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3 pledge of the leases and rents to be derived from the Project, and from a security interest in the fixtures and equipment financed as a part of the Project. If agreed to by the owners of the Bonds and the Company, the loan repayments may also be secured by one or more guaranty agreements of the Company or related parties. In the event the revenues and other security pledged to the payment of the loan repayments are not sufficient to pay the principal of, premium, if any, and interest on the Bonds when due, the owners of the Bonds will bear the loss. The Bonds will not constitute general or moral obligations of the City and will not be secured by the taxing powers of the City or any property of the City except the interests of the City in the Loan Agreement. The Bonds will be special, limited obligations of the City. Section C. Local Contributions to the Housing Program. The issuance of tax-exempt obligations for the Project is expected to allow the City to finance the Project at a lower interest cost than is otherwise available. The City believes the reduced financing cost will enhance the feasibility of the Project and result in lower rental rates for use of the Project than might otherwise be charged. Section D. Standards and Requirements Relating to the Financing of the Project Pursuant to the Housing Program. The following standards and requirements shall apply with respect to the operation of the Project: (1) Substantially all of the proceeds of the Bonds will be applied to the financing of the Project, the funding of reserves, the payment of a portion of the interest on the Bonds, and the payment of costs of issuance of the Bonds. The resolutions authorizing the issuance of the Bonds and the Loan Agreement pursuant to which the proceeds of the Bonds are to be loaned to the Company will include certain covenants to be made by the City and the Company regarding the use of proceeds, and by the Company regarding the character and use of the Project. (2) The Company will covenant that it will not arbitrarily reject an application from a proposed tenant because of race, color, creed, religion, national origin, sex, marital status, or status with regard to public assistance or disability. (3) The dwelling units of the Project will be occupied by, or held for occupancy by, elderly persons. (4) The Project is intended to be a “multifamily housing development” as defined in Section 462C.02 of the Act. Section E. Severability. The provisions of this Housing Program are severable, and if any of its provisions, sentences, clauses, or paragraphs shall be held unconstitutional, contrary to statute, exceeding the authority of the City, or otherwise illegal or inoperative by any court of competent jurisdiction, the decision of such court shall not affect or impair any of the remaining provisions. Section F. Amendment. The City shall not amend this Housing Program while the Bonds are outstanding, to the detriment of the holders of such obligations. The City may amend this Housing Program, to the extent authorized by law and the contractual obligations of the City, to the extent the City deems such amendment to be in the best interests of the City, the Project, and the owners of the Bonds. Section G. State Ceiling. The Bonds shall be issued as “qualified 501(c)(3) bonds” pursuant to Section 145 of the Internal Revenue Code of 1986, as amended, the interest on which is not includable in gross income for federal income tax purposes and which is not includable in taxable net income for