fund and Account in its custody under the provisions of the Resolution as of the end of the preceding month.

Issuance of Additional Obligations

(1) The Agency shall not create or permit the creation of or issue any obligations or create any additional indebtedness whatsoever which will be secured by a charge and lien on any Mortgage Repayments, Mortgage Advance Amortization Payments or Recovery Payments or which will be payable from the Revenue Fund, Debt Service Fund or Debt Service Reserve Fund, except that additional Series of Bonds may be issued from time to time pursuant to a Series Resolution subsequent to the issuance of the initial Series of Bonds under the Resolution on a parity with the Bonds of such initial Series of Bonds and secured by an equal charge and lien on the Mortgage Repayments, Mortgage Advance Amortization Payments or Recovery Payments and payable equally from the Revenue Fund, Debt Service Fund and Debt Service Reserve Fund for the purposes referred to under “Custody and Application of Bond Proceeds,” subject to the conditions and limitations provided below.

(2) No Series of Bonds shall be issued under the Resolution unless:

(a) the principal amount of the Bonds then to be issued, together with the principal amount of the bonds and notes of the Agency theretofore issued and outstanding, will not exceed in aggregate principal amount the limitation imposed thereon by the Resolution or any limitation thereon imposed by law;

(b) there is at the time of the issuance of such Bonds no deficiency in the amounts required by the Resolution or any Series Resolution to be paid into the Debt Service Fund;

(c) the amount of the Debt Service Reserve Fund, upon the issuance and delivery of such Bonds and the placing in the Debt Service Reserve Fund of any amount provided therefor in the Series Resolution authorizing the issuance of such Bonds, shall not be less than the Debt Service Reserve Fund Requirement for the Bonds; provided, however, that if the applicable Series Resolution directs that all proceeds of a Series of Bonds be deposited in the Bond Proceeds Account and that, in connection with a disbursement therefrom pursuant to Section 403(4) of the Resolution, the amounts required for the deposit to the Debt Service Reserve Fund will be deposited therein in connection with such a disbursement, then such Series Resolution will control and this subparagraph (c) shall be deemed satisfied by such provisions of said Series Resolution; and

(d) except as otherwise provided in the applicable Series Resolution, the Trustee shall receive at the time of the issuance of such Bonds a certificate of an Authorized Officer of the Agency stating that (i) either (x) the investment income reasonably anticipated to be earned

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on monies in the Bond Proceeds Account, Construction Financing Account, Debt Service Reserve Fund, Cost of Issuance Account and Capitalized Interest Account and any monies available under Section 818 of the Resolution, together with available principal in the Capitalized Interest Account and Cost of Issuance Account will be sufficient to pay the interest coming due on such additional Bonds pending disbursements in accordance with the Resolution or (y) in the event the monies referred to in (i)(x) above would not be sufficient for such purposes, cash or a Credit Facility equal to the difference between the amount of monies available under (i)(x) and the amount necessary to pay such interest shall, in connection with the issuance of such additional Bonds, be deposited with the Trustee for the purpose of funding any such difference; and (ii) in the event the Project goes into default either (x) Recovery Payments, together with available monies in the Revenue Fund, in the Bond Proceeds Account, in the Construction Financing Account, and in the Debt Service Reserve Fund, together with the investment income reasonably anticipated to be earned on such Recovery Payments and on monies in such funds or accounts not required to satisfy the requirements of (i) above will be sufficient to permit the Agency to redeem or pay at maturity or fund the mandatory tender of all such additional Bonds or (y) in the event the monies referred to in (ii)(x) above would not be sufficient for such purposes, cash or a Credit Facility equal to the difference between the amount of monies available under (ii)(x) and the amount necessary to redeem or pay at maturity such additional Bonds shall, in connection with the issuance of such Bonds, be deposited with the Trustee for the sole purpose of funding any such difference. Any such cash or Credit Facility shall, upon such deposit, be pledged to the Trustee for the purposes referred to in (i)(y)or (ii)(y) above; provided, however, that upon receipt of a certificate of an Authorized Officer of the Agency that the difference referred to in (i)(y) or (ii)(y) above, as the case may be, no longer exists (or has been reduced) such cash or Credit Facility (or the amount thereof in excess of such difference) shall be released from lien of the Resolution. Any cash or Credit Facility delivered pursuant to this section shall be credited to the Revenue Fund and shall be held by the Trustee.

(3) The Agency reserves the right to issue Notes and any other obligations so long as the same are not a charge or lien on the Mortgage Repayments, Mortgage Advance Amortization Payments or Recovery Payments or payable from the Revenue Fund, Debt Service Fund or Debt Service Reserve Fund.

Covenants Relating to Mortgages

No Mortgage Loan shall be made or funded by the Agency from the proceeds of Bonds unless the mortgage and other related documents under which such Mortgage Loan is to be made shall comply with the following terms, conditions, provisions and limitations, and shall have been approved by the Agency:

(a) The Mortgagor must be eligible under the Act, as amended from time to time, and the Mortgage shall be executed and recorded in accordance with the requirements of existing laws;

(b) The Mortgage shall constitute and create a first mortgage lien on the real property of the Project with respect to which the Mortgage Loan secured thereby is made and, so long as the Act shall so require, a security interest in the personal property attached to or used in connection with the operation of such Project, provided, however, that the Mortgage may also be a participation by the Agency with another party or parties (including itself, if financed under a different resolution), in the Mortgage Loan made with respect to the Project and similarly secured so long as the interest of the Agency under the Resolution shall have at least equal priority as to lien in proportion to the amount of the loan secured, but need not be equal as to interest rate, time or rate of amortization or otherwise;

(c) The amount of the Mortgage Loan shall not exceed the then estimated Project Cost or any other limitation prescribed by law or authorized regulation, whichever is less, provided, that for purposes

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of the Resolution the amount of the Mortgage Loan shall not be deemed to exceed the Project Cost by reason of the issuance of Bonds to fund the Mortgage Loan in connection with the refinancing of outstanding mortgage loans or to refund bonds previously issued in an amount in excess of the principal amount of the Mortgage Loan;

(d) The Mortgagor shall have provided, or will provide in a manner satisfactory to the Agency, in payment of the Project Cost, an amount equal to the difference between the Project Cost and the Mortgage Loan of the Agency;

(e) The Mortgage Loan (i) shall have been approved for SONYMA Insurance and the total principal amount of said Mortgage Loan shall be insured by SONYMA; provided, however, that to the extent the Mortgage Loan has been approved for SONYMA Insurance to be effective upon satisfactory completion of the Project, the Agency may make the Mortgage Loan with respect to such Project provided that pending such completion and the receipt of such SONYMA Insurance, such Mortgage Loan is, at all times, secured by a Credit Facility, (ii) in lieu of the provisions of item (i) of this paragraph, shall at all times, be secured by a Credit Facility or (iii) shall be secured by a combination of items (i) and (ii) hereof; provided further that in the event such Mortgage Loan is secured by a Credit Facility, any such Credit Facility shall be deemed pledged to the Trustee for the benefit of Bondholders pursuant to the provisions of Section 817 of the Resolution;

(f) The Mortgagor shall be required to pay or cause to be paid on a monthly basis the monies required for the Mortgage Repayments to be made by the Mortgagor under the Mortgage. The scheduled Mortgage Repayments shall be sufficient to produce monies which the Agency determines shall be sufficient in amount and time of payment, together with other available monies derived from such Mortgage Loan, monies on deposit in a Capitalized Interest Account, any monies available under Section 818 of the Resolution, interest income reasonably anticipated to be earned on the investment of undisbursed proceeds in the Bond Proceeds Account, Construction Financing Account, the Debt Service Reserve Fund, and any such other Fund or Account established under the applicable Series Resolution and the available principal from the Debt Service Reserve Fund or from such other Fund or Account established under the applicable Series Resolution to permit the Agency to pay Debt Service on the Bonds issued in connection with the Mortgage Loan;

(g) The Mortgagor and the Record Titleholder shall have acquired title to the site of the Project or an interest in real property sufficient for the location thereon of the Project, as evidenced by a title insurance policy, free and clear of all liens and encumbrances which in the opinion of the Agency would materially affect the value or usefulness of such site or interest in real property for the intended use thereof; and

(h) The Mortgagor and the Record Titleholder shall have obtained all governmental approvals then required by law for the acquisition, construction or rehabilitation (as the case may be), ownership and operation of the Project by the Mortgagor and the Record Titleholder.

Modification of Mortgage Terms. The Agency shall not consent to the modification of, or modify the rate of interest of, or the amount or time of payment of any installment of principal or interest of, the Mortgage Loan or the security for or any terms or provisions of the Mortgage Loan or the Mortgage securing the same in a manner detrimental to Bondholders; provided, however, that the Agency may consent to such modification of and modify the Mortgage Loan and the Mortgage so long as the Mortgagor shall remain obligated to pay Mortgage Repayments in sufficient amounts to comply with the provisions of the Resolution. The Agency shall not modify the Mortgage or the terms of the Mortgage Loan without the approval of the Commissioner, if required by statute.

