U.S. Department of Housing and Urban Development

Office of Housing

Special Attention of: Notice H 96-74

All Housing Directors

All Multifamily Housing Issued: August 28, 1996

Directors; All Asset Management Expires: August 31, 1997

Branch Chiefs; Owners/Managers;

Contract Administrators Cross References: 4350.1, 4350.2

Subject: PROJECT-BASED SECTION 8 CONTRACT EXPIRING IN FISCAL YEAR 97

This guidance implements Section 405(a) of the Continuing

Resolution of January 26, 1996 (CR), concerning the Department\'s policy

on Section 8 Housing Assistance Payments (HAP) contracts expiring in

Fiscal Year (FY) 1997. It is anticipated that Congress could pass new

or revised language in an FY 1997 Appropriations Act or Continuing

Resolution. However, the January 26, 1996, Continuing Resolution gave

authority to enter into new, contracts for FY 1997 and beyond, and to

ensure timely contract funding, the following procedures implement

existing authority and are outstanding until superseded.

I. WHICH PROGRAMS ARE COVERED?

Until further notice, the policies and procedures described in this

memorandum apply to all project-based Section 8 contracts expiring in FY

1997 and beyond. This includes the following programs: New

Construction/Substantial Rehabilitation (Part 880-881); Loan Management

Set-Aside and Property Disposition Set Aside (Part 886); Housing for the

Elderly (Part 885); Set-Aside for Rural Rental Projects (Part 884); and

State Housing Agency Program for Substantial Rehabilitation Projects

(Part 883). NOTE: This Notice DOES NOT COVER the Section 8 Moderate

Rehabilitation Program.

II\. CAN ANY PROVISIONS OF THIS NOTICE BE WAIVED?

The provisions of this Notice supersede your authority under the

delegation to grant waivers, which was published on December 6, 1994, as

the Notice of Revocation and Redelegation of Authority \[59 FR 62739\].

Therefore, all requests for a waiver from any provisions of this Notice

must receive the approval of the Assistant Secretary for Housing-Federal

Housing Commissioner.

HMHP: Distribution: W-3-1

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III\. WHAT IS THE DEPARTMENT\'S AUTHORITY TO OFFER PROJECT-BASED

ASSISTANCE IN

FY 1997 AND BEYOND?

A. Section 405 of the January 26, 1996 CR address the issue of

expiring Section 8 Contracts, and are discussed in considerable

depth in Notices 96-7 and 96-51, respectively.

B. Section 405(b) of the CR identified specific procedures, time

restrictions, and rent levels for renewing Section 8 contracts

expiring during FY 1996. Notice 96-7 clarified the statutory

provisions delineated in the CR, and directed that HUD offer

project owners a one year renewal, at current rent levels, for

Section 8 contracts expiring in FY 1996. This directive also stated

that there would be no provision for rent increases in these

renewals.

C. Under Section 405(a) and Section 405(c) of the CR, the Secretary

has the discretion to address project-based Section 8 contracts

expiring in FY 1997 and beyond. As a matter of programmatic

decision-making, the Department has decided to renew contracts

expiring in FY 1997 under the authority granted to the Secretary in

section 405(a). Section 405(a) states:

\"For fiscal year 1996 and henceforth, the Secretary of Housing

and Urban Development may use amounts available for the

renewal of assistance under section 8 of the United States

Housing Act of 1937, upon termination or expiration of a

contract for assistance under section 8 of such Act of 1937

(other than a contract for tenant-based assistance and

notwithstanding section 8(v) of such Act for loan management

assistance), to provide assistance under section 8 of such

Act, subject to the Section 8 Existing Fair Market Rents, for

the eligible families assisted under the contracts at

expiration or termination, which assistance shall be in

accordance with terms and conditions prescribed by the

Secretary.\"

IV\. HOW WILL HUD HANDLE EXPIRING SECTION 8 CONTRACTS?

The following guidance is based on our application of Section 405(a) of

the CR. Therefore, until further notice, the policy for all project-

based Section 8 contracts (as identified above) that expire in FY 1997

and beyond shall be as follows:

1\. Owners will be offered a new one-year HAP contract. The

Department has developed a standardized form for the new one-

year project-based Section 8 assistance contract (Attachment

1). This document shall be used in all instances where an

expiring project-based Section 8 contract is being replaced

with a new one-year contract;

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2\. If the Owner wishes to execute a new project-based section 8

assistance contract, the owner, no more than fifteen (15) days

after contract expiration or termination, must certify to HUD

or other designated contract administrator (as appropriate) in

writing as to the number of eligible families currently

occupying units (The count must not include those tenants

housed under a tenant-based subsidy);

3\. At the request of the owner, a new contract will be executed

between HUD and the owner, at rent levels established

according to the following standard:

a\. All projects whose current rents exceed 120% of Fair

Market Rents (FMRs), at the time of contract expiration,

will be reduced to 120% of FMRs in a new one-year

contract. There will be no rental adjustments during the

contract year;

b\. All projects whose current rents fall below 120% of FMR,

at the time of contract expiration, will be renewed at

their current rents in a one-year contract. For these

projects, there will be a rental adjustment provision to

allow for a rental increase during the one-year term of

the new contract, based on demonstrated need, limited to

5% of the overall budget amount, but not to exceed 120%

of FMRs. Instructions for rental adjustment requests are

set forth in Attachment 4.

4\. No later than the commencement date of the new project-based

assistance contract, a new lease should be executed between

the owner and each family who will continue to receive

project-based assistance. The revised Model Lease (Attachment

5\) contains amended Termination of Tenancy provisions which

address the one-year contract termination and owner

notification requirements. A new lease is not required if

this language is present in the existing lease.

V. WHAT ARE THE PROJECT OWNER\'S NOTICE REQUIREMENTS TO HUD AND THE

RESIDENTS?

A. Background

1\. For owner termination or contract expiration, Section 8(c) (9)

of the United States Housing Act of 1937 (42 U.S.C. Sec.

1437f) requires project owners to provide written notice to

HUD and the residents, not less than one year in advance of

the contract termination date, of either the owner\'s intention

not to continue, or the expiration of, the project\'s expiring

HAP contract.

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2\. For the purposes of 8(c) (9), the term \"termination\" means the

expiration of the assistance contract or an owner\'s refusal to

renew the assistance contract. Termination may also include

cessation of the contract for business reasons.

B. Notice of Contract Expiration

Section 8(c) (9) covers all Section 8 HAP contracts. Therefore, for

all project-based Section 8 contracts, the owner, one (1) year

prior to contract expiration, must provide proper notice to HUD and

to all affected households.

C. Notice of Rent Increases

In addition to the One-Year Notice above, the owner, no less than

ninety (90) days prior to the contract expiration date, must notify

each assisted family of any increase in the amount the household

will be required to pay for rent as a result of the expiration of

the assistance contract.

D. If Proper Notice Was Given:

If project-based Section 8 HAP contracts expire and the owner has

given proper notice in accordance with 8(c) (9), HUD shall:

1\. Provide one (1) year tenant-based assistance to all eligible

families in residence on the day of contract expiration;

2\. The instructions for replacing project-based subsidy with

tenant-based subsidy are included as Attachment 6 to this

Notice. These instructions supersede the guidance found in

Chapter 4 of HUD Handbook No. 4350.2. To ensure adequate

processing time, the process of issuing tenant-based tenant

subsidy must begin 90 days prior to the expiration date of the

project-based contract;

3\. In those instances where expiring project-based Section 8 is

replaced with tenant-based subsidy, the tenant-based

assistance shall be administered by the local Public Housing

Authority (PHA) or other designated contract administrator (as

appropriate), and will be monitored by HUD\'s Office of Public

and Indian Housing as part of their normal oversight

responsibilities.

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E. If Proper Notice Was Not Given

1\. If project-based Section 8 HAP contracts expire and the owner

has failed to give proper notice in accordance with 8(c) (9),

owners must choose one of the following two options:

a\. Entering into a new, project-based HAP contract for one

year at the rents established by this Notice; or

b\. Permit the tenants assisted by the expiring contract to

remain in their units for the one year notice period

without increasing the share of the rent these residents

were paying under the expiring contract.

2\. HUD expects that until such time as the owner has met the 8(c)

\(9\) notice requirements, the owner will not be allowed to

collect from the tenant any more than the total tenant payment

as calculated in accordance with 24 CFR Part 813.

VI\. HOW WILL HUD DETERMINE WHO IS ELIGIBLE, I.E. THE NUMBER OF ELIGIBLE

FAMILIES?

Section 405(a) of the CR states, in part, that the new assistance

is \"for the eligible families assisted under the contracts at
expiration

or termination.\" Consequently, HUD or other designated contract

administrator (as appropriate) will employ the following standard to

determine the number of eligible families:

1\. The new project-based Section 8 contract will be based on the

total number of units in the project that are occupied by

eligible families;

2\. The owner, no more than 15 days after contract expiration or

termination, must certify to the Contract Administrator (in

writing) the number of units occupied by eligible families;

3\. Upon receipt of the owner\'s certification of units, the

Contract Administrator will contract for and fund only those

units within the property which meet HUD\'s Housing Quality

Standards, and which are occupied by families who are eligible

for and receiving assistance at contract expiration or

termination up to a maximum of the total number of units under

the expiring section 8 contract.

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VI\. ATTACHMENTS

We have included the following attachments to aid you in

implementing the requirements of this notice:

o Attachment (1) is a new Project-based Section 8 contract which

reflects all of the new requirements. Until further notice,

this new contract shall be utilized in conjunction with all

Project-based Section 8 contracts expiring in FY 1997 and

beyond.

1a. HAP where HUD is CA

1b. HAP where PHA is CA

o Attachment (2) is a revised SAMPLE one-year notification

letter (to be mailed by the Field Office to the owner) to

ensure that the project owner, for contract termination

purposes, has provided adequate notice to HUD and the

residents.

o Attachment (3) is a revised SAMPLE notification letter to the

tenants (to be mailed by the owner). This letter ensures

uniformity among project owners in adhering to the

implementing provisions of this notice.

o Attachment (4) are instructions for processing rental

adjustments up to 5% of overall budget, but not exceeding 120%

of FMRs.

o Attachment (5) is the revised Model Lease. The new lease

contains ended Termination of Tenancy provisions which address

the one-year contract termination/expiration and owner

notification requirements.

o Attachment (6) are instructions for issuing tenant-based

subsidy when project-based contracts expire.

o Attachment (7) is an ACC renewal form.

o Attachment (8) is a SAMPLE letter for residents receiving

vouchers.

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o Attachment (9) is a FACT SHEET for Section 8 Rental Vouchers

for residents and/or public media.

For questions or clarifications concerning this Notice, calls may

be directed to the Program Management Division at 202-708-3944.

Nicolas P. Retsinas

Assistant Secretary for Housing-

Federal Housing Commissioner

Attachments

ATTACHMENT 1(a)

U.S DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of Housing, Federal Housing Commissioner

HOUSING ASSISTANCE PAYMENTS CONTRACT

HUD as Contract Administrator

This Housing Assistance Payments Contract (\"Contract\") is entered into

between the U.S. Department of Housing and Urban Development (\"HUD\")
and

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
(\"Owner\") pursuant to the United

States Housing Act of 1937, 42 U.S.C. 1437, et seq. (\"Act\") and the

Balanced Budget Downpayment Act, also known as the Continuing Resolution

(\"CR\") passed by Congress on January 26, 1996, (PL 104-99. See H.R.

2880, Sec. 405). The purpose of this Contract is to provide housing

assistance payments on behalf of Eligible Families (\"Families\")
leasing

decent, safe and sanitary units from the Owner.

1\. Commencement Date, Term, Contract Units, and Contract Rents.

\(a\) Commencement Date of Contract. The effective date of this Contract

is \_\_\_\_\_\_\_\_\_\_\_\_. The date inserted must be the day after the

Expiring Contract expires. For example, if the Expiring Contract

expires on February 21, 1996, the date inserted must be February

22, 1996.

\(b\) Term of Contract. The term of this Contract is one year (365

days), beginning on the Commencement Date.

\(c\) Contract Units, and Contract Rents. This Contract is hereby

executed with respect to the units (\"Contract Units\") described in

Exhibit A listed by size and their applicable rents (\"Contract

Rents\").

2\. Owner\'s Warranties

The Owner warrants that the rental units listed in Exhibit A are in

good and tenantable condition and meet HUD\'s Housing Quality

Standards.

3\. Families To Be Housed; HUD Assistance.

\(a\) Families To Be Housed. The Contract Units are to be leased by the

Owner to eligible Very Low-Income Families (\"Families\") for

occupancy by such Families solely as private dwellings and as their

principal place of residence.

\(b\) HUD Assistance.

\(1\) HUD will be the Contract Administrator.

\(2\) HUD hereby agrees to make housing assistance payments on

behalf of Families for the Contract Units, to enable the

Families to lease decent, safe, and sanitary housing pursuant

to section 8 of the Act.

\(3\) If there is a Utility Allowance and if the Allowance exceeds

the total Family contribution, the Owner shall pay the Family

the amount of the excess. HUD will pay funds to the Owner in

trust solely for the purpose of making this payment. Any

pledge by the Owner of payments properly payable under this

Contract shall not be construed to include payments covered by

this paragraph.

4\. Maximum Housing Assistance Commitment; Project Account.

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\(a\) Maximum Contract Commitment. The maximum amount of the commitment

for housing assistance payments under this Contract is

\$\_\_\_\_\_\_\_\_\_\_\_\_\_. However, this amount may be reduced
commensurately

with any reduction in the number of Contract Units or in the

Contract Rents or pursuant to any other provisions of this

Contract.

5\. Housing Assistance Payments to Owners.

\(a\) Housing Assistance Payments on Behalf of Families.

\(1\) Housing assistance payments shall be paid to the Owner for

units under lease for occupancy by Families in accordance with

the Contract. The housing assistance payment will cover the

difference between the Contract Rent and that portion of the

rent payable by the Family as determined in accordance with

the HUD-established schedules and criteria.

\(2\) The amount of housing assistance payment payable on behalf of

a Family and the amount of rent payable by the Family shall be

subject to change by reason of changes in Family Income,

Family composition, extent of exceptional medical or other

unusual expenses or program rules in accordance with the HUD-

established schedules and criteria; or by reason of a change

in any applicable Utility Allowance approved or required by

HUD. Any such change shall be effective as of the date stated

in a notification of the change to the Family, which need not

be at the end of the Lease term.

\(b\) Vacancies. The Owner may receive housing assistance payments for
so

much of the month in which the Family vacates the unit as the unit

remains vacant. Should the unit remain vacant, the Owner may

receive from HUD a housing assistance payment in the amount of 80

percent of the Contract Rent for a vacancy period not exceeding an

additional month. However, if the Owner collects any of the

Family\'s share of the rent for this period, the payment for the

vacancy period must be reimbursed to an amount which, when added to

the Family\'s payments, does not exceed 80 percent of the Contract

Rent. Any such excess shall be reimbursed by the Owner to HUD or

as HUD may direct. The Owner may receive housing assistance

payments only if the Owner:

\(1\) Certifies that it did not cause the vacancy by violating the

lease, the Contract or any applicable law or by moving a

Family to another unit;

\(2\) Notified HUD of the vacancy or prospective vacancy and the

reasons for it immediately upon learning of the vacancy or

prospective vacancy;

\(3\) Has fulfilled and continues to fulfill the requirements

specified in paragraphs (b)(1), (2), and (3) of this section;

and

\(4\) Certifies that any eviction resulting in a vacancy was carried

out in compliance with section 11.

\(c\) Prohibition of Double Compensation for Vacancies. The Owner is not

entitled to payments for vacant units to the extent it can collect

for the vacancy from other sources (such as security deposits,

other amounts collected from the Family, and governmental payments

under other

programs). If the Owner collects any of the Family\'s share of the

rent for a vacancy period in an amount which, when added to the

vacancy payment, results in more than the Contract Rent, the excess

must be reimbursed as HUD directs.

\(d\) HUD Not Obligated for Family Rent. HUD has not assumed any

obligation for the amount of rent payable by any Family or the

satisfaction of any claim by the Owner against any Family. The

financial obligation of HUD is limited to making housing assistance

payments on behalf of Families in accordance with this Contract.

\(e\) Owner\'s Monthly Requests for Payments.

\(1\) The Owner shall submit monthly requests to HUD or as directed

by HUD for housing assistance payments. Each request shall set

forth: (i) the name of each Family and the address and/or

number of the unit leased by the Family; (ii) the address

and/or the number of each unit, if any, not leased to Families

for which the Owner is claiming payments; (iii) the Contract

Rent as set forth in Exhibit A for each unit for which the

Owner is claiming payments; (iv) the amount of rent payable by

the Family leasing the unit; and (v) the total amount of

housing assistance payments requested by the Owner.

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\(2\) Each of the Owner\'s monthly requests shall contain a

certification by it that to the best of its knowledge and

belief (i) the dwelling units are in decent, safe, and

sanitary condition, (ii) all the other facts and data on which

the request for funds is based are true and correct, (iii) the

amount requested has been calculated in accordance with the

provisions of this Contract and is payable under the Contract,

\(iv\) none of the amount claimed has been previously claimed or

paid under this Contract, and (v) the Owner has not received

and will not receive any payments or other consideration from

the Family, the PHA, HUD, or any other public or private

source for the unit beyond that authorized in this Contract

and the lease.

