MANAGEMENT AGREEMENT is entered into on this
day of , 20,
by and between
whose address is
(the "Owner"), and ,
a formed under
the laws of the state of ,
whose address is
E C I T A L S:
A. The Owner is in the process of constructing or rehabilitating or
has constructed or rehabilitated a multifamily housing development
units, located in ,
and known as , MSHDA Development No.
B. The Development is or will be financed by a Mortgage Loan from
the Michigan State Housing Development Authority, a public body
corporate and politic of the State of Michigan.
C. The Secretary of the Department of Housing and Urban Development
has agreed to make interest reduction subsidy payments to the
Authority on behalf of the Owner pursuant to Section 236 of the
National Housing Act to reduce rental rates to qualified tenants and
to facilitate repayment of the Mortgage Loan, and has further agree
to make rental assistance subsidy payments to the Owner on behalf of
qualified tenants of the Development under Section 105, Section
236(f)(2) or Section 8 of the National Housing Act.
D. The Agent represents that it is highly skilled and experienced in
all aspects of the marketing and management of subsidized
multifamily housing developments occupied by low and moderate
income persons, has the requisite experienced staff to manage the
Development successfully, and has sufficient familiarity with the
requirements of the Section 236 Program so as to comply fully with
all such requirements.
E. Based upon this representation by the Agent, the Owner desires to
appoint the Agent and the Agent desires to be appointed as the
exclusive managing agent of the Development.
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment. The Owner appoints the Agent
and the Agent accepts appointment as the exclusive managing agent of
the Development, subject to the terms and conditions of this
Section 2. Definitions. In this Agreement:
2.1 "Act" means the State Housing Development Authority
Act, being Act 346 of the Public Acts of 1966, as amended; MCL
125.1401, et seq.
2.2 "Affirmative Fair Housing Marketing Plan" or "Fair
Housing Plan" means the proposal, acceptable to the Authority
that identifies a target population within the market area of the
Development and provides strategic outreach efforts for marketing to
the target population.
2.3 "Agreement" means this Management Agreement and all
amendments and addenda entered into by the Agent and Owner and
approved by the Authority.
2.4 "Audit Guidelines" means the Authority's Audit Guide
Policy or Multi-Family Annual Certified Audit Guidelines, as amended
from time to time.
2.5 "Authority" means the Michigan State Housing
Development Authority, a public body corporate and politic of the
State of Michigan, acting by and through one of its Authorized
Officers as described in Section 23 below.
2.6 "Central Office Employee" or "COE" means an
employee of the Agent who would generally be
expected to operate out of the Agent's central office, such
as those providing financial record keeping, accounting and general
staff supervision, and who receives a portion of his/her
wages and/or benefits from the Agent’s Management Fee.
2.7 "Development" means the improvements, buildings,
appurtenances, equipment and other personal property located on the
real property owned or to be owned by the Owner, including all
common areas, dwelling units, garage or carport spaces to be rented
and commercial space (if any).
2.8 "HUD" means the United States Department of Housing
and Urban Development.
2.9 "Identity of Interest" means a contractual
relationship between a vendor of services or supplies to the
Development and the Owner or the Agent, as defined in Rule 202 of
the Authority's General Rules, R 125.202, including any such
relationship that may exist between the Owner and Agent pursuant to
2.10 "Initial Release" means the date a unit has been
certified for occupancy by an Authority inspector or
2.11 "Initial Rent-up Period" shall mean the period prior
to the time when occupancy of dwelling units in the Development
first achieves ninety-five percent (95%).
2.12 "Lease" shall mean the lease form, including house
rules and other addenda that has been approved in writing by Owner
and Authority, pursuant to which Owner has agreed to let and a
Tenant has agreed to accept the dwelling unit identified in the
Lease in accordance with the terms of the Lease.
2.13 "LIHTC" means the Low Income Housing Tax Credit and
"LIHTC Program" means the Low Income Housing Tax Credit
Program as implemented by the Authority pursuant to Section 42 of
the Internal Revenue Code of 1986, as amended, and the regulations
promulgated there under.
2.14 "MIE Guidelines" means the Authority's Monthly Income
and Expenditure ("MIE") Guide Policy, as amended from time
2.15 "Maximum Allowable Management Fee" means the maximum
management fee determined in accordance with the schedule published
by the Authority and as amended from time to time, that may be paid
to an Authority-approved agent by an owner in any given year, to the
extent available from Development operations. The availability of
funds from Development operations to pay and the eligibility of an
agent to receive the Maximum Allowable Management Fee shall be
determined by the Authority.
2.16 "Mortgage" means that certain mortgage, given by the
Owner to the Authority to secure the repayment of the Mortgage Loan.
2.17 "Mortgage Loan" means the construction and/or
permanent loan and any subordinate loans made to the Owner by the
Authority to assist in the construction, rehabilitation and/or
operation of the Development.
2.18 "Operating Account" means the separate bank account
in Michigan maintained on behalf of the Owner in a manner that
indicates the custodial nature thereof, for the deposit of the
monies of the Development (except tenant security deposits), in
accordance with Section 13 below.
2.19 "Premium Management Fee" means the compensation in
addition to the Maximum Allowable Management Fee that may be paid to
an Authority-approved agent by an owner in any given year, to the
extent available from Development operations, determined and
calculated in accordance with the Authority's Premium Management Fee
Policy, as amended from time to time.
2.20 "Regulatory Agreement" means that certain agreement,
as may be amended from time to time, between the Owner and the
Authority providing for the regulation of the Owner and the
Development by the Authority in accordance with the Mortgage, the
Act and the rules and regulations of the Authority. Where
appropriate, “Regulatory Agreement” will also be deemed to
include any regulatory agreement/restrictive covenant entered into
between the Owner and the Authority for participation in the LIHTC
2.21 “Rent" means that monthly amount which a Tenant is
obligated to pay the Owner pursuant to the terms of a Lease.
2.22 "State" means the State of Michigan.
2.23 "Tenant" shall mean a person or family occupying a
dwelling unit in the Development pursuant to a Lease.
