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Home My WebLink About690309i ROOK 1400 PAGE53e TERMS AND CONDITIONS 1/ CONSTITUTING PART TWO OF AN ADMINISTRATION CONTRACT between LOCAL AUTHORITY and PUBLIC HOUSING ADMINISTRATION HOUSING AND HOME FINANCE AGENCY PUBLIC HOUSING ADMINISTRATION WASHINGTON, D. C. IS 1/ For operation of Farm Labor Camp Projects transferred to Local Authorities for low -rent use. WELD CO, COMMiS$iONf GREELEY, COLO, RECEIVED N0V5 1969 4 gisisiioiiiii2ITsgil1$ibLl 690309 BOOK 146t) PAGE537 TABLE OF CONTENTS ARTICLE I OPERATION Sec. 101 Use of Projects 102 Low -rent Character of Projects 103 Leases 104 Conditions of Occupancy 105 Rents 106 Repair, Maintenance, and Replacement 107 Reconstruction and Restoration 108 Labor Provisions 109 Compliance With Cooperation Agreement 110 Domestic and Foreign Materials 111 Nondiscrimination in Employment 112 Insurance and Fidelity Bond Coverage 113 Procurement 114 Personnel 115 Disposition of Excess Property 116 Books of Account and Records 117 Financial and Operating Statements 118 Approvals by Bureau of the Budget 119 Access to Records and Projects; Audits 120 Property Included in a Project 121 Covenant Against Conveyance or Encumbrance 122 Termination and Disposition of a Project Operated at a. Deficit ARTICLE II FISCAL PROVISIONS 201 Segregation of Funds 202 General Depositary Agreement and General Fund 203 Operating Receipts and Expenditures, Reserves, and Residual Receipts 204 Fiscal Year 205 Operating Budgets and Control of Operating Expenditures 206 Payments to PHA 207 Prohibition of Other Loans 208 No Capital Grant or Annual Contribution Page 1 1 1 1 2 2 2 3 6 6 6 7 8 8 9 9 9 9 10 10 10 11 12 12 13 14 14 15 15 15 BOOK 1400 PAGE538 TABLE OF CONTENTS ARTICLE III DEFAULTS, BREACHES, REMEDIES, AND GENERAL PROVISIONS Sec. Page 301 Conveyance of Title or Delivery of Possession in Event of Substantial Default 16 302 Delivery of Possession in Event of Substantial Breach 16 303 Reconveyance or Redelivery 16 304 Rights and Obligations of PHA During Tenure Under Sec. 301 or Sec. 302 17 305 Definition of Substantial Default 17 306 Definition of Substantial Breach 18 307 Other Defaults or Breaches, and Other Remedies 18 '308 Rights of Third Parties 19 309 Approvals and Notices 19 310 Waiver or Amendment 20 311 Titles and Table of Contents 20 312 Severability of Provisions 20 313 Interest of Members, Officers, or Employees and former Memibers, Officers, or F}nployees 20 314 Members of Local Authority Not Individually Liable 20 315 Interest of Member of or Delegate to Congress 21 316 Releases Upon Termination of Contract 21 Index of Defined Terms 22 buOK1400 PAGE539 ARTICLE I OPERATION Sec. 101. Use of Projects The Local Authority shall at all times operate each Project (i) solely for the purpose of providing decent, safe, and sanitary dwellings (including necessary appurtenances thereto) within the financial reach of Families and Persons of Low Income, and (2) in such manner as to promote serviceability, efficiency, economy, and stability. The Local Authority shall extend prefer- ence for occupancy in the Project to agricultural workers and their families. Sec. 102. Low -rent Character of Projects The Local Authority shall at all times maintain the low -rent character of each of the Projects. The low -rent character of each Project shall be deemed to be maintained so long as (1) such Project is used as provided in Sec. 101, and (2) to the knowledge or information of the Local Authority, no persons have been admitted to occupancy in such Project or allowed to continue occupancy therein except as provided in this Contract. Sec. 103, Leases (A) The Local Authority shall lease dwellings in the Projects solely to Families and Persons of Low Income as provided in this Contract, and may ]..ease at fair rental value any nondwelling space or facility in tbn Projects. The Local Authority shall not, without the approval of the PHA, grant any concessions, licenses, or permits to use any nondwelling space or facility in any Project without adequate compensation, except for programs conducted by or primarily for the occupants of the Project or for temporary public, char- itable, or similar use. (B) The Local Authority shall not permit any person or family to occupy a dwelling accommodation in the Project until such person, or a responsible member of such family shall have executed a written lease or other rental agreement for the dwelling accommodation occupied by such person or family. Sec. 104. Conditions of Occupancy (A) Each dwelling accommodation in the Project shall be occupied only by persons engaged in agricultural work or families at least one of whose members shall be engaged in agricultural work except that any vacant dwell- ing accommodation for which there are no applicants who are engagedin agricultural work may be occupied by other persons or families on the con- dition that the dwelling accommodation will be vacate3 promptly when the dwelling accommodation is needed to house agricultural workers and their families. (B) No dwelling accommodation shall be occupied by any person who is a member of an organization designated as subversive by the Attorney 'general of the United States. 1 �A r-� JI Vk BMW .1.40 i PAU5Ef0 (C) Dwelling le es or other rental agreements shall contain appropriate covenants to give effect to the foregoing obligations. (D) The Local Authority shall select tenants and assign to them dwell- ings in accordance with its established procedure which shall in all respects conform to the requirements of the Act and of this Contract. In the selection of tenants, subject to the requirements of Section 104(A), the Local Authority (1) shall not discriminate against families, otherwise eligible for admission to the Projects, because their incomes are derived in whole or in part from public assistance and (2) shall give due consideration to the urgency of the applicants' housing needs. Sec. 105. Rents The tc'cal Authority shall establish for. the Projects schedules of rents which shall not be higher than the rents which the tenants can afford to pay. Such rent schedules and all revisions thereof shall be subject to the approval of the PRA. The PHA shall approve any schedules of rents which meet the re- quirements of the Act and of this Contract and which reasonably assure the financial solvency of the Projects. Sec. 106. Repair, Maintenance, and Replacement The Local Authority shall at all times maintain each Project in good repair, order, and condition. Sec. 107. Reconstruction and Restoration (A) Whenever in any manner whatsoever, a Project, or any part thereof, shall have been damaged or destroyed, the Local Authority shall proceed promptly (1) to establish (either by settlement approved by the Local Authority and the PHA, or by litigation) and collect all valid claims which may have