Sale of Mortgage by the Agency. The Agency shall not sell the Mortgage or other obligation securing the Mortgage Loan unless the sale price thereof when received by the Agency shall not be less

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than the aggregate of (i) the principal amount of the Mortgagor’s Mortgage Loan remaining unpaid, (ii) the Mortgagor’s proportionate share of the principal amount of the Bonds of the Series issued for such Mortgage Loan issued for the purpose of paying any Bond discount, an escrow account for the defeasance of other obligations of the Agency, the Cost of Issuance Account or the Capitalized Interest Account and remaining unpaid, (iii) the interest to accrue on all Bonds to be redeemed by the Agency upon the sale of such Mortgage to the next call date thereof not previously paid by the Mortgagor, (iv) the redemption premium on the Bonds so to be redeemed and (v) the cost and expenses of the Agency in effecting the redemption of the Bonds so to be redeemed, less the amount of applicable monies available in the Redemption Account and for withdrawal from the Debt Service Reserve Fund and application to the redemption of such Bonds in accordance with the terms and provisions of the Resolution, as determined by the Agency, and the amount of any other legally available funds of the Agency transferred to the Redemption Account. The requirements of this paragraph shall be satisfied if the amount received by the Agency when aggregated with the monies available as aforesaid shall be an amount which when invested pursuant to the Resolution, shall be sufficient to pay when due the principal, Redemption Price, if applicable, and interest due and to become due on the Bonds issued for the various purposes described in the Resolution and then Outstanding.

Disposition of Mortgage Advance Amortization Payments, Proceeds of Sale of the Mortgage and Recovery Payments. The proceeds received by the Agency from a Mortgage Advance Amortization Payment or from the sale of the Mortgage or from Recovery Payments (after making any necessary reimbursements to the Debt Service Reserve Fund including the repurchase of Investment Obligations credited thereto) shall be deposited in the Redemption Account and applied to the redemption of Bonds as soon as practically possible in accordance with the requirements of the Resolution and the applicable Series Resolution.

Enforcement of Mortgage Loan, Credit Facilities and SONYMA Insurance. The Agency shall diligently enforce, and take all reasonable steps, actions and proceedings necessary for the enforcement of all terms, covenants and conditions of the Mortgage Loan and any Credit Facilities relating thereto and, to the extent permitted by law, the Agency shall, at all times, defend, enforce, preserve and protect its rights and privileges under or with respect to the Mortgage Loan and such Credit Facilities, and the obligations and agreements securing and evidencing the Mortgage Loan and Credit Facilities; provided, however, to the extent applicable, any such enforcement shall be consistent with the provisions of the SONYMA Insurance relating to a particular Mortgage Loan.

The Agency shall not take any action in conflict with the regulations or procedures of SONYMA so as to jeopardize the SONYMA Insurance. With respect to each Mortgage Loan that is the subject of SONYMA Insurance, the Agency shall promptly advise the Trustee of the occurrence of a default on the Mortgage Loan and shall keep the Trustee advised as to any actions taken to either cure such default and/or to assign any such Mortgage Loan to SONYMA and claim the benefits of SONYMA Insurance. The Agency shall assign any such Mortgage Loan in default to SONYMA in timely fashion so as to avoid any loss or diminution of benefits receivable as SONYMA Insurance, and shall take any and all action necessary or desirable to enforce its rights under the SONYMA Insurance and to ensure that all benefits of SONYMA Insurance are paid to the Agency in cash, in accordance with all applicable regulations of SONYMA.

Pledge of Mortgage and Mortgage Note. To secure the payment of the principal and Redemption Price of and Sinking Fund Payments and interest on the Bonds, the Agency pledges to the Trustee for the benefit of the Bondholders, the Mortgage and the Mortgage Note securing the Mortgage Loan for the Project. The pledge shall be valid and binding from and after the date of adoption of the Resolution, and the Mortgage and the Mortgage Note shall immediately thereafter be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the Agency,

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irrespective of whether such parties have notice thereof. Upon the happening of an event of default specified in the Resolution and the written request of the Trustee or of the Holders of not less than twenty-five per centum (25%) in principal amount of the Outstanding Bonds, the Agency, in accordance with the provisions of the Resolution shall assign outright the foregoing to the Trustee.

Certain Other Covenants

Among other covenants made by the Agency in the Resolution are those related to the following matters:

Transfer of Excess Note Earnings. On the date specified in the Series Resolution for the transfer of monies from the Bond Proceeds Account to the Redemption Account, the Agency shall, pursuant to an Authorized Officer’s certificate, deposit into the Redemption Account, the Revenue Fund and/or the Debt Service Fund the amount of earnings from the investment of Note proceeds, if any, then on deposit in any account established under the resolution authorizing the issuance of Notes which is not pledged to the payment of such Notes.

Accounts and Reports. The Agency shall keep proper books of record and account in which complete and correct entries shall be made of its transactions relating to the Mortgage, Mortgage Loan, Mortgage Repayments, Mortgage Advance Amortization Payments, Recovery Payments and all Funds and Accounts established by the Resolution, which shall at all reasonable times be subject to the inspection of the Trustee (it being understood that the Trustee shall have no obligation to do so) and the Holders of an aggregate of not less than five percent (5%) in principal amount of the Bonds then Outstanding or their representatives duly authorized in writing.

The Agency shall annually, within ninety (90) days after the close of each Fiscal Year, file with the Trustee, and otherwise as provided by law, a copy of an annual report for such Fiscal Year, accompanied by an Accountant’s Certificate, including the following in reasonable detail: (a) its operations and accomplishments; (b) its receipts and expenditures during such Fiscal Year in accordance with the categories or classifications established by the Agency for its operating and capital outlay purposes; (c) its assets and liabilities at the end of such Fiscal Year and the status of reserve, special or other funds and the Funds and Accounts established by the Resolution; and (d) a schedule of its Bonds and Notes Outstanding at the end of such Fiscal Year, together with a statement of the amounts paid or otherwise redeemed during such Fiscal Year. A copy of each such annual report and Accountant’s Certificate shall be mailed by the Agency to each Bondholder who shall have filed his name and address with the Agency for such purpose.

Budgets. The Agency shall, at least sixty (60) days prior to the beginning of each Fiscal Year, prepare and file in the office of the Trustee a preliminary budget covering its fiscal operations for the succeeding Fiscal Year which shall be open to inspection by any Bondholder (it being understood that the Trustee shall have no obligation to do so). The Agency shall also prepare a summary of such preliminary budget and on or before forty-five (45) days prior to the beginning of each Fiscal Year and mail a copy thereof to any Bondholder who shall have filed his name and address with the Agency for such purpose.

The Agency shall adopt an annual budget covering its fiscal operations for the then current Fiscal Year not later than January 1 of each successive Fiscal Year and file the same with the Trustee and such budget shall be open to inspection by any Bondholder. In the event the Agency shall not adopt an annual budget for a Fiscal Year on or before January 1 of such Fiscal Year, the budget for the preceding Fiscal Year shall be deemed to have been adopted and be in effect for such Fiscal Year until the annual budget for such Fiscal Year shall have been adopted as above provided and filed with the Trustee.

Personnel and Servicing of the Mortgage. The Agency shall at all times appoint, retain and employ competent supervisory personnel for the purpose of carrying out its duties with respect to the

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Mortgage Loan and shall establish and enforce reasonable rules, regulations, tests and standards governing the employment of such personnel at reasonable compensation, salaries, fees and charges and all persons employed by the Agency shall be qualified for their respective positions. Nothing contained in the Resolution shall prohibit the Agency from entering into contracts for the purpose of performing its obligations under the Resolution.

Defaults and Remedies

The Resolution declares each of the following events an “event of default”:

(a) a default is made in the payment of the principal, or Sinking Fund Payments, or interest on any Bond after the same shall become due, whether at maturity or upon call for redemption and such default shall continue for a period of thirty (30) days; or

(b) the Agency shall fail or refuse to comply with the provisions of the Act, or shall default in the performance or observance of any other of the covenants, agreements or conditions on its part contained in the Resolution, any Series Resolution or Supplemental Resolution, or in the Bonds, and continuance of such default for a period of ninety (90) days after written notice thereof requiring the same to be remedied shall have been given to the Agency by the Trustee, which may give such notice in its discretion and shall give such notice at the written request of the Holders of not less than five per centum (5%) in principal amount of the Outstanding Bonds; or

(c) the Agency shall file a petition seeking a composition of indebtedness under the Federal bankruptcy laws, or under any other applicable law or statute of the United States of America or of the State;

provided, however, that an event of default shall not be deemed to exist under the provisions of clause (b) above upon the failure of the Agency to enforce any obligation undertaken by the Mortgagor or the Record Titleholder pursuant to the provisions of the Mortgage Loan, including the making of the stipulated Mortgage Repayments, so long as the Agency shall be provided with monies sufficient in amount to pay the principal of, Sinking Fund Payments and interest on all Bonds as the same shall become due.