2.24 "Tenant Selection Criteria" means the Agent's
written tenant selection and eligibility criteria and other
requirements for screening and selecting tenants at the Development
consistent with applicable federal, state and local laws and
regulations, and which must be made available to applicants and
tenants at the rental office for the Development.
Section 3. Receipt of Documents; Furnishing of Rules,
Survey, Plans and Specifications.
3.1 Receipt of Documents - The Agent has received copies of
the Regulatory Agreement, the Mortgage, the Agreement for Interest
Reduction Payments, and any amendments thereto, and agrees to manage
the Development in accordance with the terms thereof. In the event
that any terms of this Agreement or any instructions of the Owner
are in contravention of the Regulatory Agreement or the Mortgage, as
may be amended, the terms of the Regulatory Agreement and the
Mortgage shall control.
3.2 Rules, Survey, Plans and Specifications - In order to
facilitate efficient operation of the Development, if
available, the Owner shall furnish the Agent with an "as-built"
survey of the Development showing the location of all improvements
(after the final closing on the Mortgage Loan) and a complete set of
architectural plans and specifications for the Development as
finally approved by the Authority. All such rules, surveys, plans
and specifications shall be maintained and available for review at
the Development. With the aid of these documents and inspections
made by the Agent, the Agent shall inform itself with respect to
layout, construction, location, character, plan and operation of the
lighting, heating, plumbing and ventilating systems, and other
mechanical equipment in the Development. Copies of guaranties and
warranties pertinent to the construction of the Development and in
force at the time of the execution of this Agreement shall be
furnished to the Agent, and maintained by the Agent as described in
Sections 5.h and 5.i below.
Section 4. Purpose of Development.
4.1 Low and Moderate Income Tenants - The Agent fully
understands that the Owner is or will be providing some or all of
the units in the Development to persons of very low, low or moderate
income solely for their residential use, as more fully described in
the Regulatory Agreement, including any regulatory
agreement/restrictive covenant that has been or may be entered into
by the Owner for participation in the LIHTC Program.
4.2 Confer with Owner - The Agent agrees, notwithstanding the
authority given to the Agent in this Agreement, to confer fully and
freely with the Owner in the performance of its duties as set forth
in this Agreement.
4.3 Compliance with Authority Act, Rules and Policies - The
Agent agrees to comply with the Act and the rules and policies of
the Authority, and HUD, now in effect and as may be amended from
time to time, in the performance of the duties and responsibilities
set forth in this Agreement.
Section 5. Services Provided to Owner. The Agent
shall provide all services necessary or desirable to manage,
operate, and maintain the Development on a day-to-day basis in
accordance with sound property management practices. The Agent will
exercise prudence and diligence in performing its duties, and will
diligently protect the property rights and interests of the Owner
while performing the functions of property manager. The Agent will
at all times endeavor to achieve the budgeted occupancy and rent
levels submitted to the Owner and the Authority, and to operate the
Development within the limits of the Owner- and Authority-approved
budget. The duties of the Agent will include, without limitation,
Leasing Office and On-Site Staff - Unless made exempt from
this requirement by the Authority's Director of Asset Management,
supervise, coordinate, and maintain a management and leasing office
at the Development site in a location to be provided by the
Owner, which office shall be funded from the operations of the
Development as reflected in the annual operating budget approved by
the Authority. The Agent shall have
sufficient qualified personnel present at the Development for the
full and efficient performance of its duties under this Agreement,
including the physical presence of responsible persons at such
times as the leasing office is open for business. The Agent will
also maintain a resident agent for service of process within the
State of Michigan.
Tenant Selection Criteria - Establish a written Tenant
Selection Criteria and an Application Processing Procedure
consistent with applicable state and federal laws and regulations.
The Tenant Selection Criteria must include screening for criminal
history and the Michigan State Police Sex Offender Registry. A
copy of the Tenant Selection Criteria and the Application
Processing Procedure shall be posted conspicuously in the on-site
Affirmative Fair Housing Marketing Plan - Develop and
implement an Affirmative Fair Housing Marketing Plan that at a
minimum addresses the following: (a) attracting prospective
residents of all minority and majority groups in the community; (b)
hiring and training rental staff on a non-discriminatory basis; (c)
participating in a community outreach program; and (d) attracting
qualified disabled residents. The Affirmative Fair Housing
Marketing Plan shall be updated as required by the Owner or the
Marketing and Leasing - Use its best efforts to market and
promptly lease to Tenants who meet the Tenant Selection Criteria,
all units which are or become vacant in the future, at rental rates
approved by the Owner and not exceeding the maximum rates permitted
by the Authority, the Regulatory Agreement or the LIHTC Program.
Advertising and signs posted must follow HUD Fair Housing and
American with Disability Act requirements. The Agent shall conduct
all leasing activities in compliance with applicable Michigan laws
and regulations and shall be responsible for the licensing of any
of its officers or employees as needed to fulfill its obligations
under this agreement. All marketing activities of the Agent,
including advertising, promotion and staffing, are subject to the
prior review and written approval of the Owner. In connection with
this responsibility, the Agent shall:
Take applications, screen and qualify prospective tenants, and
maintain records, at all times in accordance with the Agent's
written Tenant Selection Criteria and applicable federal, state and
local laws and regulations.
Promptly notify the applicant in writing regarding any
determination of applicant ineligibility on the basis of income,
family composition, or any other reason, and advising the applicant
of his or her right to meet with the Owner or Agent in accordance
with Authority requirements.
Comply with occupancy qualifications and rental restrictions
required by the Regulatory Agreement, and, if applicable, all
requirements of the LIHTC Program and any other agreements that may
be executed by the Owner.
Maintain a current waiting list (updated monthly) of all applicants
and endeavor to market all units in compliance with the Affirmative
Fair Housing Marketing Plan submitted to the Authority as described
in Section 5.c. above. The waiting list must include all items
required for the development to meet each program’s compliance
requirements, as amended from time to time in the program’s
policies published by the administering authority. Generally, the
items required to be maintained for each applicant on the waiting
Application Date and Time
Head of Household Name
Unit Size Requested
Income Eligibility (% of AMI)
Need for Accessible Units
Log of contacts made with each applicant
Waiting List Status and Status Date
Neither solicit nor receive, directly or indirectly, any
commission, bonus, gratuity, fee or any other payment from any
applicant or prospective tenant, except for the cost of obtaining a
credit report or other processing charges approved in writing by
the Director of Asset Management.
