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Draft Rental Covenenat 1 WHEN RECORDED, MAIL TO: City Mailing Address ATTN: City Clerk Planning Dept Housing Planner WASHINGTON STATE COUNTY AUDITOR/RECORDER/S INDEXING FORM Document Title(s) (or transactions contained therein): DECLARATION OF AFFORDABLE HOUSING COVENANTS-- Reference Number(s) of Documents assigned or released: ☐ Additional reference numbers on page of document. Grantor(s) (Last name first, then first name and initials): 1. ___________________________ ☐ Additional names on page of document. Grantee(s) (Last name first, then first name and initials): 1. CITY OF ____________, WASHINGTON ☐ Additional names on page of document. Legal Description (abbreviated form; i.e., lot, block, plat name, section-township-range): ______________________________ ☐ Additional legal on Exhibit “A” of document. Assessor’s Property Tax Parcel Account Number(s): ______________________________ The Auditor/Recorder will rely on the information provided on the form. The staff will not read the document. 2 DECLARATION OF AFFORDABLE HOUSING COVENANTS PROJECT NAME SECTION 1 — DEFINITIONS AND INTERPRETATION SECTION 2 — RESIDENTIAL RENTAL PROPERTY SECTION 3 — AFFORDABLE UNITS FOR ELIGIBLE HOUSEHOLDS SECTION 4 — REPORTING REQUIREMENTS SECTION 5 — SECTION 8 CERTIFICATE HOLDERS SECTION 6 — LEASE PROVISIONS SECTION 7 — SALE OR TRANSFER OF THE PROJECT SECTION 8 — TERM SECTION 9 — NO DISCRIMINATION SECTION 10 — COVENANTS RUN WITH LAND SECTION 11 — ENFORCEMENT SECTION 12 — SUBORDINATION, TERMINATION, RIGHTS RESERVED BY HUD SECTION 13 — ESTOPPEL CERTIFICATE SECTION 14 — AGREEMENT TO RECORD SECTION 15 — RELIANCE SECTION 16 — GOVERNING LAW SECTION 17 — NO CONFLICT WITH OTHER DOCUMENTS SECTION 18 — AMENDMENTS SECTION 19 — NOTICES SECTION 20 — FEE WAIVER REQUIREMENTS SECTION 21 — SEVERABILITY SECTION 22 — CONSTRUCTION SECTION 23 — TITLES AND HEADINGS EXHIBITS "A" LEGAL DESCRIPTION OF PROPERTY "B" DESIGNATION OF AFFORDABLE UNITS "C" CERTIFICATE OF HOUSEHOLD ELIGIBILITY "D" ANNUAL PROJECT CERTIFICATION 3 DECLARATION OF AFFORDABLE HOUSING COVENANTS PROJECT NAME THIS DECLARATION OF AFFORDABLE HOUSING COVENANTS (the "Covenant") is made and entered into as of this _______ day of _________________, 20____, by and between the CITY OF ___________, a Municipal Corporation of the State of Washington (the "City"); and _[ALL CAPS for name, small case for type of corporation] (the “Owner”). WITNESSETH: This Covenant is predicated upon the following facts: A. The Owner is the owner of property located at address in city, Washington. Owner intends to develop said property by constructing and renting number dwelling units (the "Project”), subject to City approval and such other approvals by State and local agencies as required. B. The Owner's proposed Project shall include ________(__) affordable rental units for Moderate-/Low-Income Households (“Eligible Households”, as the term is defined below). Such affordable rental units shall be of such bedroom quantity and quality as are in proportion to the overall proportion of bedroom quantity and quality of all of the rental units in the Project. C. The City finds that the Project will benefit the City by providing affordable rental housing for Eligible Households. D. The Owner has indicated its willingness to accept certain conditions affecting the use of the Property. It is the purpose of this Covenant to set forth the conditions under which the City has approved the Project and to impose enforceable restrictions on the use and occupancy of the rental portion of the Project. E. This Covenant is entered into pursuant to code chapter or section, which implements the Affordable Housing policies of the City. NOW, THEREFORE, for and in consideration of the mutual promises aforesaid and made and relied upon by the parties hereto, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Owner and the City agree as follows: 4 SECTION 1 — DEFINITIONS AND INTERPRETATION Capitalized terms used herein shall have the following meanings unless the context in which they are used clearly requires otherwise. “Affordable Rent” means a monthly housing expense, including Utilities or an applicable Utility Allowance for tenant-paid utilities, parking for a minimum of one car, and any expenses required by the Owner as a condition of tenancy (including but not limited to renter’s insurance, pest control, sewer system capacity charges), that is no greater than thirty percent (30%) of the monthly King County Median Income level(s) for Eligible Households, as shown in the following table, adjusted for Household Size. If a tenant pays for Utilities separately from rent, the Affordable Rent will be reduced by the amount of the applicable Utility Allowance. Affordable Rent Levels Percent of King County Median Income Low Income 50% Moderate Income 80% “Affordable Units” means the number units in the Project as selected by the Owner and as approved by the City or its Designee, as set forth in Exhibit B, and reserved for occupancy by Eligible Households pursuant to Section 3. “City” means the City of _______________. “Completion Date” means the date of the completion of the acquisition, construction, purchase, reconstruction and equipping, as the case may be, of the Project, as that date shall be certified as provided in Section 4. “Covenant” means this Declaration of Affordable Housing Covenants between the City and the Owner. “Designee” means A Regional Coalition for Housing (“ARCH”) or such other agency as may be designated by the City in writing to the Owner. The City shall notify the Owner of any determination not to utilize ARCH as its Designee for purposes of this designation. 