The Resolution provides that upon the happening and continuance of any event of default, then, and in each such case, the Trustee may proceed, and upon the written request of the Holders of not less than twenty-five per centum (25%) in principal amount of the Outstanding Bonds shall proceed, in its own name, to protect and enforce its rights and the rights of the Bondholders. Among other remedies, the Trustee shall have the right to declare all Bonds due and payable.

Modifications of Resolution

The Resolution provides procedures whereby the Agency may amend the Resolution or any Series Resolution adopted thereunder by adoption of a Supplemental Resolution.

Amendment of the respective rights and obligations of the Agency and the Bondholders under the Resolution may be made by a Supplemental Resolution with the written consent (a) of the Holders of at least two-thirds in principal amount of the Bonds Outstanding at the time such consent is given and (b) in case less than all of the several Series of Bonds then Outstanding are affected by the modification or amendment, of the Holders of at least two-thirds in principal amount of the Bonds of each Series so affected and Outstanding at the time such consent is given; but no such modification or amendment shall permit a change in the terms of redemption or maturity of the principal of any Outstanding Bond or of any installment of interest thereon or a reduction in the principal amount or Redemption Price thereof, or in

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the rate of interest thereon without the consent of the Holder of such Bond, or shall reduce the percentage of Bonds, the consent of the Holders of which is required to effect any such modification or amendment.

Defeasance

If the Agency shall pay or cause to be paid, or there shall otherwise be paid, to the Holders of the Bonds then Outstanding under the Resolution, the principal, Sinking Fund Payments and interest and Redemption Price, if any, to become due thereon, at the times and in the manner stipulated therein and in the Resolution, then and in that event the covenants, agreements and other obligations of the Agency to the Bondholders shall be discharged and satisfied.

Bonds or interest installments for the payment or redemption of which sufficient monies shall then be held by the Trustee (through deposit by the Agency of funds for such payment or redemption or otherwise), whether at or prior to the maturity or the redemption date of such Bonds shall be deemed to have been paid within the meaning and with the effect expressed in the paragraph above. All Outstanding Bonds of any Series or a portion of all Outstanding Bonds of a Series shall prior to the maturity or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in the paragraph above if, among other things, there shall have been deposited with the Trustee either monies in an amount which shall be sufficient, or obligations of the United States government or obligations the principal of and interest on which are guaranteed by the United States government, or, certain Investment Obligations the principal of and interest on which when due will provide monies which, together with the monies, if any, deposited with the Trustee at the same time, shall be sufficient to pay when due the principal, Sinking Fund Payments or Redemption Price, if applicable, and interest due and to become due on said Bonds or portion of all Outstanding Bonds on and prior to the redemption date or maturity date thereof, as the case may be, and the Agency shall have given the Trustee irrevocable instructions to publish notice of redemption of such Bonds as provided in the Resolution. Neither obligations nor monies deposited with the Trustee nor principal or interest payments on any such obligations shall be withdrawn or used for any purpose other than, and both shall be held in trust for, the payment of the principal Sinking Fund Payments or Redemption Price, if any, of and interest on said Bonds or a portion of said Bonds, as the case may be; provided that any cash received from such principal or interest payments on such obligations deposited with the Trustee, if not then needed for such purpose, shall, to the extent practicable, be reinvested in obligations of the United States government or obligations the principal of and interest on which are guaranteed by the United States government, or certain Investment Obligations, maturing at times and in amounts sufficient to pay when due the principal, Sinking Fund Payments or Redemption Price, if any, and interest to become due on said Bonds on and prior to such redemption date or maturity date thereof, as the case may be.

Any income or interest earned by, or increment to, the investment of any such monies so deposited, shall, to the extent certified by the Trustee to be in excess of the amounts required hereinabove to pay the principal, Sinking Fund Payment, Redemption Price, if any, and interest on such Bonds, as realized, be transferred by the Trustee to the Agency, and any such monies so paid by the Trustee to the Agency shall be released of the lien and pledge created by the Resolution.

Notwithstanding the preceding paragraphs, a Series Resolution may modify or restrict the application of this Section with respect to the Series of Bonds authorized by such Series Resolution.

SUMMARY OF CERTAIN PROVISIONS OF THE LETTER OF CREDIT AGREEMENT

Simultaneously with the closing of the Mortgage Loan, the LOC Bank has agreed to provide the Letter of Credit subject to certain terms and conditions as provided in the Letter of Credit and Reimbursement Agreement to be entered into between the LOC Bank and the Mortgagor (the “Letter of Credit Agreement”). At the option of the LOC Bank, an event of default under the Letter of Credit Agreement may result in a redemption of the 2007 Bonds. The following is a summary of certain

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provisions of the Letter of Credit Agreement to which reference is made for the complete provisions thereof. All terms used in this summary and not defined in this Official Statement have the meanings ascribed to such terms in the Letter of Credit Agreement.

Issuance of the Letter of Credit

The Mortgagor agrees to reimburse the LOC Bank in full for any drawing made under the Letter of Credit on the date of such drawing and upon the honoring of such drawing by the LOC Bank. Any amount due and owing by the Mortgagor to the LOC Bank after a default under the Letter of Credit Agreement is payable with interest, as set forth in the Letter of Credit Agreement. The Mortgagor also agrees to pay the LOC Bank for certain increased costs immediately on demand by the LOC Bank and to pay the LOC Bank certain fees.

Collateral

The Mortgagor’s obligations under the Letter of Credit Agreement are secured by (a) a conditional assignment and pledge of the Mortgage Note and Mortgage pursuant to the Pledge and Intercreditor Agreement between the Agency and the LOC Bank (the “Intercreditor Agreement”), (b) a pledge of the loan proceeds under the Mortgage Note, and (c) completion and non-recourse carveout guaranties of payment and completion costs (the “Guaranties”) from Hudson River Housing, Inc. (the “Guarantor”).

Authorization of Construction Disbursements

The Letter of Credit Agreement and Intercreditor Agreement contain provisions whereby the LOC Bank will authorize the Trustee to make disbursements from the Construction Financing Account for the construction of the Project. The authorization is subject to an inspection by the LOC Bank’s construction consultant and a ten percent (10%) retainage as well as an interest reserve and contingency reserve. Certain change orders which increase or decrease the cost of completing the Project require prior acceptance and approval of the LOC Bank and its construction consultant.

Certain Covenants of Mortgagor

In addition to covenants relating to the reimbursement of the LOC Bank for draws made under the Letter of Credit and to the payment of interest, fees and other amounts owing to the LOC Bank, the Mortgagor covenants and agrees, among other covenants:

(1) to furnish certain financial and other information to the LOC Bank;

(2) to rebuild the Project upon casualty, to the extent described in the Mortgage;

(3) to limit its ability to transfer or encumber its interest in the Project to the extent described in the Mortgage and the Letter of Credit Agreement; and

(4) to comply with certain financial covenants relating to appraised value, as more fully described in the Letter of Credit Agreement.

Events of Default

(a) if the Borrower shall be in default under the HFA Commitment or SONYMA Commitment or if the HFA Commitment or the SONYMA Commitment shall be terminated or cancelled;

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(b) if the Borrower shall fail to reimburse the LOC Bank in full within three (3) days of any drawing made under the Letter of Credit, together with all interest accrued thereon;

(c) if a default shall occur and be continuing beyond any applicable grace and cure period under the Note, the Mortgage, the Loan Agreement, the Resolution, the Regulatory Agreement or any of the other Financing Documents;

(d) if (i) any Guarantor or any Indemnitor shall disclaim all or any portion of such Person’s obligations pursuant to the Guaranties or Indemnity, (ii) any guarantor or any Indemnitor shall otherwise be in default, beyond the expiration of any applicable grace and cure periods, under any Guaranty or Indemnity and/or (iii) if there is a material change in the financial condition of any Guarantor or any Indemnitor;

(e) any warranty, representation or other written statement made by or on behalf of the Borrower contained herein, if any of the other Financing Documents or Bond Documents to which it is a party or in any instrument furnished in compliance with or in reference to the Letter of Credit Agreement is false or misleading in any material respect on the date as of which made;

(f) an involuntary petition shall be filed under any bankruptcy statute against the Borrower, or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official) shall be appointed to take possession, custody, or control of the properties of the Borrower, unless such petition or appointment is set aside or withdrawn or ceases to be in effect within sixty (60) days from the date of said filing or appointment;

(g) the LOC Bank shall determine that the Project cannot be completed free of unbonded liens in accordance with the Plans and Specification for the sums set forth in the Budget (plus any provided by the Borrower under Section 8.4 of the Disbursement Agreement; or

(h) the Borrower shall terminate or replace the Contractor or the architect for the Project without the prior written consent of the LOC Bank, which consent shall not be unreasonably withheld.

Upon the occurrence of an Event of Default and for so long as such Event of Default shall be continuing, the LOC Bank may, at its option and in its sole and absolute discretion either (i) declare the indebtedness evidenced and secured by the Note and the Mortgage immediately due and payable, (ii) instruct the Trustee to present a Drawing under the Letter of Credit, (iii) declare the Obligations to be immediately due and payable, (iv) pursue any and all remedies provided for in the Financing Documents, or otherwise available, or (v) pursue any combination of the foregoing to the full extent not mutually exclusive.

