D216036202 2/23/2016 2:56 PM PGS 36 Page 1 of 36 Fee: $156.00 Submitter: SIMPLIFILE Electronically Recorded by Tarrant County Clerk in Official Public Records Mary Louise Car Lin Mary Louise Garcia REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS Garcia By and Among TARRANT COUNTY HOUSING FINANCE CORPORATION, as Issuer, WILMINGTON TRUST, NATIONAL ASSOCIATION as Trustee, and RESERVE AT QUEBEC, LLC, a Texas Limited Liability Company, as Borrower tal Copy Relating to $23,000,000 Tarrant County Housing Finance Corporation Multifamily Housing Revenue Bonds (Reserve at Quebec Apartments) Series 2016 Uno Robert D. Dransfield Norton Rose Fulbright US LLP 2200 Ross Avenue, Suite 3600 Dallas, Texas 75201 PTT GF #1003-121417-1 35851937.5/11500095 Page 2 of 36 TABLE OF CONTENTS Page .2 Section 1.
Definitions and Interpretation ....
Section 2.
Acquisition, Construction and Equipping of the Project ...............
.5 Section 3.
Section 4.
Section 5.
Residential Rental Property .....
Tax-Exempt Status of the Bonds Low Income Tenants; Records and Reports …………..
Section 6.
Modification of Covenants ...
Section 7.
Section 8.
Consideration Reliance ....
Section 9.
Project in Tarrant County, Texas Section 10.
Section 11.
Section 12.
Section 13.
Section 14.
Section 15.
Section 16.
Section 17.
Section 18.
Section 19.
Section 20.
Section 21.
Section 22.
Section 23.
Section 24.
Section 25.
EXHIBITA Sale or Transfer of the Project...........
Term............
Covenants To Run With the Land......
Burden and Benefit...
Uniformity; Common Plan....
Default; Enforcement....
The Trustee.
Recording and Filing.
Payment of Fees HUD Requirements...
Governing Law..
Amendments Notices 12 .13 13 13 13 .14 15 15 15 17 17 17 .18 19 19 .A-1 EXHIBIT B B-1
..
Default; Enforcement....
The Trustee.
Recording and Filing.
Payment of Fees HUD Requirements...
Governing Law..
Amendments Notices 12 .13 13 13 13 .14 15 15 15 17 17 17 .18 19 19 .A-1 EXHIBIT B B-1 EXHIBIT C Form of Continuing Program Compliance Certificate and Occupancy Summary C-1 EXHIBIT D Form of Verification of Income ..
.D-1 Hofficial Copy 6 7 .................
.10 11 11 35851937.5/11500095 Page 3 of 36 REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (this "Agreement" or this "Regulatory Agreement") made and entered into as of February 1, 2016, by and among Tarrant County Housing Finance Corporation (the "Issuer"), a public nonprofit housing finance corporation organized and existing under the laws of the State of Texas (the "State"), Wilmington Trust, National Association, a national banking association organized and existing under the laws of the United States of America, as trustee (the "Trustee") under the hereinafter-defined Indenture, and Reserve at Quebec, LLC, a Texas limited liability company (together with its successors and assigns, the "Borrower").
WITNESSETH: RECITALS Ad WHEREAS, pursuant to the Texas Local Government Code, Chapter 394, as amended (the "Act"), the Issuer is authorized to issue qualified residential rental project bonds and to use the proceeds thereof to provide monies to aid in financing the acquisition, construction and equipping of residential rental property units; and WHEREAS, the Borrower has requested the assistance of the Issuer in financing the acquisition, construction and equipping of a multifamily residential rental housing project described in Exhibit B hereto and located on the real property described in Exhibit A hereto
n financing the acquisition, construction and equipping of a multifamily residential rental housing project described in Exhibit B hereto and located on the real property described in Exhibit A hereto (the "Project"), and, as a condition to such financial assistance, the Borrower has agreed to enter into this Regulatory Agreement, setting forth certain restrictions with respect to the Project; and WHEREAS, the Issuer has determined to assist in the financing of the Project by issuing Tarrant County Housing Finance Corporation Multifamily Housing Revenue Bonds (Reserve at Quebec Apartments) Series 2016 the Bonds"), in the principal amount of $23,000,000, and making a loan to the Borrower of such principal amount (the "Loan"), upon the terms and conditions set forth in the Financing Agreement (as hereinafter defined); and WHEREAS, in order for interest on the Bonds to be excluded from gross income of the owners thereof for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations and rulings with respect to the Code, and in order to comply with the Act, the use and operation of the Project must be restricted in certain respects; and WHEREAS, the Issuer, the Trustee and the Borrower have determined to enter into this Regulatory Agreement in order to set forth certain terms and conditions relating to the acquisition, construction, equipping and operation of the Project and in order to ensure that the Project will be constructed, used and operated in accordance with the Code and the Act; NOW, THEREFORE, in consideration of the premises and the mutual representations, covenants and undertakings set forth herein, and other good and valuable consideration, the
with the Code and the Act; NOW, THEREFORE, in consideration of the premises and the mutual representations, covenants and undertakings set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Issuer, the Trustee and the Borrower hereby agree as follows: 35851937.5/11500095 Page 4 of 36 Section 1. Definitions and Interpretation. In addition to terms defined above, the following terms shall have the respective meanings assigned to them in this Section 1 unless the context in which they are used clearly requires otherwise. All capitalized and undefined terms used herein shall have the meanings assigned to them in the Indenture.
"Adjusted Income" means the adjusted income of a person (together with the adjusted income of all persons who intend to reside with such person in one residential unit) calculated pursuant to Section 142(d) of the Code.
"Affiliated Party" means a partner or member of the Borrower, a person whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code or a person who, together with the Borrower, is a member of the same controlled group of corporations (as defined in Section 1563(a) of the Code, except that "more than 50 percent" shall be substituted for "at least 80 percent" each place it appears therein), "Agreement" or "Regulatory Agreement" means this Regulatory Agreement and Declaration of Restrictive Covenants, as it may be amended from time to time.
"Area" means the Fort Worth-Arlington TX HUD Métro FMR Area used by the U.S.
Department of Housing and Urban Development ("HUD") to reflect median family incomes.
"Authorized Borrower Representative" means any person who at the time and from time
étro FMR Area used by the U.S.
Department of Housing and Urban Development ("HUD") to reflect median family incomes.
"Authorized Borrower Representative" means any person who at the time and from time to time may be designated as such, by written certificate furnished to the Issuer and the Trustee containing the specimen signature of such person and signed on behalf of the Borrower by the sole member, manager, managing member or general partner (as applicable) of the Borrower, which certificate may designate an alternate or alternates.
"Bondholder" or "Holder" or "Owner" means, when used with respect to the Bonds, the owner of a Bond then outstanding under the Indenture as shown on the registration books maintained by the Trustee pursuant to the Indenture.
"Bonds" means the Tarrant County Housing Finance Corporation Multifamily Housing Revenue Bonds (Reserve at Quebec Apartments) Series 2016.
"Borrower" means Reserve at Quebec, LLC, a Texas limited liability company, and its successors and assigns "Borrower Certificate" means the Borrower's Tax Letter of Representation, dated as of the Closing Date, delivered to the Issuer by the Borrower.