arisen against insurers or others based upon any such damage or destruction; and (2) except as hereinafter in this Sec.. 107 provided, and to the extent that monies are available therefor, to reconstruct, restore, or repair such Project. No Operating Receipts (or reserves established pursuant to Sec. 115 and Sec. 203(C)) shall be expended for reconstruction, restoration or repair unless authorization therefor is included in an Operating Budget approved by the PEA pursuant to Sec. 205. (B) All proceeds of any such claims and any other monies provided for the reconstruction, restoration, or repair of any such Project, shall be deposited in the General Fund, and be reserved for such purpose. The Local Authority shall not, unless the PRA otherwise approves, use the monies so reserved except (1) to pay the cost of such reconstruction, restoration, or repair or (2) for application as provided in subsection (D) of this Sec. 107. (a) Whenever any such reconstruction, restoration, or repair can be accomplished, substantially as one operation, and is not to be performed by the normal staff of the Local Authority, and the estimated cost thereof is in excess of $10,000, the Local Authority shall accomplish such reconstruc- tion, restoration, or repair under lump -sum contract or contracts (unless - 2 - 86. 1400 PAf,F541 another method is approved by the PHA.) and in compliance with the provisions of this Contract, including the provisions of Secs. 1.08, 110, and 111 and in compliance with the provisions (appropriately modified) of the following sections and subsections of Form PHA -2172, Revised September 1, 1951, to wit: 106(B), (C) and (D), 108, 109, 110(A) and (B), 111, 112, 113, 114, 120, 121, 123, and 1211. (D) Any balance of the monies so reserved which remains upon the com- pletion of such work and payment of all costs incurred therefor shall be applied: First, to the payment of indebtedness, if any, which the Local Authority may have incurred to provide such monies; Second, to the reim- bursement of any other reserve or other account, to the extent that such monies were provided from such reserve or account; and Third, as unreserved Operating Receipts. (E) The Local Authority, with the approval of the PHA, may determine that all or any part of any such damage to or destruction of a Project shall not be reconstructed, restored, or repaired, and in such event, the proceeds of any claims against insurers or others arising out of such damage or destruction, to the extent not used for such reconstruction, restoration, or repair shall be promptly paid to the PHA. Sec. 108. Labor Provisions (A) Each contract entered into by the Local Authority in connection with any Project shall require that there shall be paid, and the Local Authority shall itself pay, to all maintenance laborers and mechanics em- ployed in the operation of such Project, not less than the salaries or wages prevailing in the locality of such Project, as determined or adopted (subsequent to a determination under applicable State or local law) by the PHA. (B) The so-called Anti -Kickback Act (Title 18, U.S.C. Sec. 874 and Title 40, U.S.C. Sec. 276c), and all regulations, rulings, and interpreta- tions (including any amendments or modifications thereof) issued pursuant thereto by the Secretary of Labor of the United States shall apply to the Projects. The Local Authority shall comply with such statute and shall incorporate in each contract entered into by it involving the application of such statute, the followings "Anti -Kickback Act. The contractor agrees to comply with the regula- tions, rulings, and interpretations of the Secretary of Labor of the United States pursuant to the Anti -Kickback Act (Title 18, U.S.C. Sec. 874 and Title 40, U.S.C. Sec. 276c) which makes it unlawful to induce any person employed in the construction or repair of public buildings or public works to give up any part of the compensation to which he is entitled under his contract of employment; and the con- tractor agrees to insert a like provision in all subcontracts here- under." (a) A11 questions arising under this Contract or under any contract in connection with any Project relati to the application or interpretation of the Anti -Kickback Act or Sea. 16 (2) of the Act shall be referred to the -3- A ROOK 140n PAGEo42 Secretary of Labor of the United States for ruling or interpretation, and such ruling or interpretation shall be final. All disputes concerning prevailing wage rates or classifications arising under this Contract or under any contract in connection with any Project involving (1) significant sums of money, (2) large groups of employees, or (3) novel or unusual situations shall be promptly reported to the PHA for decision or, at the option of the PHA, referral to the Secretary of Labor of the United States. The decision of the PHA or the Secretary of Labor, as the case may be, shall be final. Each contract entered into by the Local Authority involving the application of such Anti -Kickback Act or Sec. 16 (2) of the Act shall embody the provisions of this subsection (C). (D) The Local Authority shall require each contractor and subcontractor engaged on any Project to furnish to the United States Department of Labor the names and addresses of all subcontractors on the work at the earliest date practicable, and to report monthly to the Secretary of Labor of the United States (within five days after the close of each calendar month, on forms to be furnished by the United States Department of Labor), as to the number of persons on their respective payrolls on such Project, the aggregate amount of such payrolls, the total man-hours worked, and itemized expenditures for materials. (E) Each contract entered into by the Local Authority for any recon- struction, restoration, repair, alteration, remodeling, painting or decora- ting of any Project, the amount of which contract is in excess of $10,000, shall also be subject to the following provisions: (1) Each such contract shall contain the following provision: "All laborers and mechanics employed under this contract will be paid unconditionally and not less often than once a week, and without sub- sequent deduction or rebate on any account (except such payroll deduc- tions as are permitted by the Anti -Kickback Regulations (29 CFR Part 3)), the full amounts due at time of payment computed at wage rates not less than those contained in the wage determination decision of the Public Housing Administration which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor or subcontractor and such laborers and mechanics; and the wage determination decision shall be posted by the contractor at the site of the work in a prominent place where it can be easily seen by the workers." (2) Each such contract shall provide that the Local Authority will not make any payment thereunder unless