STATE’S RIGHT TO REQUIRE REDEMPTION OF BONDS

Under Section 49 of the Act, notwithstanding and in addition to any provisions for redemption which may be contained in the General Resolution, the Series Resolutions, or the Bonds, the State of New York, upon furnishing sufficient funds therefor, has reserved the right to require the Agency to redeem, prior to maturity, as a whole, any issue of Bonds on any interest payment date not less than twenty (20) years after the date of the Bonds of such issue at a redemption price of one hundred five per centum (105%) of their face value and accrued interest or at such lower redemption price as may be provided in the Bonds in case of the redemption thereof as a whole on the redemption date.

AGREEMENT OF THE STATE

In accordance with the authority granted to the Agency pursuant to the provisions of Section 48 of the Act, the Agency, on behalf of the State, has pledged to and agreed with the Holders of the Bonds

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that the State will not limit or alter the rights vested by the Act in the Agency to fulfill the terms of any agreements made with Bondholders, or in any way impair the rights and remedies of such Holders until the Bonds, together with the interest thereon, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceedings by or on behalf of such Holders, are fully met and discharged.

LEGAL INVESTMENTS

Under the provisions of Section 52 of the Act, the Bonds, in the State of New York, are made securities in which all public officers and bodies of the State and all its municipalities and municipal subdivisions, all insurance companies and associations, and other persons carrying on an insurance business, all banks, bankers, trust companies, savings banks and savings associations, including savings and loan associations, building and loan associations, investment companies and other persons carrying on a banking business, all administrators, guardians, executors, trustees and other fiduciaries, and all other persons whatsoever who are now or may hereafter be authorized to invest in bonds or other obligations of the State, may properly and legally invest funds, including capital, in their control or belonging to them. Certain of such investors may be subject to separate restrictions which limit or prevent their investment in the 2007 Bonds.

SECURITY FOR DEPOSITS

Bonds or notes of the Agency may be deposited with the State Comptroller to secure deposits of State monies in banks and trust companies in accordance with Section 105 of the State Finance Law. Bonds of the Agency may also be deposited with the State Comptroller to secure the release of amounts retained from payments to contractors performing work for the State or for any State department or official, in accordance with Section 139(3) of the State Finance Law.

TAX MATTERS

Opinion of Bond Counsel

In the opinion of Holland & Knight LLP, Bond Counsel to the Agency, under existing statutes and court decisions, (i) interest on the 2007 Bonds is excluded from gross income for Federal income tax purposes pursuant to Section 103 of the Code, except that no opinion is expressed as to such exclusion of interest on any 2007 Bond for any period during which such 2007 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 2007 Bonds or a “related person” and (ii) interest on the 2007 Bonds, however, is treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code. In rendering its opinion, Bond Counsel has relied on certain representations, certifications of fact, and statements of reasonable expectations made by the Agency, the Mortgagor and others, in connection with the 2007 Bonds, and Bond Counsel has assumed compliance by the Agency, the Mortgagor and others with the aforementioned covenants to comply with applicable requirements of the Code to assure the exclusion of interest on the 2007 Bonds from gross income under Section 103 of the Code.

In addition, in the opinion of Bond Counsel to the Agency, under existing statutes, interest on the 2007 Bonds is exempt from personal income taxes imposed by the State of New York or any political subdivision thereof (including The City of New York). See “Legislation” below for a discussion of certain litigation that may relate to this State of New York tax exemption.

Bond Counsel expresses no opinion regarding any other Federal, state or local tax consequences with respect to the 2007 Bonds. Bond Counsel renders its opinion under existing statutes and court decisions as of the issue date, and assumes no obligation to update its opinion after the issue date to

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reflect any future action, fact or circumstance, or change in law or interpretation, or otherwise. Bond Counsel expresses no opinion on the effect of any action hereafter taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross income for Federal income tax purposes of interest on the 2007 Bonds, or under state and local tax law.

Summary of Certain Federal Tax Requirements

Under applicable provisions of the Code, the exclusion from gross income of interest on the 2007 Bonds for purposes of Federal income taxation requires that (i) at least 40% of the units in the Project financed by the 2007 Bonds be occupied during the “Qualified Project Period” (defined below) by individuals whose incomes, determined in a manner consistent with Section 8 of the United States Housing Act of 1937, as amended, do not exceed 60% of the median income for the area, as adjusted for family size, and (ii) all of the units of the Project be rented or available for rental on a continuous basis during the Qualified Project Period. “Qualified Project Period” for such Project means a period commencing upon the later of (a) occupancy of 10% of the units in such Project or (b) the date of issue of the 2007 Bonds and running until the later of (i) the date which is 15 years after occupancy of 50% of the units in such Project, (ii) the first date on which no tax-exempt private activity bonds issued with respect to such Project are outstanding or (iii) the date on which any assistance provided with respect to such Project under Section 8 of the 1937 Housing Act terminates. Such Project will meet the continuing low income requirement as long as the income of the individuals occupying the unit does not increase to more than 140% of the applicable limit. Upon an increase over 140% of the applicable limit, the next available unit of comparable or smaller size in the Project must be rented to an individual having an income that does not exceed the applicable income limitation.

In the event of noncompliance with the requirements described in the preceding paragraph arising from events occurring after the issuance of the 2007 Bonds, the Treasury Regulations provide that the exclusion of interest from gross income for Federal income tax purposes will not be impaired if the Agency takes appropriate corrective action within a reasonable period of time after such noncompliance is first discovered or should have been discovered by the Agency.

Certain Ongoing Federal Tax Requirements and Covenants

The Code establishes certain ongoing requirements that must be met subsequent to the issuance and delivery of the 2007 Bonds in order that interest on the 2007 Bonds be and remain excluded from gross income under Section 103 of the Code. These requirements include, but are not limited to, requirements relating to use and expenditure of gross proceeds of the 2007 Bonds, yield and other restrictions on investments of gross proceeds, and the arbitrage rebate requirement that certain excess earnings on gross proceeds be rebated to the Federal government. Noncompliance with such requirements may cause interest on the 2007 Bonds to become included in gross income for Federal income tax purposes retroactive to their issue date, irrespective of the date on which such noncompliance occurs or is discovered. The Agency and the Mortgagor have covenanted to comply with certain applicable requirements of the Code to assure the exclusion of interest on the 2007 Bonds from gross income under Section 103 of the Code.

Certain Collateral Federal Tax Consequences

The following is a brief discussion of certain collateral Federal income tax matters with respect to the 2007 Bonds. It does not purport to address all aspects of Federal taxation that may be relevant to a particular owner of a 2007 Bond. Prospective investors, particularly those who may be subject to special rules, are advised to consult their own tax advisors regarding the Federal tax consequences of owning and disposing of the 2007 Bonds.

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Prospective owners of the 2007 Bonds should be aware that the ownership of such obligations may result in collateral Federal income tax consequences to various categories of persons, such as corporations (including S corporations and foreign corporations), financial institutions, property and casualty and life insurance companies, individual recipients of Social Security and railroad retirement benefits, individuals otherwise eligible for the earned income tax credit, and taxpayers deemed to have incurred or continued indebtedness to purchase or carry obligations the interest on which is excluded from gross income for Federal income tax purposes. Interest on the 2007 Bonds may be taken into account in determining the tax liability of foreign corporations subject to the branch profits tax imposed by Section 884 of the Code.

Information Reporting and Backup Withholding

Information reporting requirements apply to interest (including original issue discount) paid on tax-exempt obligations, including the 2007 Bonds. In general, such requirements are satisfied if the interest recipient completes, and provides the payor with, a Form W-9, “Request for Taxpayer Identification Number and Certification”, or unless the recipient is one of a limited class of exempt recipients, including corporations. A recipient not otherwise exempt from information reporting who fails to satisfy the information reporting requirements will be subject to “backup withholding”, which means that the payor is required to deduct and withhold a tax from the interest payment, calculated in the manner set forth in the Code. For the foregoing purpose, a “payor” generally refers to the person or entity from whom a recipient receives its payments of interest or who collects such payments on behalf of the recipient.

If an owner purchasing a 2007 Bond through a brokerage account has executed a Form W-9 in connection with the establishment of such account, as generally can be expected, no backup withholding should occur. In any event, backup withholding does not affect the excludability of the interest on the 2007 Bonds from gross income for Federal income tax purposes. Any amounts withheld pursuant to backup withholding would be allowed as a refund or a credit against the owner’s Federal income tax once the required information is furnished to the Internal Revenue Service.

Legislation

Tax legislation, administrative actions taken by tax authorities and court decisions, whether at the federal or state level, may adversely affect the tax-exempt status of interest on the 2007 Bonds under federal or state law and could affect the market price for, or the marketability of, the 2007 Bonds. Currently, litigation in various jurisdictions (including Davis v. Kentucky Dep’t of Revenue of the Finance and Admin. Cabinet, 197 S.W.3d 557 (2006), which the U.S. Supreme Court has agreed to hear pursuant to a writ of certiorari granted on May 21, 2007) has called into question the permissibility under the U.S. Constitution of disparate state tax treatment of interest on bonds issued by a state and its political subdivisions and on obligations issued by other states and their political subdivisions. New York State statutes currently result in such disparate treatment. Prospective purchasers of the 2007 Bonds should consult their own tax advisers regarding the foregoing matters.

