221b-gra.use -- MULTIFAMILY PROJECTS INSURED OR ASSISTED UNDER SECTION 221(d)(3) PROJECT NAME: PROJECT LOCATION: PROJECT NUMBER: USE AGREEMENT AND AMENDMENT OF EXISTING 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 LOW-INCOME HOUSING PRESERVATION AND RESIDENT HOMEOWNERSHIP ACT OF 1990 WITH A CAPITAL GRANT AND SALE OF PROPERTY 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 Deed of Trust (the "Mortgage") and insured 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 mortgage was recorded in the Recorder's Office of County on , 19 , as File Number . WHEREAS, the Project is subject to a Regulatory Agreement or any amendments thereto, (the "Regulatory Agreement"), dated , 19 and recorded on , 19 in the County Recorder's Office of County as document number at Book Page ; WHEREAS, the Owner is eligible to prepay the mortgage and the Project is subject to the provisions of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 ("LIHPRHA"), 12 U.S.C. 4101 et seq., as amended, because it meets the definition of "eligible low-income housing" in LIHPRHA; WHEREAS, pursuant to LIHPRHA, 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 useful life of the Project; NOW, THEREFORE, in consideration of the mutual promises set forth herein, the parties hereby agree as follows: 1. Definitions a. "Low-Income Tenants" are persons or families whose incomes are more than 50 percent but not more than 80 percent of Median Income as determined by HUD with adjustments for smaller or larger families. b. "Moderate Income Tenants" are persons or families whose incomes are more than 80 percent of Median Income but not more than 95 percent of Median Income as determined by HUD with adjustment for smaller or larger families. c. "Plan of Action" is that document submitted by the Owner, and approved by HUD, pursuant to LIHPRHA requesting incentives in exchange for maintaining the low and moderate income character of the Project for its remaining useful life. d. "Remaining Useful Life" is the period during which the physical characteristics of the Project remain in a condition suitable for occupancy, assuming normal maintenance and repairs are made and major systems and capital components are replaced as becomes necessary. e. "Very Low-Income Tenants" are persons or families whose incomes are not more than 50 percent of Median Income as determined by HUD with adjustments for smaller and larger families. 2. Term. This Agreement shall remain in effect for the Remaining Useful Life of the Project, as that term is defined in Paragraph 1 of this Agreement. The Owner may petition HUD to make a determination that the remaining useful life of the Project has expired not less than fifty years from the date of approval of the Plan of Action for the Project. In making such a determination, HUD shall presume that the useful life of the Project has not expired, and the Owner shall have the burden of proof in establishing such expiration. HUD will not determine that the useful life of the Project has expired if such determination results primarily from failure to make regular and reasonable repairs and replacement, as become necessary. Tenants and interested persons and organizations may provide comments on the Owner's petition and may appeal HUD's determination. 3. Use Restriction. The Project shall be used solely as rental housing for Very Low-, Low- and Moderate-Income Tenants, except to the extent that commercial use has been approved by the Commissioner. If there is any approved commercial use or non- residential units in the Project, rents from the units receiving Section 8 assistance shall not be used to pay any expenses incurred with respect to the commercial use or non-residential units. 4. Maintenance of Affordability. a. Paragraphs 4(a), (d), (f), (g), (h), and (i) of the Regulatory Agreement are deleted in their entirety. The Owner, to the extent practicable, will maintain the Project as affordable to the following proportions of Very Low-, Low- and Moderate-Income Tenants: 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. The Owner may rent to a higher proportion of Very Low-Income Tenants than required by the foregoing tenant income profile. However, HUD does not agree to provide Section 8 assistance beyond that which is already provided under an existing Section 8 assistance contract. c. 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. d. Paragraph 4(b) of the Regulatory Agreement is amended to read as follows: To the extent that it does not conflict with the tenant income profile established in Section 222 of LIHPRHA, preference for occupancy shall be given to those families displaced as a result of a major disaster as determined by the President or as a result of governmental action; 5. Distributions and Amendment of Regulatory Agreement. Paragraph 6 of the Regulatory Agreement is amended to read as follows: The Owner shall not make, or receive and retain, any distribution of assets or any income of any kind of the project except on the following conditions: 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 fiscal year shall be no more than $ 00.00 and the right to such distributions shall be cumulative. 