Not charge the Development an application processing fee, except
for reimbursements for actual credit reporting, criminal background
check and similar fees charged by third party vendors to the Agent,
unless an application fee is approved in writing by the Director of
Inspect all dwelling units prior to occupancy and prepare
certifications in form and substance acceptable to the Authority
indicated dwelling units are ready for occupancy.
Prepare all Leases and parking permits, if applicable, and execute
the same on behalf of the Owner, identifying on these documents
that the Agent is acting on behalf of the Owner.
e. Lease Requirements - Each occupied unit shall be subject
to a Lease, on a form approved by the Owner and the Authority or on
the Authority approved lease form, signed by all the adults
occupying the unit. All occupants of a unit must be named on the
lease for that unit. If a tenant moves into a unit on any other day
of the month besides the first, the Agent agrees to prorate the
first month’s rent collected from the tenant. The Agent shall
provide the Authority access to all of the documents received by the
Agent as required by this paragraph and Section 5.d.
Marketing Addendum or Transition Plan - If the Development
will be newly constructed or will undergo a "preservation"
rehabilitation while this Agreement is in effect, the Agent shall
consult with the Owner in order to coordinate marketing concerns,
and will act as liaison with the Architect and General Contractor
while construction or rehabilitation of the Development progresses
and if newly constructed, through the Initial Rent-Up Period.
Furthermore, attached to this Agreement is:
For new construction and a substantial rehabilitation during which
no dwelling units are occupied, a Marketing Plan Addendum (MSHDA
Mgmt. 401B) for the initial marketing and rent-up of the
Development must be attached if the following box is marked –
For a "preservation" rehabilitation during which some or
all of the Development's dwelling units will continue to be
occupied, a copy of the General Contractor’s Transition Plan to
minimize the disruption to existing residents and development
operations must be attached if the following box is marked –
Agent agrees to perform all applicable provisions of the Marketing
Addendum or cooperate with the General Contractor’s implementation
of the Transition Plan attached to this Agreement, if applicable.
Commercial Leases - Negotiate commercial leases and
concession agreements, subject to prior approval by the Owner of
all substantive terms and conditions, and execute the same on
behalf of the Owner, identifying on these documents that the Agent
is acting on behalf of the Owner. Rents for commercial space in
the Development shall not be less than the minimums that are, from
time to time, approved by the Owner.
Building and Grounds Maintenance - Maintain the buildings,
dwelling units located therein and all common areas, facilities and
grounds of the Development in a decent, safe and sanitary condition
as prescribed by the Authority and HUD, and in compliance with the
standards and requirements set by any governmental authority having
jurisdiction over the Development. To implement this
responsibility, Agent shall conduct, at a minimum, annual
inspections of all buildings, units and the various component
systems thereof and will undertake any measures necessary to
maintain the Development in good order and repair in accordance
with applicable standards, subject to Section 9 below.
Preventative and Ongoing Maintenance - Prepare and implement
a long-term, preventative maintenance program for the continuing
upkeep of the development, as well as a maintenance service request
system that includes a record of all services requested and a
description of the work completed and parts utilized by unit
number, resident name, staff names, and associated dates of
actions. With respect to the performance of maintenance tasks, the
Agent shall make every effort to utilize third-party vendor
guaranties and warranties to minimize the use of development
operating funds and reserves for repair and replacement costs. In
furtherance of this goal, the Agent will maintain a complete record
book containing all service contracts and their dates of
expiration, all unexpired vendor warranties and guaranties, the
model, serial number and location (by unit) of every appliance at
the development, the date of installation, and the name and contact
information of all vendors and suppliers.
Unit Turnover - Renovate and make every effort to re-lease
vacant units within 30 days after move out or as promptly
thereafter as is possible.
Fire Safety Plan - Develop and implement a fire safety plan
with the assistance of the local fire department. As a part of the
fire safety plan, the Agent must provide a means of ensuring the
prompt response to any requests for assistance using the emergency
cord system (buzzer and/or bell) installed for elderly tenants.
Rent Collection - Diligently request, demand and collect all
rents and other monthly charges due to the Development, deposit
them in the Operating Account on a daily basis, and issue receipts
to tenants on request. The Agent agrees that payment for security
deposits, rentals, and all other deposits accepted or received from
applicants and tenants shall be in the form of checks, money
orders, or similar instruments payable to the development’s name.
The Agent agrees not to receive cash as a form of payment, except
in accordance with the Management Agent’s written cash management
Expense Management - From the Operating Account, Agent
shall regularly and punctually and in the order and priority set
forth below disburse the following:
The payment(s) required under the Mortgage Loan and any other
loans from the Authority, including hazard and commercial
liability insurance premiums, taxes and assessments, interest and
principal on the Mortgage Loan, deposits to the Replacement
Reserve Fund and any other reserves or escrows, as required by the
Expenditures for the normal, day-to-day operation of the
Development, including supplies, services, utility charges, and
compensation and reimbursements due the Agent under Section 15,
and in accordance with the budget for the Development approved by
the Owner and the Authority, and for such other expenditures as
are authorized by or required to carry out the terms of this
Agreement; PROVIDED HOWEVER, that no compensation due under
Sections 15.1 or 15.2 of this Agreement shall be paid to an Agent
who has an Identity-of-Interest relationship with the Owner, so
long as there are undisputed payables aged over 90 days owing to
vendors other than Identity of Interest vendors, unless the Agent
has in place an "Accounts Payable Action Plan" approved
in writing by the Authority.
So long as the Agent exercises reasonable efforts to pay all charges
and expenses of the Development in a consistent manner, the Agent
will not be responsible for any late charges, fees, penalties,
service charges or interest due and owing as a result of the Agent's
failure to make any required payments by their due date. The
Agent's "reasonable efforts" will be judged against the
management industry's standard for prudent, fair business practices.