LITIGATION

There is no controversy or litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the 2007 Bonds or in any way contesting or affecting the validity of the 2007 Bonds or any proceedings of the Agency taken with respect to the issuance or sale thereof, or the pledge or application of any monies or security provided for the payment of the 2007 Bonds or the existence or powers of the Agency.

The Agency is involved in certain litigation and disputes incidental to its operations. Upon the basis of information currently available, the Agency believes that there are substantial defenses to such

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litigation and disputes and that, in any event, the ultimate liability, if any, resulting from such litigation and disputes will not materially adversely affect the financial position of the Agency.

LEGAL MATTERS

All legal matters incident to the authorization, issuance, sale and delivery of the 2007 Bonds are subject to the approval of Holland & Knight LLP, New York, New York, Bond Counsel to the Agency. The approving opinion of Bond Counsel to the Agency, the form of which is attached hereto as Exhibit C, will be delivered with the 2007 Bonds. Certain legal matters will be passed upon for the Mortgagor and the HDFC by Cannon Heyman & Weiss, LLP, Albany, New York, counsel to the Mortgagor and the HDFC. Certain legal matters will be passed upon for the Underwriter by its counsel, Hiscock & Barclay, LLP, Albany, New York.

UNDERWRITING

The Underwriter, George K. Baum & Company, has agreed, subject to certain conditions to purchase (i) the 2007 Series A Bonds from the Agency at a purchase price of par, plus accrued interest and will receive an underwriting fee in the amount of $36,284.07, and (ii) the 2007 Series B Bonds from the Agency at a purchase price of par, plus accrued interest and will receive an underwriting fee in the amount of $25,367.93. The Underwriter’s obligations are subject to certain conditions precedent, and the Underwriter will be obligated to purchase all such 2007 Bonds if any such 2007 Bonds are purchased. The 2007 Bonds may be offered and sold to certain dealers (including the Underwriter and other dealers depositing such 2007 Bonds into investment trusts) and others at prices lower than the public offering prices shown on the cover page of this Official Statement, and such public offering prices may be changed from time to time by the Underwriter.

RATINGS

Moody’s Investors Service has assigned to the 2007 Series A Bonds a rating of “Aa1”. Such rating reflects only the view of such organization and an explanation of the significance of such rating may be obtained from such rating agency. There is no assurance that such rating will continue for any given period of time or that it will not be revised or withdrawn entirely by such rating agency, if in its judgment, circumstances so warrant. A revision or withdrawal of such rating for the 2007 Series A Bonds may have an effect on the market price of the 2007 Series A Bonds.

Moody’s Investors Service has assigned to the 2007 Series B Bonds a rating of “Aaa”. Such rating reflects only the view of such organization and an explanation of the significance of such rating may be obtained from such rating agency. There is no assurance that such rating will continue for any given period of time or that it will not be revised or withdrawn entirely by such rating agency, if in its judgment, circumstances so warrant. A revision or withdrawal of such rating for the 2007 Series B Bonds may have an effect on the market price of the 2007 Series B Bonds.

CONTINUING DISCLOSURE

The Mortgagor will undertake in a written agreement (the “Disclosure Agreement”) upon the issuance of the 2007 Bonds for the benefit of the Holders of the 2007 Bonds to provide to the Agency annually, on or before 120 days after the end of the Mortgagor’s fiscal year, commencing with the fiscal year in which the Mortgage Loan is made, for filing by the Agency with each nationally recognized municipal securities information repository designated by the Securities and Exchange Commission (the “Repository”), and if and when one is established, a New York State information depository (the “State Information Depository”), on an annual basis on or before 180 days after the end of each such fiscal year, financial and operating data, referred to herein as “Annual Information,” including the Mortgagor’s annual financial statements.

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If, and only if, and to the extent that it receives the Annual Information, including the annual financial statements described above from the Mortgagor, the Agency will undertake for the benefit of the Holders of the 2007 Bonds in the Disclosure Agreement, on behalf of and as agent for the Mortgagor, to provide such information and financial statements, on or before 180 days after the end of each such fiscal year, commencing with the end of the fiscal year in which the Mortgage Loan is made, to each such Repository and to the State Information Depository. In addition, the Agency will undertake in the Disclosure Agreement, for the benefit of the Holders of the 2007 Bonds, to provide (1) to each such Repository or to the Municipal Securities Rulemaking Board (“MSRB”), and to the State Information Depository in a timely manner, the notices required to be provided by Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and described below; and (2) to each such Repository and to the State Information Depository, with 180 days after the end of the Agency’s fiscal year, commencing with the fiscal year in which the Mortgage Loan is made, the Agency’s audited financial statements, prepared in accordance with generally accepted accounting principles and audited by an independent firm of certified public accountants in accordance with generally accepted auditing standards; provided, however, that if audited financial statements are not available in accordance with the dates described above, unaudited financial statements shall be provided and such audited financial statements shall be delivered to each such Repository and to the State Information Depository when they become available. The undertaking set forth in clause (2) above shall be satisfied by the filing of the Agency’s Annual Report with such entities.

The Annual Information concerning the Mortgagor will consist of the following: (1) annual financial statements, prepared in accordance with generally accepted accounting principles and audited by an independent firm of certified public accountants in accordance with generally accepted auditing standards; provided, however, that if audited financial statements are not available in accordance with the dates described above, unaudited financial statements shall be provided and such audited financial statements shall be delivered to the Agency for delivery to each such Repository and to the State Information Depository when they become available; (2) levels of occupancy; and (3) outstanding indebtedness; together with a narrative explanation to avoid misunderstanding and to assist the reader in understanding the presentation of financial and operating data concerning the Mortgagor.

The notices required to be provided by Rule 15c2-12, which the Agency will undertake to provide as described above, include notices of any of the following events with respect to the 2007 Bonds, if material: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled draws on the debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements or liquidity facilities reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax-exempt status of the 2007 Bonds; (7) modification to the rights of Holders of 2007 Bonds; (8) 2007 Bond calls; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the 2007 Bonds; and (11) rating changes; and to each Repository or to the MSRB and to the State Information Depository, in a timely manner, notice of a failure by the Mortgagor to provide Annual Information required by the Disclosure Agreement.

The sole and exclusive remedy for breach or default under the Disclosure Agreement described above is an action to compel specific performance of the undertakings of the Agency and the Mortgagor and no person, including a Holder of the 2007 Bonds, may recover monetary damages thereunder under any circumstances. The Agency or the Mortgagor may be compelled to comply with their respective obligations under the Disclosure Agreement (i) in the case of enforcement of their obligations to provide information required under the Disclosure Agreement, by any Holder of Outstanding 2007 Bonds or by the Trustee on behalf of the Holders of Outstanding 2007 Bonds or (ii) in the case of challenges to the adequacy of the information provided, by the Trustee on behalf of the Holders of Outstanding 2007 Bonds; provided, however, that the rights of any Holder to challenge the adequacy of the information provided by the Mortgagor or the Agency are conditioned upon the provisions of the Resolution with

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respect to the enforcement of remedies of Holders of the 2007 Bonds upon the occurrence of an event of default described in the Resolution. A breach or default under the Disclosure Agreement shall not constitute an event of default under the Resolution or any other agreement executed and delivered in connection with the issuance of the 2007 Bonds. In addition, if all or any part of Rule 15c2-12 ceases to be in effect for any reason, then the information required to be provided under the Disclosure Agreement, insofar as the provision of Rule 15c2-12 no longer in effect required the provision of such information, shall no longer be required to be provided.

The foregoing undertakings are intended to set forth a general description of the type of financial information and operating data that will be provided; the descriptions are not intended to state more than general categories of financial information and operating data. Where an undertaking calls for information that no longer can be generated because the operations to which it related have been materially changed or discontinued, a statement to that effect will be provided. Such undertakings, however, may be amended or modified without the consent of the Holders of the 2007 Bonds under certain circumstances set forth in the Disclosure Agreement.

Copies of the Disclosure Agreement when executed by the parties thereto upon the delivery of the 2007 Bonds will be on file at the office of the Agency.

EXHIBITS

Exhibits A through C are integral parts of this Official Statement and should be read in conjunction with the foregoing material.

* * * * * * *

At the written direction of an Authorized Officer of the Agency, “CUSIP” identification numbers will be imprinted on the 2007 Bonds, but such numbers shall not constitute a part of the contract evidenced by the 2007 Bonds and any error or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept delivery of and pay for the 2007 Bonds. In addition, failure on the part of the Agency to use such CUSIP numbers in any notice to Holders of the 2007 Bonds shall not constitute an event of default or any similar violation of the Agency’s contract with such Holders.

