221b-gra.ii -- MULTIFAMILY PROJECTS INSURED OR ASSISTED UNDER SECTION 221(d)(3) PROJECT NAME PROJECT LOCATION PROJECT NUMBER USE AGREEMENT AND AMENDMENT OF REGULATORY AGREEMENT FOR MULTIFAMILY PROJECTS INSURED OR ASSISTED UNDER SECTION 221(d)(3) (BELOW MARKET INTEREST RATE) OF THE NATIONAL HOUSING ACT AND SUBJECT TO THE EMERGENCY LOW-INCOME HOUSING PRESERVATION ACT OF 1987 WITH A CAPITAL GRANT This Agreement, entered into by the Secretary of Housing and Urban Development (the "Secretary" or "HUD"), and ("Owner") provides as follows: WHEREAS, (the "Project"), a unit project located in , was financed with a Secured Note (the "Mortgage Note") and Mortgage (the "Mortgage"), dated and insured and subsidized by the Secretary under Section 221(d)(3) and (d)(5) of the National Housing Act, 12 U.S.C. Section 1715l(d)(3) and (d)(5), and covering real property as described in Exhibit "A" attached hereto, which Deed of Trust was recorded in the Recorder's Office of County on as document number , at Book , Page ; WHEREAS, the Project is subject to a Regulatory Agreement, (the "Regulatory Agreement"), dated and recorded on in the County Recorder's Office of County as document number , at Book , Page ; WHEREAS, the Project is subject to the provisions of the Emergency Low-Income Housing Preservation Act of 1987, as amended ("ELIHPA"), because it meets the definition of "eligible low- income housing" in ELIHPA; WHEREAS, pursuant to ELIHPA, the Owner has requested, and HUD has agreed to provide certain incentives, as set forth herein, in exchange for the Owner's agreement to continue low- income affordability restrictions on the Project for the remaining term of the original Mortgage; NOW, THEREFORE, in consideration of the mutual promises set forth herein, the parties hereby agree as follows: 1. Definitions a. "Lower Income Families" are persons or families whose incomes are more than 50% but not in excess of 80% of Median Income as determined by HUD with adjustments for smaller or larger families. b. "Moderate Income Families" are persons or families whose incomes are more than 80% of Median Income but not in excess of 95% of Median Income as determined by HUD with adjustment for smaller or larger families. c. "Very Low-Income Families" are persons or families whose incomes do not exceed 50% of Median Income as determined by HUD with adjustments for smaller and larger families. 2. Term. This Agreement shall remain in effect until , the maturity date of the Mortgage Note. 3. Use Restriction. The Project shall be used solely as rental housing for Very Low, Lower and Moderate Income Families, except that no tenant in occupancy as of the effective date of this Agreement ("Current Tenant(s)") shall be required to relocate on the basis of his or her income. 4. Maintenance of Affordability. Paragraphs 4(a)(3), 5(c) and 5(d) of the Regulatory Agreement are deleted in their entirety. The Owner will, to the extent practicable, maintain the Project as affordable to the following number of Very Low, Lower and Moderate Income Families: No. of Units Very Low-Income Tenants Low-Income Tenants Moderate-Income Tenants In renting vacant units to new tenants, the Owner may deviate from the above Tenant Profile to the extent necessary to keep the project financially viable, only with the approval of HUD. b. Paragraph 4(d) of the Regulatory Agreement is amended to read as follows: (d) preference for occupancy shall be given to those families displaced from an urban renewal area, or as a result of governmental action, or as a result of a disaster determined by the President to be a major disaster; 5. Displacement. No Current Tenant shall be displaced, except for good cause. 6. Reserve for Replacements and Amendment of Regulatory Agreement. Paragraph 2(a) of the Regulatory Agreement is amended by adding the following language to the end thereof: The Secretary will not approve the release of funds from the Reserve for Replacements account if doing so would reduce the balance below an amount equivalent to one month's maximum gross rent potential, except in emergencies such as natural disasters requiring immediate repairs or to avoid a default on the mortgage insured by the Commissioner. 7. Distributions and Amendment of Regulatory Agreement. Paragraphs 6(e)(1) and (2) of the Regulatory Agreement are amended to read as follows: (1) All distributions shall be made only as of or after the end of a semiannual or annual fiscal period, and only as permitted by the law of the applicable jurisdiction; all such distributions in any one year shall be limited to , and the right to such distributions shall be cumulative. The Owner shall obtain a physical inspection report each year from a certified architect, engineer, or other party whose qualifications have been approved by the Secretary. The Owner shall keep the inspection report in the Project records for at least three years. Prior to distribution of surplus cash, the Owner must certify to the Secretary that the Project meets the requirements of Paragraph 7 of this Agreement and that any deficiencies known to the Owner are being corrected. (2) Except with respect to the proceeds of an equity takeout loan approved by the Secretary and insured under Section 241(f) of the National Housing Act, no distribution shall be made from borrowed funds or when there is any default under this Agreement or under any mortgage secured by the Project. 8. Residual Receipts. Any funds on deposit in the Residual Receipts account as of the date of execution of this Agreement may be withdrawn and retained by the Owner. 9. Civil Rights Requirements. The Owner will comply with the provisions of any Federal, State or local law prohibiting discrimination in housing on the basis of race, color, creed, sex, national origin, handicap or familial status, including but not limited to: Title VI of the Civil Rights Act of 1964, the Fair Housing Act, Executive Order 11063, Section 504 of the Rehabilitation Act of 1973, and all requirements imposed by or pursuant to the regulations of the Department of Housing and Urban Development implementing these authorities, including, but not limited to 24 CFR Parts 1, 100, 107, and 110, and Subparts I and M of Part 200. 