5 “Eligible Household” means one or more adults and their dependents, which adults certify that they meet the qualifications for eligibility set forth below in this definition, in Section 3.F. of this Covenant, and as set forth in the Certificate of Household Eligibility attached hereto as Exhibit C and incorporated by reference herein, and who certify that their Household Income does not exceed the applicable percent of the King County Median Income, as set forth in this definition and Section 3.F of this Covenant, adjusted for Household Size. Maximum Household Incomes at Initial Occupancy Income Level Percent of King County Median Income Low-Income 50% Moderate–Income 80% “Household Income” means all income from all household members over the age of 18 residing in the household. Income consists of those items listed in Exhibit C, Certificate of Household Eligibility (e.g. wages, interest income, etc.). Income of dependents who reside within a household for less than four (4) months of the year will not be counted toward Household Income. “Household Size” means the average household size assumed for purposes of calculating Affordable Rents as follows: UNIT TYPE AVERAGE HOUSEHOLD SIZE Studio 1 Person 1 Bedroom 1.5 Persons 2 Bedroom 3 Persons 3 Bedroom 4.5 Persons “King County Median Income” means the median family income for the Seattle-Bellevue, WA HUD Metro FMR Area as most recently determined by the Secretary of Housing and Urban Development (“HUD”) under Section 8(f)(3) of the United States Housing Act of 1937, as amended. In the event that HUD no longer publishes median family income figures for King County, the Director may estimate the King County Median Income in such manner as the Director shall determine. “Lender” means HUD/FHA, Veterans Administration (“VA”), Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), or another party acquiring such loan upon foreclosure of a deed of trust or mortgage (“Deed of 6 Trust”) insured, made or held by HUD/FHA, VA, FNMA, FHLMC; or an institutional third-party lender or investor. “Owner” means name, and its successors and assigns, and any surviving, resulting, or transferee entity. “Owner Representative” means the person or persons (who may be employees of the Owner) designated from time to time to act hereunder on behalf of the Owner in a written certification furnished to the City or its Designee, containing a specimen signature of such person or persons and signed by the Owner or on behalf of the Owner by a duly authorized representative of the Owner. “Project” means the building, structures and other improvements to be constructed on the Property, and all equipment, fixtures and other property owned by the Owner and located on, or used in connection with, such buildings, structures and other improvements and all functionally related and subordinate facilities. “Property” means the real property which will be devoted to the Project as more particularly described in Exhibit A which is attached hereto, and incorporated by reference herein, and all rights and appurtenances thereunto appertaining. “Qualified Project Period” means for the life of the Project. “Utilities” means basic residential utility services, including heat, gas, electricity, water, sewer, and solid waste and recycling services, but excluding sewer system capacity charges and telephone, internet, and television services. “Utility Allowance” means a deduction to Affordable Rent, established by the City or its Designee, for tenant-paid Utilities. SECTION 2 — RESIDENTIAL RENTAL PROPERTY A. General Description. The Owner will acquire and construct the Project for purposes of providing multi-family rental housing and neighborhood retail uses, and the Owner shall own, manage, and operate (or cause the management and operation of) the Project to provide multi-family rental housing comprising a building or structure or several inter-related buildings or structures, each consisting of more than one dwelling unit and neighborhood retail uses and facilities functionally related and 7 subordinate thereto, and no other facilities. As used herein facilities functionally related and subordinate to the Project shall include facilities for use by the tenants, including, for example, recreational facilities, parking areas, and other facilities which are reasonably required for the Project, for example, heating and cooling equipment, trash disposal equipment, or units of resident managers or maintenance personnel. B. Similar Quality Construction. All of the dwelling units in the Project shall be constructed of similar quality, and each dwelling unit in the Project shall contain facilities for living, sleeping, eating, cooking and sanitation for a single person or a household which are complete, separate and distinct from other dwelling units in the Project and will include a sleeping area, separate bathing facility, and a cooking range, refrigerator and sink. C. Conversion to Condominium. In the event the Project is proposed for conversion to condominium, owner-occupied, or non- rental residential use, the Owner must submit to the City for its review a plan for preserving the Affordable Units. The City can consider options which would convert the Affordable Units to owner occupancy by Eligible Households. The Owner must receive authorization from the City prior to conversion to condominium, owner-occupied, or non-rental residential use. This section does not waive the Owner's obligations to comply with any other law or regulations pertaining to conversion to ownership use. SECTION 3 — AFFORDABLE UNITS FOR ELIGIBLE HOUSEHOLDS A. Number of