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 requiring immediate repairs or to avoid a default on, or assignment of, the mortgage insured by the Commissioner. 7. Savings Due to Management Efficiencies. Any net savings from reductions in operating expenses due to management efficiencies as determined by the Secretary shall be deposited into the Reserve for Replacements Account. The Owner may have access to these funds on a semiannual basis upon a finding by the Commissioner that a withdrawal will not reduce the balance in the Reserve for Replacements Account below that required in Paragraph 2(a) of the Regulatory Agreement, as amended by this Agreement, and that the Owner is maintaining the property in accordance with the Housing Quality Standards set forth in 24 CFR Part 886. 8. Displacement. No Current Tenant shall be displaced, except for good cause. 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, religion, sex, national origin, handicap or familial status, including but not limited to: Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-1), the Fair Housing Act (42 U.S.C. 3601), Executive Order 11063, Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), 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. Housing Quality Standards. The Owner shall maintain the Project in good repair and condition in accordance with the applicable local codes. 11. Violations of this Agreement. If HUD determines that the Owner has violated the terms of this Agreement, including compliance with the Housing Quality Standards, HUD shall notify the Owner of its determination and the Owner shall have 90 days in which to cure the violation. At the expiration of the 90 days, HUD shall reinspect the Project or take other investigative steps in order to ensure compliance. The failure to cure any violation within 90 days of notification of the violation may result in, but not be limited to, the forfeiture of, or reduction in, the Owner's annual distribution; reduction in, or suspension of, the Section 8 assistance, if any; acceleration of debt secured by the Project; payment of relocation expenses to tenants admitted to the Project inconsistently with the tenant income profile established in this Agreement; and the imposition of any other sanctions authorized in law. 12. Agreement Binding Upon Successors and Assigns. Upon conveyance of the Project during the term of this Agreement, the Owner shall require its successor or assignee to assume its obligations under this Agreement. In any event, this Agreement shall be binding upon the Owner's successors and assigns. 13. 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. 14. 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 LIHPRHA. 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. 15. Incorporation of Regulatory Agreement by Reference. Paragraphs 2(a), 2(c), 4(c), (4)(e), 4(j), 5, 6, 7(b), 7(d), 7(f), 7(g), 7(j), 10, 14 and 18 of the Regulatory Agreement (HUD Form 1733 dated 10/69), are adopted and incorporated by reference herein. In the event that the Owner prepays all mortgage note or notes as are described in the Regulatory Agreement or any Regulatory Agreement amendments or all 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. 16. 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 provision and to recover damages (including refunds, with interest, on rent overcharges), and/or to obtain whatever other relief may be appropriate. 17. Severability. The invalidity, in whole or in part, of any provision of this Agreement shall not affect or invalidate any remaining provisions. 18. Impairment of Regulatory Agreement. The terms and provisions of the Regulatory Agreement shall continue in full force and effect except as modified herein. Conflicts between this Agreement and the Regulatory Agreement shall be resolved in favor of this Agreement. 19. 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 conflicting requirements. 20. 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 ________________, 19 . OWNER _____________________________ _____________________________ Witness SECRETARY OF HOUSING AND URBAN DEVELOPMENT _____________________________ ____________________________ Witness BY: Director Office of Multifamily Housing HUD, Field Office STATE OF ) ) SS: COUNTY OF ) Before me, __________________, a Notary Public in and for said State, on this _____ day of _______________, 19 , 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 Henry G. Cisneros, as 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 ____________, 19 . (SEAL) ____________________________ Notary Public My commission expires ____________________, 19___. STATE OF ) ) ss: COUNTY OF ) On this ____ day of ________________, A.D., 19 , before me, a Notary Public in and for said county and State, residing therein, duly commissioned and sworn, personally appeared _____________________________, and proved to me on the basis of satisfactory evidence to be the ________________________ of the corporation that executed the within instrument and acknowledged to me that such corporation 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___.