on the contention that the reserves are excess funds and the continuation of the hap contract you are not a party that settlement agreement it's the start not the end of the determination of who contracts and part of it was paid a subsidized rent and part of that rent was then deposited by new west into the reserve account as the security agreement and the documents required to that a careful reading of the regulations relating to project funds excess funds and reserves make a clear distinction among the three and that excess of who owns the receiver which i found curious that's correct the district court concluded that the reserves quote follow the  so there was control but control is not dispositive of ownership so look to ownership you have to look to the closing documents among the parties the mortgage the security agreement the writer to the regulatory agreements you also no reference in any of the truck court orders to the hud handbook the hood opinion or those closing documents the regulatory agreement the writer to the regulatory agreement that significantly call these the the regulatory group which was part of the closing documents dictated that new west carried the reserves on its on its books as a restricted asked what could be more indicative of joliet and hud entered into a settlement agreement so that hud could get out of the underlying litigation we had that settlement one one provision of that settlement agreement and it was extensive provided that hard and jolly ed agreed that the knowledge at that time that this would be an issue that would have to be dealt with later on actually if if the intent was to take the reserves as part of the condemnation proceedings shouldn't the reserves have been part of that complaint it should have they should have been and valued as a part of the value of the property that was being condemned if it was one of their sticks in the bundle of property rights that was being condemned yes the shopping interests and has been clear they were they were not played as part of the the point of the valuation of the property the judge looted any evidence of the value of the property as a section eight housing property now had it been so that it would evident that i had contracts would have called me understand it from the settlement agreement isn't that right well that was the plan i can tell you that the project still standing and people are living in it and doing quite well the but that we discussed the application of that regulation significant extensively in our briefs but that regulation does not determine ownership of the reserve you have to look carefully at all  regulations or opinions show what happens if they subsidize building burns down forget about condemnation the building just goes up in smoke there that whatever i'm not asking what you are reasoning out i'm asking whether a regulation or opinion letter or some other legally binding document tells us what happens i have not reviewed the documents with that contingency in mind your honor if there must be other ways other than condemnation and potential raising of a project in which the project disappear and one would really like to know what happens with this fine when that happen the fund is is created pursuant to the mortgage and i know how it's created right but it can be created with a right to follow the project you can be it created with an ownership interest in the current owner or it can be created with an ownership interest in the department of housing and urban development and presumably either contract regulations will tell us which of these  fact that the money can be used to repay the mortgage but you know my concern is what happens the project is presumably insured the insurance will repay the mortgage holder right then what happens to the reserve mortgage the security agreement provides that the collateral is released to us and that when the and the is secure and the reserves are the collateral under the security agreement opinion before the trial court and now instead hutch contends that even though the mortgage is paid off i have a contract is not terminated and somehow continues to obligate new west new clo you are not specialist in the acronyms that you may have been using for years were generals if you could use real english words it would go with the what i referred to as the half contractors  however contrary to what howard has stated hard terminated that contract by notice to new west on september thirtieth two thousand and seventeen the court case walters for the u s department of housing and urban development during his advocates in support of the city ok so what's the answer to my question i am not certain if there are regulations dealing with something like a catastrophic loss of the property your honor obviously the first line would be that the reserves themselves would need to be spent to try to you know you're just taking money hypothetical though means covered by insurance burns down the insurance pays off the mortgage what happens to the money found in our in our supplemental appendix and i think if those contracts were to terminate because the property could no longer be used as section eight housing than i think that something very similar to what thing the thing that most puzzled me about the regulations that the parties are pointers to is that they all deal with how the money is used while the project is going on there don't seem to be a regulat providing what happens at the end and we're now at the end well if there's no regulation about what happens at the end one would think the money goes back to whoever kicked it in a new west says we checked  and it was part of our subsidized rent which we had to hold in reserve and if that's true and there's no regulation saying well it actually belongs to them well you see the problem i  part of with if i could just take a quick step back and so the basic principle of section eight is that it is a public private partnership