92466.1-CA Capital Advance Mixed Finance Program Regulatory Agreeme

Capital Advance Mixed Finance Program Regulatory Agreement	U.S. Department of Housing and Urban Development Office of Housing Federal Housing Commissioner	OMB Control NO. 2502-XXXX (exp. xx/xx/xxxx)
Public reporting burden for this collection of information is estimated to average 0.5 hour (30 minutes) per response, including the time for reviewing instructions, searching existing data sources, gathering and maintain the data needed, and completing and reviewing the collection of information. HUD may not collect this information and you are not required to complete this form, unless it displays a currently valid OMB control number. This information collection is necessary to ensure that viable projects are developed. It is important to obtain information from applicants to assist HUD in determining if nonprofit organizations initially funded continue to have the financial and administrative capacity needed to develop a project and that the project design meets the needs of the residents. The Department will use this information to determine if the project meets statutory requirements with respect to the development and operation of the project, as well as ensuring the continued marketability of the project. This information is required in order to obtain benefits. This information is considered non-sensitive and no assurance of confidentiality is provided.

Housing for the Elderly or Handicapped (Nonprofit)

Section 202 of the Housing Act of 1959 or Section 811

of the National Affordable Housing Act.

Project Number	Other Secured Lien Holders
Amount of Mortgage Note	Date
Mortgage Recorded State Book	County Page	Date

This agreement entered into__________________ day of __________ 20______, between _______________________________________________________ whose address is _______________________________________________ hereinafter called Mortgagor, ______________________________ (“General Partner of the Mortgagor”), and the undersigned Secretary of Housing and Urban Development hereinafter called HUD.

Whereas pursuant to the American Homeownership and Economic Opportunity Act of 2000 amended both the Section 202 Supportive Housing Program for the elderly and Section 811 Supportive Housing program for persons with disabilities to allow the use of capital advance and rental assistance funds in mixed-finance development projects owned by for-profit limited entity that is controlled by a single purpose exempt organization.

Whereas, the Mortgagor has been organized for the purpose of the ownership and operation Mortgaged Property, a ____ unit development.

Whereas ____ of the ____ units in the project are being financed in part, with the proceeds of the capital advance described herein and will receive assistance under a Project Rental Assistance Contract. The ____ HUD assisted units are hereafter referred to as the “Assisted Units.”

Whereas the remaining ____ units in the project are being financed with public/private debt and/or low income housing tax credit equity. Theses units so financed and hereafter referred to as the “Non-assisted Units.”

This Agreement regulates operations of the Assisted Units, which make up a portion of the real estate included within the mortgaged property.

In consideration of the making of the capital advance by HUD and the disbursement of any part thereof, and in order to comply with the requirements of the Housing Act of l959 or National Affordable Housing Act of l990 and the Regulations adopted by the Secretary pursuant thereto, the Mortgagor agrees for itself, its successors and assigns, and any owner of the mortgaged property, that in connection with the mortgaged property and the project operated thereon and so long as the capital advance is outstanding:

l. The Note and Mortgage bear no interest and repayment is not required so long as the Assisted Units remain available for very low-income elderly persons or very low-income persons with disabilities (whichever is applicable).

2. a) The parties to this Agreement acknowledge and agree that the Mortgagor shall maintain separate books and records for the operation maintenance of the Assisted Units and the operation and maintenance of the Non-assisted Units.

b) Unless otherwise agreed by HUD, the operating expenses between the Assisted Units and the Non-assisted Units is based on the relative square footage of the Assisted Units and the Non-assisted Units.

c) The parties acknowledge and agree that unless otherwise specifically provided herein, the terms and conditions set forth below shall apply solely to the Assisted Units, provided that nothing herein shall preclude HUD from receiving complete financial records and information pertaining to the operation of both the Assisted Units and the Non-assisted Units.

3. Mortgagor will establish and maintain a special fund to be known as the revenue fund account in a bank which is a member of the Federal Deposit Insurance Corporation, Savings Association Insurance Fund, or the National Credit Union Share Insurance Fund, into which will be deposited all rentals, charges, income and revenue arising from the operation or ownership of the project. The bank in which this account is established shall provide collateral acceptable to HUD to equal the maximum amount in the account at any one time when such amount exceeds $l00,000. If the bank will not provide appropriate collateral in such instances, the Mortgagor will be required to establish accounts in two or more banks so that the total amount on deposit at any time does not exceed $l00,000 in any one bank. Expenditures shall be made from the revenue fund account only in accordance with the operating budget submitted to and approved by HUD.