\(3\) If the Owner has received an excessive payment, HUD in

addition to any other rights to recovery, may deduct the

amount from any subsequent payment or payments.

\(4\) The Owner\'s monthly requests for housing assistance payments

are subject to penalty under 18 U.S.C. 1001, which provides,

among other things, that whoever knowingly and willfully makes

or uses a document or writing containing any false,

fictitious, or fraudulent statement or entry, in any matter

within the jurisdiction of any department or agency of the

United States, shall be fined not more than \$10,000 or

imprisoned for not more than five years, or both.

6\. Maintenance, Operation and Inspection.

\(a\) Maintenance and Operation. The Owner agrees to maintain and

operate the Contract Units, unassisted units, if any, and related

facilities to provide decent, safe, and sanitary housing including

the provision of all the services, maintenance and utilities. The

Owner also agrees to comply with the lead-based paint regulations

at 24 CFR Part 35. If HUD determines that the Owner is not meeting

one or more of these obligations, HUD shall have the right to take

action under section 20.

\(b\) Inspection.

\(1\) Prior to occupancy of any Contract Unit by a Family or to

receipt of payments hereunder, the Owner and the Family shall

inspect the unit and both shall certify, on forms prescribed

or approved by HUD, that they have inspected the unit and have

determined it to be decent, safe, and sanitary in accordance

with the criteria provided in the forms. The Owner shall keep

copies of these reports on file for at least three years.

\(2\) HUD shall inspect or cause to be inspected at such times as

may be necessary to ensure that the Owner is meeting its

obligation to maintain the units in decent, safe, and sanitary

condition including the provision of the agreed-upon utilities

and other services. HUD shall take into account complaints by

occupants and any other information coming to its attention in

scheduling inspections and shall notify the Owner and the

Family of its determination.

\(c\) Units Not Decent, Safe, and Sanitary. If HUD notifies the Owner

that it has failed to maintain a dwelling unit in decent, safe, and

sanitary condition and the Owner fails to take corrective action

within the time prescribed in the notice, HUD may exercise any of

its rights or remedies under the Contract, including reduction or

suspension of housing assistance payments, even if the Family

continues to occupy the unit. If, however, the Family wishes to be

rehoused in another dwelling unit with section 8 assistance and HUD

does not have other section 8 funds for such purposes, HUD may use

the abated housing assistance payments for the purpose of rehousing

the Family in another dwelling unit. If the Family continues to

occupy the unit, it will do so in accordance with the terms of its

lease, including the termination date and amount of rent payable by

the Family.

\(d\) Notification of Abatement. Any reduction or suspension of housing

assistance payments shall be effective as provided in written

notification to the Owner. The Owner shall promptly notify the

Family of any such abatement.

\(e\) Overcrowded and Underoccupied Units. Where HUD determines a unit

is larger or smaller than appropriate for an eligible Family, the

Owner agrees to correct the situation in accordance with HUD

instructions, regulations, and requirements in effect at the time

of the determination.

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7\. Submission of Financial and Operating Statements. The Owner must

submit to HUD:

\(a\) Within 60 days after the execution of this contract, financial

statements for the project audited by an Independent Public

Accountant in the form required by HUD, and

\(b\) Other statements as to project operation, financial conditions

and occupancy as HUD may require pertinent to administration of

the Contract and monitoring of project operations.

8\. Rent Adjustments.

\(a\) Initial Rents. In accordance with HUD Notice
\_\_\_\_\_\_\_\_\_\_\_,

entitled \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Notice), issued by HUD on

\_\_\_\_\_\_\_\_\_\_\_\_\_\_, the initial rents shall be set forth in
Exhibit

A.

\(b\) Adjustments. The Owner may request a budget-based rental

increase during the term of this Contract of 5% of the initial

rents set forth in Exhibit A. The Owner must demonstrate to HUD

sufficient need for this rental adjustment according to the

instructions set forth in the Notice. The Owner shall submit to

HUD supporting data, financial statements and certifications

which clearly support the increase.

\(c\) Limitation. In no case shall the adjusted rents exceed 120% of

the HUD published Fair Market Rent for the area on the Effective

Date of this contract.

\(d\) Incorporation of Rent Adjustment. Any adjustment in Contract

Rents shall be incorporated into Exhibit A by a dated addendum to

the exhibit establishing the effective date of the adjustment.

9\. Marketing and Leasing of Units.

\(a\) Compliance with Equal Opportunity Requirements. Marketing of

units and selection of Families by the Owner shall be in

accordance with the Owner\'s HUD-approved Affirmative Fair Housing

Marketing Plan (if required), shown as an exhibit, and with all

regulations relating to fair housing advertising. Projects shall

be managed and operated without regard to race, color, religion,

creed, sex, handicap, familial status or national origin and in

the case of previously HUD-owned projects in accordance with

approved tenant selection factors.

\(b\) Security Deposits. The Owner agrees to comply with applicable

section 8 regulations and other requirements, as revised from

time to time, regarding security deposits and to comply with all

State and local law.

\(c\) Eligibility, Selection and Admission of Families.

\(1\) The Owner shall be responsible for determination of

eligibility of applicants, selection of Families from among

those determined to be eligible, computation of the amount

of housing assistance payments on behalf of each selected

Family and of total Family contributions and recordkeeping

in accordance with applicable HUD regulations and

requirements.

\(2\) The Owner shall not charge any applicant or assisted Family

any amount in excess of the total Family contribution except

as authorized by HUD.

\(3\) In renting of the Contract Units, the Owner must lease them

to Very Low-Income Families (determined in accordance with

HUD established schedule and criteria). Exceptions may be

made and the units leased to Lower Income Families under

such circumstances as where the project viability is

endangered by the lack of sufficient number of potential

applicants who are Very Low-Income Families, but only after

the prior approval of HUD.

\(4\) The Lease entered into between the Owner and each selected

Family shall be on the form of Lease approved by HUD.

\(5\) (i) The Owner shall make a reexamination of Family income,

composition, and the extent of medical or other unusual

expenses incurred by the Family at least as often as

required by HUD regulations or other requirements, and

appropriate redeterminations shall be made by the Owner

of the amount of Family contribution and the amount of

housing assistance payment, all in accordance with

applicable HUD regulations and requirements.

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\(ii\) If a Family reports a change in income or other

circumstances that would result in a decrease of total

Family contribution between regularly scheduled

reexaminations, the Owner, upon receipt of verification

of the change, must promptly make appropriate adjustments

in the total Family contribution. The Owner may require

in its lease that Families report increases in income or

other changes between scheduled reexaminations.

(iii)A Family\'s eligibility for house assistance payments

continues

until its total Family contribution equals the total

housing expense for the unit it occupies. The termination

of eligibility at this point will not affect the Family\'s

other rights under the lease nor preclude resumption of

payments as a result of later changes in income or other

circumstances during the term of this Contract.

\(6\) The Owner shall maintain as confidential all information

relating to section 8 applicants and assisted Families, the

disclosure of which would constitute an unwarranted invasion

of personal privacy.

\(d\) Processing of Applications and Complaints. The Owner shall process

applications for admission, notifications to applicants, and

complaints by applicants in accordance with applicable HUD and PHA

regulations and requirements and shall maintain records and furnish

such copies or other information as may be required by HUD or the

PHA.

\(e\) Review: Incorrect Payments. In making housing assistance payments

to Owners, the PHA or HUD will review the Owner\'s determinations

under this section. If as a result of this review, or other

reviews, audits or information received by the PHA or HUD at any

time, it is determined that the Owner has received improper or

excessive housing assistance payments, the PHA or HUD shall have

the right to deduct the amount of such overpayments from any

amounts otherwise due the Owner, or otherwise effect recovery.

10\. Termination of Tenancy or Section 8 Assistance by the Owner; Tenant

Notice

\(a\) The Owner agrees not to terminate any tenancy of or assistance on

behalf of an assisted Family except in accordance with all HUD

regulations and other requirements, in effect at the time of the

termination, and any Federal, State and local law.

\(b\) The Owner agrees, that as a project owner participating in the

Section 8 Program, the Owner is required under Section 8(c)(9) of

the U.S. Housing Act of 1937 to provide, at minimum, a one year

notice to HUD and the affected tenants about the termination or

expiration of this Contract. The term \"termination\" means the

expiration of the assistance contract or an owner\'s refusal to

renew the assistance contract. The Owner acknowledges that if the

Owner does not give proper notice under 8(c)(9) of the Act, the

Owner must permit the tenants to remain in their unit for the one

year notice period without an increase in the tenants\' portion of

the rent they were paying under the expiring contract.

11\. Reduction of Number of Units for Failure to Lease to Eligible

Families.

\(a\) Limitation on Leasing to Ineligible Families. The owner may not at

any time during the term of this Contract lease more than 10

percent of the assisted units in the project to families which are

ineligible under section 8 requirements at initial occupancy

without the prior approval of HUD. Failure on the part of the

Owner to comply with this prohibition is a violation of the

Contract and grounds for all available legal remedies, including

specific performance of the Contract, suspension or debarment from

HUD programs and reduction of the number of units under the

Contract, as set forth in paragraph (b) of this section. (See also

section 20.)

\(b\) Reduction for Failure to Lease to Eligible Families-New and Rehab

Projects. If, at any time beginning sixty days after the effective

date of the Contract, the Owner fails for a continuous period of

sixty days to have at least 90 percent of the assisted units leased

or available for leasing by Families eligible under section 8

requirements at initial occupancy, HUD (or the PHA at the direction

of HUD, as appropriate)

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may, on at least 30 days\' notice, reduce the number of units

covered by the Contract. HUD or the PHA may reduce the number of

units to the number of units actually leased or available for lease

plus 10 percent (rounded up). This reduction, however, will not be

made if the failure to lease units to eligible Families is

permitted in writing by HUD under paragraph (a) of this section.

\(c\) Reduction-Previously HUD-Owned Projects. If, at any time beginning

sixty days after the effective date of the Contract, the Owner

fails for a continuous period of sixty days to have all of the

assisted units leased or available for leasing by Families eligible

under section 8 requirements at initial occupancy, HUD may, on 30

calendar days\' notice, reduce the number of Contract units to not

less than the number of Contract units under lease, plus 10 percent

of such number is the number is 10 or more, rounded up. Failure by

the Owner to make a reasonable effort to lease the units to

eligible Families shall be a violation of the Contract and grounds

for all legal remedies including those specified in paragraph (a)

and section 20.

\(d\) Restoration. HUD will agree to an amendment of the ACC or the

Contract, as appropriate, to provide for subsequent restoration of

any reduction made pursuant to paragraph (b) or (c) of this section

if:

\(1\) HUD determines that the restoration is justified by demand,

\(2\) The Owner otherwise has a record of compliance with its

obligations under the Contract, and

\(3\) Contract authority is available. HUD will take such steps

authorized by section 8(c)(6) of the Act as may be necessary

to carry out its agreement.

12\. Nondiscrimination.

\(a\) General. The Owner shall not in the selection of Families, in the

provision of services, or in any other manner, discriminate against

any person on the grounds of race, color, creed, religion, sex,

handicap, familial status, or national origin.

\(b\) Members of Certain Classes. The Owner shall not automatically

exclude anyone from participation in, or deny anyone the benefits

of, the Housing Assistance Payments Program because of membership

in a class, such as unmarried mothers, recipients of public

assistance, and handicapped persons.

\(c\) The Fair Housing Act. The Owner shall comply with all requirements

imposed by the Fair Housing Act, which prohibits discrimination in

the sale, rental, financing and advertising of housing on the basis

of race, color, religion, sex, handicap, familial status, or

national origin, and any related rules and regulations.

\(d\) Title VI of the Civil Rights Act of 1964 and Executive Order
11063.

The Owner shall comply with all requirements imposed by Title VI of

the Civil Rights Act of 1964, 42 U.S.C. 2000d. et seq.; the HUD

Regulations issued thereunder, 24 CFR, Subtitle A, Part 1; the HUD

requirements pursuant to these regulations; and Executive Order

11063 and any regulations and requirements issued thereunder, to

the end that, in accordance with that Act, Executive Order 11063,

and the regulations and requirements of HUD, no person in the

United States shall, on the grounds of race, color, creed, or

national origin, be excluded from participation in, or be denied

the benefits of, the Housing Assistance Payments Program, or be

otherwise subjected to discrimination. This provision is included

pursuant to the regulations of HUD, 24 CFR, Subtitle A, Part 1

issued under Title VI of the Civil Rights Act of 1964, HUD

regulations issued pursuant to Executive Order 11063 and the HUD

requirements pursuant to the regulations. The obligation of the

Owner to comply therewith inures to the benefit of the United

States of America and HUD any of which shall be entitled to invoke

any remedies available by law to redress any breach or to compel

compliance by the Owner.

\(e\) Section 504 of the Rehabilitation Act of 1973. The Owner shall

comply with all requirements imposed by section 504 of the

Rehabilitation Act of 1973, as amended, and any related rules and

regulations. Section 504 provides that no qualified handicapped

person shall, on the basis of handicap, be excluded from

participation in, be denied the benefits of, or otherwise be

subjected to discrimination under any Program or activity which

receives or benefits from Federal financial assistance.

Accordingly, the Owner (1) shall not discriminate against any

qualified handicapped person on the basis of handicap and (2) shall

cause to be incorporated into all contracts executed in connection

with this project a provision requiring compliance with rules and

regulations issued pursuant to Section 504. See also paragraph

(f)(3) through (8) concerning Section 504 protections to employees

with handicaps.

7

\(f\) Employees of Owner.

\(1\) In carrying out the obligations under this Contract, the Owner

will not discriminate against any employee or applicant for

employment because of race, color, creed, religion, sex,

handicap, familial status, or national origin. The Owner will

take affirmative action to ensure that applicants are

employed, and that employees are treated during employment,

without regard to race, color, creed, religion, sex, handicap,

familial status, or national origin. Such action shall

include, but not be limited to, the following: employment,

upgrading, demotion, or transfer; recruitment or recruitment

advertising; layoff or termination; rates of pay or other

forms of compensation; and selection for training, including

apprenticeship.

\(2\) The Owner agrees to post in conspicuous places, available to

employees and applicants for employment, notices to be

provided by HUD setting forth the provisions of this

nondiscrimination clause. The Owner will in all solicitations

or advertisements for employees placed by or on behalf of the

Owner state that all qualified applicants will receive

consideration for employment without regard to race, color,

creed, religion, sex, handicap, familial status, or national

origin. The Owner will incorporate the foregoing requirements

of this paragraph in all of its contracts for project work,

except contracts for standard commercial supplies or raw

materials, and will require all of its contractors for such

work to incorporate such requirements in all subcontracts for

project work.

\(3\) The Owner agrees to limit, segregate or classify applicants or

employees in any way that adversely affects their

opportunities or status because of handicap.

\(4\) The Owner agrees not to participate in a contractual or other

relationship that has the effect of subjecting qualified

applicants with handicaps or employees with handicaps to

discrimination.

\(5\) The Owner agrees to make reasonable accommodation to the known

physical or mental limitations of an otherwise qualified

applicant with handicaps or employee with handicaps, unless

the Owner can demonstrate that the accommodation would impose

an undue hardship on the operation of its program.

\(6\) The Owner agrees not to use any employment test or other

selection criterion that screens out or tends to screen out

individuals with handicaps unless:

\(i\) The Owner demonstrates that the test score or other

selection criterion, as used by the Owner, is job-related

for the position in question; and

\(ii\) The appropriate HUD official demonstrates that

alternative job-related tests or criteria that tend to

screen out fewer individuals with handicaps are

unavailable.

\(7\) The Owner agrees to comply with 24 CFR 8.12 and related HUD

instructions when selecting and administering tests to avoid

discrimination against individuals with handicaps.

\(8\) The Owner agrees to comply with 24 CFR 8.13 and any related

HUD instructions concerning preemployment inquiries.

\(g\) Age Discrimination Act of 1975. The Owner shall comply with any

rules and regulations issued or adopted by HUD under the Age

Discrimination Act of 1975, as amended, 42 U.S.C. 6101 et seq,

which prohibits discrimination on the basis of age in programs and

activities receiving Federal financial assistance.

13\. Cooperation in Equal Opportunity Compliance Reviews.

The Owner agrees to cooperate with HUD in the conducting of

compliance reviews and complaint investigations pursuant to or

permitted by all applicable civil rights statutes, Executive

Orders, and rules and regulations.

8

14\. Flood Insurance.

The Owner agrees that the project will be covered, during its

anticipated economic or useful life, by flood insurance in an

amount at least equal to its development or project cost (less

estimated land cost) or to the maximum limit of coverage made

available with respect to the particular type of property under the

National Flood Insurance Act of 1968, whichever is less.

15\. Clean Air Act and Federal Water Pollution Control Act.

\(a\) Definition. \"Facility\" means any building, plant, installation,

structure, mine, vessel, or other floating craft, location, or site

of operations, owned, leased, or supervised by the Owner or any

subcontractor, used in the performance of the contract or any

subcontract. When a location or site of operations includes more

than one building, plant, installation, or structure, the entire

location or site shall be deemed a facility except when the

Administrator, or a designee, of the Environmental Protection

Agency (EPA) determines that independent facilities are collocated

in one geographic area.