"Closing Date" or "Bond Closing Date" means the date upon which the Bonds are issued and delivered in exchange for the proceeds representing the purchase price of the Bonds paid by the original purchasers thereof.
"Gode" means the United States Internal Revenue Code of 1986, as amended.
"Co-Bond Counsel" means Norton Rose Fulbright US LLP and Kelly Hart & Hallman LLP or any other firm of nationally recognized bond counsel, duly admitted to practice law before the highest court of any state and designated by the Issuer as its Co-Bond Counsel for the Bonds.
35851937.5/11500095 2 Page 5 of 36
nally recognized bond counsel, duly admitted to practice law before the highest court of any state and designated by the Issuer as its Co-Bond Counsel for the Bonds.
35851937.5/11500095 2 Page 5 of 36 "Continuing Program Compliance Certificate" means the Continuing Program Compliance Certificate and accompanying Occupancy Summary to be filed by the Borrower with the Trustee at the times specified in Section 4(e) and (f) of this Regulatory Agreement, such report to be in substantially the form attached hereto as Exhibit C or such other form as may be prescribed in accordance with this Agreement and the Financing Agreement.
"Costs of Issuance" means costs of issuing the Bonds as set forth in the Indenture.
"Determination of Taxability" means (1) the failure of the Borrower to consent, within 45 days after request from the Issuer, to any amendment to the Indenture, the Financing Agreement or this Agreement which, in the written opinion of Co-Bond Counsel, is necessary to preserve the Tax-Exempt status of interest on the Bonds or (2) either (i) a final judgment or order of a court of competent jurisdiction or a final order, ruling, regulation or decision of the United States Department of the Treasury or the Internal Revenue Service which is binding and unappealable, or (ii) legislation enacted by the United States Congress which in each case in the opinion of Co-Bond Counsel, will adversely affect the Tax-Exempt status of the interest on the Bonds (other than interest on any Bond for any period during which such Bond is held by a "substantial user" of any facility financed with the proceeds of the Bonds or a related person," as such terms are used in Section 147(a) of the Code). With respect to clause (2)(i) above, a
held by a "substantial user" of any facility financed with the proceeds of the Bonds or a related person," as such terms are used in Section 147(a) of the Code). With respect to clause (2)(i) above, a judgment or order of a court shall be considered final only it no appeal or action for judicial review has been filed and the time for filing such appeal or action has expired.
"Financing Agreement" means the Financing Agreement of even date herewith, by and between the Issuer and the Borrower and acknowledged by the Trustee, as it may be amended from time to time.
"Housing Act" means the United States Housing Act of 1937, as amended, or its successor.
"HUD" means the United States Department of Housing and Urban Development.
theivelai "Income Certification" means a Verification of Income in the form attached hereto as Exhibit D or in such other form as may from time to time be prescribed in accordance with the terms of this Regulatory Agreement "Indenture" means the Trust Indenture of even date herewith, between the Issuer and the Trustee, relating to the issuance of the Bonds, and any indenture supplemental thereto.
"Inducement Date" means December 9, 2014.
"Loan" means the loan made by the Issuer to the Borrower pursuant to the Financing Agreement for the purpose of financing the acquisition, construction and equipping of the Project "Low Income Tenant" means a tenant whose Adjusted Income is 60% or less of median gross income, as determined under Section 142(d)(2)(B) of the Code, for the Area, with adjustments for family size. If all the occupants of a unit in the Project are students (as defined under Section 151(c) of the Code), no one of whom is entitled to file a joint return under
rea, with adjustments for family size. If all the occupants of a unit in the Project are students (as defined under Section 151(c) of the Code), no one of whom is entitled to file a joint return under Section 6013 of the Code, such occupants shall not qualify as Low Income Tenants. The determination of a tenant's status as a Low Income Tenant shall be made by the Borrower upon 35851937.5/11500095 3 Page 6 of 36 initial occupancy of a unit in the Project by such Tenant and annually thereafter, on the basis of an Income Certification executed by the tenant.
"Low Income Units" means the units in the Project required to be rented to, or held available for occupancy by, Low Income Tenants pursuant to Section 4(a) hereof.
"Mortgage Loan Documents" means the Mortgage, Mortgage Note and all other documents required in connection with the Mortgage.
"Project" means the Project Facilities and the Project Site.
"Project Costs" means, to the extent authorized by the Act, any and all costs incurred by the Borrower with respect to the acquisition, construction and equipping, as the case may be, of the Project, whether paid or incurred prior to or after the date of this Regulatory Agreement, including, without limitation, costs for site preparation, the planning of housing and improvements, the acquisition of land (provided that less than 25% of the net proceeds of the Bonds will be used for the acquisition of land), the removal or demolition of existing structures, the construction of housing and related facilities, and all other work in connection therewith, and all costs of financing, including, without limitation, the cost of consultant, accounting and legal services, other expenses necessary or incident to determining the feasibility of the Project,
h, and all costs of financing, including, without limitation, the cost of consultant, accounting and legal services, other expenses necessary or incident to determining the feasibility of the Project, contractors and Borrower's overhead and supervisor's fees and costs directly allocable to the Project, administrative and other expenses necessary or incident to the Project and the financing thereof.
"Project Facilities" means the multifamily housing structures and related buildings and other improvements constructed on the Project Site and to be acquired and constructed by the Borrower, and all fixtures and other property owned by the Borrower and located on, or used in connection with, such buildings, structures and other improvements constituting the Project as more fully set forth in Exhibit B hereto., "Project Site" means the parcel or parcels of real property described in Exhibit A, which is attached hereto and by this reference incorporated herein, and all rights and appurtenances thereunto appertaining.
"Qualified Project Costs" means the Project Costs incurred after the Inducement Date (or which are qualifying preliminary expenditures) which are chargeable to a capital account with respect to the Project for federal income tax and financial accounting purposes, or would be so chargeable either with a proper election by the Borrower or but for the proper election by the Borrower to deduct those amounts; provided, however, that, if any portion of the Project is being constructed by the Borrower or an Affiliated Party (whether as a general contractor or a subcontractor) Qualified Project Costs" shall include only (a) the actual out-of-pocket costs incurred by the Borrower or such Affiliated Party in constructing the Project (or any portion
tractor or a subcontractor) Qualified Project Costs" shall include only (a) the actual out-of-pocket costs incurred by the Borrower or such Affiliated Party in constructing the Project (or any portion thereof), (b) any reasonable fees for supervisory services actually rendered by the Borrower or such Affiliated Party (but excluding any profit component) and (c) any overhead expenses incurred by the Borrower or such Affiliated Party which are directly attributable to the work performed on the Project and shall not include, for example, intercompany profits resulting from members of an affiliated group (within the meaning of Section 1504 of the Code) participating in the construction of the Project or payments received by such Affiliated Party due to early completion of the Project (or any portion thereof). Qualified Project Costs do not include Costs of Issuance.
35851937.5/11500095 Page 7 of 36 "Qualified Project Period" means, with respect to the Project, the period beginning on the later of the date on which at least 10% of the units in the Project are occupied or the Closing Date and ending on the latest of (a) the date which is fifteen years after the date that at least 50% of the units in the Project are first occupied, (b) the first date on which no Tax-Exempt private activity bond (as that phrase is used in Section 142(d)(2) of the Code) issued with respect to the Project is outstanding or (c) the date on which any assistance provided with respect to the Project under Section 8 of the Housing Act terminates.