4. Not later than 30 days prior to the beginning of each fiscal year, the Mortgagor shall submit an operating budget for that fiscal year to HUD. The budget shall include all necessary operating expenses, current maintenance charges, expenses of reasonable upkeep and repairs, taxes and special assessment levies, prorated amounts required for insurance and all other expenses incident to the operation of the Assisted Units project; and shall show the expected revenue to pay such expenses, including reserve fund deposits. The expenses incurred and disbursements shall not exceed the reasonable and necessary amount thereof, and the Mortgagor will not expend any amount or incur any obligations in excess of the amounts approved in the annual operating budget except upon written certification by the Mortgagor to HUD that such expenses were unanticipated and are necessary and provided further, that nothing in this section shall limit the amount which the Mortgagor may expend from funds obtained from some other source than revenues from the Assisted Units or other funds required of the Mortgagor pursuant to this Agreement or the Capital Advance Agreement.

5. As security for the Capital Advance for the required payments under this Agreement into the reserve fund for replacements, and for all other obligations of the Mortgagor under this Agreement, the Mortgagor hereby assigns, pledges and mortgages to HUD all its rights to the income and charges of whatever sort which it may receive or be entitled to receive from the operation of the mortgaged property, subject, however, to any assignment of rents or project income in the Mortgage referred to herein. Until a default occurs under this Agreement, however, permission is granted to Mortgagor to collect and retain under the provisions of this Agreement such rents, income, operating surplus and charges, but upon default this permission is terminated, as to all rents, income, operating surplus and charges due or collected thereafter.

6. a)Mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank which is insured by the Federal Deposit Insurance Corporation, Savings Association Insurance Fund, or the National Credit Union Share Insurance Fund. Concurrently with the effective commencement of rental assistance payments under the Project Rental Assistance Contract, the Mortgagor will deposit an amount equal to $ per month unless a different date or amount is approved in writing by HUD. Such fund, whether in the form of a cash deposit or invested in obligations of, or fully guaranteed as to principal by, the United States of America shall at all times be subject to the control of HUD. Disbursements from such fund, whether for the purpose of effecting replacement of structural elements and mechanical equipment of the project for any other purpose, may be made only after the consent in writing of HUD. In the event of a default in the terms of the mortgage, HUD may demand the full or partial application of the balance in such fund to be amount due on the mortgage debt.

b) Mortgagor will deposit the minimum capital investment with an escrow agent acceptable to HUD pursuant to Regulations.

c) Mortgagor will deposit the operating reserve fund with an escrow agent acceptable to HUD pursuant to Regulations.

d) Within 60 days after the end of each fiscal year, any residual receipts realized from the operation of Assisted Units within the mortgaged property shall be deposited in a separate residual receipts account. Residual receipts shall be under the control of HUD and shall be disbursed only at the discretion of HUD for such purpose as it may determine to be necessary or appropriate.

7. The real property covered by the Mortgage and this Agreement is described in Schedule A attached hereto.

8. Mortgagor shall not without the written approval of the Secretary:

a) Transfer, dispose of or encumber any of the mortgaged property. Any such transfer shall be only to a person or persons or corporation satisfactory to and approved by HUD, who shall, by legal and valid instrument in writing, to be recorded or filed in the same recording office in which conveyances of the property covered by the Mortgage are required to be filed or recorded, duly assume all obligations under this Agreement and under the Note and Mortgage;

b) Assign, transfer, dispose of, or encumber any personal property, including rents or charges, and shall not disburse or pay out any funds except as provided herein and in the Capital Advance Agreement.

c) Remodel, reconstruct, add to, or demolish any part of the Assisted Units or those portions of the mortgaged property which have a direct material impact on the Assisted Units or subtract from any real or personal property of the project;

d) Pay any compensation or make any distribution of income or other assets derived from the Assisted Units to any of its officers, directors, trustees, members, partners or stockholders;

e) Enter into any contract or contracts for supervisory or managerial services;

f) Require as a condition of occupancy or leasing of any unit or residential space in the project, any consideration or deposit other than a security deposit in an amount equal to one month’s total tenant payment or $50, whichever is greater. The family is expected to pay the security deposit from its own resources and other available public or private resources. The Mortgagor may collect the security deposit on an installment basis.