If the Agent is unable to pay the charges and expenses of the
Development in a timely manner due to a lack of available funds,
then the Agent will notify the Owner of the deficiency. If the
deficiency is ongoing, once the Owner has been notified and is aware
of a continuing deficiency, the Agent is not required to send
subsequent notices of a lack of funds. If the Owner fails to make
funds available in the Operating Account to fund the deficiency
after notice by the Agent, or the Owner otherwise consents to the
Agent's failure to pay, the Owner assumes responsibility for any
charges, fees or interest that may be owed. In no event will the
Agent be required to fund any deficiency in the Operating Account.
The Agent will be not required to make any payments or pay other
charges that are the subject of a valid dispute so long as the Owner
or Agent is diligently pursuing resolution of the dispute, except
for property taxes and other items that must be paid to avoid
substantial late fees or penalties.
Lease Enforcement - Diligently enforce the provisions of all
Leases, and take prompt legal action to evict Tenants delinquent in
the payment of monthly rent or carrying charges or otherwise in
violation of their Leases. Agent shall also attempt to obtain
reimbursement from such Tenants for all expenses allowable by law,
including attorney's fees, incurred on behalf of the Development in
connection with such legal action.
Tenant Eligibility and Certification - In accordance with
Authority, HUD, LIHTC regulations, the Regulatory Agreement and
this Management Agreement requirements, prepare and verify
eligibility certifications and re-certifications for occupancy in
the Development when applicable, and prepare and forward
appropriate certifications to the necessary agencies.
Subsidy Payments - Diligently process applications for and
cause collection of applicable subsidy payments from HUD,
USDA-Rural Development, the Authority, and other public housing
Insurance - Purchase and maintain on behalf of the
Development, hazard, business interruption, commercial liability
and all other insurance coverages and bonds required by, and with
provisions, in amounts, and with insurers satisfactory to, the
Authority and the Owner. Insurance coverages must be maintained in
accordance with the Authority’s Insurance Guidelines, as amended
from time to time.
Security Deposits - The Agent shall establish a security
deposit account in the name of the Development, at a regulated
financial institution with an office located in Michigan and whose
deposits are insured by an agency of the U.S. Government. Any
funds collected as a Tenant security deposit shall be deposited in
the Development's security deposit account and kept separate and
apart from all other funds of the Development and the Agent. In
lieu thereof, the Owner or Agent may obtain and maintain a cash or
surety bond under Section 4 of the Michigan Security Deposit Act
(MCL 554.604). The Agent will administer all Tenant security
deposits in accordance with Michigan law.
Financial and Tenant Records - Maintain financial and tenant
records which satisfactorily account for the operations and
occupancy of the Development in compliance with Owner, Authority,
and HUD requirements.
Tenant Files - Maintain a tenant file for each occupied
unit, and hold all records for a seven-year period after move-out
or as such longer period as may be described by applicable program
requirements. On developments with LIHTC funding, all tenant
income eligibility records from the first year of operation of the
development must be held for 21 years. Each tenant file must
contain all documents required for the Development to comply with
applicable program requirements and regulations, as published from
time to time by the administering authority. Generally, each
tenant file will contain:
Completed pre-application and application forms;
Record of the receipt of application fee including the amount and
Criminal screening report
Copy of credit report;
Signed consent to release information form (e.g., HUD 9887);
Signed utility data release authorization
Verification that social security numbers are
Proof of citizenship, age, family membership
of Tenant's household;
Verification forms for all "Yes” items on the Resident
MSHDA Certification of Tenant Eligibility (or HUD 50058/50059);
Current lease and addendum;
Security deposit letter
including date of receipt and amount received; and
Agent must maintain rejected applicant files for a minimum of three
years with at least the following items:
Completed pre-application or application
Record of the receipt of the application fee
including the amount and date received;
Copy of the rejection notice; and
Proof of the rejection reason such as
citizenship status, criminal status, income verification exceeding
the income limit, or other validating materials collected during
the application process.
Agent shall provide Owner and the Authority with access to all of
the documents received by the Agent as required by this paragraph.
Authority Financial Submissions
- Prepare and submit to the Owner, the Authority, and/or HUD, the
Development's monthly financial reports, a proposed annual
operating budget, and all other reports and information required to
be prepared and submitted in accordance with Section 6 of this
Agreement. To comply with this requirement, the Agent must utilize
computer operating systems, software and hardware that are capable
of meeting the electronic reporting requirements of the Authority
and/or HUD. The Agent must update and upgrade its systems,
software and hardware as necessary to maintain compatibility.
Budget and Reports; Agent Records.
- Within thirty (30) days following the date of this Agreement and
at least ninety (90) days prior to the commencement date of each new
operating year thereafter until the termination of this Agreement,
the Agent will prepare an operating budget for the Development (the
"Budget") in a format
acceptable to the Owner, and will submit the Budget to the Owner for
approval. The Budget must also be submitted to the Authority on
forms prescribed by the Authority, at least ninety (90) days prior
to the beginning of the new operating year or as required by the
Authority’s Budget Policy as amended from time to time. With
respect to rent-restricted units, no deviation shall be made from
any applicable program rent guidelines without the prior written
consent of the Authority. With respect to unrestricted units,
deviations from the approved rent schedule contained in the Budget
may be made only with the consent of the Owner or as deemed
necessary by the Agent to promote full occupancy and to maximize
rental income from the operation of the Development. The rents
charged for and the occupancy of the units at the Development shall
at all times be subject to the rent and occupancy limits set forth
in the Regulatory Agreement.
Income and Expense (MIE) Report -
By the 20th
day of each full calendar month commencing after the date of this
Agreement, the Agent will submit monthly reports prepared in
accordance with the MIE Guidelines (the "MIE
Report") for the prior month to the Owner and the Authority
showing actual performance for the month, so that the Authority can
prepare the Monthly Income and Expenditure Analysis for the
Development. As a part of the monthly reports submitted by the
Agent to the Owner, the Agent will include a copy of (i) the monthly
rent roll for the Development, (ii) the cash disbursements journal,
including lists of payables and receivables, (iii) the bank
statement, including the reconciliation thereof, for the Operating
Account for the prior month, (iv) the MIE Report for the prior
month, accompanied by invoices supporting all disbursements, and (v)
any and all notices from the Authority during the period covered by
the monthly report. The Owner may forgo receipt of any of the items
to be included in the report.