"Regulations" means the Income Tax Regulations promulgated or proposed by the Department of the Treasury pursuant to the Code from time to time.
"Tax-Exempt" means, with respect to interest on any obligations of a state or local
me Tax Regulations promulgated or proposed by the Department of the Treasury pursuant to the Code from time to time.
"Tax-Exempt" means, with respect to interest on any obligations of a state or local government, including the Bonds, that such interest is excluded from gross income of the owners thereof for federal income tax purposes; provided, however, that such interest may constitute an item of tax preference or otherwise be includable directly or indirectly for purposes of calculating other tax liabilities, including any alternative minimum tax or environmental tax, under the Code.
"Trustee" means Wilmington Trust, National Association, a national banking association organized under the laws of the United States of America, or any successor Trustee serving as such under the Indenture.
Unless the context clearly requires otherwise, as used in this Regulatory Agreement, words of the masculine, feminine or neuter gender shall be construed to include each other gender, and words of the singular number shall be construed to include the plural number, and vice versa. This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set forth herein and to sustain the validity hereof.
The defined terms used in the preamble and recitals of this Regulatory Agreement have been included for convenience of reference only, and the meaning, construction and interpretation of all defined terms shall be determined by reference to this Section 1, notwithstanding any contrary definition in the preamble or recitals hereof. The titles and headings of the sections of this Regulatory Agreement have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or
The titles and headings of the sections of this Regulatory Agreement have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof or be considered or given any effect in construing this Regulatory Agreement or any provisions hereof or in ascertaining intent, if any question of intent shall arise.
no Section 2 Acquisition, Construction and Equipping of the Project. The Borrower hereby represents as of the date hereof, covenants and agrees as follows: Within six months from the date hereof, the Borrower will have incurred binding obligations or commitments to third parties for the Project in the amount of at least 5% of the net sales proceeds of the Bonds.
(b) After entering into said contracts, completion of the Project and the allocation of net sales proceeds of the Bonds to expenditures will proceed with due diligence.
(c) The Borrower expects that all of the net sales proceeds of the Bonds will be spent within three years from the date hereof, and that all investment proceeds of the Bonds will be spent within one year from the date of receipt.
35851937.5/11500095 5 Page 8 of 36 (d) The Borrower reasonably expects to complete the acquisition, construction and development of the Project and to expend the full amount of the Loan prior to the date which is three years after the Closing Date.
(e) Less than 25% of the net proceeds of the Bonds will be used (directly or indirectly) for the acquisition of land or an interest therein. None of the proceeds of the Bonds will be used, directly or indirectly, for the acquisition of land or an interest therein, to be used for farming purposes.
(f)
isition of land or an interest therein. None of the proceeds of the Bonds will be used, directly or indirectly, for the acquisition of land or an interest therein, to be used for farming purposes.
(f) The statements made in the various certificates delivered by the Borrower to the Issuer or the Trustee are true and correct in all material respects.
(g) The Borrower will submit, or cause to be submitted, to the Trustee, on or before the date of each disbursement on the Loan, a certificate certifying that the full amount of such disbursement will be applied to reimburse the Borrower for the payment of Project Costs and that, after taking into account the proposed disbursement, the aggregate of such disbursements will have been applied to reimburse the Borrower for the payment of Qualified Project Costs in an amount equal to 95% or more of the aggregate disbursements from proceeds of the Bonds.
(h) The Borrower (and any Affiliated Party) will not knowingly take or knowingly omit to take, as is applicable, any action if such action or omission would in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary to the requirements of the Indenture, the Financing Agreement, or this Regulatory Agreement. The Borrower acknowledges that such requirements have been designed for the purpose of ensuring compliance with the provisions of the Act the Code.
(i) All of the amounts received by the Issuer from the proceeds of the Bonds and earnings from the investment of such proceeds will be used to pay Project Costs; at least 95% of such amounts will be used to bay or reimburse the Borrower for payment of Qualified Project Costs as certified by the Borrower on requisitions in the form required by the Financing
ts; at least 95% of such amounts will be used to bay or reimburse the Borrower for payment of Qualified Project Costs as certified by the Borrower on requisitions in the form required by the Financing Agreement; and no more than 2% of such proceeds shall be used to pay issuance costs of the Bonds, within the meaning of Section 147(g) of the Code.
Section 3. Residential Rental Property. The Borrower hereby acknowledges and agrees that the Project is to be owned, managed and operated as a "qualified residential rental project" (within the meaning of Section 142(d) of the Code) for a term equal to the Qualified Project Period. To that end, and for the term of this Regulatory Agreement, the Borrower hereby represents, covenants, warrants and agrees as follows: The Project will be acquired and constructed for the purpose of providing multifamily residential rental property, and the Borrower will own, manage and operate the Project as a project to provide multifamily residential rental property comprising a building or structure or several interrelated buildings or structures, together with any functionally related and subordinate facilities, and no other facilities, in accordance with Section 142(d) of the Code, Section 1.103-8(b) of the Regulations, the Act, and in accordance with such requirements as may be imposed thereby on the Project from time to time.
(b) All of the dwelling units in the Project will be similarly constructed units, and each dwelling unit in the Project will contain complete separate and distinct facilities for living, sleeping, eating, cooking and sanitation for a single person or a family, including a 35851937.5/11500095 6 Page 9 of 36 sleeping area, bathing and sanitation facilities and cooking facilities equipped with a cooking
, cooking and sanitation for a single person or a family, including a 35851937.5/11500095 6 Page 9 of 36 sleeping area, bathing and sanitation facilities and cooking facilities equipped with a cooking range, refrigerator and sink.
(c) None of the dwelling units in the Project will at any time be utilized on a transient basis or leased or rented for a period of less than six months or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, rest home or trailer court or park.
(d) No part of the Project will at any time be owned by a cooperative housing corporation, nor shall the Borrower take any steps in connection with a conversion to such ownership or uses. The Borrower shall not take any steps in connection with a conversion of the Project to condominium ownership during the Qualified Project Period.
(e) All of the dwelling units in the Project will be available for rental on a continuous basis to members of the general public, and the Borrower will not give preference to any particular class or group in renting the dwelling units in the Project, except to the extent that dwelling units are required to be leased or rented to Low Income Tenants (f) The Project Site consists of a parcel or parcels that are contiguous except for the interposition of a road, street or stream, and all of the Project Pacilities comprise a single geographically and functionally integrated project for residential rental property, as evidenced by the ownership, management, accounting and operation of the Project.
(g) No dwelling unit in the Project shall be occupied by the Borrower; provided, however, that, if the Project contains five or more dwelling units, this subsection shall
and operation of the Project.
(g) No dwelling unit in the Project shall be occupied by the Borrower; provided, however, that, if the Project contains five or more dwelling units, this subsection shall not be construed to prohibit occupancy of not more than one dwelling unit in the Project by one or more resident managers or maintenance personnel, any of whom may be the Borrower.