All quotations from, and summaries and explanations of, the Act, the SONYMA Act, the General Resolution, the Series Resolutions, the Letter of Credit, the Letter of Credit Agreement, the SONYMA Insurance, the Mortgage, the Mortgage Note, the Disclosure Agreement and Federal and State laws and regulations contained herein do not purport to be complete and reference is made to said laws, resolutions, regulations and documents for full and complete statements of their provisions. Copies, in reasonable quantity, of the General Resolution and the Series Resolutions may be obtained upon request directed to the Agency.

For information with respect to the Agency, including its most recent audited financial statements, reference is made to the Agency’s 2006 Annual Report, copies of which, in reasonable quantity, may be obtained upon request directed to the Public Information Office of the Agency, 641 Lexington Avenue, New York, N.Y. 10022, Tel. (212) 688-4000.

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Any statements in this Official Statement involving matters of estimate or opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Agency and the purchasers or Holders of any of the 2007 Bonds.

NEW YORK STATE HOUSING FINANCE AGENCY

By: /s/ PRISCILLA ALMODOVAR President and Chief Executive Officer

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EXHIBIT A

GLOSSARY OF DEFINED TERMS

The following terms shall, for all purposes of the Official Statement, have the following meanings unless the context shall clearly indicate some other meaning:

“Accountant’s Certificate” shall mean an opinion signed by a certified public accountant or a firm of certified public accountants of recognized standing selected by the Agency.

“Act” shall mean the New York State Housing Finance Agency Act, Article III of the Private Housing Finance Law (Chapter 44-B of the Consolidated Laws of the State of New York) as amended and supplemented.

“Agency” shall mean the New York State Housing Finance Agency, the corporate governmental agency created by the Act, or any body, agency or instrumentality of the State which shall hereafter succeed to the powers, duties and functions of the Agency.

“Authorized Newspaper” shall mean a financial paper, or a newspaper of general circulation in the Borough of Manhattan, City and State of New York, customarily published at least once a day for at least five (5) days (other than legal holidays) in each calendar week, printed in the English language.

“Authorized Officer” shall mean the Chairman or any other officer of the Agency as defined in the Agency’s Bylaws.

“Bank Holding Company” shall mean a corporation which is subject to registration with the Board of Governors of the Federal Reserve System pursuant to the requirements of the Bank Holding Company Act of 1956 (12 U.S.C.A. §§1841 et seq.).

“Bank Repayment Fund” shall mean the fund by that name established by Section 507 of the Resolution.

“Bond” or “Bonds” shall mean any Bond or the issue of Bonds, as the case may be, established and created by the Resolution and issued pursuant to a Series Resolution.

“Bond Proceeds Account” shall mean the account by that name established by paragraph (2) of Section 401 of the Resolution.

“Bondholder” or “Holder” or “Holders of Bonds” or any similar term, shall mean any person or party who shall be the registered owner of any Outstanding Bond or Bonds.

“Capitalized Interest Accounts” shall mean the accounts by that name established by paragraph (4) of Section 401 of the Resolution.

“Commissioner” shall mean the Commissioner of Housing and Community Renewal of the State, or any officer, board, body, agency or instrumentality of the State which shall, after the adoption of the Resolution, succeed to the powers, functions and duties of the Commissioner.

“Construction Financing Account” shall mean the account by that name established by paragraph (3) of Section 401 of the Resolution.

“Constructively Tendered Bonds” shall mean all 2007 Bonds deemed tendered for purchase in accordance with the Series Resolution.

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“Cost of Issuance” shall mean the items of expense to be paid or reimbursed directly or indirectly by the Agency and related to the authorization, sale and issuance of Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing documents, filing and recording fees, initial fees and charges of the Trustee, legal fees and charges, professional consultants’ fees, costs of credit ratings, fees and charges for execution, transportation and safekeeping of Bonds, costs and expenses of refunding Bonds, and other costs, charges and fees in connection with the foregoing.

“Cost of Issuance Accounts” shall mean the accounts by that name established by paragraph (5) of Section 401 of the Resolution.

“Counsel’s Opinion” shall mean an opinion signed by an attorney or firm of attorneys selected by the Agency. Any such attorney may be a lawyer in the regular employment of the Agency.

“Credit Facility” shall mean a guarantee, surety bond, insurance policy or unconditional (except to the extent such letter of credit may have a fixed termination date), irrevocable letter of credit or similar security arrangement payable to the order of the Agency or the Trustee, as the case may be and stated so as to permit draws thereunder under the circumstances and at the times required by the Resolution and the applicable Series Resolution; and (a)(i) having a term of two years or less from the date of the issuance thereof; and (ii) of which the Credit Facility Provider is a bank, trust company, national banking association, insurance company, corporation or other entity (x) whose unsecured or uncollateralized short term debt obligations are assigned (as of the date of issuance of such guarantee, surety bond, insurance policy, letter of credit or similar security arrangement) to the highest short term rating category of the Rating Service and (y)(1) whose unsecured or uncollateralized long term debt obligations are assigned (as of the date of issuance of such guarantee, surety bond, insurance policy, letter of credit or similar security arrangement) to one of the two highest long term rating categories of the Rating Service or (2) whose guarantees, surety bonds, insurance policies, letters of credit or similar arrangements have been issued in support of certain debt obligations that are assigned (as of the date of issuance of such guarantee, surety bond, insurance policy, letter of credit or similar security arrangement) to one of the two highest long term rating categories of the Rating Service; or (b)(i) having a term of more than two years from the date of issuance thereof; and (ii) of which the Credit Facility Provider is a bank, trust company, national banking association, insurance company, corporation or other entity (x) whose unsecured or uncollateralized long term debt obligations are assigned (as of the date of issuance of such guarantee, surety bond, insurance policy, letter of credit or similar security arrangement) to one of the two highest long term rating categories of the Rating Service and (y) whose unsecured or uncollateralized short term debt obligations are assigned (as of the date of issuance of such guarantee, surety bond, insurance policy, letter of credit or similar security arrangement) to the highest short term rating category of the Rating Service; provided, however, that the term “Credit Facility” shall not include SONYMA Insurance. In order to accept any Credit Facility, the Agency or the Trustee, as the case may be, shall receive an unqualified opinion of counsel to the provider thereof that such Credit Facility is a valid and enforceable obligation of such provider.

“Credit Facility Provider” shall mean the issuer of or obligor under a Credit Facility.

“Debt Service” shall mean, with respect to any particular Fiscal Year, an amount equal to the sum of (a) all interest payable on the Bonds Outstanding during such Fiscal Year, plus (b) the amount payable during such Fiscal Year on account of principal of the Serial Bonds Outstanding and Sinking Fund Payments, if any, provided, however, for purposes of computing all interest payable on the Bonds Outstanding during any initial Fiscal Year, the amount of interest payable during the initial Fiscal Year for the Bonds of any particular Series of Bonds shall be deemed to be the amount of interest accruing during such initial Fiscal Year.

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“Debt Service Fund” shall mean the fund by that name established by Section 504 of the Resolution.

“Debt Service Reserve Fund” shall mean the fund by that name established by Section 505 of the Resolution.

“Debt Service Reserve Fund Requirement” shall mean, as of any date of calculation, an amount equal to the sum of the amounts specified for each Series of Bonds, in the applicable Series Resolution for each Series of Bonds, as the Series Debt Service Reserve Fund Requirement; provided that the Series Debt Service Reserve Fund Requirement with respect to such Series of Bonds shall not be less than an amount (if any) sufficient, as of the date of issuance of such Series of Bonds, to enable the Rating Service to assign an investment-grade rating to the Bonds of such Series; and provided, further, that, in lieu of a deposit to the Debt Service Reserve Fund of an amount of funds equal to the Debt Service Reserve Fund Requirement, the Agency may, with respect to all or a portion of such Debt Service Reserve Fund Requirement, provide for a Credit Facility with an entity satisfying the provisions of Section 602(2) of the Resolution which provides for the availability, at the times required pursuant to the provisions of the Resolution (including, without limitation, on any Special Mandatory Tender Date), of an amount at least equal to such portion of the Debt Service Reserve Fund Requirement being so funded and such method of funding shall be deemed to satisfy all provisions of the Resolution with respect to the Debt Service Reserve Fund Requirement and the amounts required to be on deposit in the Debt Service Reserve Fund.

“Fiscal Year” shall mean twelve (12) consecutive calendar months commencing with the first day of November and ending on the last day of the following October.

“General Reserve Fund” shall mean the fund by that name established by Section 506 of the Resolution.

“Interest Account” shall mean the account by that name established by paragraph (2) of Section 504 of the Resolution.

“Investment Obligations” shall mean (a) direct obligations of the United States of America, (b) obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, (c) investments which evidence direct ownership of future interest and principal payments of United States Treasury bonds, (d) general obligations of any state, municipality or political subdivision or agency thereof, which obligations are rated in the highest rating category of Moody’s Investors Service, and (e) municipal obligations the payment of principal, redemption price, if any, and interest on which is irrevocably secured by obligations of the type referred to in (a) and (b) and which obligations have been deposited in an escrow arrangement which is irrevocably pledged to the credit of such municipal obligations and which municipal obligations are rated in the highest rating category of Moody’s Investors Service.