and until it has received an affi- davit from the contractor that such contractor and each of his subcon- tractors has made payment to each class of employees in compliance with the provisions of subsections (A) and (E)(1) of this Sec, 108. The Local Authority shall not make any such payment unless and until it has received such affidavit. (3) Each such contract shall require that if the contractor or any of his subcontractors finds it necessary or desirable to exceed the prevailing salary or wage rates specified in his contract, any expense incurred by -4- SOU 1400 PAGE543 the contractor or subcontractors h' ause of the payment of salaries or wages in excess of such amounts shall not be cause for any increase in the amount payable under his contract, The Local Authority shall not con- sider or allow any claim for additional compensation made by the contractor or subcontractors because of such payments. (4) Each suwh contract shall provide that in cases of underps.,nncn`, of sal- aries or wages to any class of employee described in subsection (A) of this Sec. 108 by the contractor or any of his subcontractors, the Local Authority may withhold from such contractor out of payments due, an amount sufficient to pay persons employed on the work covered by the con- tract the difference between the salaries or wages required to be paid under the contract and the salaries or wages actually paid such employees for the total number of hours worked, and shall further provide that the amounts withheld may be disbursed by the Local Authority for and on account of the contractor or the subcontractor to the respective employees to whom they are due. The Local Authority shall in cases of such under- payment withhold such monies; Provided, That the Local Authority shall not be considered in default under this sentence if it has in good faith made payments to the contractor in reliance upon an affidavit of the con- tractor that the salaries and wages required under his contract have actually been paid, (5) Each such contract shall provide that apprentices shall be employed thereunder only under a bona fide apprenticeship program registered with a State Apprenticeship Council which is recognized by the Federal Committee on Apprenticeship, United States Department of Labor, or if no such re- cognized Council exists in the State, under a program registered with the Bureau of Apprenticeship, United States Department of Labor. (6) Each such contract shall provide that no laborer or mechanic employed thereunder shall be discharged or in any other manner discriminated against because such laborer or mechanic has filed any complaint or in- stituted or caused to be instituted any proceedings or has testified or is about to testify in any proceeding under or relating to the labor standards incorporated in such contract. (7) Each suchcontract shall require that payroll records be maintained during the course of the work and preserved for a period of three years thereafter for all laborers and mechanics employed thereunder. Such records shall contain the name and address of eachsuch employee, his correct classification, rate of pay, daily and weekly number of hours worked, deductions made, and actual wages paid. The contractor shall be required to submit weekly to the Local Authority such copies and summaries (on forme prescribed by the PHA and furnished by the Local Authority) of all his payrolls and those of each of his subcontractors, as the Local Authority or the PHA may require. Each such payroll and summary shall be accompanied by an affidavit to the effect that (1) such payroll is correct and complete, (2) the wage rates contained therein are not less than those determined by the PHA, and (3) the clas- sificatiarsset forth for each laborer or mechanic conform with the work - 5 - ROOK 14011 PACE 544 performed. The contractor shall be required to make his employment records available for inspection by authorized representatives of the Local Authority, the PEA, and the United States Department of Labor, and to permit such representatives to interview employees during working hours on the job. (8) Each such contract shall require the contractor to insert in each of his subcontracts the provisions (appropriately modified) of this Sec. 108. (9) Each such contract shall provide that it may be terminated by the Local Authority upon default by the contractor of any of the provisions ' of this Sec. 108. (10) No such contract, or Subcontract thereunder, shall be entered into with any contractor or subcontractor who at the time is ineligible under the provisions of any regulations issued by the Secretary of Labor of the United States to receive an award of contract from the United States. (F) Within thirty days after the end of each Fiscal Year, the Local Authority shall certify to the PHA as to compliance with the provisions of subsection (A) of this Sec. 108 relating to the payment of prevailing salaries and wages during such Fiscal Year. Sec. 109. Compliance With Cooperation Agreement (A) The Local Authority shall perform and comply with all applicable provisions of the Cooperation Agreement, shall at all times retain, pre- serve, and enforce its rights thereunder, and shall not terminate, amend, or modify the same in any manner, except with the approval of the PHA. (B) The Local Authority shall not, without the approval of the PHA, make or agree to make any payments in lieu of taxes in excess of those pro- vided in the Cooperation Agreement, Sec. 110. Domestic and Foreign Materials. Each contract entered into by the Local Authority in connection with the alteration, or repair of any Project shall require that there shall be used, and the Local Authority shall itself use, in the alteration, and repair of any Project only such unmanufactured articles, materials, and supplies as have been mined or produced in the United States, and only such manufactured articles, materials, and supplies as have been manu- factured in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured, as the case may be, in the United States. The PHA reserves the right, upon request of the Local. Authority, to waive the foregoing restrictions if the PHA determines that the use of domestic articles, materials, or supplies is impracticable, or that the cost thereof as determined by the PHA is unreasonable. Sec. 111. Nondiscrimination in Employment Each contract (other than contracts or purchase orders for the furn- ishing of standard commercial articles or raw materials) entered into by • -6 - • BOOK 1 '9 PAGE 545 the Local Authority in connection with any Project shall require that the contractor and hie subcontractors will not discriminate, and the Local Authority in connection with any Project shall not itself discriminate, against any employee or applicant for employment because of race, creed, color, or national