\(b\) In compliance with regulations issued by the United States

Environmental Protection Agency (EPA), 40 CFR Part 15, pursuant to

the Clean Air Act, as amended (\"Air Act\"), 42 U.S.C. 7401, et seq.,

the Federal Water Pollution Control Act, as amended (\"Water Act\"),\'

33 U.S.C. 1251, et seq, and Executive Order 11738, the Owner agrees

to:

\(1\) Not utilize any facility in the performance of this contract

or any subcontract which is listed on the EPA List of

Violating Facilities pursuant to Part 15 of the regulations

for the duration of time that the facility remains on the

list;

\(2\) Promptly notify HUD if a facility the Owner intends to use in

the performance of this contract is on the EPA List of

Violating Facilities or the Owner knows that it has been

recommended to be placed on the List;

\(3\) Comply with all requirements of the Air Act and the Water Act,

including the requirements of Section 114 of the Air Act and

Section 308 of the Water Act, and all applicable clean air and

clean water standards; and

\(4\) Include or cause to be included the provisions of this clause

in every subcontract, and take such action as HUD may direct

as a means of enforcing such provisions.

16\. Reports and Access to Premises and Records.

\(a\) The Owner shall furnish any information and reports pertinent to

this Contract as reasonably may be required from time to time by

HUD.

\(b\) The Owner shall permit HUD or any of their duly authorized

representatives to have access to the premises and, for the purpose

of audit and examination, to have access to any books, documents,

papers and records of the Owner that are pertinent to compliance

with this Contract, including the verification of information

pertinent to the housing assistance payments.

17\. Interest of Local Public Officials and Employees when PHA has an

Interest in the Contract.

If a PHA is a party to or has an interest in this contract, no

member, officer, or employee of the PHA; no member of the governing

body of the locality (city or county) in which the project is

situated or in which the PHA was activated; and no other public

official of such locality or localities who exercises any functions

or responsibilities with respect to the project, shall have any

interest, direct or indirect in this Contract or in any proceeds or

benefits arising from it during his/her tenure or for one year

thereafter. This provision may be waived by HUD for good cause.

18\. Interest of Member of or Delegate to Congress.

No member of or delegate to the Congress of the United States of

America or resident commissioner shall be admitted to any share or

part of this Contract or to any benefits which may arise from it.

9

19\. Assignment, Sale or Foreclosure.

\(a\) The Owner agrees that it has not made and will not make any sale,

assignment, or conveyance or transfer in any fashion, of this

Contract, the Agreement, the ACC (if applicable), or the project or

any part of them or any of its interest in them, without the prior

written consent of HUD. However, in the case of an assignment as

security for the purpose of obtaining financing of the project, HUD

shall consent in writing if HUD has approved the terms of the

financing.

\(b\) The Owner agrees to notify HUD promptly of any proposed action

covered by paragraph (a) of this section. The Owner further agrees

to request the prior written consent of HUD.

\(c\) (1) For purposes of this section, a sale, assignment, conveyance,

or transfer includes but is not limited to one or more of the

following:

\(i\) A transfer by the Owner, in whole or in part,

\(ii\) A transfer by a party having a substantial interest in

the Owner,

(iii)Transfers by more than one party of interests aggregating

a substantial interest in the Owner,

\(iv\) Any other similarly significant change in the ownership

of interests in the Owner, or in the relative

distribution of interests by any other method or means,

and

\(v\) Any refinancing by the Owner of the project.

\(2\) An assignment by the Owner to a limited partnership, in which

no limited partner has a 25 percent or more interest and of

which the Owner is the sole general partner, shall not be

considered an assignment, conveyance, or transfer. An

assignment by one or more general or limited partners of a

limited partnership interest to a limited partner, who will

have no more than a 25 percent interest, shall not be

considered an assignment, conveyance, or transfer.

\(3\) The term \"substantial interest\" means the interest of any

general partner, any limited partner having a 25 percent or

more interest in the organization, any corporate officer or

director, and any stockholder having a 10 percent or more

interest in the organization.

\(d\) The Owner and the party signing this Contract on behalf of the

Owner represent that they have the authority of all of the parties

having ownership interests in the Owner to agree to this provision

on their behalf and to bind them with respect to it.

\(e\) Except where otherwise approved by HUD, this Contract, the

Agreement, and the ACC (if applicable) shall continue in effect and

housing assistance payments will continue in accordance with the

terms of the Contract in the event:

\(1\) Of assignment, sale, or other disposition of the project or

this Contract, the Agreement, or the ACC,

\(2\) Of foreclosure, including foreclosure by HUD,

\(3\) Of assignment of the mortgage or deed in lieu of foreclosure,

\(4\) The PHA or HUD takes over possession, operation or ownership,

\(5\) The Owner prepays the mortgage.

20\. Defaults by PHA and/or Owner.

\(a\) Rights of Owner if PHA Defaults under Contract (for Private-

Owner/PHA Projects).

\(1\) Events of Default. The occurrence of any of the following

events, if the Owner is not in default, is defined as a

default under the ACC:

\(i\) If the PHA fails to perform or observe any term or

condition of this Contract;

\(ii\) If the Contract is held to be void, voidable, or ultra

vires;

(iii)If the power or right of the PHA to enter into the

Contract is drawn into question in any legal proceeding;

or

10

\(iv\) If the PHA asserts or claims that the Contract is not

binding upon the PHA for any such reason.

\(2\) Owner Request for HUD Determination of Default. If the Owner

believes that an event as specified in paragraph (a)(1) has

occurred, and the Owner is not in default, the Owner may,

within 30 days of the initial occurrence of the event:

\(i\) Notify HUD of the occurrence of the event;

\(ii\) Provide supporting evidence of the default and of the

fact that the Owner is not in default; and

(iii)Request HUD to determine whether there has been a

default.

\(3\) HUD Determination of Default and Curing of Default. HUD,

after notice to the PHA giving it a reasonable opportunity to

take corrective action, or to demonstrate that it is not in

default, shall make a determination whether the PHA is in

default and whether the Owner is not in default. If HUD

determines that the PHA is in default and that the Owner is

not, HUD shall take appropriate action to require the PHA to

cure the default. If necessary for the prompt continuation of

the project, HUD shall assume the PHA\'s rights and obligations

under the Contract, including any funds. HUD shall continue to

pay annual contributions with respect to the units covered by

this Contract in accordance with the ACC and this Contract

until reassigned to the PHA. All rights and obligations of the

PHA assumed by HUD will be returned as constituted at the time

of the return:

\(i\) When HUD is satisfied that all defaults have been cured

and that the project will thereafter be administered in

accordance with all applicable requirements, or

\(ii\) When the Contract is at an end, whichever occurs sooner.

\(4\) Enforcement by Owner. The provisions of this paragraph (a)

are made for the benefit of the Owner, the lender, the PHA

where it is the lender and then only in its capacity as

lender, and the Owner\'s other assignees, if any, who have been

specifically approved by HUD prior to the assignment. These

provisions shall be enforceable by these parties against HUD

by suit at law or in equity.

\(b\) Rights of PHA and HUD if Owner Defaults under Contract.

\(1\) Events of Default. A default by the Owner under this Contract

shall result if:

\(i\) The Owner has violated or failed to comply with any

provision of, or obligation under, this Contract or of

any Lease, including failure to correct any deficiencies

identified by HUD in connection with any inspection; or

\(ii\) The Owner has asserted or demonstrated an intention not

to perform some or all of its obligations under this

Contract or under any Lease; or

(iii)For projects with mortgages insured by HUD or loans made

by

HUD, the Owner has violated or failed to comply with the

regulations for the applicable insurance or loan program,

with the insured mortgage, or with the regulatory

agreement; or the Owner has filed any false statement or

misrepresentation with HUD in connection with the

mortgage insurance or loan.

\(2\) HUD Determination of Default. Upon a determination by HUD

that a default has occurred, HUD shall notify the Owner of

\(i\) The nature of the default,

\(ii\) The actions required to be taken and the remedies to be

applied on account of the default (including actions by

the Owner to cure the default), and

(iii)The time within which the Owner shall respond with a

showing

that all the required actions have been taken.

If the Owner fails to respond or take action to the

satisfaction of HUD, HUD shall have the right to take

corrective action to achieve compliance, in accordance with

paragraph (b)(3) or to terminate this Contract with HUD

approval, in whole or in part, or to take other corrective

action to achieve compliance in its discretion, or as directed

by HUD.

\(3\) Corrective Action. Pursuant to paragraph (b)(2) of this

section, HUD may take the following corrective actions:

11

\(i\) Take possession of the project, bring any action to

enforce any rights of the Owner growing out of the

project operation, and operate the project in accordance

with the terms of this Contract until such time as HUD

determines that the Owner is again in a position to

operate the project in accordance with this Contract. If

HUD takes possession, housing assistance payments shall

continue in accordance with the Contract.

\(ii\) Collect all rents and charges in connection with the

operation of the project and use these funds to pay the

necessary expenses of preserving the property and

operating the project and to pay the Owner\'s obligations

under the note and mortgage or other loan documents.

(iii)Apply to any court, State or Federal, for specific

performance

of this Contract, for an injunction against any violation

of the Contract, for the appointment of a receiver to

take over and operate the project in accordance with the

Contract, or for such other relief as may be appropriate.

These remedies are appropriate since the injury to the

PHA and/or HUD arising from a default under any of the

terms of this Contract could be irreparable and the

amount of damage would be difficult to ascertain.

\(iv\) Reduce or suspend housing assistance payments.

\(v\) Recover any overpayments.

\(c\) Remedies Not Exclusive and Non-Waiver of Remedies. The
availability

of any remedy under this Contract or the ACC, where applicable,

shall not preclude the exercise of any other remedy under this

Contract or the ACC or under any provisions of law, nor shall any

action taken in the exercise of any remedy be considered a waiver

of any other rights or remedies. Failure to exercise any right or

remedy shall not constitute a waiver of the right to exercise that

or any other right or remedy at any time.

21\. Entire Agreement.

This Contract, including the exhibit(s), is the entire agreement

between HUD and the Owner. No changes in this Contract may be made

except in writing signed by both the Owner and HUD. The Agreement

and Contract must be interpreted and implemented in accordance with

HUD requirements.

Warnings:

There are fines and imprisonment - \$10,000/5 years - for anyone who

makes false, fictitious, or fraudulent statements or entries in any

matter within the jurisdiction of the Federal Government (18 U.S.C.

1001).

There are fines and imprisonment - \$250,000/5 years - for anyone

who misuses rents and proceeds in violation of HUD regulations relative

to this project. This applies when the mortgage note is in default or

when the project is in a nonsurplus cash position (12 U.S.C. 1715z-9).

HUD may seek a \"double damages\" civil remedy for the use of assets

or income in violation of any Regulatory Agreement or any applicable HUD

regulations (12 U.S.C. 1715z-4a).

12

HUD may seek additional civil money penalties to be paid by the

mortgagor through personal funds for:

\(1\) Violation of an agreement with HUD to use nonproject funds for

certain specified purposes as a condition of receiving

transfers of physical assets, flexible subsidy loan, capital

improvement loan, modification of mortgage terms or workout.

The penalties could be as much as the HUD Secretary\'s loss at

foreclosure sale or sale after foreclosure.

\(2\) Certain specific violations of the Regulatory Agreement, the

penalties could be as much as \$25,000 per occurrence (12

U.S.C. 1735f-15).

\[THIS SPACE INTENTIONALLY LEFT BLANK\]

13

This Contract is hereby executed with respect to the Contract Units

described in Exhibit A.

United States of America

Secretary of Housing and

Urban Development OWNER

By:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

By:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Official Title) (Official Title)

Date:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Warning: 18 U.S.C. 1001 provides, among other things, that whoever

knowingly and willfully makes or uses a document or writing containing

any false, fictitious, or fraudulent statement or entry, in any matter

within the jurisdiction of any department or agency of the United

States, must be fined not more than \$10,000 or imprisoned for not more

than five years, or both.

14

EXHIBIT A

IDENTIFICATION OF UNITS (\"CONTRACT UNITS\")

BY SIZE AND APPLICABLE CONTRACT RENTS

Number Number of Contract

of Units Bedrooms Rent\*\*

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_

\*\*to compute Contract Rents, use policy set forth in Notice \_\_\_\_
issued

on \_\_\_\_\_.

ATTACHMENT 1(b)

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of Housing, Federal Housing Commissioner

HOUSING ASSISTANCE PAYMENTS CONTRACT

PHA as Contract Administrator

This Housing Assistance Payments Contract (\"Contract\") is entered into

between the
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
(\"PHA\") and

(\"Owner\") pursuant to the United States Housing Act of 1937, 42 U.S.C

1437, et seq. (\"Act\") and the Balanced Budget Downpayment Act, also

known as the Continuing Resolution (\"CR\") passed by Congress on
January

26, 1996, (PL 104-99. See H.R. 2880, Sec. 405). The purpose of this

Contract is to provide housing assistance payments on behalf of Eligible

Families (\"Families\") leasing decent, safe and sanitary units from the

Owner.

1\. Commencement Date, Term, Contract Units, and Contract Rents.

\(a\) Commencement Date of Contract. The effective date of this Contract

is\_\_\_\_\_\_\_\_\_\_\_\_\_\_. The date inserted must be the day after
the

Expiring Contract expires. For example, if the Expiring Contract

expires on February 21, 1996, the date inserted must be February

22, 1996.

\(b\) Term of Contract. The term of this Contract is one year (365

days), beginning on the Commencement Date.

\(c\) Contract Units, and Contract Rents. This Contract is hereby

executed with respect to the units (\"Contract Units\") described in

Exhibit A listed by size and their applicable rents (\"Contract

Rents\").

2\. Owner\'s Warranties.

The Owner warrants that the rental units listed in Exhibit A are in

good and tenantable condition and meet HUD\'s Housing Quality

Standards.

3\. Families To Be Housing; Contract Administrator (\"CA\") Assistance.

\(a\) Families To Be Housed. The Contract Units are to be leased by the

Owner to eligible Very Low-Income Families (\"Families\") for

occupancy by such Families solely as private dwellings and as their

principal place of residence.

\(b\) CA Assistance.

\(1\) The PHA will be the Contract Administrator (CA).

\(2\) The CA hereby agrees to make housing assistance payments on

behalf of Families for the Contract Units, to enable the

Families to lease decent, safe, and sanitary housing pursuant

to section 8 of the Act.

\(3\) If there is a Utility Allowance and if the Allowance exceeds

the total Family contribution, the Owner shall pay the Family

the amount of the excess. The CA will pay funds to the Owner

in trust solely for the purpose of making this payment. Any

pledge by the Owner of payments properly payable under this

Contract shall not be construed to include payments covered by

this paragraph.

4\. Maximum Housing Assistance Commitment; Project Account.

\(a\) Maximum Contract Commitment. The maximum amount of the commitment

for 2

housing assistance payments under this Contract is

\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_. However, this amount may be
reduced

commensurately with any reduction in the number of Contract Units

or in the Contract Rents or pursuant to any other provisions of

this Contract.

5\. Housing Assistance Payments To Owners.

\(a\) Housing Assistance Payments on Behalf of Families.

\(1\) Housing assistance payments shall be paid to the Owner for

units under lease for occupancy by Families in accordance with

the Contract. The housing assistance payment will cover the

difference between the Contract Rent and that portion of the

rent payable by the Family as determined in accordance with

the HUD-established schedules and criteria.

\(2\) The amount of housing assistance payment payable on behalf of

a Family and the amount of rent payable by the Family shall be

subject to change by reason of changes in Family Income,

Family composition, extent of exceptional medical or other

unusual expenses or program rules in accordance with the HUD-

established schedules and criteria; or by reason of a change

in any applicable Utility Allowance approved or required by

the CA. Any such change shall be effective as of the date

stated in a notification of the change to the Family, which

need not be at the end of the Lease term.

\(b\) Vacancies. The Owner may receive housing assistance payments for

so much of the month in which the Family vacates the unit as the

unit remains vacant. Should the unit remain vacant, the Owner may

receive from HUD a housing assistance payment in the amount of 80

percent of the Contract Rent for a vacancy period not exceeding an

additional month. However, if the Owner collects any of the

Family\'s share of the rent for this period, the payment for the

vacancy period must be reduced to an amount which, when added to

the Family\'s payments, does not exceed 80 percent of the Contract

Rent. Any such excess shall be reimbursed by the Owner to HUD or as

HUD may direct. The Owner may receive housing assistance payments

only if the Owner:

\(1\) Certifies that it did not cause the vacancy by violating the

lease, the Contract or any applicable law or by moving a

Family to another unit;

\(2\) Notified the CA of the vacancy or prospective vacancy and the

reasons for it immediately upon learning of the vacancy or

prospective vacancy;

\(3\) Has fulfilled and continues to fulfill the requirements

specified in paragraphs (b)(1), (2), and (3) of this section;

and

\(4\) Certifies that any eviction resulting in a vacancy was carried

out in compliance with section 11.