Certified Audit - Annually, within
120 days after the close of each operating year (or portion of an
operating year), the Agent will submit a certified annual audit of
the operation of the Development for the year, conducted in
accordance with the Audit Guidelines, along with the Certification
required from the Owner's general partner(s), manager(s) or
member(s). The Agent will cooperate with the auditor as needed to
prepare the audit and will promptly deliver all information and
records requested. The Agent will also submit to the Owner and the
Authority such other statements and reports as the Owner or
Authority shall reasonably request from time to time.
6.4 Maintain Records - The Agent agrees to maintain adequate
and complete books, records, papers, contract and files, all of
which shall be the property of the Owner and shall be kept separate
and apart from the Agent's books and records. The Agent shall
establish and maintain an accounting system acceptable to the Owner
and the Authority which shall, at a minimum, include:
General ledger containing all the accounts
necessary to facilitate the completion of the MIE Report;
Current records as to all receipts, including without limitation,
application fees, security deposits, monthly rentals and those
obtained from all other sources;
Current records as to all disbursements;
Accounts receivable and payable subsidiary
Monthly rent roll, including unit number,
tenant name, gross rent, security deposit, and move-in and lease
Bank statements and reconciliations for
operating and security deposit accounts;
Copies of all paid and unpaid invoices;
Vendor contact lists; and
Copies of all legal, general, and compliance
In addition, the Agent must maintain an internal control structure
that promotes the safeguarding of assets (including the segregation
of duties), checks the accuracy and reliability of accounting data,
promotes operational efficiency, and encourages adherence to
prescribed policies and regulatory requirements.
6.5 Access to
Records - The Owner and the
Authority will have access to the books and records relating to the
Development at all reasonable times and will have the right to audit
such books and records at the Development's expense. Any adjustment
in amounts due and owing to the Development as a result of
information discovered by the audit will be paid within thirty (30)
days following receipt of the audit by the Agent. Upon termination
of this Agreement, the Agent must deliver to the Owner all the books
and records for the Development pursuant to Section 16 of this
Agreement within thirty (30) days of receipt of termination.
Staff Positions and Compensation.
Position Descriptions; Hiring - The
Agent shall provide below position descriptions that set forth the
services to be provided by each employee of the Agent who will be
working on a full or part-time basis at the Development site or who
will be compensated in any way from monies in the Operating Account
or from other funds of the Development. On the basis of these
position descriptions, the Budget, and wage rates set forth in the
approved Budget, the Agent shall hire, pay, supervise and discharge
the staff necessary to properly maintain and operate the
Development. Such staff shall in every instance be in the Agent's
and not in the Owner's employ. The Agent will, in the hiring and
retention of all employees, use reasonable care to select qualified,
competent and trustworthy employees. The Agent agrees that it will
not discriminate against any employee or applicant for
employment because of race, color, religion, sex, national origin,
age, height, weight, disability, arrest record or marital status.
The Agent will comply with all other federal, State and local laws
and regulations providing for nondiscrimination, reasonable
accommodation and equal opportunity in employment.
Compensation - The Agent agrees
that, as of the date of this Agreement, only those staff filling the
positions described below will receive any part of their
compensation paid from or charged to the Development, and then only
for services provided by the Agent with respect to the Development.
Thereafter, the Agent agrees that only those staff whose positions
and compensation are detailed in the Budget approved by the Owner
and the Authority will be paid from or charged to the Development.
Per the Authority's written Management Fee Policy, as amended from
time to time, a Central Office Employee performing temporary
replacement duties may also be paid from or charged to the
Development. The Agent understands that a material factor in its
appointment by the Owner and approval by the Authority as the
exclusive managing agent of the Development is the high level of
experience and competence of the staff assigned to or providing
services to or for the benefit of the Development. The staff
positions paid from or charged to the Development are listed below:
Position DescriptionName, if knownHours
7.3. Type of
Development Compensation -
Compensation including fringe benefits and local, state and federal
tax assessments for the employees listed in Section 7.2 shall be
borne solely by the Development and shall be included as a separate
line item in the Budget. Compensation for Central Office Employees
shall be paid from the Agent's compensation as set forth in Section
From the Agent - The Agent shall
maintain workers' compensation and employer's liability insurance,
social security coverage and unemployment insurance for all of its
employees in such amounts and coverage and with such deductibles as
are consistent with standard industry practice, and shall withhold
and pay on the employee's behalf such additional taxes as may be
required under federal, state or local law.
Training - The Agent agrees to make
reasonable efforts to train and employ residents of the Development
whenever possible to perform services. The Agent agrees to
make a reasonable effort to train newly hired staff on Fair Housing
rules within 6 months of hire and update existing staff on Fair
Housing rules at least once every three years.
Criminal History Check - The Agent agrees to conduct a
criminal history check and a check of the Michigan State Police
Sex Offender Registry of all on-site employees and any other
employee who may visit the Development on a periodic basis. The
Agent will endeavor not to hire anyone who, on the basis of the
criminal history or Michigan State Police Sex Offender Registry
screening, might be a potential threat to any Tenant or visitor of
The Agent shall comply fully with (a) the provisions of all
federal, state and local laws prohibiting discrimination in the
rental of housing on the basis of religion, race, color, national
origin, age (unless with respect to an elderly housing development),
sex, marital status, familial status or disability, and (b) the fair
housing regulations and directives of HUD (if applicable) and the
Authority providing for nondiscrimination and equal opportunity in
Limit on Disbursements, Contractual
Obligations and Liabilities. With
the exception of payments required under the Mortgage Loan or
Regulatory Agreement, taxes, insurance, utilities and Owner-approved
contractual obligations, no single disbursements shall be made in
nor shall any contract or ongoing supply or services arrangement
that is estimated to exceed
per year be entered into unless specifically authorized in writing
by the Owner, excepting, however, that emergency repairs involving
manifest danger to life or property, or immediately necessary for
the preservation and safety of the Development, or for the safety of
the tenants, or required to avoid the suspension of any necessary
services to the Development, may be made by the Agent irrespective
of the cost limitation imposed by this Section. Notwithstanding this
authority as to emergency repairs, the Agent shall, if at all
possible, confer immediately with the Owner regarding every such
expenditure. The Agent shall not incur liabilities (direct or
contingent) that will at any time exceed the aggregate amount of
or any liability maturing more than one (1) year from the creation
thereof, without first obtaining the written approval of the Owner.