origin. Sec. 112. Insurance and Fidelity Bond Coverage (A) The Local Authority shall carry adequate (1) owners', landlords' and tenants' public liability insurance (excluding property damage), (2) workmen's compensation coverage (statutory or voluntary), (3) automobile liability insurance against property damage and bodily injury (owned and nonowned), (4) burglary and inside robbery insurance, (5) outside robbery insurance unless armored car service is u'ced for the transportation of cash, (6) boiler insurance (if steam boilers have been inztalled), and (7), if prescribed by WA, war damage insurance. The Local Authority shall not carry fire and extended coverage insurance except as may be specifically approved by the PHA. (B) The Local. Authority shall obtain or provide for the obtaining of adequate fidelity bond coverage of its officers, agents, or employees handling cash or authorized to sign checks or certify vouchers. (C) Each insurance policy or bond shall be written to become effec- tive at the time the Local Authority becomes subject to the risk or hazard covered thereby, and. shall. be continued in full force and effect for such period as the Local Authority is subject to such risk or hazard. Such insurance and bonds shall (1) be payable in such manner, (2) be in such form, and. (3) be for such amounts, all as may be determines by the Ircal Authority and approved by the PHA, and shall be obtained from financially erund and responsible insurance companies. (D) In connection with each policy, including renewals,'for owners', landlords° and tenants' public liability insurance (and for fire and ex- tended eover..?ge insurance, as may be approved by the PHA) the Local Authority shall. give full opportunity for open and competitive bidding. The Local Authority shall give such publicity to advertisements for bids as will assure adequate competition and shall. afford an opportunity to bid to all insurers who have indicated in writing to the Local Authority their desire to submit a hid and. who are licensed to do business in the State. Such insurance shall be awarded to the lowest bidder. The lowest bid shall be determined upon the basis of net cost to the Local Authority. Net Cost, for the purposes of this subsection (D), shall mean the gross deposit premium, plus the cost of in- surance against the hazards, if any, of assessments, less any anticipated dividend based on the dividend, payment and assessment record of the inspirer for the previous ten years. Nothing in this subsection (D) shall have the effect of requiring the Local Authority to purchase insurance from any in- surer not licensed. to do business in the State cr to purchase insurance which involves any hazard of assessment unless insurance against such hazard is available. • 7 BOOK 1400 PAGE546 (E) The Local Authority shall require that each liability insurance policy prohibit the insurer from defending any tort claim on the ground of immunity of the Local Authority from suit. (F) The Local Authority shall submit certified duplicate copies of all insurance policies and bonds to the PHA not less than forty five days before the effective date thereof for review to determine compliance with this Contract. Unless disapproved by the PHA within thirty days of the date submitted, the policies and bonds submitted shall be considered as approved by the PHA. (G) If the Local Authority shall fail at any tine to obtain and main- tain insurance as required by subsections (A), (B), and (C) of this Sec. 112, the PHA may obtain such insurance on behalf of the Local Authority and the Local Authority shall promptly reimburse the PHA for the cost thereof to- gether with interest at 3% per annum. Sec. 113. Procurement In the purchasing of equipment, materials, and supplies, and in the award of contracts for services or for repairs, maintenance, and replacements, the Local Authority shall comply with all applicable State and local laws, and in any event shall make such purchases and award such .contracts only after advertising a sufficient time previously for proposals, excepts. (1) When the amount involved in any one case does not exceed $500; or (2) When the public exigencies require the immediate delivery of the articles or performance of the service; or (3) When only one source of supply is available and the purchasing or contracting officer of the Local Authority shall so certify; or (4) When the services required are (a) of a technical and professional nature, or (b) to be performed under Local Authority supervision and paid for on a time basis. Sec. 114. Personnel (A) The Local Authority shall adopt and comply with a statement of per- - sonnel policies comparable with pertinent local public and private practice. Such statement shall cover job titles and classifications, salary and wage rates for employees other than those whose salaries or wages are determined pursuant to Sec. 108, weekly hours of work, qualification standards, leave regulations, and payment of expenses of employees in travel status. (B) The Local Authority may charge contributions for participation in a retirement plan for its employees to Operating Expenditures where such plan has been approved by the PHA or is required by law. (C) The Local Authority shall maintain complete records with respect to employees' leave, authorizations of overtime and official travel, and vouchers supporting reimbursement of travel expense. • 8 1 • BOCK1400 PAGE54( (D) No fVundi; of any Project may be used to pay any compensation for the services of members of the Local Authority. Sec. 115. Disposition of Excess Property (A) The Local Authority at any time may determine any personal property, and, with the approval of the PHA, any real property, constituting a part of any Project, which is no longer useful or necessary to the operation of such Project, to be excess to the needs of such Project. (B) Excess real property shall be sold as soon as practicable at public sale for not less than the fair value thereof, unless other disposition or method of disposition is approved by the PHA. The proceeds of any such sale or other disposition of any real property constituting a part of any Project shall be promptly paid to the PHA. (0) Personal property shall not be sold or exchanged for less than its fair value. Personal property of the value of $1,000 or more which is to be sold to other than a public body for a public use sav+l1 be sold at public sale. The proceeds of any sale of personal property shall be promptly paid to the PHA: Provided That if it is determined to replace any such personal property, the Local Authority may reserve such proceeds for the purpose of paying the cost of such replacement: Provided further/ That any such pro- ceeds not used for such replacement within two years from the date of receipt by the Local Authority, shall. be withdrawn from