(h) Until the last maturity (whether due to the stated maturity, call for redemption or declaration of acceleration) of the Bonds, the Project shall be a "residential development," as defined in Section 394,003(13) of the Act and not less than 90% of the units within the Project shall be occupied, or vacant and available for occupancy, provided that no unit shall be required to stand vacant awaiting the person who meets the requirements specified in this subsection, by a person whose Adjusted Income, together with the Adjusted Income of all persons who intend to reside with such person in one dwelling unit, did not, for the immediately preceding taxable year, exceed the maximum amount constituting low and moderate income in Tarrant County, Texas. For purposes of this subsection, the maximum amount constituting low and moderate income in the Tarrant County, Texas shall be (i) one hundred fifty percent (150%) of the then current median family income for the Fort Worth-Arlington, TX HUD Metro FMR Area as published by NUD, or such greater amounts as may be established from time to time by the Issuer as the maximum amount constituting such low and moderate income. The status of a person's qualification hereunder shall be made at the time of initial occupancy of a dwelling unit and if such person moves from one unit to another unit within the Project, at the time of such relocation.
n's qualification hereunder shall be made at the time of initial occupancy of a dwelling unit and if such person moves from one unit to another unit within the Project, at the time of such relocation.
(i) Low income tenants will have equal access to and enjoyment of all common facilities of the Project.
Section 4. Low Income Tenants; Records and Reports. Pursuant to the requirements of the Code, the Issuer and the Borrower hereby represent, warrant and covenant as follows: 35851937.5/11500095 7 Page 10 of 36 (a) At all times during the Qualified Project Period, no less than 40% of the total number of units of the Project shall at all times be rented to and occupied by Low Income Tenants. For the purposes of this paragraph (a), a vacant unit which was most recently occupied by a Low Income. Tenant is treated as rented and occupied by a Low Income Tenant until reoccupied, other than for a temporary period of not more than 31 days, at which time the character of such unit shall be redetermined. The Authorized Borrower Representative will certify to the Trustee in writing the date on which 10% of the units in the Project are first occupied and the first date that at least 50% of the units are first occupied.
(b) No tenant qualifying as a Low Income Tenant shall be denied continued occupancy of a unit in the Project because, after admission, such tenant's Adjusted Income increases to exceed the qualifying limit for Low Income Tenants; provided, however, that, should a Low Income Tenant's Adjusted Income, as of the most recent determination thereof, exceed 140% of the then applicable income limit for a Low Income Tenant of the same family size and such Low Income Tenant constitutes a portion of the 40% requirement of paragraph (a)
nation thereof, exceed 140% of the then applicable income limit for a Low Income Tenant of the same family size and such Low Income Tenant constitutes a portion of the 40% requirement of paragraph (a) of this Section 4, the next available unit in such Project of comparable of smaller size must be rented to (or held vacant and available for immediate occupancy by a Low Income Tenant and such new Low Income Tenant will then constitute a portion of the 40% requirement of paragraph (a) of this Section 4; and provided, further, that, until such next available-unit is rented to a tenant who is a Low Income Tenant, the former Low Income Tenant who has ceased to qualify as such shall be deemed to continue to be a Low Income Tenant for purposes of the 40% requirement of paragraph (a) of this Section 4.
(c) After the date of this Agreement, the Borrower will obtain, complete and maintain on file Income Certifications from each Low Income Tenant, including (i) an Income Certification dated immediately prior to the initial occupancy of such Low Income Tenant in the Project, and (ii) thereafter, annual Income Certifications which must be obtained on the anniversary of such Low Income Tenant's oecupancy of the unit, and in no event less than once in every 12-month period following each Low Income Tenant's occupancy of a unit in the Project. The Borrower will obtain such additional information as may be required in the future in the opinion of Co-Bond Counsel by Section 142(d) of the Code, as the same may be amended from time to time, or in such other form and manner as may be required by applicable rules, rulings, policies, procedures, Regulations or other official statements now or hereafter promulgated, proposed or made by the Department of the Treasury or the Internal Revenue
ed by applicable rules, rulings, policies, procedures, Regulations or other official statements now or hereafter promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service with respect to obligations which are Tax-Exempt under Section 142(d) of the Code. A copy of the most recent Income Certification for Low Income Tenants commencing or continuing occupation of a Low Income Unit (and not previously filed) shall be attached to the Continuing Program Compliance Certificate which is to be filed with the Trustee as provided in paragraph (e) of this Section 4. The Borrower shall make a diligent and good-faith effort to determine that the income information provided by an applicant in an Income Certification is accurate by taking one or more of the following steps, as a part of the verification process: (1) obtain pay stubs for the most recent six-week period; (2) obtain income tax returns for the most recent two tax years; (3) conduct consumer credit search; (4) obtain an income verification from the applicant's current employer; (5) obtain an income verification from the Social Security Administration; or (6) if the applicant is unemployed, does not have income tax returns or is otherwise unable to provide other forms of verification as required above, obtain another form of independent verification as would, in the Borrower's reasonable commercial judgment, be satisfactory and will comply with the terms of this Regulatory Agreement.
(d) The Borrower will maintain complete and accurate records pertaining to the Low Income Units and will permit, at all reasonable times and upon reasonable notice during 35851937.5/11500095 8 Page 11 of 36 normal business hours, any duly authorized representative of the Issuer, the Trustee, the
and will permit, at all reasonable times and upon reasonable notice during 35851937.5/11500095 8 Page 11 of 36 normal business hours, any duly authorized representative of the Issuer, the Trustee, the Department of the Treasury or the Internal Revenue Service to inspect the books and records of the Borrower pertaining to the Project, including those records pertaining to the occupancy of the Low Income Units.
(e) Beginning with the first calendar quarter after the first unit in the Project is occupied, the Borrower will prepare and submit to the Issuer and the Trustee quarterly until the end of the Qualified Project Period, a Continuing Program Compliance Certificate in substantially the form attached hereto as Exhibit C executed by the Borrower.
(f) On or before each April 15 during the Qualified Project Period, the Borrower will submit to the Issuer and the Trustee a completed Internal Revenue Service Form 8703 or such other annual certification required by Section 142(d) of the Code, to the Secretary of the Treasury, with a copy to the Trustee and the Issuer.
(g) Each lease or rental agreement pertaining to a Low Income Unit shall contain a provision to the effect that the Borrower has relied on the income Certification and supporting information supplied by the Low Income Tenant in determining qualification for occupancy of the Low Income Unit and that any material misstatement in such certification (whether or not intentional) may be cause for immediate termination of such lease or rental agreement. Each such lease or rental agreement shall also provide (and shall so disclose to the tenant) that the tenant's income is subject to annual certification in accordance with Section 4(c) hereof.
(h) If any assistance is provided under Section 8 of the Housing Act, the
so disclose to the tenant) that the tenant's income is subject to annual certification in accordance with Section 4(c) hereof.
(h) If any assistance is provided under Section 8 of the Housing Act, the Borrower will notify the Trustee of the date of the termination thereof.
Section 5.
Tax-Exempt Status of the Bonds. The Borrower and the Issuer make the following representations, warranties and agreements for the benefit of the holders of the Bonds from time to time: (a) The Borrower and the Issuer will not knowingly take or permit, or knowingly omit to take or cause to be taken, as is appropriate, by parties within their or its control any action that would adversely affect the Tax-Exempt nature of the interest on the Bonds, and, if either should become aware that it has taken or permitted, or omitted to take or caused to be taken, any such action, it will take all lawful actions necessary to rescind or correct such actions or omissions promptly upon obtaining knowledge thereof.
no The Borrower and the Issuer will take such action or actions as may be necessary, in the written opinion of Co-Bond Counsel filed with the Issuer and the Trustee to comply fully with all applicable rules, rulings, policies, procedures, Regulations or other official statements promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service pertaining to obligations the interest on which is Tax-Exempt under Section 142(d) of the Code.