Compliance with Governmental
Directives. The Agent shall take
such action as may be necessary to comply promptly with any and all
orders or requirements of any federal, state, county, or municipal
authority having jurisdiction over the Development, subject to the
same limitations contained in Section 9 of this Agreement in
connection with the making of repairs and alterations. The Agent,
however, shall not take any action under this Section so long as the
Owner is contesting, or has affirmed in writing its intention to
contest, any such order or requirement. The Agent shall promptly,
and in no event later than seventy-two (72) hours from the time of
their receipt, notify the Owner and the Authority in writing of all
such orders and notices or requirements.
Commissions or Rebates;
Kickbacks; Identity of Interest.
11.1 When taking bids or issuing purchase orders, the Agent shall at
all times be under the direction of the Owner, and shall utilize its
best efforts to secure for credit to the Development any discounts,
commissions or rebates reasonably obtainable as a result of such
bids or purchase orders.
11.2 The Owner and Agent agree to obtain materials, supplies and
services at the most advantageous cost and terms available to the
Development and to secure and credit to the Development all
discounts, rebates or commissions obtainable with respect to
purchases, service contracts and other transactions on behalf of the
11.3 Neither the Owner nor the Agent shall
enter into any agreement or contract with an Identity of Interest
Vendor providing goods or services to the Development which involves
a “kick-back" of any part of the cost of the services or
goods, or which involves any payment, gift or benefit in recognition
of or in return for the Owner or Agent entering into the agreement
or contract, other than routine gifts made to all customers of the
vendor, such as in connection with holidays, etc.
11.4 Any business conducted with an Identity of Interest Vendor must
comply with the requirements of Rule 203 of the Authority's General
Rules, as set forth in R 125.203. Any relationship between the
Owner or the Agent and an Identity of Interest Vendor proposing to
provide goods or services, whether related directly or indirectly to
the Development, must be disclosed to the Authority using the form
prescribed by the Authority, before any business with the Identity
of Interest Vendor can be conducted. The Owner and the Agent agree
that all goods and services purchased from Identity of Interest
Vendors shall be purchased at costs not in excess of those that
would be incurred in making arms'-length purchases on the open
market, and that all discounts, rebates or commissions that may be
obtained will be credited to the Development as required by Section
Agent of Owner.
12.1 All actions by the Agent pursuant to the provisions of Sections
5, 9, 10, and 11 shall be as agent of the Owner, and all obligations
or expenses incurred thereunder shall be for the account, on behalf
and at the expense of the Development, except as otherwise provided
herein. The Agent shall not be obliged to make any advance to or
for the account of the Owner, or to pay any sum except out of funds
held or provided as aforesaid. The Agent shall not be obliged to
incur any liability or obligation for the account of the Owner
without written assurance that the necessary funds for the discharge
thereof shall be provided by the Owner.
12.2 The Agent shall assume responsibility for
losses of rental income, late fees, and increases in operating
expense or financial deficits resulting from the Agent's negligent
omissions or failures to act in accordance with the standards set
forth in this Agreement in the performance of any and all of the
duties necessary to the proper management and marketing of the
The Agent shall establish the Operating Account with a regulated
financial institution with an office located in Michigan, in the
name of the Development, with authority to draw thereon for any
payments to be made by the Agent under Section 5.m. Funds in the
operating account may be placed in a deposit account insured by an
Agency of the Federal Government, or invested in direct obligations
of the U.S. Government maturing within one (1) year, or in money
market funds investing solely in obligations of the U.S. Treasury.
All deposits to and payments or withdrawals from the Operating
Account shall be subject to the limitations set forth in this
Agreement and the Regulatory Agreement. The funds in the Operating
Account shall not be commingled with any other accounts or funds of
the Agent or owner and shall be maintained and disbursed in
accordance with the provisions of the Regulatory Agreement and the
written policies of the Authority and HUD. Only the Agent and its
authorized employees shall have access to funds in the Operating
Term of Agreement.
14.1 The initial term of this Agreement shall
commence as of the effective date of ,
[to be filled in by the Authority]
and shall terminate on December 31,
14.2 At the end of the initial term, this
Agreement will be automatically extended for successive one (1) year
terms at the rate of compensation provided for in Section 15.1 or an
Addendum to this Agreement (MSHDA Mgmt. 401A), until terminated
pursuant to Section 16 of this Agreement. This subsection shall not
be effective if this Agreement is in the process of being terminated
pursuant to Section 16.
Compensation of Agent.
Fees - Except for the salaries,
taxes and fringe benefits that are to be paid on behalf of the Agent
to employees out of the Operating Account pursuant to Section 7, the
basic compensation from Development operations that the Agent shall
be entitled to receive for services performed during the initial
term of this Agreement shall not exceed $
per unit per year, or a prorated amount of 1/12th of this fee for
each month of any partial year during which services are performed.
Services will be deemed to begin on the commencement date specified
in Section 14.1, except in the case of new construction or
rehabilitation, in which case services will be deemed to begin with
respect to any unit on the later of (a) the date on which the
Authority issues its Permission to Occupy or (b) the date on which a
Certificate of Occupancy is issued by the municipality. This fee
will be paid in equal monthly installments on the first business day
of the month in which the services being compensated will be
performed. Management fees cannot be paid in advance for any
subsequent month. In no event shall this fee exceed the Maximum
Allowable Management Fee. After the initial term of this Agreement,
the basic compensation to be paid shall be the amount established in
the approved Management Agreement Addendum (MSHDA Mgmt. 401A) for
the year in which the services are performed. In the event of a
termination that is effective on other than December 31, no fee
shall be due for the months following the termination, assuming a
prorated amount of 1/12th of the total fee is attributable to each
Management Fees - Following each
operating year, if the Agent qualifies under the Authority's Premium
Management Fee Policy, as amended from time to time, the Agent may
also be paid the Premium Management Fee, if approved by the Owner
and the Authority. If the Premium Management Fee is earned
by the Agent, the amount of the Premium Management Fee that may be
paid to the Agent during the initial term of this Agreement shall
not exceed $
per unit per year.