such reserve and promptly paid to the PHA. Sec. 116, Books of Account and Records The Local. Authority shall maintain complete and accurate books of account and records, as may be prescribed by the PHA, in connection with the Projects, including (1) books of account and other fiscal records in accord- ance with a classification of accounts prescribed by the PHA, and (2) opera- tion records which shall include applications for admission to and continued occupancy in the Projects and the evidence (or notations thereof) used by the Local Authority to verify such applications. Sec. 117. Financial and Operating Statements The Local Authority shall furnish the PHA such financial, operating, and statistical reports, records, statements, and documents at such times, in such form, and accompanied by such supporting data, all as may reasonably be required by the PHA. Sec. 118. Approvals by Bureau of the Budget (A) The recording and reporting required by this Contract have been approved by the Bureau of the Budget pursuant to the Federal Reports Act of 1 9 • I BOOK14fI) PAGELAS (B) All specific recording or reporting requirements which may be pre- scribed by the PHA pursuant to this Contract will be subject to the approval of the Bureau of the Budget pursuant to the Federal Reports Act of 1942. Sec. 119. Access to Records and Projects; Audits (A) The PHA shall have full and free access, at any time during normal business hours, to the Projects and to all the books and records of the Local Authority, including the right to audit, and to make excerpts and transcripts from such books and records. (B) The Local Authority shall not charge as an Operating Expenditure the cost or expense of any audit with respect to any Project for any Fiscal Year unless (1) the PHA has approved such audit, or (2) such audit is required by law, or (3) the PHA has failed to furnish the Local Authority with a report of its fiscal audit of the Local Authority's books of account for such Fiscal Year within six months after the end thereof and, subsequent to a notice by the Local Authority of such failure, the PHA has failed to submit its report of such audit within three months after receipt of such notice. Sec. 120. Property Included in a Project Each Project shall include all real and personal property, or interest therein, conveyed by the PHA to the Local Authority, and (1) all real prop- erty or interest therein subsequently acquired and held by the Local Authority in connection with such Project, together with all easements, rights -of -way, and all incorporeal hereditaments thereunto belonging or in any wise apper- taining, and (2) all personal property, tangible and intangible, or interest therein subsequently acquired and held by the Local Authority in connection with such Project, including (but not limited to) equipment and apparatus, monies on hand and on deposit, reserves, securities, accounts receivable, choses in action, leases, contracts, books of account, papers, and records. All such property immediately upon acquisition by the Local Authority shall become a part of such Project and shall be subject to the terms, covenants, and conditions of this Contract. Sec. 121. Covenant Against Conveyance or Encumbrance The Local Authority shall not at any time during the Administration Period transfer, convey, assign, lease, mortgage, pledge, or otherwise en- cumber, or permit or suffer any transfer, conveyance, assignment, leasing, mortgage, pledge, or other encumbrance of any Project, any appurtenances thereto, any rent, revenues, income, or receipts therefrom or in connection therewith, or any of the benefits granted to it by or pursuant to this Con- tract, or any interest in any of the same: Provided, That if at any time during the Administration Period the Local Authority and the PHA agree that any Project or any part thereof, is no longer suitable for use as low -rent housing, such Project, or part thereof, shall be sold on such terms as the PHA may prescribe and the proceeds from such sale, after payment of the reason- able expenses thereof, shall be promptly paid to the PHA: Provided further, That the Local Authority may (1) lease dwellings and other spaces and facil- ities in the Projects in accordance with the provisions of Sec. 103, or -10- BoodZI„) Par,E549 (2) convey or otherwise dispose of any real or personal property which is determined to be excess to the needs of the Projects as provided in Sec. 115, or (3) with the approval of the PHA, convey or dedicate land for use as streets, alleys, or other public rights -of -way, and grant easements for the establish- ment, operation, and maintenance of public utilities. Nothing in this Sec. 121 shall be construed as prohibiting the conveyance of title to or delivery of possession of the Projects pursuant to Sec. 301 or Sec. 302. Sec. 122. Termination and Disposition of a Project Operated at a Deficit. If this Contract covers two or more Projects, and if at any time during the Administration Period an operating deficit is incurred by any Project and paid from the operating receipts of any other Project, the PHA shall have the right to determine that a need for the Project that incurred the deficit no longer exists and that such Project shall be terminated as low -rent housing and sold on such terms as the PHA may prescribe. The proceeds from such sale, after payment of the reasonable expenses thereof shall be promptly paid to the PHA: Provided, however, that the PHA shall not have the right to direct that any such Project shall be terminated and sold if the Local Authority tenders to the PHA a sum equal to all deficits incurred in connection with such Project from the date of the commencement of the Administration Period and continues to pay all deficits that occur in connection with the .Project during the balance of the Administration Period. Any such tender and payment shall be made from funds other than those derived from the operation of any other Project under this Contract. tl IS u 4 BOOK1400 fA E55O ARTICLE II FISCAL PROVISIONS Sec. 201. Segregation of Funds All monies from whatever source received by or held for account of the Local Authority for the purposes of or in connection with the Projects shall at alltimes be segregated and held in funds and bank accounts separate and distinct from all other funds and bank accounts of the Local Authority rela- tive —to any other project or enterprise developed, administered, or operated by the Local Authority: Provided, That the Local Authority may deposit such amount as the PHA nay approve from the General Fund in a revolving fund pro- vided for the convenient and efficient payment of items chargeable in part to the Projects and in part to any other project or enterprise of the Local Authority, and may thereafter, from time to time, reimburse such revolving fund for such portion