and in return for hud putting up the vast majority of funding for a project owners agree to take what are called limited distribution to say that they are sharply curtailed in their ability to take money out of the prop project as profit or as an asset so you can find that throughout the various contracts you can find that most clearly and i'm i'm aware of that  poorly phrased your honor if it was used to avoid any future rambling as this case shows can happen as to whether you could apply this money in the event of a default or in start the project on our work come in and say no you can't take this money and use  to cover this mortgage payments but there's a number of things so the general principle at eight zero six zero one is that project funds must be used for the benefit of the project expenses without it without going through the rules for distribution and the west has never done that there is caps on how much money people can take out of these two very brief points during the that and the vesting order also reaffirms that and it does as you know to go on to say that the reserves should be transferred but we read that ultimately i just being a recognition that the was an order that recognized the settlement agreement that was entered into between hardinge iliac and pursuant to the order of besting title after the kind of nation and taking place directed the parties to follow the site of an agreement that had been previously entered into so as part of that settlement defendants cannot possibly just if you're referring to dispense as new west i would agree with you that they couldn't do that because under the have contracts that was not property which was subject to being condemned if i can try to answer your question about what happens if there are five if there's a fight juliet now has the problem joy is operating the property as a section eight housing development pursuant to hug regulations and under how to regulate since you have two things going on you have you would have a joliet was not taken at all as juliet's today as the owner of the project under those section eight housing assistance program contracts if the project burned juliet would not be entitled to receive rent subsidies under the section eight contracts because it could not fulfill the obligation of providing housing therefore the contracts were terminated and pursuant to twenty four c f r s point two and five it says apart terminations of the housing assistance contracts any excess funds must be remitted taught so in the event of a fire when there is no project meaning that we cannot provide housing there is no subsidy contracts the section eight housing housing contracts and when they end any reserve fund is remitted to hard heartaches that money now that i can decide do they want to rebuild the project do they want to use it to provide further assistance to rents they have the discretion to do that sort that's what i would suggest you happens now for juliet is the owner of the property that's why part of owns the money because when that contradicti terminated and upon the condemnation of the property you ever could not provide housing under everyone never going to because the right to do that had been terminated there section eight housing assistance program contracts excuse me terminated the reserve fund that they had which they could have drawn down in the time they could have applied for application abroad down on it and had the achieve full reserve final payment they would have been entitle to research receive up to a twenty percent distribution for that so that gets to your question about security interest why take a security interest in money that yours because in the future had new west paid the full amount of the reserve fund they would have been entitle to receive money back on that and so part was properly taking a security interest in money that could have been in the future new west had they applied for it and have been approved by not raising mr president anymore and we're not back now it's going on an operation there's an initial term of the agreement between and that was part of the settlement agreement continue with the operation of everyone and everything to ask a subsidized housing assistance program and it's important i understand it with reserve land was that house was being torn down now maybe the other half later but now it seems to be receding into the future that yes or that's true and so the operation of the reserves to it and you know julie it's kind of on the back end right so the first part of this story begins with new west and their agreements w housing during the period of transition from the u s to joliet as operational costs and they had a right to do that on the regulations sort of do you think there is a conflict between the regulation and the subsidy contract  true you're right if there is no look i am not right or wrong i am asking how these two statements new west lawyer and yours can be true with the same time us is ignoring that case so your view is that the regulations simply override the contract regulations are part of the contract a reference and you know that regulations are not part of the contract that's metaphysics the contracts between the parties and a treaty and then there are regulations regulations or promulgated under the administrative procedure act they are created by contract the rig the regulation people of talking same contracts what your obligations are under that so while you might be up entitle to receive the reserve under the loan you may not be able to receive it on your section eight housing contracts you don't fulfil the terms of that council if the project is originally conceived in the  on an operation to answer your question yes i would have been able to acquire that reserve fund if they chose to and then apply that to other housing assistance programs are you making additions to the reserve funds as yes in depleted we're required to yes and to you oh no