“Loan Agreement” shall mean the Disbursement Agreement by and among the LOC Bank, the Agency, the Mortgagor, the Record Titleholder and the Trustee, dated as of August 22, 2007, as amended from time to time, executed in connection with the Mortgage.

“Mortgage” shall mean the documents evidencing the grant by the Mortgagor and the Record Titleholder to the Agency of a first mortgage lien on the real property of the Project and a security interest in the personal property attached to or used or to be used in connection with the construction or operation of the Project which is not excluded as permitted pursuant to the Act. Such term shall include the Loan Agreement and the Mortgage, Assignment of Leases and Rents and Security Agreement from the Mortgagor and the Record Titleholder to the Agency, dated as of August 22, 2007, as amended from time to time.

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“Mortgage Advance Amortization Payment” shall mean the payment made by the Mortgagor with respect to the Project in full or partial satisfaction of the Mortgage Loan in advance of the due date or dates thereof in accordance with the provisions of the Mortgage.

“Mortgage Loan” shall mean the loan made or funded by the Agency pursuant to the Resolution and any related documents with respect to the Project, evidenced by the Mortgage Note and secured by the Mortgage. Mortgage Loan shall also mean any subsequent increase to the initial Mortgage Loan for the Project for the purpose of financing the completion of or improvements, replacements or any capital additions to such Project. For the purposes of the Resolution, the making or funding of the Mortgage Loan shall be deemed to include, but shall not be limited to, the refunding of bonds originally issued to make such Mortgage Loan.

“Mortgage Note” shall mean a promissory note given by the Mortgagor and the Record Titleholder to or assigned to the Agency to evidence the Mortgage Loan.

“Mortgage Repayments” shall mean the amounts paid or required to be paid from time to time for principal and interest by or on behalf of the Mortgagor on the Mortgage Loan pursuant to the Mortgage. Mortgage Repayments include amounts paid by SONYMA as “periodic payments” under the SONYMA Insurance in respect of regularly scheduled principal and interest on the Mortgage Loan, and amounts paid by a Credit Facility Provider under a Credit Facility in respect of regularly scheduled principal and interest on the Mortgage Loan.

“Mortgagor” shall mean Cannon Street Limited Partnership, a New York limited partnership, or its permitted successors and assigns.

“Notes” shall mean short term obligations of the Agency issued for the purpose of providing construction financing with respect to the Project.

“Notice” shall mean written notice delivered in person or sent by first-class United States mail to a party at such address as the party shall direct in writing, and in the case of Holders of Bonds who do not indicate otherwise, at their addresses appearing on the registration books maintained by the Trustee.

“Outstanding”, when used with reference to Bonds, shall mean, as of any date, Bonds which have been delivered under the provisions of the Resolution, except: (i) any Bonds canceled by the Trustee at or prior to such date; (ii) Bonds for the payment or redemption of which monies equal to the principal amount or Redemption Price thereof, as the case may be, with interest to the date of maturity or redemption date, shall be held by the Trustee in trust (whether at or prior to the maturity or redemption date); provided that if such Bonds are to be redeemed, notice of such redemption shall have been given as in Article III of the Resolution provided or provision satisfactory to the Trustee shall have been made for the giving of such notice; (iii) Bonds in lieu of or in substitution for which other Bonds shall have been delivered pursuant to Article II or Section 307 or Section 1006 of the Resolution; (iv) Bonds or portions of Bonds deemed to have been paid as provided in Section 1302 of the Resolution; and (v) Bonds surrendered by SONYMA (at its option) to the Trustee for cancellation on any Business Day after a Special Mandatory Tender Date.

“Period of Construction” shall mean that period during which the Project is being constructed or rehabilitated.

“Principal Account” shall mean the account by that name established by paragraph (3) of Section 504 of the Resolution.

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“Project” shall mean the multi-family rental housing development known as Cannon Street Senior Apartments and to be located at 132-136 Cannon Street in the City of Poughkeepsie, Dutchess County, New York.

“Project Cost” shall mean costs and expenses approved by the Agency to be necessary in connection with the Project.

“Purchase Fund” shall mean, for each Series of Bonds, the fund by that name created by the applicable Series Resolution.

“Purchase Price” shall mean with respect to Constructively Tendered Bonds an amount equal to the unpaid principal amount thereof and accrued and unpaid interest thereon to but not including the Special Mandatory Tender Date, without premium; provided that if the Special Mandatory Tender Date is also an interest payment date, Purchase Price shall not include such accrued and unpaid interest.

“Rating Service” shall mean Moody’s Investors Service or any nationally recognized rating agency or the successor thereto which shall have issued a rating on any Bonds Outstanding at the request of the Agency.

“Record Titleholder” shall mean Cannon Street Housing Development Fund Company, Inc., a New York not-for-profit corporation, or its permitted successors and assigns.

“Recovery Payments” shall mean monies received by the Agency with respect to the Project from (i) proceedings taken by the Agency in the event of the default by the Mortgagor or the Record Titleholder, including the sale, assignment or other disposition of the Mortgage Loan or the Project in accordance with the terms of the SONYMA Insurance or the applicable Credit Facility or (ii) the condemnation of the Project or any part thereof or from hazard insurance payable with respect to the damage or destruction of the Project and which are not applied to the repair or reconstruction of the Project. Recovery Payments do not include (i) any amounts paid to the Trustee for deposit in the Purchase Fund for the purchase of Bonds deemed tendered on a Special Mandatory Tender Date, (ii) any amounts paid by SONYMA as “periodic payments” under the SONYMA Insurance in respect of regularly scheduled principal and interest on the Mortgage Loan, or (iii) any amounts paid by a Credit Facility Provider under a Credit Facility in respect of regularly scheduled principal and interest on the Mortgage Loan.

“Redemption Account” shall mean the account by that name established by paragraph (5) of Section 504 of the Resolution.

“Redemption Price” shall mean, with respect to any Bond, the principal amount thereof, plus the applicable premium, if any, payable upon redemption thereof pursuant to the Resolution and the Series Resolution pursuant to which the same was issued.

“Refunding Issue” shall mean all Bonds delivered pursuant to Section 203 of the Resolution.

“Regulatory Agreement” shall mean the Regulatory Agreement by, between and among the Agency, the New York State Housing Trust Fund Corporation (the “HTFC”), the Record Titleholder and the Mortgagor, dated as of August 22, 2007 executed in connection with the Project and the Bonds, as the same may be amended or supplemented from time to time.

“Resolution” shall mean the Cannon Street Senior Apartments Multi-Family Housing Revenue Bond Resolution as from time to time amended or supplemented by Supplemental Resolutions in accordance with the terms and provisions of the Resolution.

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“Revenue Fund” shall mean the fund by that name established by Section 503 of the Resolution.

“Serial Bonds” shall mean Bonds which mature in semi-annual or annual installments of principal, which need not be equal.

“Series Debt Service Reserve Fund Requirement” shall mean, with respect to the 2007 Series A Bonds, as of any date of calculation, an amount equal to one-third of the maximum amount of principal, whether at maturity or on mandatory redemption, and interest payable in any twelve (12) month period on all 2007 Series A Bonds then Outstanding; provided that the calculation of the maximum interest payable in any twelve (12) month period shall exclude the amount of interest payable on the 2007 Series A Bonds that is payable as a result of the first interest payment date for such Bonds being more than six (6) months after the date of such Bonds. With respect to the 2007 Series B Bonds, the Series Debt Service Reserve Fund Requirement is zero.

“Series of Bonds”, “Series” or “Bonds of a Series” shall mean the Series of Bonds authorized by a Series Resolution.

“Series Resolution” shall mean a resolution of the Agency authorizing the issuance of a Series of Bonds in accordance with the terms and provisions of the Resolution adopted by the Agency in accordance with Article IX of the Resolution.

“Sinking Fund Account” shall mean the account by that name established by paragraph (4) of Section 504 of the Resolution.

“Sinking Fund Payment” shall mean, with respect to any Series of Bonds, the payments for Term Bonds established for such Series of Bonds pursuant to Section 202 of the Resolution.

“SONYMA” shall mean the State of New York Mortgage Agency, a corporate governmental agency of the State of New York, constituting a political subdivision and public benefit corporation established under the SONYMA Act or any body, agency or instrumentality of the State which shall, after the adoption of the Resolution, succeed to the powers, duties and functions of SONYMA.

“SONYMA Act” shall mean the State of New York Mortgage Agency Act, constituting Chapter 612 of the Laws of New York, 1970, as amended.

“SONYMA Insurance” shall mean the mortgage insurance for multi-family rental housing developments authorized pursuant to the SONYMA Act.

“Special Mandatory Tender Date” shall mean, upon the occurrence of a Special Tender Event, the date specified to the Trustee by SONYMA for purchase of all 2007 Series A Bonds (other than 2007 Series A Bonds to be redeemed pursuant to the 2007 Series A Resolution), which shall not be later than eight (8) days following receipt by the Trustee of such specification. Upon the occurrence of a Special Tender Event, the Trustee shall give Notice to the Holders of the 2007 Series A Bonds (other than 2007 Series A Bonds to be redeemed on or prior to the Special Mandatory Tender Date pursuant to the 2007 Series A Resolution) of the Special Mandatory Tender Date and that on such Special Mandatory Tender Date all 2007 Series A Bonds (other than 2007 Series A Bonds to be redeemed pursuant to the 2007 Series A Resolution) shall be subject to mandatory tender at the Purchase Price.