The security deposits must be placed in a segregated interest-bearing account. A record shall be maintained of the amount in this account that is attributable to each family in residence in the project. Annually for all families, and when computing the amount available for disbursement, the Mortgagor shall allocate to the family’s balance, the interest accrued on the balance during the year. Unless prohibited by State or local law, the Mortgagor may deduct for the family, from the accrued interest for the year, the administrative cost of computing the allocation to the family’s balance. The amount of the administrative cost adjustment shall not exceed the accrued interest allocated to the family’s balance for the year. The amount of the segregated, interest-bearing account maintained by the Mortgagor must at all times equal the total amount collected from the families then in occupancy plus any accrued interest and less allowable administrative cost adjustments. The Mortgagor must comply with any applicable State and local laws concerning interest payments on security deposits. The Mortgagor, subject to State and local law, may use the family’s security deposit balance as reimbursement for any unpaid family contribution or other amount, which the family owes under the lease in accordance with the Regulations.

g) Permit the use of the dwelling accommodations of the project for any purpose except the use, which was originally intended, or permit commercial use greater than that originally approved by HUD.

h) Amend its articles of incorporation or by-laws other than as permitted under the terms of the articles of incorporation approved by HUD.

9. Mortgagor shall maintain the mortgaged premises, accommodations and the grounds and equipment appurtenant thereto, in good and substantial repair and condition; provided that, in the event all or any of the buildings covered by the Mortgage shall be destroyed or damaged by fire or other casualty, the money derived from any insurance on the property shall be applied in accordance with the terms of the Mortgage.

10. Mortgagor shall not file any petition in bankruptcy or insolvency, or for a receiver, or for reorganization or composition, or make any assignment for the benefit of creditors or to a trustee for creditors; or permit an adjudication in bankruptcy, or insolvency, the taking possession of the mortgaged property or any part thereof by a receiver, or the seizure and sale of the mortgaged property or any part thereof under judicial process or pursuant to any power of sale and fail to have such adverse actions set aside within 45 days.

11. Mortgagor shall from funds other than project income generated by the Assisted Units immediately satisfy or release any mechanic’s lien, or any other lien which attaches to the mortgaged property or any personal property used in the operation of the project, and shall dismiss or have dismissed or vacated any receivership, or petition in bankruptcy or assignment for benefit of creditors, creditors bill or insolvency proceeding involving the project or the mortgaged property.

12. a) All income and other funds of the Assisted Units shall be segregated from and accounted for separately from income and funds of the Non-assisted Units and from income and funds of any non-project sources, and from any funds of any other corporations and persons. Income and other funds pledged to the project shall be expended only for the purposes of the project.

b) Mortgagor shall provide for the management of the project satisfactory to HUD. Any management contract entered into by the Mortgagor involving the project shall contain a provision that it shall be subject to termination, without penalty and with or without cause, upon written request by HUD addressed to the Mortgagor and the management agent. Upon receipt of such request the Mortgagor shall immediately move to terminate the contract within a period of not more than 60 days and shall make arrangements satisfactory to HUD for continuing proper management of the project.

c) Neither Mortgagor nor its agents shall make any payments for services, supplies or materials unless such services are actually rendered for the project or such supplies or materials are delivered to the project and are reasonably necessary for its operation. Payments for such services or materials shall not exceed the amount ordinarily paid for such services, supplies or materials in the area where the services are rendered or the supplies or materials furnished.

d) The mortgaged property, equipment, buildings, plans, offices, devices, books, apparatus, contracts, records, documents, and all other papers relating thereto shall at all times be maintained in reasonable condition for proper audit and subject to examination and inspection at any reasonable time by HUD and its duly authorized agents. Mortgagor and its successors, assigns or its agents shall retain copies of all written contracts or other instruments which affect the mortgaged property, all or any of which may be subject to inspection and examination by HUD or its duly authorized agents.

e) The books and accounts of the operations of the mortgaged property and of the project shall be kept in accordance with the requirements of HUD.

f) Within 60 days following the end of each fiscal year HUD shall be furnished with a complete annual financial report based upon an examination of the books and records of Mortgagor prepared in accordance with the requirements of HUD, certified to be an officer of the Mortgagor and, when required by HUD, prepared and certified by a Certified Public Accountant, or other person accepted to HUD.

g) At the request of HUD, its agents, employees, or attorneys, the Mortgagor shall give specific answers to questions upon which information is desired from time to time relative to the income, assets, liabilities, contracts, operation, and condition of the property and the status of the Mortgage and any other information with respect to the Mortgagor or the mortgaged property and of the project which may be requested.

h) All receipts of the project shall be deposited in the name of the project and specifically designated as relating to the Assisted Units and the Non-assisted Units, in a bank, whose deposits are insured by the FDIC, Savings Association Insurance Fund, or the National Credit Union Share Insurance Fund. Such funds shall be withdrawn only in accordance with the provisions of this Agreement for expenses of the project. Any person receiving funds of the project shall immediately deposit such funds in the project bank account and failing so to do in violation of this Agreement shall hold such funds in trust. Any person receiving property of the project in violation of this Agreement shall immediately deliver such property to the project and failing so to do shall hold such property in trust.