Affordable Units. The Owner shall lease or rent, or make available for lease or rental, to the general public, all of the Affordable Units in the Project. The Owner shall designate all of the Affordable Units, reserved for occupancy by Eligible Households, as follows: Dwelling Units Unit Type (Bedrooms) Affordable Units Total Units Low-Income Moderate-Income Studio Open 1-bedroom 1-bedroom 2-bedroom Total 8 B. Designation/Re-designation of Affordable Units. The Owner agrees to rent the dwelling units designated in Exhibit B as Affordable Units. Units so designated shall have substantially the same equipment and amenities as other dwelling units in the Project with the comparable number of rooms. The Affordable Unit(s) shall be intermingled with all other dwelling units and shall have a unit mix comparable to the overall mix of units in the Project. The City or its Designee shall approve or deny the proposed Affordable Units based upon the criteria set forth in this section. The Owner, from time to time, may propose to change the particular units designated as Affordable Units, provided that at all times at least number of all of the residential units in the Project are designated as Affordable Units, and provided that at all times the same unit mix [and affordability mix] is retained. The Owner shall notify the City or its Designee of the proposed change in writing for the City's or its Designee's approval. The City or its Designee will review the proposed changes and shall approve or deny the proposed changes based upon the criteria set forth in this Section. C. Affordable Units Rent Level. The monthly rent for the Affordable Units occupied by Eligible Households shall not exceed the applicable Affordable Rents, and for each specific tenant, shall be adjusted no more than once every twelve (12) months, and in no event within the first twelve months of occupancy. D. Renting Affordable Units to Eligible Households. During the Qualified Project Period, the Owner shall rent or lease the Affordable Units to Eligible Households and, if at any time the Owner is unable to rent or lease the Affordable Units, the Affordable Units shall remain vacant pending rental or lease to Eligible Households. [ALTERNATE (Redmond): During the Qualified Project Period, the Owner shall rent or lease the Affordable Units to Eligible Households and, if at any time the Owner is unable to rent or lease an Affordable Unit, such Affordable Unit shall remain vacant pending rental or lease to Eligible Households for a period of not less than six (6) consecutive months. If, despite diligent efforts of the part of the Owner and the City to lease an Affordable Unit, such Affordable Unit has been vacant and available for six (6) consecutive months, the City may relax the income restriction required for the Affordable Unit from the Maximum Initial Income Level to the Maximum Recertification Income Level, as defined in 9 Section 3F of this Covenant. At the expiration of the lease of such Affordable Unit, the income restriction will be restored to the Maximum Initial Income Level. In the event the income restrictions are relaxed by the City pursuant to this Section, there will be no change in the Affordable Units rent level established pursuant to Section 3.C of this Covenant.] E. Equal Access to Common Facilities. Tenants in the Affordable Units shall have equal access to enjoyment of all common facilities of the Project. F. Qualifying Eligible Household Income for Affordable Units at Initial Occupancy and Recertification. Qualifying Eligible Household Income at time of occupancy may not exceed the applicable percent of King County Median Income set forth in the table below, adjusted for Household Size. At time of annual recertification, a household will remain eligible for an Affordable Unit as long as Household Income does not exceed the Maximum Recertification Income set forth in the table below, adjusted for Household Size. If at the time of recertification Household Income exceeds the Maximum Recertification Income limit for the income level initially qualified for by a household, then within 90 days either such household must pay market rent and the next available comparable market rate unit must be rented as an Affordable Unit; or the household must vacate the unit, unless otherwise prohibited by law, to make it available for an Eligible Household. Maximum Permitted Income Levels Income Level Maximum Income at Initial Occupancy Maximum Recertification Income Low Income 50% % Moderate Income 80% 100% G. Household Size Limits for Affordable Units. The Owner shall utilize the following occupancy standards for Affordable Units: Unit Size Household Size Studio 1–2 Persons 1 Bedroom 1–2 Persons 2 Bedroom 2–4 Persons 3 Bedroom 3–6 Persons 10 SECTION 4 — REPORTING REQUIREMENTS A. Notice of Occupancy Permit. Within thirty (30) days of issuance of any final inspection or, if applicable, occupancy permits, the Owner shall notify the City's Planning and Community Development Department [Attn: Housing Planner] or its Designee of receipt of the first certificate of occupancy for the Project. B. City Mailing List. The City or its Designee maintains a mailing list of households interested in occupying Affordable Units. From time to time the City or its Designee will provide to the Owner the names of persons from the mailing list. In determining which eligible applicants shall be rented Affordable Units, the Owner shall, subject to Section 4.C. below, reasonably consider persons on the mailing list, and when they were placed on the mailing list. C. Completion of Certificate of Household Eligibility. Prior to allowing