\(c\) Prohibition of Double Compensation for Vacancies. The Owner is not

entitled to payments for vacant units to the extent it can collect

for the vacancy from other sources (such as security deposits,

other amounts collected from the Family, and governmental payments

under other programs). If the Owner collects any of the Family\'s

share of the rent for a vacancy period in an amount which, when

added to the vacancy payment, results in more than the Contract

Rent, the excess must be reimbursed as HUD directs.

\(d\) CA Not Obligated for Family Rent. The CA has not assumed any

obligation for the amount of rent payable by any Family or the

satisfaction of any claim by the Owner against any Family. The

financial obligation of the CA is limited to making housing

assistance payments on behalf of Families in accordance with this

Contract.

\(e\) Owner\'s Monthly Requests for Payments.

\(1\) The Owner shall submit monthly requests to the CA or as

directed by the CA for housing assistance payments. Each

request shall set forth: (i) the name of each Family and the

address and/or number of the unit leased by the Family; (ii)

the address and/or the number of each unit, if any, not leased

to Families for which the Owner is claiming payments; (iii)

the Contract Rent as set forth in Exhibit A for each unit for

which the Owner is claiming payments; (iv) the amount of rent

payable by the Family leasing the unit; and (v) the total

amount of housing assistance payments requested by the Owner.

3

\(2\) Each of the Owner\'s monthly requests shall contain a

certification by it that to the best of its pledge and belief

\(i\) the dwelling units are in decent, safe, and sanitary

condition, (ii) all the other facts and data on which the

request for funds is based are true and correct, (iii) the

amount requested has been calculated in accordance with the

provisions of this Contract and is payable under the Contract,

\(iv\) none of the amount claimed has been previously claimed or

paid under this Contract and (v) the Owner has not received

and will not receive any payments or other consideration from

the Family, the PHA, HUD, or any other public or private

source for the unit beyond that authorized in this Contract

and the lease.

\(3\) If the Owner has received an excessive payment, the CA (or HUD

where the CA is a PHA), in addition to any other rights to

recovery, may deduct the amount from any subsequent payment or

payments.

\(4\) The Owner\'s monthly requests for housing assistance payments

are subject to penalty under 18 U.S.C. 1001, which provides,

among other things, that whoever knowingly and willfully makes

or uses a document or writing containing any false,

fictitious, or fraudulent statement or entry, in any matter

within the jurisdiction of any department or agency of the

United States, shall be fined not more than \$10,000 or

imprisoned for not more than five years, or both.

6\. Maintenance, Operation and Inspection.

\(a\) Maintenance and Operation. The Owner agrees to maintain and

operate the Contract Units, unassisted units, if any, and related

facilities to provide decent, safe, and sanitary housing including

the provision of all the services, maintenance and utilities. The

Owner also agrees to comply with the lead-based paint regulations

at 24 CFR Part 35. If the CA determines that the Owner is not

meeting one or more of these obligations, the CA shall have the

right to take action under section 20.

\(b\) Inspection.

\(1\) Prior to occupancy of any Contract Unit by a Family or to

receipt of payments hereunder, the Owner and the Family shall

inspect the unit and both shall certify, on forms prescribed

or approved by the CA, that they have inspected the unit and

have determined it to be decent, safe, and sanitary in

accordance with the criteria provided in the forms. The Owner

shall keep copies of these reports on file for at least three

years.

\(2\) The CA shall inspect or cause to be inspected at such times as

may be necessary to ensure that the Owner is meeting its

obligation to maintain the units in decent, safe, and sanitary

condition including the provision of the agreed-upon utilities

and other services. The CA shall take into account complaints

by occupants and any other information coming to its attention

in scheduling inspections and shall notify the Owner and the

Family of its determination.

\(c\) Units Not Decent, Safe, and Sanitary. If the CA notifies the Owner

that it has failed to maintain a dwelling unit in decent, safe, and

sanitary condition and the Owner fails to take corrective action

within the time prescribed in the notice, the CA may exercise any

of its rights or remedies under the Contract, including reduction

or suspension of housing assistance payments, even if the Family

continues to occupy the unit. If, however, the Family wishes to be

rehoused in another dwelling unit with section 8 assistance and the

CA does not have other section 8 funds for such purposes, the CA

may use the abated housing assistance payments for the purpose of

rehousing the Family in another dwelling unit. If the Family

continues to occupy the unit, it will do so in accordance with the

terms of its lease, including the termination date and amount of

rent payable by the Family.

\(d\) Notification of Abatement. Any reduction or suspension of housing

assistance payments shall be effective as provided in written

notification to the Owner. The Owner shall promptly notify the

Family of any such abatement.

\(e\) Overcrowded and Underoccupied Units. Where the CA determines a

unit is larger or smaller than appropriate for an eligible Family,

the Owner agrees to correct the situation in accordance with HUD

instructions, regulations, and requirements in effect at the time

of the determination.

4

7\. Submission of Financial and Operating Statements. The Owner must

submit to the CA:

\(a\) Within 60 days after the execution of this contract, financial

statements for the project audited by an Independent Public

Accountant in the form required by HUD, and

\(b\) Other statements as to project operation, financial conditions and

occupancy as HUD may require pertinent to administration of the

Contract and monitoring of project operations.

8\. Rent Adjustments.

\(a\) Initial Rents. In accordance with HUD Notice \_\_\_\_\_\_\_\_,
entitled

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Notice), issued by
HUD on

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, the initial rents shall be set
forth in

Exhibit A.

\(b\) Adjustments. The Owner may request a budget-based rental increase

during the term of this Contract of 5% of the initial rents set

forth in Exhibit A. The Owner must demonstrate to HUD sufficient

need for this rental adjustment to the instructions set forth in

the Notice. The Owner shall submit to HUD supporting data,

financial statements and certifications which clearly support the

increase.

\(c\) Limitations. In no case shall the adjusted rent exceed 120% of the

HUD published Fair Market Rent for the area on the Effective Date

of this contract.

\(d\) Incorporation of Rent Adjustment. Any adjustment in Contract Rents

shall be incorporated into Exhibit A by a dated addendum to the

exhibit establishing the effective date of the adjustment.

9\. Marketing and Leasing of Units.

\(a\) Compliance with Equal Opportunity Requirements. Marketing of units

and selection of Families by the Owner shall be in accordance with

the Owner\'s HUD-approved Affirmative Fair Housing Plan (if

required), shown as an exhibit, and with all regulations relating

to fair housing advertising. Projects shall be managed and

operated without regard to race, color, religion, creed, sex,

handicap, familial status or national origin and in the case of

previously HUD-owned projects in accordance with approved tenant

selection factors.

\(b\) Security Deposits. The Owner agrees to comply with applicable

section 8 regulations and other requirements, as revised from time

to time, regarding security deposits and to comply with all State

and local law.

\(c\) Eligibility, Selection and Admission of Families.

\(1\) The Owner shall be responsible for determination of

eligibility of applicants, selection of Families from among

those determined to be eligible, computation of the amount of

housing assistance payments on behalf of each selected Family

and of total Family contributions and recordkeeping in

accordance with applicable HUD regulations and requirements.

\(2\) The Owner shall not charge any applicant or assisted Family

any amount in excess of the total Family contribution except

as authorized by HUD.

\(3\) In renting of the Contract Units, the Owner must lease them to

Very Low-Income Families (determined in accordance with HUD

established schedule and criteria). Exceptions may be made and

the units leased to Lower Income Families under such

circumstances as where the project viability is being

endangered by the lack of sufficient number of potential

applicants who are Very Low-Income Families, but only after

the prior approval of HUD.

\(4\) The Lease entered into between the Owner and each selected

Family shall be on the form of Lease approved by HUD.

\(5\) (i) The Owner shall make a reexamination of Family income,

composition, and the extent of medical or other unusual

expenses incurred by the Family at least as often as

required by HUD regulations or other requirements, and

appropriate redeterminations shall be made by the Owner

of the amount of Family contribution and the amount of

housing assistance payment, all in accordance with

applicable HUD regulations and requirements.

5

\(ii\) If a Family reports a change in income or other

circumstances that would result in a decrease of total

Family contribution between regularly scheduled

reexaminations, the Owner, upon receipt of verification

of the change, must promptly make appropriate adjustments

in the total Family contribution. The Owner may require

in its lease that Families report increases in income or

other changes between scheduled reexaminations.

(iii)A Family\'s eligibility for housing assistance payments

continues until its total Family contribution equals the

total housing expense for the unit it occupies. The

termination of eligibility at this point will not affect

the Family\'s other rights under the lease nor preclude

resumption of payments as a result of later changes in

income or other circumstances during the term of this

Contract.

\(6\) The Owner shall maintain as confidential all information

relating to section 8 applicants and assisted Families, the

disclosure of which would constitute an unwarranted invasion

of personal privacy.

\(d\) Processing of Applications and Complaints. The Owner shall process

applications for admission, notifications to applicants, and

complaints by applicants in accordance with applicable HUD and PHA

regulations and requirements and shall maintain records and furnish

such copies or other information as may be required by HUD or the

PHA.

\(e\) Review: Incorrect Payments. In making housing assistance payments

to Owners, the PHA or HUD will review the Owner\'s determinations

under this section. If as a result of this review, or other

reviews, audits or information received by the PHA or HUD at any

time, it is determined that the Owner has received improper or

excessive housing assistance payments, the PHA or HUD shall have

the right to deduct the amount of such overpayments from any

amounts otherwise due the Owner, or otherwise effect recovery.

10\. Termination of Tenancy or Section 8 Assistance by the Owner; Tenant

Notice.

\(a\) The Owner agrees not to terminate any tenancy of or assistance on

behalf of an assisted Family except in accordance with all HUD

regulations and other requirements, in effect at the time of the

termination, and any Federal, State and local law.

\(b\) The Owner agrees, that as a project owner participating in the

Section 8 Program, the Owner is required under Section 8(c)(9) of

the U.S. Housing Act of 1937 to provide, at minimum, a one year

notice to HUD and the affected tenants about the termination or

expiration of this Contract. The term \"termination\" means the

expiration of the assistance contract or an owner\'s refusal to

renew the assistance contract. The Owner acknowledges that if the

Owner does not give proper notice under 8(c)(9) of the Act, the

Owner must permit the tenants to remain in their unit for the one

year notice period without an increase in the tenants\' portion of

the rent they were paying under the expiring contract.

11\. Reduction of Number of Units for Failure to Lease to Eligible

Families.

\(a\) Limitation on Leasing to Ineligible Families. The Owner may not at

any time during the term of this Contract lease more than 10

percent of the assisted units in the project to families which are

ineligible under section 8 requirements at initial occupancy

without the prior approval of HUD. Failure on the part of the Owner

to comply with this prohibition is a violation of the Contract and

grounds for all available legal remedies, including specific

performance of the Contract, suspension or debarment from HUD

programs and reduction of the number of units under the Contract,

as set forth in paragraph (b) of this section. (See also section

20.)

\(b\) Reduction for Failure to Lease to Eligible Families-New and Rehab

Projects. If, at any time beginning sixty days after the effective

date of the Contract, the Owner fails for a continuous period of

sixty days to have at least 90 percent of the assisted units leased

or available for leasing by Families eligible under section 8

requirements at initial occupancy, HUD (or the PHA at the direction

of HUD, as appropriate)

6

may, on at least 30 days\' notice, reduce the number of units

covered by the Contract. HUD or the PHA may reduce the number of

units to the number of units actually leased or available for

leasing plus 10 percent (rounded up). This reduction, however, will

not be made if the failure to lease units to eligible Families is

permitted in writing by HUD under paragraph (a) of this section.

\(c\) Reduction-Previously HUD-Owned Projects. If, at any time beginning

sixty days after the effective date of the Contract, the Owner

fails for a continuous period of sixty days to have all of the

assisted units leased or available for leasing by Families eligible

under section 8 requirements at initial occupancy, HUD may, on 30

calendar days\' notice, reduce the number of Contract units to not

less than the number of Contract units under lease, plus 10 percent

of such number if the number is 10 or more, rounded up. Failure by

the Owner to make a reasonable effort to lease the units to

eligible Families shall be a violation of the Contract and grounds

for all legal remedies including those specified in paragraph (a)

and section 20.

\(d\) Restoration. HUD will agree to an amendment of the ACC or the

Contract, as appropriate, to provide for subsequent restoration of

any reduction made pursuant to paragraph (b) or (c) of this section

if:

\(1\) HUD determines that the restoration is justified by demand,

\(2\) The Owner has a record of compliance with its obligations

under the Contract, and

\(3\) Contract authority is available. HUD will take such steps

authorized by section 8(c)(6) of the Act as may be necessary

to carry out its agreement.

12\. Nondiscrimination.

\(a\) General. The Owner shall not in the selection of Families, in the

provision of services, or in any other manner, discriminate against

any person on the grounds of race, color, creed, religion, sex,

handicap, familial status, or national origin.

\(b\) Members of Certain Classes. The Owner shall not automatically

exclude anyone from participation in, or deny anyone the benefits

of, the Housing Assistance Payments Program because of membership

in a class, such as unmarried mothers, recipients of public

assistance, and handicapped persons.

\(c\) The Fair Housing Act. The Owner shall comply with all requirements

imposed by the Fair Housing Act, which prohibits discrimination in

the sale, rental, financing and advertising of housing on the basis

of race, color, religion, sex, handicap, familial status, or

national origin, and any related rules and regulations.

\(d\) Title VI of the Civil Rights Act of 1964 and Executive Order
11063.

The Owner shall comply with all requirements imposed by Title VI of

the Civil Rights Act of 1964, 42 U.S.C. 2000d. et seq.; the HUD

Regulations issued thereunder, 24 CFR, Subtitle A, Part 1; the HUD

requirements pursuant to these regulations; and Executive Order

11063 and any regulations and requirements issued thereunder, to

the end that, in accordance with that Act, Executive Order 11063,

and the regulations and requirements of HUD, no person in the

United States shall, on the grounds of race, color, creed, or

national origin, be excluded from participation in, or be denied

the benefits of, the Housing Assistance Payments Program, or be

otherwise subjected to discrimination. This provision is included

pursuant to the regulations of HUD 24 CFR, Subtitle A, Part 1

issued under Title VI of the Civil Rights Act of 1964, HUD

Regulations issued pursuant to Executive Order 11063 and the HUD

requirements pursuant to the regulations. The obligation of the

Owner to comply therewith inures to the benefit of the United

States of America, HUD and the PHA (where the CA is a PHA), any of

which shall be entitled to invoke any remedies available by law to

redress any breach or to compel compliance by the Owner.

\(e\) Section 504 of the Rehabilitation Act of 1973. The Owner shall

comply with all the requirements imposed by section 504 of the

Rehabilitation Act of 1973, as amended, and any related rules and

regulations. Section 504 provides that no qualified handicapped

person shall, on the basis of handicap, be excluded from

participation in, be denied the benefits of, or otherwise be

subjected to discrimination under any program or activity which

receives or benefits from Federal financial assistance.

Accordingly, the Owner (1) shall not discriminate against any

qualified handicapped person on the basis of handicap and (2) shall

cause to be

7

incorporated into all contracts executed in connection with this

project a provision requiring compliance with rules and regulations

issued pursuant to section 504. See also paragraph (f)(3) through

\(8\) concerning Section 504 protections to employees with handicaps.

\(f\) Employees of Owner.

\(1\) In carrying out the obligations under this Contract, the Owner

will not discriminate against any employee or applicant for

employment because of race, color, creed, religion, sex,

handicap, familial status, or national origin. The Owner will

take affirmative action to ensure that applicants are

employed, and that employees are treated during employment,

without regard to race, color, creed, religion, sex, handicap,

familial status, or national origin. Such action shall

include, but not be limited to, the following: employment,

upgrading, demotion, or transfer; recruitment or recruitment

advertising; layoff or termination; rates of pay or other

forms of compensation; and selection for training, including

apprenticeship.

\(2\) The Owner agrees to post in conspicuous places, available to

employees and applicants for employment, notices to be

provided by HUD setting forth the provisions of this

nondiscrimination clause. The Owner will in all solicitations

or advertisements for employees placed by or on behalf of the

Owner state that all qualified applicants will receive

consideration for employment without regard to race, color,

creed, religion, sex, handicap, familial status, or national

origin. The Owner will incorporate the foregoing requirements

of this paragraph in all of its contracts for project work,

except contracts for standard commercial supplies or raw

materials, and will require all of its contractors for such

work to incorporate such requirements in all subcontracts for

project work.

\(3\) The Owner agrees not to limit, segregate, or classify

applicants or employees in any way that adversely affects

their opportunities or status because of handicap.

\(4\) The Owner agrees not to participate in a contractual or other

relationship that has the effect of subjecting qualified

applicants with handicaps or employees with handicaps to

discrimination.

\(5\) The Owner agrees to make reasonable accommodation to the known

physical or mental limitations of an otherwise qualified

applicant with handicaps or employee with handicaps, unless

the Owner can demonstrate that the accommodation would impose

an undue hardship on the operation of its program.

\(6\) The Owner agrees not to use any employment test or other

selection criterion that screens out or tends to screen out

individuals with handicaps unless:

\(i\) The Owner demonstrates that the test score or other

selection criterion, as used by the Owner, is job-related

for the position in question; and

\(ii\) The appropriate HUD official demonstrates that

alternative job-related tests or criteria that tend to

screen out fewer individuals with handicaps are

unavailable.