i) Mortgagor shall at all times, if required by the laws of the jurisdiction, maintain in full force and effect a license to operate the project from the State and/or other licensing authority. Mortgagor shall lease any portion of the project attributable to the Assisted Units only on terms approved by HUD.

j) Mortgagor shall not collect from tenants or occupants or prospective tenants or occupants of the project any admission fee, founder’s fee, life-care fee, or similar payment pursuant to any agreement, oral or written, whereby the Mortgagor agrees to furnish accommodations or services in the project to persons making such payments.

k) No officer, director, trustee, member, stockholder, partner nor authorized representative of the Mortgagor except for management by sponsor or non-profit affiliate, shall have any financial interest in any contractual arrangement entered into by the Mortgagor in connection with rendition of services, the provision of goods or supplies, management of the project, procurement of the site or other matters whatsoever.

13. a) If project is funded under Section 202 of the Housing Act of l959, as amended, Mortgagor will limit public occupancy of the Assisted Units in the project to elderly families and individuals as defined in Section 202 of the Housing Act of l959, and applicable HUD Regulations. If project is funded under Section 8ll of the National Affordable Housing Act of l990, Mortgagor will limit public occupancy of the Assisted Units in the project to persons with disabilities as defined in Section 8ll of the National Affordable Housing Act of l990, and applicable HUD Regulations. The criteria governing eligibility of tenants for admission to the Assisted Units and the conditions of continued occupancy shall be in accordance with the Project Rental Assistance Contract.

b) Except as provided in (d) below Mortgagor will make its dwelling accommodations and services available to eligible occupants of the Assisted Units at charges established in accordance with a schedule to be approved in writing by HUD. Such accommodations shall not be rented for a period less than 30 days. Commercial facilities, if any, shall be rented only in accordance with a schedule of charges fixed by the Mortgagor. Subleasing of the Assisted Units shall be permitted only upon the terms and conditions approved by HUD in writing.

c) Upon prior written approval by the Secretary, Mortgagor may charge to and receive from any tenant in a Assisted Unit such amounts as from time to time may be mutually agreed upon between the tenant and the Mortgagor for any facilities and/or services which may be furnished by the Mortgagor or others to such tenant upon request, in addition to the facilities and services included in the approved Project Rental Assistance Contract.

d) Nothing contained in this Agreement shall be construed to relieve the Mortgagor of any obligations under the Project Rental Assistance Contract.

14. Mortgagor will comply with the provisions of any Federal, State or local law prohibiting discrimination in housing on the grounds of race, color, creed, age, sex, handicap, familial status or national origin, including Title VI of the Civil Rights Act of l964 (42U.S.C.2000d-1), the Fair Housing Act (42U.S.C.360l), Section 504 of the Rehabilitation Act of l973(29U.S.C.794), Age Discrimination Act of l975(42U.S.C.6l0l) Executive Orders ll063 and ll246, Section 3 of the Housing and Urban Development Act of l968, and the affirmative fair housing marketing requirements at 24CFR part 200, subpart M.

15. No litigation seeking the recovery of a sum in excess of $5,000 nor any action for specific performance or other equitable relief shall be instituted nor shall any claim for a sum in excess of $5,000 be settled or compromised by the Mortgagor unless prior written consent thereto has been obtained from HUD. Such consent may be subject to such terms and conditions as HUD may prescribe.

16. Upon a violation of any of the above provisions of this Agreement by Mortgagor, HUD may give written notice, thereof, to Mortgagor, by registered or certified mail, addressed to the address stated in this Agreement, or such other address as may subsequently, upon appropriate written notice thereof to HUD, be designated by the Mortgagor as its legal business address. If such violation is not corrected to the satisfaction of HUD within 30 days after the date such notice is mailed or within such further time as HUD determines is necessary to correct the violation, without further notice HUD may declare a Default under this Agreement effective on the date of such declaration of default and such default HUD may:

a) Bring any action necessary to enforce any rights of the Mortgagor growing out of the project operation, and operate the project in accordance with the terms of this Agreement until such time as HUD in its discretion determines that the Mortgagor is again in a position to operate the project in accordance with the terms of this Agreement and incompliance with the requirements of the Note and Mortgage, or require Power of Attorney from Mortgagor to effectuate transfer of the project to a HUD approved nonprofit corporation.

b) Collect all rents and charges in connection with the operation of the project and use such collections to pay the Mortgagor’s obligations under this Agreement and under the Note and Mortgage, and the necessary expenses of preserving the property and operating the project.

c) Declare the whole of said indebtedness immediately due and payable and then proceed with the foreclosure of the mortgage.

