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C. Financing Costs. If the Capital Improvement costs are amortized., the Park Owner may include reasonable financing costs, not to exceed the Prime Rate plus two percent (2%), for the Capital Improvement costs. D. Removal of Capital Improvements Costs from Space Rent. . Whenever a Capital Improvement cost has been amortized and passed through to the Residents in the form of a rent increase on their monthly rent statements, the Park Owner shall remove this cost as a line item on the monthly rent statements once the Park Owner has fully recovered such cost. E. Resident Approval for Certain Capital Improvement Costs. Capital Improvement costs over $2,000, other than Capital Improvement costs required to comply with a city, county, state or federal government act or regulation, shall require the prior approval of the Residents in order for the Park Owner to amortize and pass through to Residents such costs. Capital Improvement costs to rehabilitate or replace existing Capital Improvements (as set forth on Exhibit D) shall not require prior approval of the Residents in order for the Park Owner to amortize and pass through to the Residents such costs unless such amortized costs in any one year exceed more than two percent of the lowest monthly rent then in effect or unless such amortized costs, during the term of this Agreement, exceed more than six percent of the lowest monthly rent then in effect; provided, however, that such costs may exceed the two percent and six percent limitations but only if the City has reviewed the proposed Capital Improvement to be replaced or rehabilitated and determined that such Capital Improvement is necessary for the health and safety of the Residents and that the cost is reasonable. Where "prior approval" is required the Park Owner shall put the matter to a vote of the Residents (on the basis of one vote per household) and"prior approval" shall mean fifty percent (50%) plus one of the total number of households that cast votes. Thirty days prior to putting the matter to a vote or, in the case of a replacement or rehabilitated Capital Improvement that does not require a vote, thirty days before incurring the costs for such Improvement the Park Owner shall inform the Residents of the proposed Capital Improvement, its estimated cost, and the estimated increase in monthly rents and for what length of time the rent would be increased. The Residents may request the City to review the cost estimate of the proposed Capital Improvement, whether the Capital Improvement is new or to replace/rehabilitate an existing Improvement. F. Information Statement to Residents. If the notice informing Residents of the increase in rents includes any allocation for Capital Improvement costs, then that notice shall also include an itemization of what Capital Improvements were made and at what cost. G. Disputes as to Certain Capital Improvements. Disputes regarding whether a given Capital Improvement is required by a government act or regulation, such as the duty of the Park Owner to maintain safe premises, shall be referred to the City Manager for resolution. Disputes as to whether the useful life of an existing Capital Improvement has expired shall be governed by Article III. VIII. ANNIVERSARY DATE January 1 shall be the anniversary date upon which annual rent adjustments shall be effective. 7