Compensation - In addition to
compensation for services performed, Agent is entitled to
reimbursement for the following:
a. Compensation payable to the employees
specified in Section 7, including benefits, and for employment and
other taxes payable to local, State, and Federal governments paid in
connection with their employment.
b. Actual, reasonable and necessary purchases
made by the Agent on behalf of the Development, e.g., purchases of
supplies, equipment and services to be used specifically for the
operation of the Development pursuant to the Authority's
Management Fee Policy, as amended from time to time.
Default - If a material default by
the Agent under this Agreement, the Regulatory Agreement or the
Mortgage occurs because of the Agent's failure, refusal or inability
to perform its responsibilities in an efficient and businesslike
manner, either the Authority or the Owner shall have the right to
withhold or suspend the Agent's compensation following written
notice of the default to Agent, subject to the following conditions:
a. The Agent shall have thirty (30) calendar days from the date of
the notice to cure the default. The failure to cure or take all
necessary steps to obtain a cure during the 30-day period following
receipt of the notice shall entitle the Authority or the Owner to
withhold or suspend the Agent's compensation. However, in cases of
emergency (including, but not limited to, situations endangering the
health and safety of the tenants, serious danger to property,
or misuse of Development funds) or where good cause for termination
exists, the 30-day notice shall not be required in order to withhold
or suspend the Agent's compensation.
b. If the Agent's compensation is withheld or suspended as provided
above, such withholding or suspension shall continue until the Agent
corrects or takes all necessary steps to cure the default, as
determined in the discretion of the Authority and the Owner, at
which point the Agent's compensation will be reinstated. If the
Agent's compensation has been withheld, the Agent shall lose its
right to recoup any compensation that has been withheld; but the
Agent will have the right to recoup any compensation that has been
suspended (and not withheld) once the default giving rise to the
suspension has been cured.
of Remedies - The remedies
described in Section 15.4 are in addition to and are not limited in
any way by any other remedy available to the Authority or the Owner
under this Agreement.
of Owner/Management Agent - The
Agent and Owner certify that neither the Owner nor any of partner,
member, manager, shareholder, officer or owner of any beneficial
interest in the Owner, is receiving any part of the Agent's
compensation, except through involvement in an identity of interest
company that is disclosed to the Authority on an Identity of
Interest Disclosure (MSHDA Mgmt. 450B) form.
Termination without Cause - The
parties to this agreement expressly understand and agreed that
either the Owner or the Authority shall have the right to terminate
this Agreement without cause, and without penalty, on thirty (30)
days' advance written notice to the Agent. In the event of a
termination under this subsection, the Owner or the Authority will
promptly send written notice to the other party of its action to
Termination with Cause - The
parties to this agreement expressly understand and agree that either
the Owner or the Authority shall have the right to terminate this
Agreement immediately for good cause, upon notice to the Agent and
without penalty. Good cause shall include, but is not limited to,
the voluntary or involuntary bankruptcy of the Agent; the commission
of fraud or other malfeasance by the Agent or its employees or
agents; the intentional commission of (or omission leading to) a
material default under this Agreement, the Mortgage or the
Regulatory Agreement by the Agent or its employees or agents; or the
commission of criminal acts or the threat of criminal acts on the
part of the Agent or its employees or agents. In the event of
immediate termination for good cause, written notice of the
termination shall be sent promptly to all parties.
Bankruptcy or Default - In the
event a petition in bankruptcy is filed by or against the Owner, the
Owner makes an assignment for the benefit of creditors to take
advantage of any insolvency law; or the Owner is in default of its
obligations under the Mortgage or the Regulatory Agreement, the
Authority may immediately terminate this Agreement upon written
notice to the Owner and Agent.
Termination without Cause - The
Agent will have the right to terminate this Agreement without cause
on thirty (30) days' advance written notice to the Owner. In the
event of a termination under this subsection, the Agent will also
send notice to the Authority of its action to terminate. On written
notice to the Agent, the Authority may extend the termination date
by an additional thirty (30) days, in order to maintain the
financial and physical stability of the Development.
16.5 Agent Accounting of Operations - Within thirty (30) days
after termination, the Agent shall submit an accounting of the
operations of the Development and after the parties have accounted
to each other with respect to all matters outstanding as of the date
of termination, the Owner shall furnish the Agent with reasonable
security, satisfactory to the Agent, against any outstanding
obligations or liabilities which may have been incurred hereunder.
Delivery of Records - In the event
of termination, all books, records and documents pertaining to the
Development in the actual or constructive possession of the Agent
shall be delivered into the possession of the Owner within thirty
(30) days of termination. Such books, records and documents are
considered to be the property of the Owner and the Development and
shall include, but are not limited to, the following:
Architectural plans and specifications;
Guaranties and warranties pertinent to the
construction of the Development;
Operating statements, cash receipts journal,
general ledger, and check register;
Tenant ledger cards (including unit number,
resident name, gross rent, security deposit paid, move-in and lease
Tenant files, preliminary applications and
certifications and tenant leases;
Current waiting list, if applicable;
Bank statements and reconciliations (with
operating and security deposits), deposit tickets, check register,
and certificates of deposits;
Accounts payable and receivable records with
original paid and unpaid invoices;
Ongoing contracts for which performance is
continuing or has not been rendered;
Copies of the most recent MIE Report and
annual certified audits;
Copies of all legal, general and/or
compliance issue correspondence;
Vendor contact lists;
Copy of the CNA, if applicable, and;
Copy of the Regulatory Agreement and all
Authority policies and rules applicable to the Development (but
limited to copies that are in the actual possession of the Agent).
Owner shall provide the Agent with reasonable access to the above
documents during regular business hours solely for the purpose
of enabling the Agent to complete any final audits, financial
statements or tax returns of the Agent.
of Remedies - The Owner, the Agent
and the Authority reserve the right to pursue those remedies stated
in this Agreement and those prescribed by law or in the Act for
violation of this Agreement. As to a violation under this
subsection, these remedies include, but are not limited to,
withholding or suspending any unpaid compensation or the institution
of legal action for specific performance to obtain the physical
return of the above documents.
