Establishment and Administration Clause Samples

Establishment and Administration. The parties agree that Owner shall establish and fund the following operating reserves for the Project Units (collectively, the "Operating Reserves"): (i) an operating deficit reserve to be initially funded in the amount of [27A] dollars ($ [27B] ) derived from the following non-public housing funds: [27C] (the “Operating Deficit Reserve”). The Operating Deficit Reserve is designed to ensure that any operating deficits (other than operating deficits resulting from the Authority's failure to provide Operating Subsidy payments, as provided herein) can be paid for in the normal course of operating the Project. Funds in the Operating Deficit Reserve can be used by the Owner only for the following purposes: (i) to pay eligible expenses not encompassed by the Operating Budget, or (ii) because of an operating deficit caused by lower-than-projected public housing tenant rental contributions. The Authority may provide Operating Subsidy or tenant rental contributions to replenish amounts drawn down by the Owner to pay for the reasonable and necessary operating deficits of the Project, but may not use these funding sources to make incremental contributions to the Operating Deficit Reserve. (ii) an affordability reserve to be initially funded in the amount of [28A] dollars ($ [28B] ) derived from the following non-public housing funds: [28C] (the “Affordability Reserve”). The Affordability Reserve is intended to ensure that the Authority's Operating Subsidy obligation on behalf of the Project Units is made available to the Owner on time, and in the amount, as required by section 4.1. Operating Subsidy and/or tenant rental contributions may be used to replenish amounts drawn down from the Affordability Reserve with respect to the Project Units, but may not be used to make incremental contributions to the Affordability Reserve. Owner may, with the prior written notification to the Authority, make a withdrawal from the Affordability Reserve for either of the following two reasons: (A) if the Authority fails to provide, by the due date, the amount of Operating Subsidy required under section 4.1 because of a reduction in annual appropriations under section 9(e) of the Act. In this case, Owner may obtain a disbursement from the Affordability Reserve in an amount equal to the sum of the Authority’s missed operating subsidy payment(s); or (B) if the Authority's payment of Operating Subsidy to Owner falls below a pre-determined baseline figure, as adjusted for inflation, and a...