\(7\) The Owner agrees to comply with 24 CFR 8.12 and related HUD

instructions when selecting and administering tests to avoid

discrimination against individuals with handicaps.

\(8\) The Owner agrees to comply with 24 CFR 8.13 and any related

HUD instructions concerning preemployment inquiries.

\(g\) Age Discrimination Act of 1975. The Owner shall comply with any

rules and regulations issued or adopted by HUD under the Age

Discrimination Act of 1975, as amended, 42 U.S.C. 6101 et seq.

which prohibits discrimination on the basis of age in programs and

activities receiving Federal financial assistance.

13\. Cooperation in Equal Opportunity Compliance Reviews.

The Owner and the PHA (where the CA is a PHA) agree to cooperate

with HUD in the conducting of compliance reviews and complaint

investigations pursuant to or permitted by all applicable civil

rights statutes, Executive Orders, and rules and regulations.

8

14\. Flood Insurance.

The Owner agrees that the project will be covered, during its

anticipated economic or useful life, by flood insurance in an

amount at least equal to its development or project cost (less

estimated land cost) or to the maximum limit of coverage made

available with respect to the particular type of property under the

National Flood Insurance Act of 1968, whichever is less.

15\. Clean Air Act and Federal Water Pollution Control Act.

\(a\) Definition. \"Facility\" means any building, plant, installation,

structure, mine, vessel, or other floating craft, location, or site

of operations, owned, leased, or supervised by the Owner or any

subcontractor, used in the performance of the contract or any

subcontract. When a location or site of operations includes more

than one building, plant, installation, or structure, the entire

location or site shall be deemed a facility except when the

Administrator, or a designee, of the Environmental Protection

Agency (EPA) determines that independent facilities are collocated

in one geographical area.

\(b\) In compliance with regulations issued by the United States

Environmental Protection Agency (EPA), 40 CFR Part 15, pursuant to

the Clean Air Act, as amended (\"Air Act\"), 42 U.S.C. 7401, et seq.,

the Federal Water Pollution Control Act, as amended (\"Water Act\"),

33 U.S.C. 1251, et seq., and Executive Order 11738, the Owner

agrees to:

\(1\) Not utilize any facility in the performance of this contract

or any subcontract which is listed on the EPA List of

Violating Facilities pursuant to Part 15 of the regulations

for the duration of time that the facility remains on the

list;

\(2\) Promptly notify HUD if a facility the Owner intends to use in

the performance of this contract is on the EPA List of

Violating Facilities or the Owner knows that it has been

recommended to be placed on the List;

\(3\) Comply with all requirements of the Air Act and the Water Act,

including the requirements of Section 114 of the Air Act and

Section 308 of the Water Act, and all applicable clean air and

clean water standards; and

\(4\) Include or cause to be included the provisions of this clause

in every subcontract, and take such action as HUD may direct

as a means of enforcing such provisions.

16\. Reports and Access to Premises and Records.

\(a\) The Owner shall furnish any information and reports pertinent to

this Contract as reasonably may be required from time to time by

HUD and the PHA (where the CA is a PHA).

\(b\) The Owner shall permit HUD and the PHA (where the CA is a PHA) or

any of their duly authorized representatives to have access to the

premises and, for the purpose of audit and examination, to have

access to any books, documents, papers and records of the Owner

that are pertinent to compliance with this Contract, including the

verification of information pertinent to the housing assistance

payments.

17\. Interest of Local Public Officials and Employees when PHA has an

Interest in the Contract.

If a PHA is a party to or has an interest in this contract, no

member, officer, or employee of the PHA; no member of the governing

body of the locality (city or county) in which the project is

situated or in which the PHA was activated; and no other public

official of such locality or localities who exercises any functions

or responsibilities with respect to the project, shall have any

interest, direct or indirect, in this Contract or in any proceeds

or benefits arising from it during his/her tenure or for one year

thereafter. This provision may be waived by HUD for good cause.

9

18\. Interest of Member of or Delegate to Congress.

No member of or delegate to the Congress of the United States of

America or resident commissioner shall be admitted to any share or

part of this Contract or to any benefits which may arise from it.

19\. Assignment, Sale or Foreclosure.

\(a\) The Owner agrees that it has not made and will not make any sale,

assignment, or conveyance or transfer in any fashion, of this

Contract, the Agreement, the ACC (if applicable), or the project or

any part of them or any of its interest in them, without the prior

written consent of HUD (and the PHA where it is the CA). However,

in the case of an assignment as security for the purpose of

obtaining financing of the project, HUD (and the PHA where it is

the CA) shall consent in writing if HUD has approved the terms of

the financing.

\(b\) The Owner agrees to notify HUD (and the PHA where it is the CA)

promptly of any proposed action covered by paragraph (a) of this

section. The Owner further agrees to request the prior written

consent of HUD (and the PHA where it is the CA).

\(c\) (1) For purposes of this sectIon, a sale, assignment, conveyance,

or transfer includes but is not limited to one or more of the

following:

\(i\) A transfer by the Owner, in whole or in part,

\(ii\) A transfer by a party having a substantial interest in

the Owner,

(iii)Transfers by more than one party of interests dating

aggregating a substantial interest in the Owner,

\(iv\) Any other similarly significant change in the ownership

of interests in the Owner, or in the relative

distribution of interests by any other method or means,

and

\(v\) Any refinancing by the Owner of the project.

\(2\) An assignment by the Owner to a limited partnership, in which

no limited partner has a 25 percent or more interest and of

which the Owner is the sole general partner, shall not be

considered an assignment, conveyance, or transfer. An

assignment by one or more general or limited partners of a

limited partnership interest to a limited partner, who will

have no more than a 25 percent interest, shall not be

considered an assignment, conveyance, or transfer.

\(3\) The term \"substantial interest\" means the interest of any

general partner, any limited partner having a 25 percent or

more interest in the organization, any corporate officer or

director, and any stockholder having a 10 percent or more

interest in the organization.

\(d\) The Owner and the party signing this Contract on behalf of the

Owner represent that they have the authority of all of the parties

having ownership interest in the Owner to agree to this provision

on their behalf and to bind them with respect to it.

\(e\) Except where otherwise approved by HUD, this Contract, the

Agreement, and the ACC (if applicable) shall continue in effect and

housing assistance payments will continue in accordance with the

terms of the Contract in the event:

\(1\) Of assignment, sale, or other disposition of the project or

this Contract, the Agreement, or the ACC,

\(2\) Of foreclosure, including foreclosure by HUD,

\(3\) Of assignment of the mortgage or deed in lieu of foreclosure,

\(4\) The PHA or HUD takes over possession, operation or ownership,

\(5\) The Owner prepays the mortgage.

20\. Defaults by PHA and/or Owner.

\(a\) Rights of Owner if PHA Defaults under Contract (for Private-

Owner/PHA Projects).

\(1\) Events of Default. The occurrence of any of the following

events, if the Owner is not in default, is defined as a

default under the ACC:

10

\(i\) If the PHA fails to perform or observe any term or

condItion of this Contract;

\(ii\) If the Contract is held to be void, voidable, or ultra

vires;

(iii)If the power or right of the PHA to enter into the

Contract is

drawn into question in any legal proceeding; or

\(iv\) If the PHA asserts or claims that the Contract is not

binding upon the PHA for any such reason.

\(2\) Owner Request for HUD Determination of Default. If the Owner

believes that an event as specified in paragraph (a)(1) has

occurred, and the Owner is not in default, the Owner may,

within 30 days of the initial occurrence of the event:

\(i\) Notify HUD of the of the event;

\(ii\) Provide supporting evidence of the default and of the

fact that the Owner is not in default; and

(iii)Request HUD to determine whether there has been a

default.

\(3\) HUD Determination of Default and Curing of Default. HUD,

after notice to the PHA giving it a reasonable opportunity to

take corrective action, or to demonstrate that it is not in

default, shall make a determination whether the PHA is in

default and whether the Owner is not in default. If HUD

determines that the PHA is in default and that the Owner is

not, HUD shall take appropriate action to require the PHA to

cure the default. If necessary for the prompt continuation of

the project, HUD shall assume the PHA\'s rights and obligations

under the Contract, including any funds. HUD shall continue to

pay annual contributions with respect to the units covered by

this Contract in accordance with the ACC and this Contract

until reassigned to the PHA. All rights and obligations of the

PHA assumed by HUD will be returned as constituted at the time

of the return:

\(i\) When HUD is satisfied that all defaults have been cured

and that the project will thereafter be administered in

accordance with all applicable requirements, or

\(ii\) When the Contract is at an end, whichever occurs sooner.

\(4\) Enforcement by Owner. The provisions of this paragraph (a) are

made for the benefit of the Owner, the lender, the PHA where

it is the lender and then only in its capacity as lender, and

the Owner\'s other assignees, if any, who have been

specifically approved by HUD prior to the assignment. These

provisions shall be enforceable by these parties against HUD

by suit at law or in equity.

\(b\) rights of PHA and HUD if Owner Defaults under Contract.

\(1\) Events of Default. A default by the Owner under this Contract

shall result if:

\(i\) The Owner has violated or failed to comply with any

provision of, or obligation under, this Contract or of

any Lease including failure to correct any deficiencies

identified by the CA in connection with any inspection;

or

\(ii\) The Owner has asserted or demonstrated an intention not

to perform some or all of its obligations under this

Contract or under any Lease; or

(iii)For projects with mortgages insured by HUD or loans made

by

HUD, the Owner has violated or failed to comply with the

regulations for the applicable insurance or loan program,

with the insured mortgage, or with the regulatory

agreement; or the Owner has filed any false statement or

misrepresentation with HUD in connection with the

mortgage insurance or loan.

\(2\) HUD Determination of Default. Upon a determination by HUD

that a default has occurred, HUD shall notify the Owner of

\(i\) The nature of the default,

\(ii\) The actions required to be taken and the remedies to be

applied on account of the default (including actions by

the Owner to cure the default), and

(iii)The time within which the Owner shall respond with a

showing

that all the required actions have been taken.

If the Owner fails to respond or take action to the

satisfaction of HUD, HUD shall have the right to take

corrective action to achieve compliance, in accordance with

paragraph (b)(3)

11

or to terminate this Contract with HUD approval, in whole or

in part, or to take other corrective action to achieve

compliance in its discretion, or as directed by HUD.

\(3\) Corrective Actions. Pursuant to paragraph (b)(2) of this

section, HUD may take the following corrective actions:

\(i\) Take possession of the project, bring any action

necessary to enforce any rights of the Owner growing out

of the project operation, and operate the project in

accordance with the terms of this Contract until such

time as HUD determines that the Owner is again in a

position to operate the project in accordance with this

Contract. If HUD takes possession, housing assistance

payments shall continue in accordance with the Contract.

\(ii\) Collect all rents and charges in connection with the

operation of the project and use these funds to pay the

necessary expenses of preserving the property and

operating the project and to pay the Owner\'s obligations

under the note and mortgage or other loan documents.

(iii)Apply to any court, State or Federal, for specific

performance

of this Contract, for an injunction against any violation

of the Contract, for the appointment of a receiver to

take over and operate the project in accordance with the

Contract, or for such other relief as may be appropriate.

These remedies are appropriate since the injury to the

PHA and/or HUD arising from a default under any of the

terms of this Contract could he irreparable and the

amount of damage would be difficult to ascertain.

\(iv\) Reduce or suspend housing assistance payments.

\(v\) Recover any overpayments.

\(c\) Remedies Not Exclusive and non-Waiver of Remedies. The

availability of any remedy under this Contract or the ACC, where

applicable, shall not preclude the exercise of any other remedy

under this Contract or the ACC or under any provisions of law, nor

shall any action taken in the exercise of any remedy be considered

a waiver of any other rights or remedies. Failure to exercise any

right or remedy shall not constitute a waiver of the right to

exercise that or any other right or remedy at any time.

21\. Entire Agreement.

This Contract, including the exhibit(s), is the entire agreement

between HUD and the Owner. No changes in this Contract may be made

except in writing signed by both the Owner and HUD. The Agreement

and Contract must be interpreted and implemented in accordance with

HUD requirements.

Warnings:

There are fines and imprisonment - \$10,000/5 years - for anyone who

makes false, fictitious, or fraudulent statements or entries in any

matter within the jurisdiction of the Federal Government (18 U.S.C.

1001).

There are fines and imprisonment -\$250,000/5 years - for anyone who

misuses rents and proceeds in violation of HUD regulations relative to

this project. This applies when the mortgage note is in default or when

the project is in a nonsurplus cash position (12 U.S.C. 1715z-9).

HUD may seek a \"double damages\" civil remedy for the use of assets

or income in violation of any Regulatory Agreement or any applicable HUD

regulations (12 U.S.C. 1715z-4a).

HUD may seek additional civil money penalties to be paid by the

mortgagor through personal funds for:

12

\(1\) Violation of an agreement with HUD to use nonproject funds for

certain specified purposes as a condition of receiving

transfers of physical assets, flexible subsidy loan, capital

improvement loan, modification of mortgage terms or workout.

The penalties could be as much as the HUD Secretary\'s loss at

foreclosure sale or sale after foreclosure.

\(2\) Certain specific violations of the Regulatory Agreement, the

penalties could be as much as \$25,000 per occurrence (12

U.S.C. 1735f-15).

\[THIS SPACE INTENTIONALLY LEFT BLANK\]

13

This Contract is hereby executed with respect to the Contract Units

described in Exhibit A.

United States of America

Secretary of Housing and

Urban Development OWNER

By:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
By:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Official Title) (Official Title)

Date:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Date:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Warning: 18 U.S.C. 1001 provides, among other things, that whoever

knowingly and willfully makes or uses a document or writing containing

any false, fictitious, or fraudulent statement or entry, in any matter

within the jurisdiction of any department or agency of the United

States, must be fined not more than \$10,000 or imprisoned for not more

than five years, or both.

14

EXHIBIT A

IDENTIFICATION OF UNITS (\"CONTRACT UNITS\")

BY SIZE AND APPLICABLE CONTRACT RENTS

Number of Number of Contract

Units Bedrooms Rent \*\*

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_

\*\*To compute Contract Rents, use policy set forth in Notice \_\_\_\_
issued

on \_\_\_\_\_.

ATTACHMENT 2(a)

(for projects meeting HQS)

\[date\]

Dear \[Owner\]:

As a project owner participating in the Section 8 Program, you are

required under Section 8(c)(9) of the U.S. Housing Act of 1937 (42

U.S.C. Sec. 1437f) to provide, at minimum, a one year notice to the U.S.

Department of Housing and Urban Development (HUD or Department) and the

affected tenants about the termination or expiration of your project-

based Section 8 contract. Specifically, Section 8(c)(9) says:

\"Not less than 1 year prior to terminating any contract under which

assistance payments are received under \[Section 8\] . . . . an

owner shall provide written notice to the Secretary and the tenants

involved of the proposed termination . . . . \[T\]he term

\'termination\' means the expiration of the assistance contract or an

owner\'s refusal to renew the assistance contract . . . .\"

This statute applies to all expiring project-based Section 8

contracts. For guidance on owner notice requirements and for

instructions on HUD\'s procedures when an owner fails to provide

sufficient notice, please refer to HUD\'s Section 8 Loan Management Set

Aside Handbook, HB 4350.2 REV-1, Chapter 3-4.

Some owners incorrectly assume that the reinstatement of the right

to prepay the HUD-insured, HUD-held or State-assisted mortgage under the

Low-Income Housing Preservation and Resident Homeownership Act of 1990,

as amended, supersedes their obligations under the Section 8 HAP

contract. This is an incorrect assumption. Prepayment of the mortgage

removes an owner\'s obligations under the regulatory agreement.

Prepayment of the mortgage does not relieve the owner\'s
responsibilities

to HUD and the tenants under the Section 8 HAP contract and the U.S.

Housing Act of 1937. An owner\'s obligations under a regulatory

agreement are separate obligations from those responsibilities under a

Section 8 HAP contract.

Owners who fail to give the mandatory one year notice will be faced

with one of two options: (i) renew the project-based contract for one

year under the authority granted to HUD by the Balanced Budget

Downpayment Act, also known as the Continuing Resolution (\"CR\") passed

by Congress on

2

January 26, 1996, (P.L. 104-99); or (ii) permit the tenants to remain in

their unit for the one year notice period without an increase in the

share of the rent they were paying under the expiring contract.

If your Section 8 HAP contract has expired, or will expire in less

than one year and you have not provided the one year notice, you must

select one of the aforementioned options and notify HUD of your choice

within \_\_\_\_\_ calendar days after the date set out at the top of
this

letter. If you do not make such a selection, HUD may seek appropriate

remedies to enforce the notice requirement. These remedies include:

injunctive relief to prevent you from raising the tenant\'s portion of

the rent for one year beyond the expiration of the Section 8 HAP

contract, or for one year after notice is actually given to HUD and the

tenants; and/or the initiation of administrative sanctions against you.

If you have any questions about this matter, you should contact

\[Asset Manager, phone number of local office\] at the earliest

opportunity.

