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12. Accounts. Agent shall establish the following separate bookkeeping <br />accounts for Development funds. These accounts shall be the "Development <br />Operating Account," the "Reserve Fund for Replacements Account" and the <br />"Security Deposit Account." Funds from these accounts shall be kept in <br />depositories whose deposits are insured by the FDIC or the FSLIC, under the <br />Development name with Agent as trustee. <br /> <br /> (a) Security Deposit Account: If required by the tenant leases, <br />Agent shall collect security deposits. In collecting, handling and disbursing <br />these funds, Agent shall comply with California Civil Code Section 1950.5. <br />These funds shall be kept in an interest bearing account. The balance of such <br />account shall at all times equal or exceed the aggregate of all outstanding <br />obligations under said account, plus accrued interest thereon. <br /> <br /> (b) Development Operating Account: All revenue collected pursuant <br />to Section 11 and 22 of this Agreement shall be credited to the Development <br />Operating Account. <br /> <br /> {c) Reserve Fund for Replacement Account: Each month Agent shall <br />transfer from the Development Operating Account to the Reserve Fund for <br />Replacements Account an amount if and when required by the RegulatOry Agreement <br />and ~//ta//M/~t shown in the Annual Operating Budget for the Development. <br /> <br /> Funds held in the Reserve Fund for Replacement Account <br />shall only be withdrawn and used for the purposes approved in writing by the <br />City and CHFA. <br /> <br /> 13, Dis~rs~nts. Agent may disburse funds from the accounts described <br />in Section 12 of this Agreement only for the following purposes. All other <br />disbursements shall require the express written permission of Owner and City, <br />except when necessary for emergency repairs required.to avoid injury to persons <br />or property. In the case of emergencies, the Agent shall, as soon as practical <br />thereafter, provide notice of the emergency expenditure to the City and Owner. <br /> <br /> {a) Security Deposit Account: Disbursements may be made from this <br />account only to: <br /> <br /> (1) Pay the cost of any unpaid rent, damage or unreasonable <br />wear and tear caused by the tenant, or to reimburse the Development Operating <br />Account for such payment; and <br /> <br /> (2) Return to the tenant upon termination of the tenancy the <br />portion of the security deposit not used in accordance with {1) above. <br /> <br /> (b) Development Operating Account: Disbursement may be made form <br />this account only to: <br /> <br /> {1) Make the payments required to be made by Owner to the <br />Lenders under their respective mortgage loans which may include payments of <br />principal and interest, taxes, assessments, fire and other hazard insurance <br />premiums or other amounts that may from time to time be required; and <br /> <br /> (2) Make monthly transfers to the Reserved Fund for <br />Replacements Account; <br /> <br />19:MGMTAGR.EHI (10/27/89) 6 <br /> <br /> <br />