any household to occupy any Affordable Unit, the Owner shall require the prospective tenant to complete a Certificate of Household Eligibility that shall be substantially in the form set forth in Exhibit C. The Owner shall also undertake a good faith effort to verify the applicant's Household Income, as reported on the completed Certificate. The Owner's obligation to verify the reported Household Income shall be limited to requesting copies of and reviewing the applicant's federal income tax returns, unless the Owner has actual knowledge, or reason to believe, that the information provided by the applicant is materially inaccurate. In the event federal income tax returns are not available, the Owner shall verify Household Income using wage or salary statements, or other income records that the City or its Designee may consider appropriate. D. Annual Recertification of Residents. On an annual basis, the Owner shall require all households occupying Affordable Units to complete and return to the Owner an updated Certificate of Household Eligibility. The Owner shall undertake a good faith effort to verify the reported Household Income, as reported in the completed Certificate. The Owner's obligation to verify the Household Income shall be limited to obtaining a copy of and reviewing the tenant's federal income tax returns, unless the Owner has actual knowledge or reason to believe that the information provided by the household is materially inaccurate. In the event federal income tax returns are not available, the Owner shall 11 verify Household Income using wage or salary statements, or other income records the City or its Designee may consider appropriate. The Owner shall file certifications with the City or its Designee, by attachment to the Annual Project Certification required pursuant to Subsection E of this Section. The City or its Designee may investigate independently to verify certifications submitted by the Owner. E. Annual Project Certification. After the Completion Date and until 90% of the rental units are occupied, the Owner shall, on a quarterly basis, file with the City or its Designee an Annual Project Certification, in substantially the form of Exhibit D. Thereafter, the Owner shall file such certification annually on or before March 31st, which must set forth the required information for the preceding year. F. Maintain Complete Records. The Owner shall maintain complete and accurate records pertaining to the Affordable Units, and shall permit any duly authorized representative of the City, including, without limitation, its Designee, to inspect the books and records of the Owner pertaining to the Affordable Units, and if applicable, incomes of Eligible Households residing in the Project. The Owner’s failure to maintain such records or failure to allow examination by the City or any duly authorized representative shall constitute a default hereunder. G. Form of Certification. Notwithstanding anything in this Section to the contrary, the Owner shall submit all documentation required by this Section on the forms designated herein, which may be modified by the City or its Designee from time to time. Changes to forms by the City or its Designee shall not significantly enlarge the Owner's obligations hereunder. H. Monitoring Fee. The City may assess, and the Owner agrees to pay fees to cover the costs of monitoring the Owner’s compliance with income and affordability restrictions of this Covenant. SECTION 5 — SECTION 8 CERTIFICATE HOLDERS The Owner shall accept as tenants for Affordable Units, on the same basis as all other prospective households, households who are recipients of Federal certificates for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, as amended. The Owner shall not apply or 12 permit the application of management policies or lease provisions with respect to the Project which have the effect of precluding occupancy of Units by holders of Section 8 certificates. SECTION 6 — LEASE PROVISIONS A. It is the Owner's responsibility to screen and select tenants for desirability and credit worthiness. Except as restricted in this Covenant, such selection is within the Owner's discretion. If written management policies exist, or exist in the future, with respect to the Project, the City or its Designee may review such written policies and may require changes in such policies, if necessary, so that they comply with the requirements of this Covenant. B. All leases for Affordable Units shall contain clauses wherein each individual lessee: (i) certifies the accuracy of the statements made in the Certificate of Household Eligibility, (ii) agrees that the household income and other eligibility requirements shall be deemed substantial and material obligations of the tenancy, and (iii) agrees that misrepresentation in the certification is a material breach of the lease, entitling the Owner to terminate the lease for the Affordable Unit. SECTION 7 — SALE OR TRANSFER OF THE PROJECT The Owner hereby covenants and agrees not to sell, transfer or otherwise dispose of the Project or any portion thereof without first providing a written notice from the purchaser stating that the purchaser understands, and will comply with the Owner's duties and obligations under this Covenant. Such notice must be received by the City or its Designee at least 10 days prior to the close of escrow. SECTION 8 — TERM This Covenant shall become effective upon its execution and delivery and shall continue in full force and effect throughout the Qualified Project Period, unless sooner modified or terminated in accordance with Section 12 hereof. SECTION 9 — NO DISCRIMINATION The Owner