of the disbursements made therefrom as is chargeable to the Projects. Seco 202. General. Depositary Agreement and General Fund (A) Promptly after the date of this Contract, the Local Authority shall enter into, and thereafter maintain, one or more agreements which are herein collectively called the "General Depositary Agreement", in substantially the form of Form PHA -2244, February 1952, with one or more banks (each of which shall be, and continue to be, a member of the Federal Deposit Insurance Corporation) selected as depositary by the Local Authority. Immediately upon the execution of any General Depositary Agreement the Local Authority shall furnish to the PHA such executed or conformed copies thereof as the PHA may require. No such General Depositary Agreement shall be terminated except after thirty days notice to the PHA. (e) All monies received by or held for account of the Local Authority for the purposes of or in connection with the. Projects, shall constitute the "General Fund". (C) The Local Authority shall deposit promptly with such bank or banks, under the terms of the General Depositary Agreement, all monies constituting the General Fund except (1) the amount held in any revolving fund pursuant to Sec. 201 and (2) reasonable amounts for use by the Local Authority as petty cash or change accounts. (D) The Local Authority may withdraw monies from the General Fund only for (1) the payment of Operating Expenditures subject to the provisions of subsection (F) of Sec. 205, (2) the purchase of investment securities as approved by the PHA, (3) other purposes specified in this Contract, and (4) other purposes specifically approved by the PHA. No withdrawals shall be made except in accordance with a voucher or vouchers then on file in the office of the Local Authority stating in proper detail the purpose for which such withdrawal is made. (E) If at any time the Local Authority has monies on deposit in the General Fund in excess of its prudently estimated needs for the next ninety a 12 - 1:39 BOOK 1400 fa&c551 days, such excess monies shall be invested in investment securities selected by the Local Authority and approved by the PHA. Such securities shall be purchased, held, and disposed of from time to time, by the depositary of the General Fund under the terms of the General Depositary Agreement. (F) If the Local Authority (1) in the determination of the PHA, is in Substantial Default or Substantial Breach, or (2) makes or has made any fraudient or willful misrepresentation of any material fact in any of the documents or data submitted to the PHA pursuant to this Contract or in any document or data submitted to the PHA as a basis for this Contract or as an inducement to the PHA to enter into this Contract, then the PHA shall have the right to require any bank or other depositary which holds any monies relating to the Projects to refuse to permit any withdrawals of such monies: Provided/ That upon the curing of such default or breach the PHA shall promptly rescind such requirement. Sec. 203 Operating Receipts and Expenditures, Reserves, and Residual Receipts (A) "Operating Receipts" with respect to each Project shall mean all rents, revenues, income, and receipts accruing from, out of, or in connection with such Project, from whatever source derived: Provided, That Operating Receipts shall not include (1) proceeds from the disposition of real prop- erty, (2) proceeds from the disposition of personal property to the extent that such proceeds are payable to the PHA, or (3) the proceeds of claims against insurers or others arising out of damage to or destruction of such Project to the extent provided in Sec. 1O7. (B) "Operating Expenditures" with respect to each Project shall mean all costs incurred by the Local Authority for administration, maintenance, establishment of reserves (as provided in subsection (C) of this Sec. 203), and other costs and charges (including, but not limited to, payments in lieu of taxes and operating improvements) which are necessary for the operation of such Project in such a manner BS to provide decent, safe, and sanitary dwellings within the financial reach of Families and Persons of Low Income, and to promote serviceability, efficiency, economy, and stability. (C) The Local Authority may establish out of the Operating Receipts of the Projects, and maintain in the General Fund, reserves for such purposes and in such reasonable amounts as may be required in the prudent operation of the Projects and as may be approved by the PHA. All amounts for the establishment of reserves, including all increases or decreases therein, shall be taken into account in the determination of Residual Receipts; and all such amounts, including all increases or decreases therein (except in respect to reserves authorized by Sec. 107 and Sec. 115) shall be included in the Operating Budgets. (D) "Residual Receipts" for the Projects as of the end of any Fiscal Year shall mean the amount by which the aggregate Operating Receipts of the Projects for such Year exceeded the aggregate Operating Expenditures for the Projects for such Year. -13- i BOOK 1.400 mg 552 Sec. 204. Fiscal. Year The Local Authority shall, with the approval of the PHA, adopt a Fiscal Year for the Projects which shall consist of any period of twelve consecu- tive months beginning with any one of the following dates, namely, January 1, April 1, July 1, or October 1. Sec. 205. Operating Budgets and Control of Operating Expenditures (A) The term "Operating Budget" shall mean a realistic estimate of the Operating Expenditures to be incurred in connection with the prudent operation of any Project during a specified period., broken down according to a classi- fication of accounts prescribed by the PHA. (B) Not earlier than one hundred fifty days nor later than ninety days before the expiration of the Fiscal Year covered by any approved Operating Budget for any Project, the Local Authority shall submit to the PHA for approval a proposed Operating Budget.for the next Fiscal Year for such Project, which upon approval by the PHA shall govern the operation of such Project for such Fiscal Year. With such Budgets for each Fiscal Year, the Local Authority shall submit to the PHA an estimate of the Residual Receipts pay- able next after the end of such Fiscal Year, which estimate shall include a summary consolidation of the Operating Budgets for the Projects together with an estimate of the Operating Receipts with respect to the Projects. I (C) The PHA will promptly approve each proposed Operating Budget, if the plan of operation and the amounts included therein are reasonable. Reason- ableness of a proposed Operating Budget shall be determined in the light of the necessity for (1) incurring the proposed Operating Expenditures in the efficient and economical operation of the Project for the purpose