(c) The Borrower and the Issuer will file of record such documents and take such other steps as are necessary, in the written opinion of Co-Bond Counsel filed with the Issuer and the Trustee (upon the request of Co-Bond Counsel), in order to provide that the
ocuments and take such other steps as are necessary, in the written opinion of Co-Bond Counsel filed with the Issuer and the Trustee (upon the request of Co-Bond Counsel), in order to provide that the requirements and restrictions of this Regulatory Agreement will be binding upon the owner of the Project, including, but not limited to, the execution and recordation of this Regulatory Agreement in the real property records of Tarrant County, Texas.
35851937.5/11500095 9 Page 12 of 36 (d) The Borrower will not enter into any agreements which, in the opinion of Co-Bond Counsel, would result in the payment of principal of or interest on the Bonds being "federally guaranteed" within the meaning of Section 149(b) of the Code.
(e) The Borrower hereby reaffirms the covenants and agreements made by it in Section 5.4 of the Financing Agreement, and such covenants and agreements are hereby incorporated herein as covenants of the Borrower by this reference.
(f) The Borrower hereby covenants to include the requirements and restrictions contained in this Regulatory Agreement in any documents transferring any interest in the Project to another person to the end that such transferee has notice of, and is bound by, such restrictions, and to obtain the agreement from any such transferee to abide by all requirements and restrictions of this Regulatory Agreement.
Section 6.
Modification of Covenants. The Borrower, the Trustee and the Issuer hereby agree as follows: (a) To the extent any amendments to the Act, the Regulations or the Code shall, in the written opinion of Co-Bond Counsel filed with the Issuer and the Trustee who shall deliver a copy thereof to the Borrower, impose requirements upon the ownership or operation of
the Code shall, in the written opinion of Co-Bond Counsel filed with the Issuer and the Trustee who shall deliver a copy thereof to the Borrower, impose requirements upon the ownership or operation of the Project more restrictive than those imposed by this Regulatory Agreement and if such requirements are applicable to the Project and compliance therewith is necessary to maintain the validity of, or the tax-exempt status of interest on the Bonds, this Regulatory Agreement shall be deemed to be automatically amended to impose such additional or more restrictive requirements. The parties hereto hereby agree to execute such amendment hereto as shall be necessary to document such automatic amendment hereof, (b) To the extent that the Act, the Regulations or the Code, or any amendments thereto, shall, in the written opinion of Co-Bond Counsel filed with the Issuer, the Trustee and the Borrower, impose requirements upon the ownership or operation of the Project less restrictive than imposed by this Regulatory Agreement, this Regulatory Agreement may be amended or modified to provide such Tess restrictive requirements but only by written amendment signed by the Issuer, the Trustee and the Borrower and approved by the written opinion of Co-Bond Counsel to the effect that such amendment is permitted by the Act and will not affect the Tax-Exempt status of interest on the Bonds.
(c) The Borrower, the Issuer and, if applicable, the Trustee shall execute, deliver and, if applicable, file of record any and all documents and instruments reasonably necessary, as determined by Co-Bond Counsel, to effectuate the intent of this Section 6, and each of the Borrower and the Issuer hereby appoints the Trustee as its true and lawful
struments reasonably necessary, as determined by Co-Bond Counsel, to effectuate the intent of this Section 6, and each of the Borrower and the Issuer hereby appoints the Trustee as its true and lawful attorney-in-fact to, upon the written advice of Co-Bond Counsel, execute, deliver and, if applicable, file of record on behalf of the Borrower or the Issuer, as is applicable, any such document or instrument (in such form as may be approved in writing by Co-Bond Counsel) if either the Borrower or the Issuer defaults in the performance of its obligations under this subsection (c); provided, however, that, unless directed in writing by the Issuer, the Trustee shall take no action under this subsection (c) without first notifying in writing the Borrower or the Issuer, or both of them, as is applicable, and without first providing the Borrower or the Issuer, or both, as is applicable, an opportunity to comply with the requirements of this Section 6.
Nothing in this Section 6(c) shall be construed to allow the Trustee to execute an amendment to this Regulatory Agreement on behalf of the Issuer.
35851937.5/11500095 10 Page 13 of 36 Section 7.
Consideration. The Issuer has issued the Bonds to provide funds to make the Loan to finance the Project, all for the purpose, among others, of inducing the Borrower to acquire, develop, construct and operate the Project in accordance with this Agreement. In consideration of the issuance of the Bonds by the Issuer, the Borrower has entered into this Regulatory Agreement and has agreed to restrict the uses to which this Project can be put on the terms and conditions set forth herein.
Section 8.
Reliance. The Issuer, the Trustee and the Borrower hereby recognize
eement and has agreed to restrict the uses to which this Project can be put on the terms and conditions set forth herein.
Section 8.
Reliance. The Issuer, the Trustee and the Borrower hereby recognize and agree that the representations and covenants set forth herein may be relied upon by all persons interested in the legality and validity of the Bonds, and in the exclusion from gross income for purposes of federal income taxation of the interest on the Bonds. In performing their duties and obligations hereunder, the Issuer and the Trustee may rely upon statements and certificates of the Low Income Tenants and upon audits of the books and records of the Borrower pertaining to the Project. In addition, the Issuer and the Trustee may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Issuer or the Trustee hereunder in good faith and in conformity with such opinion. In determining whether any default by the Borrower exists under this Regulatory Agreement, the Trustee shall not be required to conduct any investigation into or review of the operations or records of the Borrower and may rely on any written report, notice or certificate delivered to the Trustee by any person retained to review the Borrower's compliance with this Regulatory Agreement or by the Borrower or the Issuer with respect to the occurrence or absence of a default unless it knows that the report, notice or certificate is erroneous.
Section 9. Project in Tarrant County, Texas. The Borrower hereby represents that the Project is located entirely within Tarrant County, Texas, Section 10. Sale or Transfer of the Project. The Borrower hereby covenants and
Tarrant County, Texas. The Borrower hereby represents that the Project is located entirely within Tarrant County, Texas, Section 10. Sale or Transfer of the Project. The Borrower hereby covenants and agrees not to voluntarily sell, transfer or otherwise dispose of the Project, or any portion thereof (other than for individual tenant use as contemplated hereunder), without obtaining the prior written consent of the Issuer which consent shall not be unreasonably withheld by the Issuer and shall be given by the Issuer if (a) the Borrower shall not be in default hereunder; (b) the purchaser or assignee shall covenant to operate the Project in such a manner as to comply with the provisions of this Regulatory Agreement; (c) the Issuer and the Trustee shall have received (i) reasonable evidence satisfactory to the Issuer and the Trustee that the Borrower's purchaser or transferee has assumed in writing and in full the Borrower's duties and obligations under this Regulatory Agreement and paid to the Issuer a transfer fee of $1,500, (ii) an opinion of counsel to the transferee that the transferee has duly assumed the obligations of the Borrower under this Regulatory Agreement and that such obligations and this Regulatory Agreement are binding on the transferee, (in) an opinion of Co-Bond Counsel that such transfer shall not adversely affect the Tax-Exempt nature of the interest on the Bonds, provided, however, that any fee and expenses of Co-Bond Counsel in connection with rendering such opinion shall be paid by the Borrower or the transferee and (iv) a Continuing Program Compliance Certificate current as of a date no more than 45 days prior to delivery thereof; (d) the Borrower or transferee shall pay all
by the Borrower or the transferee and (iv) a Continuing Program Compliance Certificate current as of a date no more than 45 days prior to delivery thereof; (d) the Borrower or transferee shall pay all costs of the transfer of title, including, but not limited to, the cost of meeting the conditions specified in this Section 10; and (e) such other conditions are met as the Issuer and the Trustee may reasonably impose to assure compliance by the Project with the requirements of this Agreement, which may include the assumption of the Borrower's obligations under the Financing Agreement. It is hereby expressly stipulated and agreed that any sale, transfer or other disposition of the Project in violation of this Section 10 shall be null, void and without effect, shall cause a reversion of title to the Borrower and shall be ineffective to relieve the 35851937.5/11500095 11 Page 14 of 36 Borrower of its obligations under this Regulatory Agreement. Nothing contained in this Section 10 shall affect any provision of any other document or instrument between the Borrower or any other party which requires the Borrower to obtain the consent of such other party as a precondition to sale, transfer or other disposition of the Project. Upon any sale or other transfer which complies with this Agreement, the Borrower shall be fully released from its obligations hereunder to the extent such obligations have been assumed by the transferee of the Project.