“Special Tender Event” shall mean receipt by the Trustee of written notice from SONYMA that a “covered default” has occurred under the SONYMA Insurance relating to the Project, together with (a) a written direction from SONYMA to the Trustee to purchase all of the 2007 Series A Bonds (other than 2007 Series A Bonds to be redeemed pursuant to the 2007 Series A Resolution) on a date specified in such direction by SONYMA, which date shall not be later than eight (8) days following receipt by the

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Trustee of such direction, and also together with (b) an amount of money from SONYMA equal to the Purchase Price that will be due for such 2007 Series A Bonds to be purchased pursuant to such written direction from SONYMA, which money shall be deposited upon receipt by the Trustee in the Purchase Fund.

“State” shall mean the State of New York.

“Supplemental Resolution” shall mean a resolution supplemental to or amendatory of the Resolution, adopted by the Agency in accordance with Article IX of the Resolution.

“Term Bonds” shall mean Bonds not constituting Serial Bonds.

“Trustee” shall mean the commercial bank, trust company, or national banking association appointed pursuant to Section 701 of the Resolution to act as trustee under the Resolution, and its successor or successors and any other commercial bank, trust company, or national banking association at any time substituted in its place pursuant to the Resolution.

“Wrongful Dishonor” shall mean an uncured default by the Credit Facility Provider of its obligations to honor (i) a request for payment by wire transfer (made in accordance with the terms of the Credit Facility) by supplying the Trustee with the fedwire number relating to the wiring of the requested amount or (ii) a request for payment made in accordance with the terms of the Credit Facility.

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EXHIBIT B

DESCRIPTION OF PROPOSED PROJECT

A brief description follows of the Project for which the Agency presently anticipates making a Mortgage Loan from the proceeds of the 2007 Bonds.

Project Name Location Dwelling Units/Type*

Estimated Mortgage Amount

Cannon Street Senior Apartments1 Poughkeepsie 40/N $3,350,0002

* N = New Construction. 1 After completion of construction, it is anticipated that all of the thirty-nine (39) revenue-producing units will be set aside for households in which at least one member is fifty-five (55) years of age or older and whose annual household incomes do not exceed sixty percent (60%) of the area median income, adjusted for family size. Twenty-nine (29) of the revenue producing units will be set aside for households in which at least one member is fifty-five (55) years of age or older and whose annual household incomes do not exceed fifty percent (50%) of the area median income, adjusted for family size. 2 The Mortgage Loan for the Project will be funded in the aggregate amount of approximately $3,350,000. Upon completion of construction, approximately $1,490,000 of such Mortgage Loan is anticipated to be prepaid, leaving the balance of approximately $1,860,000 to be amortized over a thirty (30) year period (see “Plan of Financing”).

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EXHIBIT C

FORM OF LEGAL OPINION

Upon delivery of the 2007 Bonds, Holland & Knight LLP, Bond Counsel to the Agency, proposes to issue its approving opinion in substantially the following form:

HOLLAND & KNIGHT LLP 195 BROADWAY

NEW YORK, NEW YORK 10007

New York State Housing Finance Agency 641 Lexington Avenue New York, New York 10022

Ladies and Gentlemen:

We have examined a record of proceedings relating to the issuance by the New York State Housing Finance Agency, a corporate governmental agency of the State of New York constituting a public benefit corporation (the “Agency”), of $1,860,000 Cannon Street Senior Apartments Multi-Family Housing Revenue Bonds, 2007 Series A (the “2007 Series A Bonds”) and of $1,490,000 Cannon Street Senior Apartments Multi-Family Housing Revenue Bonds, 2007 Series B (the “2007 Series B Bonds”; the 2007 Series A Bonds and the 2007 Series B Bonds being collectively referred to as the “2007 Bonds”). The 2007 Bonds are being issued pursuant to the New York State Housing Finance Agency Act, Article III of the Private Housing Finance Law, Chapter 44-B of the Consolidated Laws of the State of New York, as amended (the “Act”), the Cannon Street Senior Apartments Multi-Family Housing Revenue Bond Resolution, adopted by the Agency on October 18, 2006 (the “General Resolution”) and the Cannon Street Senior Apartments Multi-Family Housing Revenue Bond, 2007 Series A Resolution, adopted by the Agency on October 18, 2006, authorizing the 2007 Series A Bonds, and the Cannon Street Senior Apartments Multi-Family Housing Revenue Bond, 2007 Series B Resolution, adopted by the Agency on October 18, 2006, authorizing the 2007 Series B Bonds (collectively, the “Series Resolutions”; the General Resolution and the Series Resolutions being collectively referred to as the “Resolution”).

The 2007 Bonds are being issued for the purpose of financing a Mortgage Loan (as defined in the Resolution) to be made by the Agency for the Project (as defined in the Resolution).

The 2007 Bonds are dated, mature, are payable, bear interest and are subject to redemption all as set forth in the Resolution.

The Agency has reserved the right to issue additional Bonds (as defined in the Resolution) on the terms and conditions and for the purposes stated in the General Resolution. Under and subject to the provisions of the General Resolution, the 2007 Series A Bonds, the 2007 Series B Bonds and all Bonds hereafter issued under the General Resolution rank and will rank equally as to security and payment (except with respect to the Bank Repayment Fund, the Purchase Fund and the respective Credit Facilities (or portions thereof), as such terms are defined in the Resolution).

The Internal Revenue Code of 1986, as amended (the “Code”) establishes certain requirements that must be met subsequent to the issuance and delivery of the 2007 Bonds in order that interest on the 2007 Bonds be and remain excluded from gross income for Federal income tax purposes. Noncompliance with such requirements may cause interest on the 2007 Bonds to become subject to Federal income taxation retroactive to their date of issue, irrespective of the date on which such noncompliance is

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ascertained. The Agency, the Mortgagor of the Project and others have covenanted to comply with certain provisions and procedures, pursuant to which the pertinent Code requirements can be satisfied.

We are of the opinion that:

1. The Agency has been duly created and is validly existing under the Act and has the right, power and authority to adopt the Resolution, and the Resolution has been duly adopted by the Agency, is in full force and effect, and is valid and binding upon the Agency and enforceable in accordance with its terms.

2. The Resolution creates the valid pledge which it purports to create of the monies and investments held in all funds and accounts established by the Resolution (excluding the Bank Repayment Fund and the Purchase Fund, as defined in the Resolution) subject to the application thereof to the purposes and on the conditions permitted by the Resolution.

3. The 2007 Bonds have been duly and validly authorized and issued by the Agency and are valid and binding special revenue obligations of the Agency, payable solely from the sources provided therefor in the Resolution.

4. The 2007 Bonds are not a debt of the State of New York, and the State of New York is not liable thereon, nor shall the 2007 Bonds be payable out of funds of the Agency other than those pledged for the payment of the 2007 Bonds.

5. Under existing statutes, regulations, rulings and court decisions, interest on the 2007 Bonds is excluded from gross income for Federal income tax purposes pursuant to Section 103 of the Code, except that no opinion is expressed as to such exclusion of interest on any 2007 Bond for any period during which such 2007 Bond is held by a “substantial user” of the facilities financed with the proceeds of the 2007 Bonds or a “related person” within the meaning of Section 147(a) of the Code. Interest on the 2007 Bonds is, however, treated as a preference item in calculating alternative minimum tax imposed under the Code on individuals and corporations. In rendering its opinion, Bond Counsel has relied on certain representations, certifications of fact, and statements of reasonable expectations made by the Agency, the Mortgagor and others, in connection with the 2007 Bonds, and Bond Counsel has assumed compliance by the Agency, the Mortgagor and others with the aforementioned covenants to comply with applicable requirements of the Code to assure the exclusion of interest on the 2007 Bonds from gross income under Section 103 of the Code.

6. Under existing statutes, interest on the 2007 Bonds is exempt from personal income taxes imposed by New York State or any political subdivision thereof (including The City of New York).

We express no opinion regarding any other Federal, state or local tax consequences with respect to the 2007 Bonds. We are rendering this opinion under existing statutes and court decisions as of the date hereof, and assume no obligation to update this opinion after the date hereof to reflect any future action, fact or circumstance, or change in law or interpretation, or otherwise. We express no opinion on the effect of any action hereafter taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross income for Federal income tax purposes of interest on the 2007 Bonds, or under state and local tax law.

In rendering this opinion, we are advising you that the enforceability of rights and remedies with respect to the 2007 Bonds and the Resolution may be limited by bankruptcy, insolvency and other laws affecting creditors’ rights or remedies heretofore or hereafter enacted, and is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

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We have examined an executed 2007 Series A Bond and an executed 2007 Series B Bond and, in our opinion, the forms of said Bonds and their execution are regular and proper.

Very truly yours,