of serving Families and Persons of Low Income in the locality thereof, and (2) securing the largest Residual Receipts consistent with maintaining the low -rent char- acter of such Project. If the PHA disapproves any proposed Operating Budget, the Local Authority shall be so notified in writing and be furnished with a detailed explanation of the reasons for such disapproval. (o) Failure of the PRA to notify the Local Authority of its approval or disapproval of any proposed Operating Budget for any Fiscal Year submitted pursuant to subsection (B) of this Sec. 205 within (1) forty-five days after the receipt of all the Budgets and the estimate of Residual Receipts required for such Fiscal Year pursuant to subsection (B) of this Sec. 205, or (2) forty-five days prior to the beginning of such Fiscal Year, whichever is the later, shall constitute approval thereof. (E) The Local Authority may at any time submit to the PHA a proposed revision of any approved Operating Budget. In such case the proposed re- vision shall be subject to all of the provisions of subsection (C) of this Sec. 205. (F) The Local Authority shall not (1) incur any Operating Expenditures with respect to any Project except pursuant to and in accordance with an approved Operating Budget for such Project, nor (2) during any Fiscal Year -14- j BOCK 14tn) PAGE 553 or other budget period, incur with respect to any Project total Operating Expenditures, nor expenditures for management expense, miscellaneous authority expense, establishment of reserves, or operating improvements in excess of the respective amounts therefor shown in an approved Operating Budget (includ- ing revisions thereof) governing such Fiscal Year or other budget period: Provided, That nothing in this subsection (F) shall preclude the incurring of expenditures in emergencies where necessary to eliminate an immediate serious hazard to life, health, or safety of the occupants of a Project, and that the amount of any such emergency expenditures shall be reported promptly to the PHA and the Operating Budget shall be amended accordingly. Sec. 206. Payments to PHA (A) Within thirty days after the last day of each Fiscal Year, the Local Authority shall account for, and pay over to the PHA, all Residual Receipts of the Projects derived during such Fiscal Year. Any operating deficit of the Projects occurring in any such Fiscal Year shall be the sole obligation of the Local Authority: Provided, That any such operating deficit resulting from the charging of proper and allowable Operating Expenditures against the Operating Receipts of the Projects may be charged against such Receipts derived from the Projects in succeeding Fiscal Years, and in deter- mining the Residual Receipts of the Projects in such succeeding fiscal Years there shall be deducted the amount of Operating Receipts used to meet such deficit. (B) Within thirty days after the last day of the Administration Period, the Local Authority shall account for, and pay over to the PHA, all Residual Receipts of the Projects derived during the time intervening between the close of the next preceding Fiscal Year and such last day of such Period, together with any and all balances of funds remaining in or accruing to the General Fund: Provided, That the Local Authority may retain from such funds such amount as may be necessary to pay Operating Expenditures properly in- curred during the Administration Period which remain outstanding and unpaid on said last day of such Period. Sec. 207. Prohibition of Loans The Local Authority shall not, without the approval of the PHA, obtain, from any source whatsoever, any loan in connection with the Projects. Sec. 208. No Capital Grant or Annual Contribution This Contract shall not be construed in any manner as providing or agree-, ing to provide a capital grant or annual contribution by the PHA with respect to the Projects. 15 BOOK 14000 PAGE 5t54 ARTICLE III DEFAULTS, BREACHES, REMEDIES, AND GENERAL PROVISIONS Sec. 301. Conveyance of Title or Delivery of Possession in Event et Substantial Deia: t Upon the occurrence of a Substantial Default (as hereinafter in Sec. 305 defined) in respect to the convenants or conditions to which the Local Authority is subject hereunder, the Local Authority shall, at the op- tion of the PHA, either (a) convey to the PRA title to the Projects as then constituted if, in the determination of the PHA (which determination shall be final and conclusive), such conveyance of title is necessary to achieve the purposes of the Act, or (b) deliver possession to the PHA of the Projects as then constituted. Sec. 302. Delivery of Possession in Event of Substantial Breach Upon the occurrence of a Substantial Breach (as hereinafter in Sec. 306 defined) in respect to the covenants or conditions to which the Local Author- ity is subject hereunder, the Local Authority shall, upon demand by the PHA deliver possession to the PHA of the Projects as then constituted. Sec. 303. Reconveyance or Redelivery (A) If the PHA shall acquire title to or possession of the Projects pur- suant to Sec. 301 or Sec. 302, the PHA shall reconvey or redeliver possession of the Projects, as constituted at the time of such reconveyance or redelivery, to the Local Authority (ii" it then exists) or to its successor (if a successor exists at the time of such reconveyance or such redelivery) as soon as prac- ticable after the PHA shall be satisfied that all defaults and breaches with respect to the Projects have been cured and that the Projects will, in order to fulfill the purposes of the Act, thereafter be operated in accordance with the terms of this Contract. (B) Upon any reconveyance or redelivery of the Projects to the Local Authority the PHA shall account for all monies which it has received or expended in connection therewith: Provided, That the PHA shall retain all Residual Receipts accrued during any period in which it holds title to or possession of the Projects. If during the period in which the PHA has held title to or possession of the Projects, the PHA incurs any deficit by reason of expenditures in the improvement of the Projects, the Local Authority, at the time of the reconveyance or redelivery of the Projects (and as a con- dition precedent thereto) shall pay to the PHA the amount of any such deficit with interest thereon at 3% per annum. (C) No conveyance of title and reconveyance thereof, or delivery of possession and redelivery thereof, shall exhaust the right to require a conveyance of title or delivery of possession of the Projects to the PHA pursuant to Sec. 301 or Sec. 302 upon the subsequent occurrence of a Sub- stantial Default or a Substantial Breach, as the case may be. 16 BOOK .t A) PAGE555 Sec. 304. Rights and Obligations of PHA Daring Tenure Under Sec. 301 or Sec. 302 (A) During any period in which the PHA holds title to, or possession