shall not discriminate on the basis of race, creed, religion, color, sex, sexual orientation, age, national origin, marital status, or presence of any mental or physical handicap as 13 set forth in RCW 49.60.030, as now existing and as may be amended, in the lease, use, or occupancy of the Project or in connection with the employment or application for employment of persons for the operation and management of the Project. SECTION 10 — COVENANTS RUN WITH LAND The City and Owner hereby declare their understanding and intent that the covenants, conditions, and restrictions set forth herein directly benefit the land (i) by enhancing and increasing the enjoyment and use of the Project by certain Eligible Households, and (ii) by furthering the public purposes of providing housing for Eligible Households. The City and the Owner hereby declare that the covenants and conditions contained herein shall bind and the benefits shall inure to, respectively, the Owner and their successors and assigns and all subsequent owners of the Project or any interest therein, and the City and its successors and assigns, all for the Qualified Project Period. Except as provided in Section 12 of this Covenant, each and every contract, deed or other instrument hereafter executed conveying the Project or any portion thereof or interest therein shall contain an express provision making such conveyance subject to the covenants and conditions of this Covenant, provided however, that any such contract, deed, or other instrument shall conclusively be held to have been executed, delivered and accepted subject to such covenants and conditions, regardless of whether or not such covenants and conditions are set forth or incorporated by reference in such contract, deed, or other instrument. SECTION 11 — ENFORCEMENT A. Enforcement Provisions. The Owner shall exercise reasonable diligence to comply with the requirements of this Covenant and shall correct any such noncompliance within sixty (60) days after such noncompliance is first discovered by the Owner or would have been discovered by the exercise of reasonable diligence, or within 60 days after the Owner receives notice of such noncompliance from the City or its Designee; provided however, that such period for correction may be extended by the City if the Owner is exercising due diligence to correct the noncompliance. If such noncompliance remains uncured after such period, then the Owner shall be in default and the City on its own behalf may take any one or more of the following steps: 14 1) By any suit, action or proceeding at law or in equity, require the Owner to perform its obligations under this Covenant, or enjoin any acts or things which may be unlawful or in violation of the rights of the City hereunder; it being recognized that the beneficiaries of the Owner's obligations hereunder cannot be adequately compensated by monetary damages in the event of the Owner's default; 2) Have access to, and inspect, examine and make copies of, all of the books and records of the Owner pertaining to the Project. Provided, however, the City or its Designee shall not divulge such information to any third party unless required by law or unless the same is necessary to enforce the City's rights hereunder; and 3) Take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants, conditions and agreements of the Owner under this Covenant. 4) The Owner hereby grants to the City or the Designee the option, upon Owner's default under this Covenant, for the Qualified Project Period to lease up to number of the units in the Project as mutually selected by the City or its Designee and the Owner for the purpose of subleasing such units to Eligible Households, but only to the extent necessary to comply with the provisions of this Covenant. The City or its Designee may lease from the Owner the units at the Affordable Rent level less a reasonable management fee to reimburse the City or its Designee for any expenses incurred in connection with such sublease. The City or its Designee may terminate its lease of the units in the Project upon determination that the Owner is no longer in default pursuant to this Covenant. B. Hold Harmless. The Owner shall defend, indemnify, and hold the City, its officers, officials, employees, volunteers and its Designee and any other party authorized hereunder to enforce the terms of this Covenant, harmless from any and all claims, injuries, damages, losses, or suits, including attorney fees, arising out of or resulting from this Covenant. C. No Third-Party Beneficiaries. The provisions of this Covenant and of the documents to be executed and delivered in connection herewith are and will be for the benefit of the Owner, the City and its Designee only and are not for the benefit of any 15 third party (including, without limitation, any tenants or tenant organizations), and accordingly, no third party shall have the right to enforce the provisions of this Covenant or of the documents to be executed and delivered in connection herewith. SECTION 12 — SUBORDINATION, TERMINATION, RIGHTS RESERVED BY HUD A. Notwithstanding any provision in this Covenant to the contrary, all of the provisions of this Covenant shall terminate and have no further force and effect upon the occurrence of one of the following events: (1) Foreclosure of a HUD/FHA insured loan is initiated under which the Project is held as a security. (2) Title to the Project is acquired by Lender or HUD/FHA by deed in lieu of foreclosure of the Deed of Trust. (3) Title to the Project is acquired by HUD/FHA, Veterans Administration ("VA"), Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or another