10. Agreement Binding Upon Successors and Assigns. Upon conveyance of the Project during the term of this Agreement, the Owner shall require its grantee to assume its obligations under this Agreement. In any event, this Agreement shall be binding upon the Owner's successors and assigns. 11. Reports. The Owner shall furnish the Secretary with such reports concerning the financial condition, operation and condition of the Project as the Secretary may prescribe. 12. Incorporation of Regulatory Agreement by Reference. Paragraphs 2; 4(a)(1), (2) and (4); 4(b); 4(c); 5(a); 5(b); 5(e); 6(a)-(h); 6(k); 7; 9; 12; 13; and 17 of the Regulatory Agreement, are adopted and incorporated by reference herein. In the event that the Owner prepays the Mortgage Note or the FHA mortgage insurance is terminated, the provisions listed above shall remain in full force and effect, binding the Owner, its successors and assigns as if the Mortgage Note were not prepaid or the mortgage insurance terminated, except that in the case of such prepayment or termination: a. the phrase "the Secretary" shall be substituted for the term "Mortgagee" throughout the adopted language of the Regulatory Agreement; and b. the "mortgaged property" or "mortgaged premises" referred to in the Regulatory Agreement, shall be the Project. 13. Enforcement. In the event of a breach or threatened breach of any of the provisions of this Agreement, any eligible tenant or applicant for occupancy, or the Secretary or his or her successors or delegates, may institute proper legal action to enforce performance of such provisions, to enjoin any acts in violation of such provisions, to recover whatever damages can be proven (including refunds, with interest, on rent overcharges), and/or to obtain whatever other relief may be appropriate. 14. Severability. The invalidity, in whole or in part, of any of the provisions set forth above shall not affect or invalidate any remaining provisions. 15. Impairment of Regulatory Agreement. The terms and provisions of the Regulatory Agreement shall continue in full force except as modified herein. Conflicts between this Agreement and the Regulatory Agreement shall be resolved in favor of this Agreement. 16. Execution of Other Agreements. The Owner agrees that it has not and will not execute any other agreement with provisions contradictory of, or in opposition to, the provisions of this Agreement, and that in any event, the provisions of this Agreement are paramount and controlling as to the rights and obligations set forth and supersede any other requirements in conflict therewith. 17. Conversion to Alternative Prepayment System. In accordance with HUD's regulations at 24 CFR Part 248, the Owner shall be entitled to convert to the system of incentives and restrictions provided by the Low-Income Housing Preservation and Resident Homeownership Act of 1990, with such adjustments as the Secretary determines are appropriate to compensate for the value of any benefits received by the Owner under ELIHPA. 18. Reimbursement of Assistance. If, within ten years of plan of action approval, the Owner becomes affiliated with, or transfers title in the Project to, a for-profit entity, the Secretary may seek reimbursement from the Owner for the difference between the amount of incentives approved in the plan of action and the amount of incentives which the for-profit entity would have been entitled to receive under ELIHPA. Any Owner receiving incentives or other property of the project in violation of this agreement shall immediately deliver such property to the project and failing to do so shall hold such property in trust. 19. Subsequent Statutory Amendments. If revisions to the provisions of this Use Agreement are necessitated by subsequent statutory amendments, the Owner agrees to execute modifications to this Use Agreement that are needed to conform to the statutory amendments. In the alternative, at HUD's option, HUD may implement any such statutory amendment through rulemaking by amending 24 C.F.R. Part 248. IN WITNESS WHEREOF, the parties hereto have executed this Agreement and have agreed that it shall be effective as of the ______ day of ________________, 1992. OWNER _____________________________ _____________________________ Witness SECRETARY OF HOUSING AND URBAN DEVELOPMENT _____________________________ ____________________________ Witness BY: Director Office of Housing Management HUD, Field Office STATE OF ) ) SS: COUNTY OF ) Before me, __________________, a Notary Public in and for said State, on this _____ day of _______________, 1992, personally appeared _____________________, who is personally well known to me to be the Director, ____________________________, and the person who executed the foregoing instrument by virtue of the authority vested in him by Section 204(g) of the National Housing Act, as amended, and I having first made known to him the contents thereof, he did acknowledge the signing thereof to be his free and voluntary act and deed on behalf of the Secretary of Housing and Urban Development for the uses, purposes and considerations therein set forth. Witness my hand and official seal this ____ day of ____________, 1992. (SEAL) ____________________________ Notary Public My commission expires ____________________, 19___. STATE OF ) ) ss: COUNTY OF ) On this ____ day of ________________, A.D., 1992, before me residing therein, duly commissioned and sworn, personally appeared _____________________________, a Notary Public in and for said county and State, proved to me on the basis of satisfactory evidence to be the ________________________ of the limited partnership that executed the within instrument and acknowledged to me that such limited partnership executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this Certificate first above written. __________________________________ NOTARY PUBLIC (SEAL) My Commission expires _____________________, 19___.