Sincerely,

\[name\]

\[title\]

ATTACHMENT 2(b)

(for projects not

meeting HQS)

\[date\]

Dear \[Owner\] :

As a project owner participating in the Section 8 Program, you are

required under Section 8(c) (9) of the U.S. Housing Act of 1937 (42

U.S.C. § 1437f) to provide, at minimum, a one year notice to the U.S

Department of Housing and Urban Development (HUD or Department) and the

affected tenants about the termination or expiration of your project-

based Section 8 contract. Specifically,

Section 8(c) (9) says:

..TX:

\"Not less than 1 year prior to terminating any contract under

which assistance payments are received under \[Section 8\] . .

. . an owner shall provide written notice to the Secretary

and the tenants involved of the proposed termination . . . .

\[T\]he term \'termination\' means the expiration of the

assistance contract or an owner\'s refusal to renew the

assistance contract . . . .\"

This statute applies to all expiring project-based Section 8

contracts. For guidance on owner notice requirements and for

instructions on HUD\'s procedures when an owner fails to provide

sufficient notice, please refer to HUD\'s Section 8 Loan Management Set

Aside Handbook, HB 4350.2 REV-1, Chapter 3-4.

Some owners incorrectly assume that the reinstatement of the right

to prepay the HUD-insured, HUD-held or State-assisted mortgage under the

Low-Income Housing Preservation and Resident Homeownership Act of 1990,

as amended, supersedes their obligations under the Section 8 HAP

contract. This is an incorrect assumption. Prepayment of the mortgage

removes an owner\'s obligations under the regulatory agreement.

Prepayment of the mortgage does not relieve the owner\'s
responsibilities

to HUD and the tenants under the Section 8 HAP contract and the U.S.

Housing Act of 1937. An owner\'s obligations under a regulatory

agreement and responsibilities under a Section 8 HAP contract are

separate obligations.

However, HUD is not permitted to enter into Section 8 contracts

that do not meet minimum decent, safe, and sanitary standards. As our

letter to you on
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\[date of letter\]
states,

inspection of your units on
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\[date of

inspection\], by \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \[inspecting
entity\] show the units

do not meet\'s HUD\'s decent, safe, and sanitary standards. Therefore,
the

eligible tenants in your project will be given tenant-based section 8

assistance which they may use to find

suitable housing elsewhere. However, since you have failed to give the

mandatory one year notice, you must permit the residents currently

assisted by the section 8 Project-based contract to remain in their

units until the Department can process their section 8 certificates or

vouchers. During this time period, which we anticipate will take 90

days, you are not permitted to increase the portion of the rent these

residents are paying under the expiring contract.

If you do not follow these instructions, HUD may seek appropriate

remedies to enforce the notice requirement. These remedies include:

injunctive relief to prevent you from raising the tenant\'s portion of

the rent for one year beyond the expiration of the Section 8 HAP

contract, or for one year after notice is actually given; and/or the

initiation of administrative sanctions against you.

If you have any questions about this matter, you should contact

\[Asset Manager, phone number of local office\] at the earliest

opportunity.

Sincerely,

\[name\]

\[title\]

ATTACHMENT 3

SAMPLE NOTIFICATION LETTER TO TENANTS

Dear Tenant:

As you may know, \[NAME OF PROJECT\] Section 8 project-based Housing

Assistance Payments (HAP) contract with the Department of Housing and

Urban Development (HUD) will expire on \[DATE\].

The Congress has passed legislation which gives HUD the ability to

continue our project-based HAP contract for one year. However, there is

no guarantee that HUD will extend our contract at the end of this one-

year term.

As participants in HUD\'s Section 8 program, we are required to

provide you with one year s written notice prior to the termination or

expiration of \[NAME OF PROJECT\] Section 8 HAP contract. Pending HUD\'s

approval, this letter shall serve to fulfill this notification

requirement. Therefore, the Section 8 project-based rental assistance

attached to your apartment will expire on \[DATE\]. However, next year
it

is possible that we may agree with HUD to a renewal of the contract and

the termination would be avoided.

If HUD does not offer us a new contract or if we decide not to

renew our project-based contract at the end of this new one-year

extension, it is our understanding that HUD will provide rental

certificates or vouchers to all eligible residents. This tenant-based

subsidy will let you choose the place you wish to rent. This may

include the rental of single-family homes, townhomes, as well as

apartments. This may or may not include your current unit.

If you have questions about this letter or would like additional

information about the Section 8 rental certificate/voucher program,

please contact \[NAME AND PHONE NUMBER OF LOCAL OFFICE\].

Sincerely,

ATTACHMENT 4

PROCEDURES FOR REQUESTING AND PROCESSING BUDGETED RENT INCREASES

FOR ALL PROJECT-BASED SECTION 8 CONTRACTS

I. FIELD OFFICE REVIEW.

The HUD Field Office will review and analyze the documents

submitted by the owner and tenants, and other documents as

appropriate, to determine the overall needs of the project. If

there is a demonstrated need, and the project\'s current rents fall

below 120% of the FMR at the time of the contract expiration, Field

Offices may approve a rent increase up to 5% of the overall budget

amount, but not to exceed 120% of the FMRs for a one-year contract.

There will be no rental adjustments during the contract year for

projects whose rents exceed 120% of the FMRs.

To qualify for a rent increase, projects must be in compliance with

Housing Quality Standards (HQS).

II\. OWNER REQUIREMENTS.

If the increase in proposed potential rent is less than or equal to

the Maximum Allowable Rent Potential, owners need only submit a new

Rent Schedule 92458 reflecting the proposed potential rent. Tenant

comment procedures in 24 CFR 245 do NOT apply. If the proposed

rent increase exceeds the Maximum Allowable Rent Potential, owners

must take the following actions:

A. OWNERS MUST ISSUE A NOTICE TO TENANTS of any proposed rent

increase. The Notice must contain all of the information

contained in 24 CPR Part 245, Subpart D Procedures for

Requesting Approval of an Increase in Maximum Permissible

Rents and Subpart E, Procedures for Requesting Approval of a

Conversion From Project-Paid Utilities to Tenant-Paid

Utilities or of a Reduction in Tenant Utility Allowances,

where applicable. A copy of those provisions is attached.

The Notice shall be given to tenants at the same time the

request, for a rent increase is submitted to HUD. The HUD

Field Office shall also receive a copy of the Notice to

Tenants along with the documents and information that will be

used to justify the rent increase as part of the formal rent

increase request.

2

1\. TENANT REVIEW AND COMMENT. During the 30 days following

the date the Notice to Tenants was given, the owner must

make all of the materials included in the rent increase

submission package, plus any additional information used

to justify the increase, available to tenants or their

representatives to review and/or copy. Tenants may

submit written comments on the increase request to the

owner or to the HUD Field Office or both. In cases where

comments are submitted to the owner, all such comments

must be reviewed and evaluated. The comments, and

evaluations, must be forwarded to the HUD Field Office as

part of the formal rent increase request.

If, during the 30 day comment period, the owner makes a

material change in any of the documents submitted in

support of the increase, the owner must notify the

tenants of the change(s) in the same manner as the

original Notice to Tenants.

2\. CERTIFICATION OF COMPLIANCE WITH TENANT COMMENT

PROCEDURES. At the conclusion of the tenant comment

period, the owner must forward, in addition to the tenant

comments and evaluations, an executed copy of the Owner\'s

Certification as to Compliance with Tenant Review and

Comment Procedures in 24 CFR Part 245. A sample Owner\'s

Certification is attached.

B. PROCEDURES FOR OWNER\'S REQUEST FOR RENT INCREASE. The request

for a rent increase should include the materials listed below,

plus any additional documents being used to support the

request.

1\. A cover letter that briefly does all of the following:

o summarizes the reasons why a rent increase is

needed and the date the increase will be effective.

The reasons stated in the cover letter must be the

same as the reasons stated in the Notice to

Tenants.

o identifies any proposed changes in services,

equipment, or charges, and the reasons for the

change(s).

3

2\. A Budget Worksheet providing income and expenses for the

12 months following the anticipated effective date of the

proposed rent increase. A sample Budget Worksheet is

attached.

3\. A brief statement explaining the basis for any increase

in the expense line items on the budget work sheet.

4\. A copy of the Notice to Tenants annotated to show where

and how the Notice was distributed (e.g., posted, mailed,

hand carried).

5\. An executed copy of the Owners\'s Certification Regarding

Purchasing Practices and Reasonableness of Expenses. A

copy is attached.

6\. A status report on the project\'s implementation of its

current Energy Conservation Plan. This applies only to

236 and BMIR projects, projects that receive rent

supplement, and projects that converted from Rent

Supplement to Section 8.

7\. A signed request for an increase in the Reserve for

Replacement, if such an increase is contemplated as part

of the rent increase request.

8\. For projects with Utility Allowances, a recommendation to

what utility allowance is appropriate for each unit type

and a summary of how the owner/agent arrived at that

amount with appropriate documentation.

For clarification and/or additional information, refer to Chapter

7, HUD Handbook 4350.1.

Attachments

COPY OF FEDERAL REGISTER SECTION 245.315.

CERTIFICATION AS TO PURCHASING PRACTICES AND

REASONABLENESS OF EXPENSES

FHA or Non-insured

Project Name\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Project
No.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Acting on behalf of,
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,

the Project Owner, I certify that ALL of the following statements are

true.

1\) The project is obtaining utilities at the lowest rates available.

2\) The project has received or requested any tax relief for which it

is eligible and management has analyzed the project\'s property tax

bills and appealed any assessments which appeared unreasonable.

3\) Amounts paid to individuals or companies having an identity-of-

interest with the owner or the management agent were not excess of

the costs that would have been incurred in making arms-length

purchases on the open market.

4\) Management has exerted reasonable effort to take advantage of

discounts and has credited the project with all discounts, rebates

or commissions received with respect to purchases, service

contracts and other transactions made on behalf of the project.

5\) Management has obtained contracts, materials, supplies and

services, including the preparation of the annual audit, on terms

most advantageous to the project and at costs not in excess of

amounts ordinarily paid for comparable contracts, materials,

supplies and services in the area in which such services, supplies,

or materials are furnished.

6\) Management has solicited verbal or written cost estimates, as

necessary to comply with the Paragraphs 3 through 5 above.

Management has documented the reasons for accepting other than the

lowest bid and will make the documentation available to HUD, upon

request.

OWNER\'S CERTIFICATION AS TO COMPLIANCE WITH TENANT COMMENT

PROCEDURES IN 24 CFR 245 (FORMERLY IN 24 CFR 401)

FHA or Non-Insured

Project Name\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Project
No.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Acting on behalf of
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,
the

Project Owner, I certify that project management has taken ALL of the

action listed below.

1\) Distributed a Notice to Tenants, in the forms and manner required

by 24 CFR 245.310 and 245.410. (24 CFR 245.410 applies only if a

reduction in utility allowances is proposed.)

2\) Took reasonable steps to assure that any posted Notices remained

intact and in legible form for the full comment period required by

24 CFR 245.

3\) Made all materials submitted to justify the increase available

during normal business hours in a place reasonably convenient to

project residents.

4\) Honored any resident\'s request to inspect those materials.

5\) Reviewed and evaluated all comments received from project residents

or their authorized representatives.

6\) Examined all materials submitted to HUD/the State Agency in support

of the rent increase request.

I also certify, that all information submitted with my rent increase

request is true, correct and complete.

WARNING: 18 U.S.C. 1001 provides, among other things, that whoever

knowingly and willingly makes or uses a document or writing containing

any false, fictitious or fraudulent statement or entry, in any matter

within the jurisdiction of any department or agency of the United

States, shall be fined not more than \$10,000 or imprisoned for not more

than 5 years, or both.

Signed by:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Name

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Title

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature Date

COPY OF FORM HUD-92547-A, BUDGET WORKSHEET - INCOME AND EXPENSE

PROJECTIONS.

ATTACHMENT 5

MODEL LEASE

1\. Parties and Dwelling Unit:

The parties to this Agreement are

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,
referred to as the Landlord,

and \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
(A)\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,

referred to as the Tenant. The Landlord leases to the Tenant unit

number \_\_\_\_\_\_, located at \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ in the project
known as

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

2\. Length of Time (Term):

The initial term of this Agreement shall begin on

\_\_\_\_\_\_\_(A)\_\_\_\_\_\_\_\_ and end on
\_\_\_\_\_\_(B)\_\_\_\_\_\_. After the initial

term ends, the Agreement will continue for successive terms of one

\_\_\_\_\_(C)\_\_\_\_\_ each unless automatically terminated as
permitted by

paragraph 23 of this Agreement.

3\. Rent:

The Tenant agrees to pay \$\_\_\_\_(A)\_\_\_\_ for the partial month
ending

on \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_. After that, Tenant agrees to pay
a rent of

\$\_\_\_\_\_(B)\_\_\_\_ per month. This amount is due on the \_\_(C)\_\_
day of

the month at

\_\_\_\_(D)\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.
The

Tenant understands that this monthly rent is less than the market

(unsubsidized) rent due on this unit. This lower rent is available

either because the mortgage on this project is subsidized by the

Department of Housing and Urban Development (HUD) and/or because

HUD makes monthly payments to the Landlord on behalf of the Tenant.

The amount, if any, that HUD makes available monthly on behalf of

the Tenant is called the tenant assistance payment and is shown on

the \"Assistance Payment\" line of the Certification and

Recertification of Tenant Eligibility Form which is Attachment No.

1 to this Agreement.

4\. Changes in the Tenant\'s Share of the Rent:

a\. The Tenant agrees that the amount of rent the Tenant pays

and/or the amount of assistance that HUD pays on behalf of the

Tenant may be changed during the term of this Agreement if:

\(1\) HUD or the Contract Administrator (such as a Public

Housing Agency) determines, in accordance with HUD

procedures, that an increase in rents is needed;

1

\(2\) HUD or the Contract Administrator changes any allowance

for utilities or services considered in computing the

Tenant\'s share of the rent;

\(3\) the income, the number of persons in the Tenant\'s

household or other factors considered in calculating the

Tenant\'s rent change and HUD procedures provide that the

Tenant\'s rent or assistance payment be adjusted to

reflect the change;

\(4\) changes in the Tenant\'s rent or assistance payment are

required by HUD\'s recertification or subsidy termination

procedures;

\(5\) HUD\'s procedures for computing the Tenant\'s assistance

payment or rent change; or

\(6\) the Tenant fails to provide information on his/her

income, family composition or other factors as required

by the Landlord.

b\. The Landlord agrees to implement changes in the Tenant\'s rent

or tenant assistance payment only in accordance with the time

frames and administrative procedures set forth in HUD\'s

handbooks, instructions and regulations related to

administration of multifamily subsidy programs. The Landlord

agrees to give the Tenant at least 30 days advance written

notice of any increase in the Tenant\'s rent except as noted in

paragraphs 11, 15 or 17. The Notices will state the new

amount the Tenant is required to pay, the date the new amount

is effective, and the reasons for the change in rent. The

Notice will also advise the Tenant that he/she may meet with

the Landlord to discuss the rent change.

5\. Charges for Late Payments and Returned Checks:

If the Tenant does not pay the full amount of the rent shown in

paragraph 3 by the end of the 5th day of the month, the Landlord

may collect a fee of \$5 on the 6th day of the month. Thereafter,

the Landlord may collect \$1 for each additional day the rent

remains unpaid during the month it is due. The Landlord may not

terminate this Agreement for failure to pay late charges, but may

terminate this Agreement for non-payment of rent, as explained in

paragraph 23. The Landlord may collect a fee of \$\_\_\_\_\_\_ on the

second or any additional time a check is not honored for payment

(bounces). The charges discussed in this paragraph are in addition

to the regular monthly rent payable by the Tenant.

6\. Condition of Dwelling Unit:

By signing this Agreement, the Tenant acknowledges that the unit is

safe, clean and in good condition. The tenant agrees that all

appliances

2

and equipment in the unit are in good working order, except as

described on the Unit Inspection Report which is Attachment No. 2

to this Agreement. The Tenant also agrees that the Landlord has

made no promises to decorate, alter, repair or improve the unit,

except as listed on the Unit Inspection Report.

7\. Charges for Utilities and Services:

The following charts describe how the cost of utilities and

services related to occupancy of the unit will be paid. The Tenant

agrees that these charts accurately describe the utilities and

services paid by the Landlord and those paid by the Tenant.

a\. The Tenant must pay for the utilities in column (1). Payments

should be made directly to the appropriate utility company.

The items in column (2) are included in the Tenant\'s rent.

\(1\) (2)

Put \"x\" by any Type of Put \"x\" by any

Utility Tenant Utility Utility Included

pays directly in Tenant Rent

\_\_\_\_\_\_\_\_ Heat \_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_ Lights, Electric \_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_ Cooking \_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_ Water \_\_\_\_\_\_\_\_

Other (Specify)

\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_

b\. The Tenant agrees to pay the Landlord the amount shown in

column (3) on the date the rent is due. The Landlord

certifies that HUD had authorized him/her to collect the type

of charges shown in column (3) and that the amounts shown in

column (3) do not exceed the amounts authorized by HUD.