party upon foreclosure of a deed of trust or mortgage ("Deed of Trust") insured, made or held by HUD/FHA, VA, FNMA, FHLMC; or an institutional, third-party lender or investor (collectively, "Lender"). (4) The Deed of Trust, if insured by HUD/FHA, is assigned to HUD/FHA. Notwithstanding anything in this Covenant to the contrary, enforcement of this Covenant shall not serve as a basis for (i) default under the Deed of Trust insured by HUD/FHA or any other Lender, or (ii) an acceleration of the loan secured by the Deed of Trust ("Loan"), or result in any claim against the Project, the Loan proceeds, any reserve or deposit required by HUD/FHA or any other Lender in connection with the Loan transaction or the rents or other income from the Project other than from available surplus cash as that term is defined by HUD/FHA or any other Lender. B. Notwithstanding anything in this Covenant to the contrary: (1) All of the provisions of this Covenant are subordinate and subject to the Deed of Trust, the Loan, and all documents relating to the Loan ("Loan Documents"), if any, as well as all applicable HUD/FHA mortgage insurance regulations, related 16 HUD/FHA administrative requirements, Section 8 of the U.S. Housing Act of 1937, as amended, and the regulations thereunder, as amended, and the rights of the Lender thereunder. In the event of any conflict between this Covenant and the provisions of any applicable HUD/FHA mortgage insurance regulations, related HUD/FHA administrative requirements, Section 8 of the U.S. Housing Act of 1937, as amended, and the regulations thereunder, as amended, the applicable HUD/FHA mortgage insurance regulations, related HUD/FHA administrative requirements, Section 8 of the U.S. Housing Act of 1937, as amended, and the regulations thereunder, as amended, will control. (2) Lender shall take no role in monitoring compliance with state and federal use and occupancy requirements; nor shall Lender be required to provide notice to third parties of actions under the Deed of Trust, if any. (3) No amendment to this Covenant will be effective without the prior written consent of Lender, if any. (4) The Owner, its successors or assigns, will take all steps necessary to comply with this Covenant; provided that the Owner, its successors or assigns, shall not be required to take action prohibited by, or to refrain from action required by Lender, pursuant to the National Housing Act (as amended), applicable HUD/FHA mortgage insurance regulations, related administrative requirements, Section 8 of the Housing Act of 1937, as amended, and the regulations thereunder, as amended, or the Loan and the Loan Documents. SECTION 13 — ESTOPPEL CERTIFICATE The City agrees, upon the request of the Owner or its successor in interest, to promptly execute and deliver to the Owner or its successor in interest or to any potential or actual purchaser, mortgagor or encumbrance of the Project, a written certificate stating, if such is true, that the City has no knowledge of any violation or default by the Owner of any of the covenants or conditions of this Covenant, or if there are such violations or defaults, the nature of the same. SECTION 14 — AGREEMENT TO RECORD The Owner shall cause this Covenant to be recorded in the real property records of King County, Washington. The Owner shall pay all fees and charges incurred in connection with such recording 17 and shall provide the City or its Designee with a copy of the recorded document. SECTION 15 — RELIANCE The City and the Owner hereby recognize and agree that the representations and covenants set forth herein may be relied upon by City and the Owner. In performing its duties and obligations hereunder, the City may rely upon statements and certificates of the Owner and Eligible Households, and upon audits of the books and records of the Owner pertaining to occupancy of the Project. In performing its duties hereunder, the Owner may rely on the Certificates of Household Eligibility unless the Owner has actual knowledge or reason to believe that such Certificates are inaccurate. SECTION 16 — GOVERNING LAW This Covenant shall be governed by the laws of the State of Washington, except to the extent such laws conflict with the laws of the United States or the regulations of federally insured depository institutions or would restrict activities otherwise permitted in relation to the operation of federally insured depository institutions. SECTION 17 — NO CONFLICT WITH OTHER DOCUMENTS The Owner warrants that it has not executed and will not execute, any other agreement with provisions contradictory to, or in opposition to, the provisions hereof, and that in any event the requirements of this Covenant are paramount and controlling as to the rights and obligations herein set forth and supersede any other requirements in conflict herewith. SECTION 18 — AMENDMENTS This Covenant shall be amended only by a written instrument executed by the parties hereto or their respective successors in title, and duly recorded in the real property records of King County, Washington. Amendments to Exhibit B shall be considered to be approved in writing when the revised Exhibit B is signed by the Owner and the City or its Designee without the need for a further written document attaching the revised exhibit and striking prior versions of the exhibit. In the event of conflict between versions of Exhibits B, the version maintained by the City or its Designee 18 as the then-current version, signed by Owner and City or its Designee, shall prevail. SECTION 19 — NOTICE Any notice or communication hereunder, except legal notices, shall be in writing and may be given by