Any transfer of the Project to any entity, whether or not affiliated with the Borrower, shall be subject to the provisions of this Section 10. Notwithstanding anything herein to the contrary, this Section 10 shall not apply to a foreclosure or deed in lieu of foreclosure.
h the Borrower, shall be subject to the provisions of this Section 10. Notwithstanding anything herein to the contrary, this Section 10 shall not apply to a foreclosure or deed in lieu of foreclosure.
The Borrower shall not change or cause to be changed the manager of the Borrower (or cause the Borrower to have more than one manager) without the prior written consent of the Issuer, which consent will not be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing, the managing member of the Borrower may be removed and replaced by the Investor Member, Special Member or any of their affiliates, in accordance with the terms of Borrower's Operating Agreement, as it may be amended from time to time.
Section 11. Term. This Regulatory Agreement and all and each of the provisions hereof shall become effective upon its execution and delivery, shall remain in full force and effect for the periods provided herein and, except as otherwise provided in this Section 11, shall terminate in its entirety at the end of the Qualified Project Period, it being expressly agreed and understood that the provisions hereof are intended to survive the retirement of the Bonds, discharge of the Loan, termination of the Financing Agreement and defeasance or termination of the Indenture.
The terms of this Regulatory Agreement to the contrary notwithstanding, the requirements set forth herein shall terminate and be of no further force and effect in the event of involuntary noncompliance with the provisions of this Regulatory Agreement caused by fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, change in a federal law or an action of a federal agency after the Closing Date which prevents the Issuer or
fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, change in a federal law or an action of a federal agency after the Closing Date which prevents the Issuer or the Trustee from enforcing the provisions hereof, or condemnation or a similar event, but only if, within a reasonable period thereafter either the Bonds are retired or amounts received as a consequence of such event are used to provide a project which meets the requirements of the Code set forth in Sections 2 through 5 of this Regulatory Agreement. In the event that the requirements set forth herein are terminated in the manner set forth in the immediately preceding sentence and, at any subsequent time during the Qualified Project Period, the Borrower or any related person (within the meaning of Section 1.103-10(e) of the Regulations) obtains an ownership interest in the Project for tax purposes, such requirements shall be reinstated. The Borrower hereby agrees that, following any foreclosure, transfer of title by deed in lieu of foreclosure or similar event, neither the Borrower nor any related person as described above will obtain an ownership interest in the Project for tax purposes. The Issuer shall not be required to consent to termination of this Regulatory Agreement for any reason other than those specified above!
This Regulatory Agreement may be terminated upon agreement of the Issuer, the Trustee, and the Borrower upon receipt of an opinion of Co-Bond Counsel to the effect that such termination will not adversely affect the exclusion from gross income of interest on the Bonds for any reason other than those set forth above.
Upon the termination of the terms of this Regulatory Agreement, the parties hereto agree
ffect the exclusion from gross income of interest on the Bonds for any reason other than those set forth above.
Upon the termination of the terms of this Regulatory Agreement, the parties hereto agree to execute, deliver and record appropriate instruments of release and discharge of the terms 35851937.5/11500095 12 Page 15 of 36 hereof; provided, however, that the execution and delivery of such instruments shall not be necessary or a prerequisite to the termination of this Agreement in accordance with its terms.
All costs, including fees and expenses of the Issuer and the Trustee, incurred in connection with the termination of this Regulatory Agreement shall be paid by the Borrower and its successors in interest.
Section 12. Covenants To Run With the Land. The Borrower hereby subjects the Project (including the Project Site) to the covenants, reservations and restrictions set forth in this Regulatory Agreement. The Issuer, the Trustee and the Borrower hereby declare their express intent that the covenants, reservations and restrictions set forth herein shall be deemed covenants running with the land and shall pass to and be binding upon the Borrower's successors in title to the Project; provided, however, that on the termination of this Agreement said covenants, reservations and restrictions shall expire, as provided in this Agreement. Each and every contract, deed or other instrument hereafter executed covering or conveying the Project or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instruments.
ed and accepted subject to such covenants, reservations and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instruments.
No breach of any of the provisions of this Regulatory Agreement shall impair, defeat or render invalid the lien of any mortgage, deed of trust or like encumbrance made in good faith and for value encumbering the Project or any portion thereof.
Section 13. Burden and Benefit. The Issuer, the Trustee and the Borrower hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Borrower's legal interest in the Project is rendered less valuable thereby. The Issuer, the Trustee and the Borrower hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Project by Low Income Tenants, the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the public purposes for which the Bonds were issu Section 14. Uniformity: Common Plan. The covenants, reservations and restrictions hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan for the use, development and improvement of the Project Site.
Section 15. Default; Enforcement. If the Borrower defaults in the performance or observance of any covenant, agreement or obligation of the Borrower set forth in this Regulatory Agreement, and if such default remains uncured for a period of 60 days after written notice thereof shall have been given by the Issuer or the Trustee to the Borrower, then the
orth in this Regulatory Agreement, and if such default remains uncured for a period of 60 days after written notice thereof shall have been given by the Issuer or the Trustee to the Borrower, then the Trustee, acting on its own behalf or on behalf of the Issuer, shall declare an "Event of Default" to have occurred hereunder; provided, however, that, if the default stated in the notice is of such a nature that it cannot be corrected within 60 days, such default shall not constitute an Event of Default hereunder so long as (i) the Borrower institutes corrective action within said 60 days and diligently pursues such action until the default is corrected and (ii) in the opinion of Co-Bond Counsel, the failure to cure said default within 60 days will not adversely affect the Tax-Exempt status of interest on the Bonds.
Following the declaration of an Event of Default hereunder, the Trustee, subject to being indemnified to its satisfaction with respect to the costs and expenses of any proceeding, or the Issuer may, at its option, take any one or more of the following steps: 35851937.5/11500095 13 Page 16 of 36 (i) by mandamus or other suit, action or proceeding at law or in equity, including injunctive relief, require the Borrower to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of the rights of the Issuer or the Trustee hereunder; (ii) have access to and inspect, examine and make copies of all of the books and records of the Borrower pertaining to the Project; and (iii) take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of the Borrower hereunder.