Show \$ Amount Tenant

Pays to LandLord in

Addition to Rent

Parking \$\_\_\_\_\_\_\_\_

Other (Specify)

\_\_\_\_\_\_\_\_\_\_ \$\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_ \$\_\_\_\_\_\_\_\_

8\. Security Deposits:

The Tenant has deposited \$\_\_\_(A)\_\_\_ with the Landlord. The

Landlord will hold this security deposit for the period the Tenant

occupies the unit. After the Tenant has moved from the unit, the

Landlord will

3

determine whether the Tenant is eligible for a refund of any or all

of the security deposit. The amount of the refund will be

determined in accordance with the following conditions and

procedures.

a\. The Tenant will be eligible for a refund of the security

deposit only if the Tenant provided the Landlord with the 30-

day written notice of intent to move required by paragraph 23,

unless the Tenant was unable to give the notice for reasons

beyond his/her control.

b\. After the Tenant has moved from the unit, the Landlord will

inspect the unit and complete another Unit Inspection Report.

The Landlord will permit the Tenant to participate in the

inspection, if the Tenant so requests.

c\. The Landlord will refund to the Tenant the amount of the

security deposit \[plus interest computed at \_\_(B)\_\_%,

beginning \_\_(C)\_\_\], less any amount needed to pay the cost of:

\(1\) unpaid rent;

\(2\) damages that are due to normal wear and tear and are not

listed on the Unit Inspection Report;

\(3\) charges for late payment of rent and returned checks, as

described in paragraph 5; and

\(4\) charges for unreturned keys, as described in paragraph 9.

d\. The Landlord agrees to refund the amount computed in paragraph

8c within \_\_(D)\_\_ days after the Tenant has permanently moved

out of the unit, returned possession of the unit to the

Landlord, and given his/her new address to the Landlord. The

Landlord will also give the Tenant a written list of charges

that were subtracted from the deposit. If the Tenant

disagrees with the Landlord concerning the amounts deducted

and asks to meet with the Landlord, the landlord agrees to

meet with the Tenant and informally discuss the disputed

charges.

e\. If the unit is rented by more than one person, the Tenants

agree that they will work out the details of dividing any

refund among themselves. The Landlord may pay the refund to

any Tenant identified in paragraph 1 of this Agreement.

f\. The Tenant understands that the Landlord will not count the

Security Deposit towards the last month\'s rent or towards

repair charges owed by the Tenant in accordance with paragraph

11\.

9\. Keys and Locks:

The Tenant agrees not to install additional or different locks or

gates on any doors or windows of the unit without the written

permission of

4

the Landlord. If the Landlord approves the tenant\'s request to

install such locks, the Tenant agrees to provide the Landlord with

a key for each lock. When this Agreement ends, the Tenant agrees

to return all keys to the dwelling unit to the Landlord. The

Landlord may charge the Tenant \$\_\_\_\_\_ for each key not returned.

10\. Maintenance:

a\. The Landlord agrees to:

\(1\) regularly clean all common areas of the project;

\(2\) maintain the common areas and facilities in a safe

condition;

\(3\) arrange for collection and removal of trash and garbage;

\(4\) maintain all equipment and appliances in a safe and

working order;

\(5\) make necessary repairs with reasonable promptness;

\(6\) maintain exterior lighting in good working order;

\(7\) provide extermination services, as necessary; and

\(8\) maintain grounds and shrubs.

b\. The Tenant agrees to:

\(1\) keep the unit clean;

\(2\) use all appliances, fixtures and equipment in a safe

manner and only for the purposes for which they are

intended;

\(3\) not litter the grounds or common areas of the project;

\(4\) not destroy, deface, damage or remove any part of the

unit, common areas, or project grounds;

\(5\) give the Landlord prompt notice of any defects in the

plumbing, fixtures, appliances, heating and cooling

equipment or any other part of the unit or related

facilities; and

\(6\) remove garbage and other waste from the unit in a clean

and safe manner.

11\. Damages:

5

Whenever damage is caused by carelessness, misuse, or neglect on

the part of the Tenant, his/her family or visitors, the Tenant

agrees to pay:

a\. the cost of all repairs and do so within 30 days after receipt

of the Landlord\'s demand for the repair charges; and

b\. rent for the period the unit is damaged whether or not the

unit is habitable. The Tenant understands that HUD will not

make assistance payments for any period in which the unit is

not habitable. For any such period, the Tenant agrees to pay

the approved market rent rather than the Tenant rent shown in

paragraph 3 of this agreement.

12\. Restrictions on Alterations:

The Tenant agrees not to do any of the following without first

obtaining the Landlord\'s written permission:

a\. change or remove any part of the appliances, fixtures or

equipment in the unit;

b\. paint or install wallpaper or contact paper in the unit;

c\. attach awnings or window guards in the unit;

d\. attach or place any fixtures, signs, or fences on the

building(s) the common areas, or the project grounds;

e\. attach any shelves, screen doors, or other permanent

improvements in the unit;

f\. install washing machines, dryers, fans, heaters or air

conditioners in the unit; or

g\. place any aerials, antennas or other electrical connections on

the unit.

13\. General Restrictions:

The Tenant must live in the unit and the unit must be the Tenant\'s

only place of residence. The Tenant shall use the premises only as

a private dwelling for himself/herself and the individuals listed

on the Certification and Recertification of Tenant Eligibility.

The Tenant agrees to permit other individuals to reside in the unit

only after obtaining the prior written approval of the Landlord.

The Tenant agrees not to:

a\. sublet or assign the unit, or any part of the unit;

b\. use the unit for unlawful purposes;

6

c\. engage in or permit unlawful activities in the unit, in the

common areas or on the project grounds;

d\. have pets or animals of any kind in the unit without the prior

written permission of the Landlord; or

e\. make or permit noises or acts that will disturb the rights or

comfort of neighbors. The Tenant agrees to keep the volume of

any radio, phonograph, television or musical instrument at a

level which will not disturb the neighbors.

14\. Rules:

The Tenant agrees to obey the House Rules which are Attachment No.

3 to this Agreement. The Tenant agrees to obey additional rules

established after the effective date of this Agreement if:

a\. the rules are reasonably related to the safety, care and

cleanliness of the building and the safety, comfort and

convenience of the Tenants; and

b\. the Tenant receives written notice of the proposed rule at

least 30 days before the rule is enforced.

15\. Regularly Scheduled Recertifications:

Every year around the \_\_\_(A)\_\_\_ day of \_\_\_(B)\_\_\_, the
Landlord will

request the Tenant to report the income and composition of the

Tenant\'s household and to supply any other information required by

HUD for the purposes of determining the Tenant\'s rent and

assistance payment, if any. The Tenant agrees to provide accurate

statements of this information and to do so by the date specified

in the Landlord\'s request. The Landlord will verify the

information supplied by the Tenant and use the verified information

to recompute the amount of the Tenant\'s rent and assistance

payment, if any.

a\. If the Tenant does not submit the required recertification

information by the date specified in the Landlord\'s request,

the Landlord may impose the following penalties. The Landlord

may implement these penalties only in accordance with the

administrative procedures and time frames specified in HUD\'s

regulations, handbooks and instructions related to the

administration of multifamily subsidy programs.

\(1\) Require the Tenant to pay the higher, HUD-approved market

rent for the unit.

\(2\) Implement any increase in rent resulting from the

recertification processing without providing the 30-day

notice otherwise required by paragraph 4 of this

Agreement.

7

b\. The Tenant may request to meet with the Landlord to discuss

any change in rent or assistance payment resulting from the

recertification processing. If the Tenant requests such a

meeting, the Landlord agrees to meet with the Tenant and

discuss how the Tenant\'s rent and assistance payment, if any,

were computed.

16\. Reporting Changes Between Regularly Scheduled Recertification:

a\. If any of the following changes occur, the Tenant agrees to

advise the Landlord immediately.

\(1\) Any household member moves out of the unit.

\(2\) An adult member of the household who was reported as

unemployed on the most recent certification or

recertification obtains employment.

\(3\) The household\'s income cumulatively increases by \$40 or

more a month.

b\. The Tenant may report any decrease in income or any change in

other factors considered in calculating the Tenant\'s rent.

Unless the Landlord has confirmation that the decrease in

income or change in other factors will last less than one

month, the Landlord will verify the information and make the

appropriate rent reduction. However, if the Tenant\'s income

will be partially or fully restored within two months, the

Landlord may delay the certification process until the new

income is known, but the rent reduction will be retroactive

and the Landlord may not evict the Tenant for nonpayment of

rent due during the period of the reported decrease and the

completion of the certification process. The Tenant has

thirty days after receiving written notice of any rent due for

the above described time period to pay or the Landlord can

evict for nonpayment of rent.

c\. If the Tenant does not advise the Landlord of these interim

changes, the Landlord may increase the Tenant\'s rent to the

HUD-approved market rent. The Landlord may do so only in

accordance with the time frames and administrative procedures

set forth in HUD\'s regulations, handbooks and instructions on

the administration of multifamily subsidy programs.

d\. The Tenant may request to meet with the Landlord to discuss

how any change in income or other factors affected his/her

rent or assistance payment, if any. If the Tenant requests

such a meeting, the Landlord agrees to meet with the Tenant

and explain how the Tenant\'s rent or assistance payment, if

any, was computed.

8

17\. Removal of Subsidy:

a\. The Tenant understands that assistance made available on

his/her behalf may be terminated if events in either items 1

or 2 below occur. Termination of assistance means that the

Landlord may make the assistance available to another Tenant

and the Tenant\'s rent will be recomputed. In addition, if the

Tenant\'s assistance is terminated because of criterion (1)

below, the Tenant will be required to pay the HUD-approved

market rent for the unit.

\(1\) The Tenant does not provide the Landlord with the

information or reports required by paragraph 15 or 16

within 10 calendar days after receipt of the Landlord\'s

notice of intent to terminate the Tenant\'s assistance

payment.

\(2\) The amount the Tenant would be required to pay towards

rent and utilities under HUD rules and regulations equals

the Family Gross Rent shown on Attachment 1.

b\. The Landlord agrees to give the Tenant written notice of the

proposed termination. The notice will advise the Tenant that,

during the ten calendar days following the date of the notice,

he/she may request to meet with the Landlord to discuss the

proposed termination of assistance. If the Tenant requests a

discussion of the proposed termination, the Landlord agrees to

meet with the Tenant.

c\. Termination of assistance shall not affect the Tenant\'s other

rights under this Agreement, including the right to occupy the

unit. Assistance may subsequently be reinstated if the Tenant

submits the income or other data required by HUD; procedures,

the Landlord determines the Tenant is eligible for assistance,

and assistance is available.

18\. Tenant Obligation to Repay:

If the tenant submits false information on any application,

certification or request for interim adjustment or does not report

interim changes in family income or other factors as required by

paragraph 16 of this Agreement, and as a result, is charged a rent

less than the amount required by HUD\'s rent formulas, the Tenant

agrees to reimburse the Landlord for the difference between the

rent he/she should have paid and the rent he/she was charged. The

Tenant is not required to reimburse the Landlord for undercharges

caused solely by the Landlord\'s failure to follow HUD\'s procedures

for computing rent or assistance payments.

19\. Size of Dwelling:

The Tenant understands that HUD requires the Landlord to assign

units

9

according to the size of the household and the age and sex of the

household members. If the Tenant is or becomes eligible for a

different size unit, and the required size unit becomes available,

the Tenant agrees to:

a\. move within 30 days after the Landlord notifies him/her that

a unit of the required size is available within the project;

or

b\. remain in the same unit and pay the HUD-approved market rent.

20\. Access by Landlord:

The Landlord agrees to enter the unit only during reasonable hours,

to provide reasonable advance notice of his/her intent to enter the

unit, and to enter the unit only after receiving the Tenant\'s

consent to do so, except when emergency situations make such

notices impossible or except under paragraph (c) below.

a\. The Tenant agrees to permit the Landlord, his/her agents or

other persons, when authorized by the Landlord, to enter the

unit for the purpose of making reasonable repairs and periodic

inspections.

b\. After the Tenant has given a notice of intent to move, the

Tenant agrees to permit the Landlord to show the unit to

prospective tenants during reasonable hours.

c\. If the Tenant moves before this Agreement ends, the Landlord

may enter the unit to decorate, remodel, alter or otherwise

prepare the unit for re-occupancy.

21\. Discrimination Prohibited:

The Landlord agrees not to discriminate based upon race, color,

religion, creed, national origin, sex, age, handicap, membership in

a class, such as unmarried mothers or recipients of public

assistance, or because there are children in the family.

22\. Change in Rental Agreement:

The Landlord may, with the prior approval of HUD, change the terms

and conditions of this Agreement. Any changes will become

effective only at the end of the initial term or a successive term.

The Landlord must notify the Tenant of any change and must offer

the Tenant a new Agreement or an amendment to the existing

Agreement. The Tenant must receive the notice at least 60 days

before the proposed effective date of the change. The Tenant may

accept the changed terms and conditions by signing the new

Agreement or the amendment to the existing Agreement and returning

it to the Landlord. The Tenant may reject the

10

changed terms and conditions by giving the Landlord written notice

that he/she intends to terminate the tenancy. The Tenant must give

such notice at least 30 days before the proposed change will go

into effect. If the Tenant does not accept the amended agreement,

the Landlord may require the Tenant to move from the project, as

provided in paragraph 23.

23\. Termination of Tenancy:

a\. To terminate this Agreement, the Tenant must give the Landlord

30-days written notice before moving from the unit. If the

Tenant does not give the full 30-day notice, the Tenant shall

be liable for rent up to the end of the 30 days for which

notice was required or to the date the unit is re-rented,

whichever date comes first.

b\. Any termination of this Agreement by the Landlord must be

carried out in accordance with HUD regulations, State and

local law, and the terms of this Agreement. The Landlord may

terminate this Agreement only upon:

\(1\) the Tenant\'s material noncompliance 1/ with the terms of

this Agreement;

\(2\) the Tenant\'s material failure to carry out obligations

under any State Landlord and Tenant Act; or

\(3\) criminal activity that threatens the health, safety, or

right to peaceful enjoyment of the premises by other

tenants or any drug-related criminal activity on or near

such premises, engaged in by a tenant, any member of the

tenant\'s household, or any guest or other person under

the tenant\'s control; or

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

1/The term material noncompliance with the lease includes: (1) one

or more substantial violations of the lease; (2) repeated minor

violations of the lease that: (a) disrupt the livability of the project,

\(b\) adversely affect the health or safety of any person or the right
of

any tenant to the quiet enjoyment of the leased premises and related

project facilities, (c) interfere with the management of the project, or

\(d\) have an adverse financial effect on the project; (3) failure of
the

tenant to timely supply all retired information on the income and

composition, or eligibility factors, of the tenant household (including,

but not limited to, failure to meet the disclosure and verification

requirements for Social Security Numbers, or failure to sign and submit

consent forms for the obtaining of wage and claim information from State

Wage Information Collection Agencies), or to knowingly provide

incomplete or inaccurate information; and (4) non-payment of rent or any

other financial obligation due under the lease beyond any grace period

permitted under State law. The payment of rent or any other financial

obligation due under the lease after the due date but within the grace

period permitted under State law constitutes a minor violation.

11

\(4\) expiration of the section 8 Housing Assistance Payments

Contract between the Owner and HUD; or

\(5\) other good cause.

c\. If the Landlord proposes to terminate this Agreement, the

Landlord agrees to give the Tenant written notice of the

proposed termination. If the Landlord is terminating this

agreement for \"other good cause,\" the termination notice must

be mailed to the Tenant and hand-delivered to the dwelling

unit in the manner required by HUD at least 30 days before the

date the Tenant will be required to move from the unit.

Notices of proposed termination for other reasons must be

given in accordance with any time frames set forth in State

and local law. Any HUD-required notice period may run

concurrently with any notice period required by State or local

law. All termination notices must:

\(1\) specify the date this Agreement will be terminated;

\(2\) state the grounds for termination with enough detail for

the Tenant to prepare a defense;

\(3\) advise the Tenant that he/she has 10 days within which to

discuss the proposed termination of tenancy with the

Landlord. The 10-day period will begin on the earlier of

the date the notice was hand-delivered to the unit or the

day after the date the notice is mailed. If the Tenant

requests the meeting, the Landlord agrees to discuss the

proposed termination with the Tenant; and

\(4\) advise the Tenant of his/her right to defend the action

in court.

d\. If an eviction is initiated, the Landlord agrees to rely only

upon those grounds cited in the termination notice required by

paragraph (c).

24\. Hazards:

The Tenant shall not undertake, or permit his/her family or guests

to undertake, any hazardous acts or do anything that will increase

the project\'s insurance premiums. Such action constitutes a

material non-compliance. If the unit is damaged by fire, wind, or

rain to the extent that the unit cannot be lived in and the damage

is not caused or made worse by the Tenant, the Tenant will be

responsible for rent only up to the date of the destruction.

Additional rent will not accrue until the unit has been repaired to

a livable condition.

12

25\. Penalties for Submitting False Information:

Knowingly giving the Landlord false information regarding income or

other factors considered in determining Tenant\'s eligibility and

rent is a material noncompliance with the lease subject to

termination of tenancy. In addition, the Tenant could become

subject to penalties available under Federal law. Those penalties

include fines up to \$10,000 and imprisonment for up to five years.

