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deposits shall be made annually to the Replacement Reserve in the amount of not less <br /> than $300 per unit per annum, and to the extent available from the Project's cash flow, as <br /> defined in the Partnership Agreement, annual contributions to the Operating Reserve for <br /> the purpose of covering unanticipated operating expenses, reserves, debt service, and <br /> resident service costs, in addition to the capitalized operating reserve specified in Exhibit <br /> B. <br /> Withdrawals from the accounts shall be made in a manner consistent with any applicable <br /> requirements of the Project lenders and investors, including the City, if the City elects to <br /> impose such requirements. If disbursements from reserves are approved by other lenders <br /> or investors, a copy of such reserve disbursement approvals shall be provided to the City. <br /> Withdrawals from the replacement reserve account shall be made only for capital <br /> improvements such as replacing or repairing structural elements, furniture, fixtures, or <br /> equipment of the Project which are reasonably required to preserve the Project. <br /> Withdrawals from the operating reserve account may be utilized only to cover actual and <br /> reasonable operating expenses, or to compensate for vacancy and bad debt losses. Any <br /> other reserves required by the City and identified in this Agreement, shall not be used for <br /> purposes other than the purposes designated in said budgets for such reserves. <br /> If other funding entities have differing requirements, the City may amend this paragraph <br /> in writing to be consistent with those other requirements. Notwithstanding the foregoing or <br /> other provisions of this Loan Agreement to the contrary (including Section J below), the <br /> City hereby consents to the replacement and operating reserve amounts and the funding <br /> and use of the replacement and operating reserves and other requirements applicable to <br /> such reserves to be set forth in the Partnership Agreement. To the extent the requirements <br /> respecting the replacement and operating reserves set forth in this Loan Agreement <br /> conflict with those set forth in the Partnership Agreement will control. <br /> All reserves shall remain with the Project upon sale or transfer, and shall be used solely <br /> for the purposes stated therein, notwithstanding any change in the ownership of the <br /> Project. <br /> I. Tenant Security Deposits <br /> Any funds collected as security deposits shall be kept separate and apart from all other <br /> funds of the Project in a trust account with a depository insured by the Federal Deposit <br /> Insurance Corporation and shall be held and disbursed in accordance with Washington <br /> law and this Loan Agreement. The balance of such account shall at all times equal or <br /> exceed the aggregate of all outstanding obligations under said account, plus accrued <br /> interest thereon. <br /> J. Use of Income from Operations <br /> The Owner or the Owner's management agent shall promptly deposit all operating income <br /> in a segregated account established in the Owner's name exclusively for the Project. <br /> There shall be no commingling of the Project funds with other funds controlled by the <br /> Agency. <br /> Loan Agreement <br /> Housing Hope Properties <br /> Page 32 of 51 <br />