The Borrower hereby agrees that specific enforcement of the Borrower's agreements
y as may appear necessary or desirable to enforce the obligations, covenants and agreements of the Borrower hereunder.
The Borrower hereby agrees that specific enforcement of the Borrower's agreements contained herein is the only means by which the Issuer may obtain the benefits of such agreements made by the Borrower herein, and the Borrower therefore agrees to the imposition of the remedy of specific performance against it in the case of any default by the Borrower hereunder.
The Issuer and the Trustee hereby agree that any cure of any default hereunder made or tendered by the Investor Member, Special Member, or any of their designees shall be deemed to be cured by the Borrower, and shall be accepted or rejected on the same basis as if made or tendered by the Borrower.
Section 16. The Trustee. The Trustee shall act as specifically provided herein and in the Indenture. The Trustee shall act as the agent of and on behalf of the Issuer when requested in writing by the Issuer to do so upon being indemnified or otherwise secured to its satisfaction against the costs, expenses and liabilities that might be incurred by it in compliance with such request, and any act required to be performed by the Issuer as herein provided shall be deemed taken if such act is performed by the Trustee. The Trustee is entering into this Regulatory Agreement solely in its capacity as Trustee under the Indenture and not in its individual capacity, and the duties, powers, rights and obligations of the Trustee in acting (or omitting to act) hereunder shall be subject to the provisions of the Indenture, including, without limitation, the provisions of Article IX thereof, which are incorporated by reference herein. The
(or omitting to act) hereunder shall be subject to the provisions of the Indenture, including, without limitation, the provisions of Article IX thereof, which are incorporated by reference herein. The incorporated provisions of the Indenture are intended to survive the retirement of the Bonds, discharge of the Loan, termination of the Financing Agreement and defeasance or termination of the Indenture.
Neither the Trustee nor any of its officers, directors or employees shall be liable for any action taken or omitted to be taken by it or them hereunder or in connection herewith except for its or their own gross negligence, bad faith, fraud or willful misconduct. No provision of this Regulatory Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder, in the exercise of any of its rights of powers if it shall have reasonable grounds for believing that the payment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
The Trustee shall examine all documents prepared by the Borrower and furnished to the Trustee to determine whether such documents conform on their face to the requirements of this Regulatory Agreement. The Trustee shall notify the Issuer and Borrower in writing if the Trustee does not receive any document from the Borrower at the time required under this Regulatory Agreement or if such document does not conform on its face to the requirements of this Regulatory Agreement. The Trustee may conclusively rely on and shall be protected in acting or omitting to act in good faith upon the certificates and other writings, which conform to the
ents of this Regulatory Agreement. The Trustee may conclusively rely on and shall be protected in acting or omitting to act in good faith upon the certificates and other writings, which conform to the requirements of this Regulatory Agreement, as the Trustee may receive in connection with the 35851937.5/11500095 14 Page 17 of 36 administration of its obligations hereunder and has no duty or obligation to make an independent investigation with respect thereto.
Section 17. Recording and Filing. The Borrower shall cause this Regulatory Agreement, and all amendments and supplements hereto and thereto, to be recorded and filed in the real property records of Tarrant County and in such other places as the Issuer or the Trustee may reasonably request. The Borrower shall pay all fees and charges incurred in connection with any such recording. This Agreement is subject to and subordinate to all matters of record as of the date hereof.
Section 18. Payment of Fees. Notwithstanding any prepayment of the Loan and notwithstanding a discharge of the Indenture, throughout the term of this Regulatory Agreement, the Borrower shall continue to pay to the Issuer and the Trustee reimbursement for all expenses provided to be paid to the Issuer and the Trustee by the Borrower pursuant to the Financing Agreement and reasonable compensation for any services rendered by them hereunder and reimbursement for all expenses reasonably incurred by them in connection therewith, provided, however, any and all such fees and expenses will be payable only from Surplus Cash and/or non-Project Assets, as each term is defined in the Regulatory Agreement for Multifamily Projects between the Borrower and HUD.
Section 19. HUD Requirements.
(a)
e payable only from Surplus Cash and/or non-Project Assets, as each term is defined in the Regulatory Agreement for Multifamily Projects between the Borrower and HUD.
Section 19. HUD Requirements.
(a) In the event of any conflict between any provision contained elsewhere in this Regulatory Agreement and any provision contained in this Section 19, the provision contained in this Section 19 shall govern and be controlling in all respects.
Section 19: (b) The following terms shall have the following definitions as used in this "HUD Regulatory Agreement" means the U.S. Department of Housing and Urban Development Regulatory Agreement for Multifamily Projects, between Borrower and HUD with respect to the Project, as the same may be supplemented, amended or modified from time to time.
A[ TINS "Lender" means Dougherty Mortgage LLC, a Delaware limited liability company, its successors and assigns:" "Mortgage Loan means the mortgage loan made by Lender to the Borrower pursuant to the Mortgage Loan Documents with respect to the Project.
Mortgage Loan Documents" means the Security Instrument, the HUD Regulatory Agreement and all other documents required by HUD or Lender in connection with the Mortgage Loan.
"National Housing Act" means the National Housing Act of 1934, as amended.
“Program Obligations” has the meaning set forth in the Security Instrument.
"Residual Receipts" has the meaning specified in the Program Obligations.
35851937.5/11500095 15 Page 18 of 36 “Security Instrument" means the Multfamily Deed of Trust, Assignment of Leases and Rents and Security Agreement, from Borrower in favor of Lender, as the same may be supplemented, amended or modified.
"Surplus Cash" has the meaning specified in the HUD Regulatory Agreement.
ases and Rents and Security Agreement, from Borrower in favor of Lender, as the same may be supplemented, amended or modified.
"Surplus Cash" has the meaning specified in the HUD Regulatory Agreement.
(c) Notwithstanding anything in this Regulatory Agreement to the contrary, except the requirements in 26 U.S.C. 42(h)(6)(E)(ii), the provisions hereof are expressly subordinate to (i) the Mortgage Loan Documents, including without limitation, the Security Instrument and (ii) Program Obligations (the Mortgage Loan Documents and Program Obligations are collectively referred to herein as the "HUD Requirements"). The Borrower covenants that it will not take or permit any action that would result in a violation of the Code, HUD Requirements or this Regulatory Agreement. In the event of any conflict between the provisions of this Regulatory Agreement and the provisions of the HUD Requirements, Hub shall be and remains entitled to enforce the HUD Requirements. Notwithstanding the foregoing, nothing herein limits the Issuer's ability to enforce the terms of the Regulatory Agreement, provided such terms do not conflict with statutory provisions of the National Housing Act or the regulations related thereto. The Borrower represents and warrants that to the best of Borrower's knowledge the Regulatory Agreement imposes no terms or requirements that conflict with the National Housing Act and related regulations (d) In accordance with 26 U.S.C. 42(h)(6)(E)(i)(1) in the event of foreclosure (or deed in lieu of foreclosure), this Regulatory Agreement (including without limitation, any and all land use covenants and/or restrictions contained herein) shall automatically terminate, with the exception of the requirements of 26 U.S.C. 42(b)(6)(E)(ii) above, to the extent applicable, or
and all land use covenants and/or restrictions contained herein) shall automatically terminate, with the exception of the requirements of 26 U.S.C. 42(b)(6)(E)(ii) above, to the extent applicable, or as otherwise approved by HUD.