Seattle removed c) I think we should keep it.

d) Apply to any court, State or Federal, for specific performance of this Agreement, for an injunction against any violation of this Agreement, for the appointment of a receiver to take over and operate the property in accordance with the terms of this Agreement, or for such other relief as may be appropriate, since the injury to HUD arising from a default under any of the terms of this Agreement would be irreparable and the amount of damage would be difficult to ascertain.

e) Require the Mortgagor to transfer all of its right title and interest in the project and to all project assets to a private for-profit or nonprofit entity designated by HUD and, for this purpose the Mortgagor hereby constitutes and appoints HUD its true and lawful attorney-in-fact, with full power of substitution in the premises, to transfer the project and all project assets to the private nonprofit corporation designated by HUD, if the Mortgagor fails or refuses to make such a transfer as required by HUD.

17. a) Mortgagor has executed the Project Rental Assistance Contract. The terms of the Project Rental Assistance Contract, when executed, shall be incorporated by reference into this Regulatory Agreement.

b) A violation of the Project Rental Assistance Contract may be construed to constitute a default hereunder in the sole discretion of HUD.

c) In the event said Project Rental Assistance Contract expires or terminates before the expiration or termination of this Agreement, the provisions of this paragraph and any other reference to said Contract, and to assisted units contained herein shall be self-canceling and shall no longer be effective as of the date of the expiration or termination of the Project Rental Assistance Contract.

18. As used in this Agreement the term:

a) “Assistance Contract” refers to a Project Rental Assistance Contract between the Mortgagor and HUD under Section 202 of the Housing Act of l959 or between the Mortgagor and HUD under Section 8ll(d)(2) of the National Affordable Housing Act of l990.

b) “Assisted Units” refer to units assisted pursuant to Project Rental Assistance Contract.

c) “Default” means a default declared by HUD when a violation of this Agreement is not corrected to its satisfaction within the time allowed by this Agreement or such further time as may be allowed by HUD after written notice;

d) “Distribution” means any withdrawal or taking of cash or other assets of the project other than for payment of reasonable expenses incident to its construction, operation and maintenance;

e) “Mortgage” includes “Deed of Trust”, “Chattel Mortgage“ Declaration of Covenants” and any other security for the Note identified herein;

f) “Mortgaged Property” includes property, real, personal, or mixed, covered by the mortgage or mortgages securing the note held by HUD;

g) “Mortgagee” refers to the holder of the mortgage identified herein, its successors and assigns;

h) “Project” includes the mortgaged property and all its other assets or whatsoever situate, used in or owned by the business conducted on said mortgaged property;

i) “Residual Receipts” means with respect to the Assisted Units, any cash remaining after;

l) The Payment of;

i) All amounts required to be deposited in the reserve fund for replacements;

ii) All obligations of the project other than the mortgage held by HUD unless funds for payment are set aside or deferment of payment has been approved by HUD; and

2) The segregation of;

i) An amount equal to the aggregate of all special funds required to be maintained by the project;

ii) All tenant security deposits held.

19. HUD shall not be liable for any of its actions hereunder except for arbitrary and capricious conduct.

20. This instrument shall bind, and the benefits shall inure to, the respective parties hereto, their legal representatives, executors, administrators, successors in office or interest, and assigns, and all owners of the mortgaged property, so long as the Mortgage is outstanding.

21. The invalidity of any clause, part or provision of this Agreement shall not affect the validity of the remaining portions thereof.

22. Mortgagor warrants that it has not, and will not, execute any other agreement with provisions contradictory of, or in opposition to, the provisions hereto, and that, in any event, the requirements of this Agreement are paramount and controlling as to the rights and obligations set forth and supersede any other requirements in conflict therewith.

23. Mortgagor does not assume personal liability for payments due under the Note and mortgage or for payments to the reserve for replacement fund. However, defaults or other failures to follow program requirements may result in limited denial of participation or debarment from HUD or other Federal programs.

24. Mortgagor shall have available necessary equipment or devices and make reasonable accommodations to meet the needs of persons with visual and/or hearing impairments in compliance with Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and 24 CFR Part 8.

25. Notwithstanding any other provisions herein, HUD specifically acknowledges and agrees that the provisions of this Agreement shall not restrict the ability of the Mortgagor to make debt service payments from income or cash derived from operations of the Non-assisted Units or to otherwise utilize or distribute income or cash from the operations of the Non-assisted Units.

United States of America Secretary of Housing and Urban Development (Signature)		Owner (Signature)
By (Name)		By (Name)
Official Title	Date	Official Title	Date

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form HUD-92466.1-CA (11/17/2006)