registered or certified mail. The notice or communication shall be deemed to have been given and received when deposited in the United States Mail, properly addressed with postage prepaid. If given otherwise, it shall be deemed to be given when delivered to and received by the party to whom addressed. Such notices and communications shall be given to the parties hereto at their following addresses: If to the City: city name mailing address city, WA zip Attn: person name or title With a copy to the Designee A Regional Coalition for Housing (ARCH) 16225 NE 87th Street, Suite A-3 Redmond, WA 98052 Attn: Housing Planner If to the Owner: owner name mailing address city, st zip Attn: person name or title Any party may change its address for notices upon ten (10) days prior written notice to the other parties. Legal counsel for a party may deliver notices on behalf of the represented party and such notice shall be deemed delivered by such party. OPTION ADD IF FEE WAIVER SECTION 20 — FEE WAIVER REQUIREMENTS Pursuant to _______________________________the Owner received fee waivers in the approximate amount of $_____________ as consideration for the provision of affordable units in the Project. In the event at any time during the term of this Covenant, the Affordable Units are not provided pursuant to the provisions of this Covenant, the City retains the right to require the Owner to pay to the City all fees that were waived at the rate prevailing 19 at the time the City determines the Project is no longer conforming to the affordability requirements of this Covenant. This provision shall survive termination of the Covenant if such occurs prior to expiration of the Qualified Project Period. SECTION 21 — SEVERABILITY If any provision of this Covenant shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. SECTION 21 — CONSTRUCTION Unless the context clearly requires otherwise, words of the masculine, feminine or neuter gender shall be construed to include each other gender when appropriate and words of the singular number shall be construed to include the plural number, and vice versa, when appropriate. All the terms and provisions hereof shall be construed to effectuate the purposes set forth in this Covenant and to sustain the validity hereof. SECTION 22 — TITLES AND HEADINGS The titles and headings of the sections of this Covenant have been inserted for convenience of reference only, are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof or be considered or given any effect in construing this document or any provision hereof or in ascertaining intent, if any question of intent shall arise. [Signature page follows.] 20 IN WITNESS WHEREOF, the Owner and City have each executed this Declaration of Affordable Housing Covenants on the Date first above written. Owners: City: name name Its: title Its: title Approved as to Form: ______________________ City Attorney 21 STATE OF WASHINGTON } } ss. COUNTY OF KING } On this ________ day of _____________, 20___, before me, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared _________________, known to me to be the _____________________ of the CITY OF ____________, who executed the foregoing document on behalf of said City, and acknowledged the said document to be the free and voluntary act and deed of said City, for the uses and purposes therein mentioned, and on oath stated that he or she was authorized to execute said document. IN WITNESS WHEREOF I have given under my hand and official seal this ___ day of ___________, 20___. Notary Public in and for the State of Washington. Print Name Residing at My commission expires 22 STATE OF WASHINGTON } } ss. COUNTY OF KING } On this ________ day of _____________________, 20___, before me, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared ___________________________________, to me known to be the ____________________ of ________________________, corporation, who executed the foregoing instrument on behalf of the said corporation, and acknowledged the said document to be the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned, and on oath stated that he or she was authorized to execute said document. IN WITNESS WHEREOF I have given under my hand and official seal this ____ day of ___________, 20___. Notary Public in and for the State of Washington. Print Name Residing at My commission expires 23 EXHIBIT A LEGAL DESCRIPTION 24 EXHIBIT B DESIGNATION OF AFFORDABLE UNITS Unit Number Unit Type Unit Size (sq ft) See attached diagram(s). BEAUX ARTS VILLAGE♦BELLEVUE♦BOTHELL♦CLYDE HILL♦HUNTS POINT♦ISSAQUAH♦KENMORE♦KIRKLAND MEDINA♦MERCER ISLAND♦NEWCASTLE♦REDMOND♦SAMMAMISHWOODINVILLE♦YARROW POINT♦KING COUNTY EXHIBIT C FORM OF CERTIFICATE OF HOUSEHOLD ELIGIBILITY Together Center Campus 16225 NE 87th Street, Suite A-3 ♦ Redmond, WA 98052 (425) 861-3677 ♦ Fax: (425) 861-4553 WEBSITE: www.archhousing.org CERTIFICATION OF HOUSEHOLD ELIGIBILITY I, , and I , , as applicants for rental of the following Affordable unit, do hereby represent and warrant that my/our adjusted annual income is $ Project:_______________________ Project Address: ______________________________________ Unit # No. of Bedrooms: Household size *: Disabled: Yes / No Household Members: , Age , Age , Age , Age , Age , Age The attached computation is $ , and includes all income I/we received for the date I/we execute a rental agreement for an affordable unit, or the date on which I/we will initially occupy such unit, whichever is earlier. This affidavit is made with the knowledge that it will be relied upon by the City to determine maximum income for eligibility. I/We warrant that all information set forth in this Certification of Household Eligibility is true, correct and complete based upon information I/We deem reliable, and that the estimate contained in the preceding paragraph is reasonable and based upon such investigation as the undersigned deemed necessary. I/we will assist the Owner in obtaining any information or documents required to verify the statements made in this Certification. I/We acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this affidavit will constitute a material breach of my/our agreement with the Owner to lease the unit and will entitle the Owner to prevent or terminate my/our occupancy of this unit by institution of an action for eviction or other appropriate proceedings. I/We do hereby swear under penalty of perjury that the foregoing statements are true and correct. 