26\. Contents of this Agreement:

This Agreement and its Attachments make up the entire agreement

between the Landlord and the Tenant regarding the unit. If any

Court declares a particular provision of this Agreement to be

invalid or illegal, all other terms of this Agreement will remain

in effect and both the Landlord and the Tenant will continue to be

bound by them.

27\. Attachments to the Agreement:

The Tenant certifies that he/she has received a copy of this

Agreement and the following Attachments to this Agreement and

understands that these Attachments are part of this Agreement.

a\. Attachment No. 1 - Form HUD-50059, Certification and

Recertification of Tenant Eligibility.

b\. Attachment No. 2 - Unit Inspection Report.

c\. Attachment No. 3 - House Rules (if any).

28\. Signatures:

TENANT

1\.
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_/\_\_/\_\_

Date Signed

2\.
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_/\_\_/\_\_

Date Signed

3\.
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_/\_\_/\_\_

Date Signed

LANDLORD

1\.
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_/\_\_/\_\_

Date Signed

13

ATTACHMENT 6

OVERVIEW OF CONVERSION PROCEDURE

Conversion from Project-Based Contract (PBC) to Rental Vouchers or

Certificates

Current Units Meet Program Requirements (Refer to steps A-O in table

below):

A BC DE FG HI JKLMN O

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

-210 -180 -150 -120 -90 -60 -30 EXP. of PBC

Days from Contract Expiration Date

Current Units Do Not Meet Program Requirements (Refer to steps A-P in

table

below:

A BC DE FG HI JKLM N O P

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

-210 -180 -150 -120 -90 -60 30 EXP. of PBC

Days from Contract Expiration Date

PROCESS

Abbreviations: OMF - Office of Multifamily Housing

OPH - Office of Public Housing

HA - Housing Authority Related

ACC - Annual Contributions Contract Documents

HUDCAPS - (PIH\'s accounting system)

A: Field OMF determines that rental o Current HUD-50059

forms

vouchers or certificates are needed for for families

assisted

continuing assistance. OMF advises OPH under expiring

contract.

of number of occupants and family

composition (e.g., bedroom size). o Project profile

fact

sheet (including

work-

\(1\) sheet).

B: Field OPH determines budget authority o New Increment

Funding

requirements in consultation with OMF. Worksheet for

Rental

OPH determines administering HA. Voucher or Rental

Certificate

Program.

(OPH may request PHA to submit

application for vouchers or certificates

at this time to facilitate Step G below.)

\(2\)

C: Field OMF notifies Headquarters OMF of o Memo/cc:mail from

funding need and PHA identified by Field MF Director

to

OPH. Al Sullivan.

(Attach

Funding Worksheet).

\(3\)

D: As necessary, Headquarters OMF reallots o Memo/cc:mail from

budget authority to Headquarters OPH Al Sullivan to

through Budget office. Linda Reid (HOB).

o Advice of Allotment

(PIH increase;

Housing

\(4\) decrease).

E: Headquarters OMF reviews Funding o Memo/cc:mail from

Worksheet with Headquarters OPH; Al Sullivan to

obtains corrections from FieId as Gerald Benoit.

necessary. Headquarters OMF authorizes

Headquarters OPH to assign funds to

Field OPH.

\(5\)

F: Headquarters OPH assigns budget o Form HUD-185 Fund

authority to Field OPH. Assignment.

\(6\) o HUDCAPS record.

G: HA submits application for Section 8 o HA application

package

Existing Program (Form HUD-52515 and

\(7\) certifications).

H: Field OPH indicates request for o HUDCAPS record.

comments pursuant to Section 213(c) of

the HCD Act of 1974. Upon receipt of o ACC contract

prepared.

Section 213 comments, OPH reserves

budget authority and prepares ACC.

\(8\)

I: Field OPH determines application approval o Approval letter and

ACC.

letter to HA with ACC attached.

\(9\)

J: HA executes ACC. Usually requires

resolution and board meeting. (Must

allow 4-6 weeks).

\(10\)

K. HA returns ACC to Field OPH; ACC o Executed ACC.

executed by OPH.

\(11\)

L: HA issues rental vouchers or certificates o Housing

to designated families.

Voucher/Certificate.

\(12\)

M: Each family decides whether to stay in

place or move. As necessary, locates

alternative housing (allow 60 days for

housing search).

\(13\)

N: Each family submits request for lease o Request for lease

approval to HA. (Program requires approval.

1-year lease.)

\(14\)

O: HA reviews each lease and inspects unit.

If unit meets Section 8 requirements, HA

signs HAP contract with owner and

family and owner signs lease.

(If unit does not meet housing quality

standards, HA will advise owner of

repairs that must be completed before

HAP can be signed. If owner does not

make repairs, family must use its rental

voucher or certificate in another unit.)

\(15\)

P: If necessary, family moves to a unit that

meet program requirements. Assistance

payments under Housing Voucher/

Certificate program begin.

\(16\)

ATTACHMENT 7

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM

ANNUAL CONTRIBUTIONS CONTRACT RENEWAL

EFFECTIVE DATE OF THIS CONTRACT
RENEWAL:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

MASTER SECTION 8 ACC NUMBER AND
DATE:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

HAP CONTRACT NUMBER AND
DATE:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

SECTION 8 PROJECT
NUMBER:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

FHA PROJECT NUMBER (if
applicable):\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

This ANNUAL CONTRIBUTIONS CONTRACT RENEWAL (\"ACC\") is entered into

between the U.S. Department of Housing and Urban Development (\"HUD\")
and

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (\"PHA\") pursuant to
the United States Housing

Act of 1937, 42 U.S.C. 1437, et seq. and the Balanced Budget Downpayment

Act, also known as the Continuing Resolution (\"CR\") passed by Congress

on January 26, 1996, (PL 104-99. See H.R. 2880, Sec. 405). The purpose

of this ACC is to provide annual contributions to the PHA in order for

the PHA to make housing assistance payments to the Owner of the Project

(\"Owner\") on behalf of Eligible Families (Families\") leasing decent,

safe and sanitary units from the Owner.

Previously, HUD and the PHA entered into an Annual Contributions

Contract (\"Expiring ACC\") to provide annual contributions to the PHA
on

behalf of eligible families living in
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(\"Project\").

The Expiring ACC expires on \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,
1996.

HUD and the PHA desire to renew this Expiring ACC EXCEPT for those

provisions relating to Annual Contributions and Periodic Adjustments to

Contract Rents.

THEREFORE, HUD and the PHA hereby agree as follows:

1\. HUD will make annual contributions (\"ACC Payments\") to the PHA so

that the PHA can renew for one year its Housing Assistance Payments

Contract with the Owner. These ACC Payments will be used by the

PHA to make housing assistance payments on behalf of eligible

families to lease decent, safe and sanitary units that meet HUD\'s

Housing Quality Standards in the Project from the Owner.

2\. The PHA will execute a one-year Section 8 Housing Assistance

Payments Contract with the Owner. The PHA warrants that it will use

HUD\'s standard Form HAP Contract attached as Exhibit\_\_\_\_ to Notice

\_\_\_\_, issued on \_\_\_\_\_\_\_\_\_\_\_\_, 1996.

2

3\. All terms of the Expiring ACC are renewed except for those

provisions relating to the computation of the annual contributions

and the periodic adjustments of contract rents.

4\. In the Expiring ACC, Section (b) of the provision dealing with

Annual Contributions is hereby replaced with the following:

\(b\) Computation of Annual Contribution. Subject to the

maximum dollar limitation in this Contract, HUD shall make

contributions to the PHA for one year with respect to the

Project in an amount equal to the sum of the following

(subject to reduction by the amount of any Project Receipts

other than annual contributions, which Receipts shall be

available for Project Expenditures):

\(1\) The maximum amount of the commitment for housing

assistance payments payable under the HAP Contract.

\(2\) The allowance, in the amount approved by HUD, for

preliminary costs of administration.

\(3\) The allowance, in the amount approved by HUD, for

the regular costs of administration, including

costs of HUD-required audits of Owners and the PHA.

5\. The maximum amount of the commitment for annual contributions under

this Contract is \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

6\. The Effective Date of this ACC is \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

(The date inserted must be the day after the expiration date of the

Expiring ACC Contract. For example, if the ACC expires on February

21, 1996, the date inserted must be February 22, 1996).

7\. This Contract terminates on \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

(The date inserted must correspond to the expiration date of the

HAP Renewal Contract, regardless of the length of this ACC Renewal.

Therefore, the term of this ACC renewal may be less than one year.

For example, if the HAP Renewal Contract expires on February 21,

1997, the date inserted must be February 21, 1997).

8\. The PHA warrants that the rental units supported by this Contract

and the HAP renewal are in good and tenantable condition and meet

HUD\'s Housing Quality Standards.

United States of America PHA \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Secretary of Housing and \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Urban Development \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

By:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
By:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Official Title) (Official Title)

3

Date: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Date:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

ATTACHMENT 8

\[Letterhead\]

SAMPLE LETTER FOR RESIDENTS RECEIVING VOUCHERS

\[date\]

Dear Resident:

On \[date\] the section 8 rental assistance that you and many of your

neighbors receive at \[project\] will change because the project\'s
section

8 Housing Assistance Payments Contract with the U.S. Department of

Housing and Urban Development (\"HUD\") will expire. The section 8
rental

assistance will no longer be tied to your apartment. Instead, you will

receive a section 8 rental voucher that will allow you to lease a unit

approved by the Public Housing Agency (\"PHA\") administering the
section

8 rental voucher program in your area. The PHA will provide section 8

assistance in the amount of the difference between 30% of your monthly

adjusted income and a payment standard established by the PHA. If your

unit rent is greater than the payment standard, you must pay more than

30% of your monthly adjusted income for rent and utilities. However, if

the unit rent is lower than the payment standard, you would pay less

than 30% of your monthly adjusted income.

o You do not have to move. However, you may have to pay

more than 30% of your monthly adjusted gross income if

you choose to stay in your current unit and the rental

rate rises above the payment standard for the area.

\[PIH has suggested that it might prove helpful to the

resident if this letter gave some indication of whether

the project rents will exceed FMR.\]

o The percentage of your income you pay for rent may or

may not change depending on the unit you choose.

One important difference between the former type of section 8

rental assistance and the section 8 rental voucher program is that you

do not have to remain at \[project\] in order to receive assistance.

o You now have a choice of places to live because the

rental voucher allows you to choose the unit you wish to

rent. This could include the rental of single family

homes and townhomes as well as apartments.

You will be required to provide the PHA the same type of household

and income information you provided under the expiring section 8 program

in order to continue your assistance under the rental voucher program.

Because you were previously assisted under the former project-based

section 8 program, you are eligible to participate in the section 8

rental voucher program,

2

provided your family income is below 80 percent of the median income for

the area as adjusted for family size. Therefore, requirements similar

to the requirements of the former program will apply to your continued

participation in the section 8 rental voucher program. A representative

of \[PHA name\] will also explain how you can use your new rental
voucher

to move if you wish.

o You must furnish the PHA the same type of household and

income information you provided under the former program.

o Similar rules apply to your continued eligibility for the

section 8 rental voucher program.

o You will receive all the technical assistance and

information you need to get signed up for the rental

voucher program from the PHA representative.

You will be invited to attend a resident meeting regarding the

rental voucher program and at that time representatives from HUD and

\[PHA name\] will be there to answer any questions you may have. In the

meantime, if we may be of further assistance, please contact \[Asset

Manager, phone number of local office\].

Sincerely,

\[name\]

\[title\]

ATTACHMENT 9

U.S. Department of Housing and Urban Development

SECTION 8 RENTAL VOUCHERS

FACT SHEET

WHAT ARE SECTION 8 VOUCHERS?

The Section 8 rental voucher program is one of the federal

government\'s major programs for assisting very low income families, the

elderly, and the disabled to rent decent, safe, and sanitary housing in

the private market. Since the rental assistance is provided on behalf of

the family or individual, participants are able to find and rent

privately owned housing, including single-family homes, townhouses, and

apartments. The participant is free to choose any housing that meets

the requirements of the program and is not limited to units located in

subsidized housing projects.

Section 8 rental vouchers are administered locally by public and

Indian housing agencies (HAs). The HAs receive Federal funding from the

U.S. Department of Housing and Urban Development (HUD) to administer the

Section 8 program. A family is issued a rental voucher and is

responsible for finding and selecting a suitable rental unit of their

choice, which may include their present unit. Rental units must meet

minimum standards of health and safety, as determined by the HA. A

rental subsidy is paid directly to the landlord on behalf of the

participating family. The family then pays the difference between the

actual rent charged by the landlord and the amount subsidized by the

program.

HOW DO RENTAL VOUCHERS WORK?

The Section 8 rental voucher program places the choice of housing

in the hands of the individual family. A very low income family who has

been selected by the HA to participate is encouraged to consider several

housing choices to secure the best rental housing for its needs.

The rental unit must meet an acceptable level of health and safety

before the HA can approve payments to landlords under the rental voucher

program. When the rental voucher holder finds a unit to occupy and

reaches an agreement with the landlord over the lease terms, the HA must

inspect the dwelling and review the lease for approval. A rental

voucher holder is also advised of the unit size for which it is

eligible, based on family size and composition, and the applicable rent

levels.

In the rental voucher program the HA determines a payment standard

which is used to calculate the amount of rental assistance a family will

receive, but does not affect the amount of rent a landlord may charge or

the family may pay.

A family which receives a rental voucher can select a unit which

rents below or above the payment standard. If the unit rent is greater

than the payment standard, the rental voucher family must pay more than

30% of its monthly adjusted gross income for rent and utilities However,

the family would pay less than 30% of its monthly adjusted income if the

total rent was less than the payment standard. (See below for details.)

FAMILY SHARE OF RENT VERSUS THE RENT SUBSIDY.

Under the rental voucher program, a family may choose a unit that

rents for more than the payment standard and may pay more or less than

30% of its monthly adjusted income for rent. The HA calculates the

maximum amount of rental assistance allowable, which is the difference

between the payment standard and 30% of the family\'s monthly adjusted

income, and pays that amount to the landlord. The family pays the

landlord the difference between the total rent and the maximum amount of

rental assistance.

The amount of rental assistance paid by the HA changes with the

payment standard while the amount the tenant pays varies with the actual

rent. For example, if a family locates a unit that rents below the

payment standard, it would pay less than 30% of its monthly adjusted

income for rent. On the other hand, if a family decides to rent a unit

above the payment standard, it would pay over 30% of its monthly

adjusted income for rent. The family\'s rent share also changes when its

income or family circumstances change.

CAN I MOVE AND CONTINUE TO RECEIVE SECTION 8 RENTAL ASSISTANCE?

A family\'s housing needs change over time with changes in family

size, job locations, and for other reasons. The rental voucher program

is designed to allow families to move without the loss of rental

assistance. Moves are permissible as long as the family notifies the HA

ahead of time, terminates its existing lease within the appropriate

provisions, and finds acceptable alternate housing.

Under the rental voucher program, voucher holders may choose a unit

anywhere in the United States where there is an HA administering the

Section 8 rental voucher or certificate program, if the family lived

within the jurisdiction of the HA issuing the rental voucher when the

family applied for assistance. Those families not living within the

jurisdiction of the HA at the time the family applies for assistance

must initially rent a unit within that jurisdiction for the first twelve

months of assistance. A family that wishes to move to another HA\'s

jurisdiction must consult with the HA that currently administers its

rental assistance to determine the procedures for moving with continued

rental assistance.

ROLES \-- THE TENANT\'S, THE LANDLORD\'S, THE HA\'S, AND HUD\'S:

Once an HA approves an eligible family\'s lease and housing unit,

the family and the landlord sign a lease and at the same time, the

landlord and the HA sign a housing assistance contract which runs for

the same term as the lease. This means that everyone \-- landlord,

tenant and HA \-- have obligations to meet their responsibilities within

the rental voucher program.

Role of the Tenant:

When a family selects a housing unit, and the HA approves the unit

and lease, the family signs a lease with the landlord for at least one

year. The tenant may be required to pay a security deposit to the

landlord. After the first year the landlord may initiate a new lease or

allow the family to remain on a month-to-month lease.

Once the family is settled in a new home, the family is expected to

comply with the lease and program requirements, pay its rent share on

time, maintain the unit in good condition and notify the HA of any

changes in income or family composition.

Role of the Landlord:

The role of the landlord in the rental voucher program is to

provide decent, safe, and sanitary housing to tenants at a reasonable

rent. The dwelling unit must pass the program\'s housing standards and

be maintained up to those standards as long as the owner receives

housing assistance payments. In addition, the landlord is expected to

provide the services agreed to as part of the lease signed with the

tenant and the contract signed with the HA.

Role of the HA:

The HA administers the rental voucher program locally. The HA

provides a family with the rental assistance that enables the family to

seek out suitable housing and enters into a contract with the landlord

to provide assistance payments on behalf of the family. If the landlord

fails to meet his/her obligations under the lease, the HA has the right

to terminate assistance payments.

Role of HUD:

To cover the cost of the program, HUD provides funds to allow HAs

to make housing assistance payments on behalf of the families and HUD

pays the HA a fee for the costs of administering the program. When

additional funds become available for assistance to new families, HUD

will invite HAs to submit applications for additional rental vouchers

and certificates. Applications are then reviewed and funding awarded to

the selected HAs on a competitive basis.