(e) Borrower and the Issuer acknowledge that Borrower's failure to comply with the covenants provided in this Regulatory Agreement does not and shall not serve as a basis for default under the HUD Requirements, unless a default also arises under the HUD Requirements.
(f) Except for the Issuer's reporting requirement, in enforcing this Regulatory Agreement the Issuer will not file any claim against the Project, the Mortgage Loan proceeds, any reserve or deposit required by HUD in connection with the Security Instrument or HUD Regulatory Agreement, or the rents or other income from the property other than a claim against: und Available surplus cash, if the Borrower is a for-profit entity; Available distributions of surplus cash and residual receipts authorized for release by HUD, if the Borrower is a limited distribution entity; or (iii) non-profit entity or Available residual receipts authorized by HUD, if the Borrower is a (g) (iv) A HUD-approved collateral assignment of any HAP contract.
For so long as the Mortgage Loan is outstanding, Borrower and Issuer shall not further amend this Regulatory Agreement, with the exception of clerical errors or administrative correction of non-substantive matters, without HUD's prior written consent.
35851937.5/11500095 16 Page 19 of 36 (h) Subject to the HUD Regulatory Agreement, the Issuer may require the Borrower to indemnify and hold the Issuer harmless from all loss, cost, damage and expense arising from any claim or proceeding instituted against Issuer relating to the subordination and
require the Borrower to indemnify and hold the Issuer harmless from all loss, cost, damage and expense arising from any claim or proceeding instituted against Issuer relating to the subordination and covenants set forth in this Regulatory Agreement, provided, however, that Borrower's obligation to indemnify and hold the Issuer harmless for such claims shall be limited to available Surplus Cash and/or residual receipts of the Borrower.
(i) Notwithstanding anything to the contrary contained herein, it is not the intent of any of the parties hereto to cause a recapture of the Low Income Housing Tax Credits or any portion thereof related to any potential conflicts between the HUD Requirements and this Regulatory Agreement. Borrower represents and warrants that to the best of Borrower's knowledge the HUD Requirements impose no requirements which may be inconsistent with full compliance with this Regulatory Agreement. The acknowledged purpose of the HUP Requirements is to articulate requirements imposed by HUD, consistent with its governing statutes, and the acknowledged purpose of this Regulatory Agreement is to articulate requirements imposed by Section 42 of the Code. In the event an apparent conflict between the HUD Requirements and this Regulatory Agreement arises, the parties (and HUD will work in good faith to determine which federally imposed requirement is controlling. It is the primary responsibility of the Borrower, with advice of counsel, to determine that it will be able to comply with the HUD Requirements and its obligations under this Regulatory Agreement. No action shall be taken in accordance with the rights granted herein to preserve the tax exemption of the interest on the Bonds, or prohibiting the owner from taking any action that might jeopardize the
action shall be taken in accordance with the rights granted herein to preserve the tax exemption of the interest on the Bonds, or prohibiting the owner from taking any action that might jeopardize the tax-exemption, except in strict accord with Program Obligations.
Nothing in this Section 19 shall be construed to contravene laws of the State.
Section 20.
Governing Law. This Regulatory Agreement shall be governed by the laws of the State. The Trustee's rights, duties, powers and obligations hereunder are governed in their entirety by the terms and provisions of this Agreement and the Indenture.
Section 21. Amendments Subject to the provisions of Section 6 hereof, this Regulatory Agreement shall be amended only by a written instrument executed by the parties hereto, or their successors in title, and duly recorded in the real property records of Tarrant County, and only upon receipt by the Issuer of an opinion from Co-Bond Counsel that such amendment will not adversely affect the Tax-Exempt status of interest on the Bonds and is not contrary to the provisions of the Act.
Section 22. Notices. Any notice required to be given hereunder shall be made in writing and shall be given by personal delivery, certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: THE ISSUER: Tarrant County Housing Finance Corporation 100 E. Weatherford Fort Worth, Texas 76102 Attention: President 35851937.5/11500095 17 Page 20 of 36 TRUSTEE: Wilmington Trust, National Association 15950 N. Dallas Parkway, Suite 550 Dallas, Texas 75248 Attention: Corporate Trust Services BORROWER: Reserve at Quebec, LLC c/o Fort Worth Housing Finance Corporation 1000 Throckmorton Street
ociation 15950 N. Dallas Parkway, Suite 550 Dallas, Texas 75248 Attention: Corporate Trust Services BORROWER: Reserve at Quebec, LLC c/o Fort Worth Housing Finance Corporation 1000 Throckmorton Street Fort Worth, TX 76102 Attention: Fort Worth City Attorney WITH A COPY TO: Shackelford, Melton, McKinley & Norton, LLP 9201 N. Central Expressway, Fourth Floor Dallas, TX 75231 Attention: John Shackelford ffal Copy offic AND: Dinsmore & Shohr Fifth Third Center 1 S. Main Street, Suite 1300 Dayton, Ohio 45402 Attention: Frederick Caspar Notice shall be deemed given three business days after the date of mailing.
Section 23 Limitation on Liability.
Notwithstanding the foregoing or any other provision or obligation to the contrary contained in this Regulatory Agreement, (i) the liability of the Borrower under this Regulatory Agreement to any person or entity, including, but not limited to, the Trustee or the Issuer and their successors and assigns, is limited to the Borrower's interest in the Project, the Trust Estate and the amounts held in the funds and accounts created under the Indenture, or any rights of the Borrower under any guarantees relating to the Project, and such persons and entities shall look exclusively thereto, or to such other security as may from time to time be given for the payment of obligations arising out of this Regulatory Agreement or any other agreement securing the obligations of the Borrower under this Regulatory Agreement; and (ii) from and after the date of this Regulatory Agreement, no deficiency or other personal judgment, nor any order or decree of specific performance (other than pertaining to his Regulatory Agreement, any agreement pertaining to the Project or any
Agreement, no deficiency or other personal judgment, nor any order or decree of specific performance (other than pertaining to his Regulatory Agreement, any agreement pertaining to the Project or any other agreement securing the Borrower's obligations under this Regulatory Agreement), shall be rendered against the Borrower, the assets of the Borrower (other than the Borrower's interest in 35851937.5/11500095 18 Page 21 of 36 the Project, this Regulatory Agreement, amounts held in the funds and accounts created under the Indenture, any rights of the Borrower under the Indenture or any other documents relating to the Bonds or any rights of the Borrower under any guarantees relating to the Project), its partners, members, successors, transferees or assigns and each of its respective officers, directors, employees, partners, agents, heirs and personal representatives, as the case may be, in any action or proceeding arising out of this Regulatory Agreement and the Indenture or any agreement securing the obligations of the Borrower under this Regulatory Agreement, or any judgment, order or decree rendered pursuant to any such action or proceeding, except to the extent provided in the Financing Agreement.
Section 24.
Severability. If any provision of this Regulatory Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby.
Section 25. Multiple Counterparts. This Regulatory Agreement may be simultaneously executed in multiple counterparts, all of which shall constitute one and the same instrument, and each of which shall be deemed to be an original.
[Remainder of page intentionally left blank] Unofficial 35851937.5/11500095 19