- The parties to this agreement understand and agree that no
liability shall attach to the Authority in the event of termination
of this Agreement pursuant to this Section.
Ownership or Control of Agent.
17.1 Change in
Ownership/Control - The Agent shall
not assign or sell any of its rights, obligations or duties under
this Agreement without the prior written approval of the Owner and
the Authority. Within the meaning of this Section, an assignment or
sale shall include one or more sales or transfers by operation of
law or otherwise by which a controlling interest in the Agent shall
be vested in a party or parties who are not shareholders, members or
partners of the Agent as of the date of this Agreement.
of Ownership - The Agent represents
that as of the date hereof the persons listed below or on a Schedule
of Ownership/Control attached as an addendum to this Agreement
(MSHDA Mgmt. 401A1), constitute all the shareholders, members or
partners of the Agent, holding the percentages of ownership set
forth opposite their names:
To the extent that any interest in the Agent
is owned by a corporation, limited liability company or partnership
entity, the identity and percentages of ownership of the entity must
also be disclosed.
Officers - The Agent represents
that as of the date hereof the following persons are the officers or
managers of the Agent who have no ownership interest in the Agent or
the Owner but have the authority to authorize contracts with vendors
providing services or supplies to the Development:
Liability and Employee Dishonesty
Insurance - The Agent will carry
and maintain in force, at its own expense, professional liability or
errors and omissions insurance in the minimum amount of $100,000.
Crime and Dishonesty Insurance -
The Agent will carry and maintain in force, employee crime and
dishonesty insurance issued by a carrier acceptable to the Owner and
the Authority. The employee crime and dishonesty insurance coverage
must be in an amount that is the greater of (a) two months' gross
rent potential for the Development (adjusted annually), or (b)
$200,000, and includes forgery coverage in the amount of $100,000
and such other coverages and terms that are required by the
Authority's Insurance Guidelines, as amended from time to time.
All employees of the Agent must be covered, and the Owner must be
listed as an additional insured and/or a loss payee.
Proof of coverage acceptable to the Authority must be submitted
annually to the Owner and the Authority.
- The Agent agrees to indemnify and hold the Owner harmless from any
and all claims, demands, liability, loss, cost or expense arising
out of or in any way connected with any acts or forbearances of the
Agent or its employees or agents, that arise out of matters outside
the scope of the Agent's authority under this Agreement, or that
involve or arise out of the gross negligence or willful misconduct
of the Agent or its employees or agents. The Owner agrees to
indemnify and hold the Agent harmless from any and all claims,
demands, liability, loss, cost or expense arising out of or in any
way connected with the performance by the Agent of its duties and
obligations within the scope of this Agreement, but excluding any
claims, demands, liability, loss, cost or expense arising out of the
Agent's gross negligence or willful misconduct. The indemnities
contained in this Section shall survive the termination of this
Agreement with respect to any act or occurrence preceding such
Authority as Final Arbitrator.
The Authority shall be the final arbitrator of all unresolved
disputes between the Owner and Agent and the parties hereto agree to
abide by the decision of the Authority. To the extent possible, the
arbitration shall be conducted in accordance with the then
applicable rules of the American Arbitration Association. Any such
decision by the Authority shall be enforceable in a Michigan court
of competent jurisdiction. The Authority may withdraw or delegate
its role as arbitrator, or may waive this requirement to arbitrate
in its entirety if the Authority deems it is in all the parties'
interests to do so.
Reimbursement for Excess Subsidies
Received. In the event that excess
interest reduction, rent supplement, rental assistance or Section 8
subsidy payments are paid by HUD with respect to the Development on
account of the Agent's failure to obtain certifications or
re-certifications of income from tenants of the Development as
required by HUD or Authority rules or regulations, the Agent agrees
to reimburse HUD from the Agent's own resources for any such excess
payments made. The Owner agrees to indemnify the Agent for payments
made by the Agent pursuant to this Section 20 to the extent that the
Owner itself has actually received or directly benefited from any of
such excess payments.
Agreement Subject to Rights of
Authority. This Agreement,
which is made subject and subordinate to all rights of the
Authority, including those as the mortgagee under the Mortgage,
shall inure to the benefit of and constitute a binding obligation
upon the parties hereto, their successors and assigns, and to the
extent that it confers rights, privileges and benefits upon the
Authority the same shall be deemed to inure to its benefit, in the
same manner and with the same force and effect as though the
Authority was a party to this Agreement.
This Agreement shall constitute the entire agreement between the
parties, and no variance or modification of Agreement shall be valid
and enforceable, except by written amendment, or by an Addendum on
the MSHDA Mgmt. 401A or 401A1 or 401B forms, executed by the parties
and approved by the Authority in the same manner as this Agreement.
Actions on Behalf of the Authority.
Except as otherwise provided herein, the following officers of the
Authority are authorized to give any approval or notice or take any
action on behalf of the Authority in connection with the
administration of this Agreement: the Executive Director, any
Deputy Director, the Director of Finance, the Director of Legal
Affairs, the Director of Asset Management, the Manager of Core
Operations/Intake, or any person duly authorized to act in that
capacity. The term "Authorized Officer of the Authority"
refers to the foregoing employees of the Authority when acting
within the scope of their authority.
Execution in Counterparts.
For the convenience of the parties, this Agreement may be executed
in several counterparts, which are in all respects similar and each
of which shall be deemed to be complete in itself so that any one
may be introduced in evidence or used for any other purpose without
the production of the other counterparts.
Consent of Authority.
This Agreement and any amendments to it, including any terms for
Agent compensation, shall not be effective until the written
approval of an Authorized Officer of the Authority is indicated on
the signature page.
If any clause, provision or section of this Agreement is found to
be invalid or unenforceable by any court of competent jurisdiction,
the invalidity or unenforceability of such clause, provision or
section shall not affect any of the remaining clauses, provisions or
Except to the extent that applicable federal law is superseding,
this Agreement shall be governed by and construed in accordance with
The Effective Date of this Agreement shall be the date established
by an Authorized Officer of the Authority in Section 14.1.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their authorized representatives on the date shown above.
The foregoing Agreement and Management Agent are approved.