26 Applicant Applicant Date: ___________________ Date:____________________ Mailing Address Phone INCOME COMPUTATION "Household income" includes all items listed below, from all household members over the age of 18. Income of dependents over 18, who reside in the unit for less than four (4) months of the year will not be counted toward household income. For the previous 12-month period, indicate income received from the following sources: a) The full amount, before any payroll deductions, of wages, salaries, overtime pay, commissions, fees, tips, bonuses and other compensation for personal services, and payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay and any earned income tax credit to the extent that it exceeds tax liability; a) __________ b) Net income from operations of a business or profession or net income of any kind from real or personal property; b) __________ c) Interest and dividends; c) __________ d) The full amount of periodic payments received from Social Security, pensions, retirement funds, annuities, insurance policies, disability or death benefits, alimony, child support, or any similar type of periodical payments, and any regular contributions or gifts from persons not residing in the unit; d) __________ e) Public assistance payments; e) __________ f) Regular and special allowances and pay of a member of the Armed Forces who is a spouse or head of the family. f) __________ TOTAL $ __________ (NOTE: The following are not considered income: occasional, infrequent gifts of money; one- time payments from insurance policies or an inheritance settlement; scholarships or student loans for tuition, fees or books; foster child care payments; the value of Food Stamp coupons; hazardous duty pay to a member of the Armed Forces; relocation payments; assistance received under the Low Income Home Energy Assistance Program or any similar program). 27 EXHIBIT D FORM OF ANNUAL PROJECT CERTIFICATION ANNUAL PROJECT CERTIFICATION Project: __________________________________________ Address: __________________________________________ The undersigned hereby certifies that during the annual Reporting Period ending ___________________________________, __________ units or _______ percent of the residences in the Project were utilized as Affordable housing, as required in the Declaration of Affordable Housing Covenants, in the following manner: a) ______ units or ______ percent of units in the Project were rented to Tenants who did not exceed the applicable income limits of _______% or _______% of area median income; b) ______ units or ______ percent of units in the Project were rented to Tenants who exceeded _______% or _______% of area median income but were below _______% or _______ % of area median income; c) ______ units or ______ percent of units in the Project were rented to Tenants who now exceed ______% or _____% of area median income, and therefore can no longer be considered eligible for Affordable units; d) ______ units or ______ percent of units in the Project are being held vacant for eligible Tenants. The above information and that on the attached sheet(s) has been verified as required by the Declaration of Affordable Housing Covenants between the City of _____________________ and Owner Organization Name: ___________________________________________ _________________________________ ____________________________________ Name of Owner Signature of Owner Date: _______________________________, 20____ 28 ANNUAL PROJECT CERTIFICATION PROJECT NAME_________________________________________________ REPORTING PERIOD: __________________ through ___________________. Vacancy Status: The following units are vacant as of __________________ and are being held vacant for eligible Tenants. Does Contract Rent include:Are residents required to buy: Electricity Yes Water &Yes Garbage?Yes Renter's Yes One Parking Yes Renter's Yes & Gas?No Sewer?No No insurance?No Space?No insurance?No For each "No" enter the Allowance or Fee below (except Renter's Insurance, if it's not required). Unit # Tenant Name Family Size Move-in Date Current Lease Date Current HH Income* Unit Type (BRs) Affrd Level Max Housing Expense** Electric & Gas Allowance Water & Sewer Allowance *** Garbage Allowance (or Fee) Insurance Allowance Parking Fee Max Rent Current Contract Rent $0 $0 $0 $0 $0 $0 $0 $0 *As of report date or when current lease was signed. **Find on "Rental and Income Guidelines." ***Maximum Housing Expenses also include water, sewer, and garbage. If these are paid for directly by the tenant (in addition to rent), the maximum rent must be reduced by the typical costs to the tenant of such utilities, or a set allowance established by the city (or ARCH). ARCH Electric & Gas Allowances:Water & Sewer Allowances: Studio Studio 1-bedroom 1-bedroom 2-bedroom 2-bedroom 3-bedroom 3-bedroom 4-bedroom 4-bedroom 5-bedroom 5-bedroom