of, the Projects pursuant ti Sec. 301 or Sec. 302, it shall (1) exercise diligence in the protection of the Projects, and (2) operate the Projects as nearly as practicable in accordance with the provisions of this Contract, including the carrying of insurance as described in subsection (A) of Sec. 112. (B) During any period in which the PEA holds title to or possession of the Projects pursuant to Sec. 301 or Sec. 302, it may, in the name of and on behalf of the Local Authority or in its own name and on its own behalf, exer- cise any or all of the rights and privileges of the Local Authority pursuant to this Contract and perform any or all of the obligations and responsibil- ities of the Local Authority pursuant of this Contract. (C) Neither the conveyance of title to or the delivery of possession of the Projects by the Local Authority pursuant to Sec. 301 or Sec. 302, nor the acceptance of such title or possession by the PHA, shall abrogate or affect in any way any indebtedness of the Local Authority to the PHA arising under this Contract, and in no event shall any such conveyance or delivery or any such acceptance be deemed to constitute payment or cancel- lation of any such indebtedness. Sec. 305. Definition of Substantial Default For the purpose of this Contract a "Substantial Default" is defined to be the occurrence of any of the following events: (1) If any Project shall cease to be exempt from all real and personal property taxes levied or imposed by the State, city, county, or other political subdivisions, or if the Local Authority without the approv- al of the PHA shall make or agree to make any payments in lieu of taxes in excess of those provided in the Cooperation Agreement; or (2) If the Local Authority shall default in the observance of any of the provisions of Sec. 121, or if any Project shall be acquired by any third party in any manner including a bona -fide foreclosure under a mortgage or other lien held by a third party; or (3) If the Local Authority shall fail to furnish certification relating to the payment of prevailing salaries and wages as required by sub- section (F) of Sec. 108; or (4) If the Local Authority fails to make any payment to the PHA required' under this Contract and such failure is not remedied within sixty days from the date that any such payment is due; or (5) If the Local Authority shall (a) fail to maintain the low -rent char- acter of each Project as required by Sec. 102, or (b) fail to prosecute 17 - 4 ., 1 . • nr01400 PAGE556 diligently the reconstruction, restoration, or repair of any Project as required by Sec. 107; and any such failure is not remedied within three months after the PHA has notified the Local Authority thereof. Sec. 306. Definition of Substantial Breach For the purposes of this Contract a "Substantial Breach" is defined to be the occurrence of any of the following events: (1) If the Local Authority, in violation of subsection (T) of Sec. 205, has (a) incurred any Operating Expenditures with respect to any Project except pursuant to and in accordance with an approved Operating Budget for such Project, or (b) during any Fiscal Year or other budget period incurred with respect to any Project total Operating Expenditures in excess of the amount therefor shown in an approved Operating Budget (including revisions thereof) governing such Fiscal Year or other budget period; or (2) If the Local Authority has violated any of the provisions of sub- section (D) of Sec. 202; or (3) If there is a breach by the Local Authority of any of the provisions of this Contract relating to the payment of prevailing salaries and wages; and such breach is not remedied within thirty days after the PEA has notified the Local Authority of such breach; or (4) If there is a breach of any of the provisions relating to the pay- msnt of prevailing salaries and wages which are required by this Con- tract to be included in contracts of the Local Authority in connection with the Projects; and such breach is not remedied or appropriate action to remedy the same initiated by the Local Authority within thirty days after the PHA has notified the Local Authority of such breach, or if such remedial action is not thereafter diligently prosecuted to con- clusion; or (5) If there shall be a flagrant breach by the Local Authority in the performance or observance of any other term, covenant, or condition of this Contract, or frequent breaches by the Local Authority in the per- formance or observance of such other terms, covenants, and conditions over a period of six consecutive months after the PHA shall have noti- fied the Local Authority of any such breach. Sec. 307. Other Defaults or Breaches, and Other Remedies (A) Neither the provision of the special remedies set forth in Sec. 301 and Sec. 302 in the event of a Substantial Default or a Substantial Breach, as the case may be, nor any exercise thereof, shall affect or abro- gate any other remedy which may be available to the PEA in the event of a Substantial Default, Substantial Breach, or any other default or breach; and the PHA may, during any period in which it holds title to or possess- ion of the Projects pursuant to Sec. 301 or Sec. 302, exercise any other remedy available to it. Neither the definition of certain defaults or -18- 133 BOOK 1400 „A557 breaches as Substantial Defaults or Substantial Breaches, nor the provision of special remedies therefor, shall be deemed to constitute an agreement that any other type of default or breach shall be considered insignificant or without remedy. (B) If the Local Authority shall at any time be in default or breach, or take any action which will result in a default or breach, in the per- formance or observance of any of the terms, covenants, and conditions of this Contract, then the PHA shall have, to the fullest extent permitted by law (and the Local Authority hereby confers upon the PHA the right to all remedies both at law and in equity which it is by law authorized to so confer) the right (in addition to any rights or remedies in this Contract specifically provided) to maintain any and all actions at law or in equity against the Local Authority to enforce the correction of any such default or breach or to enjoin any such default or breach. (C) The remedies of the PHA, whether provided by law or by this Con- tract, shall be cumulative, and the exercise of any one or more of such remedies shall not preclude the exercise, at the same or different times, of any other such remedies for the same default or breach or for any other default or breach by the Local Authority of any covenant or agreement on its part contained in this Contract. (D) No act of the PHA (except the issuance of a waiver in writing), nor any omission by the PHA to act, shall constitute or be construed as a waiver of any provision of this Contract or of any default or breach of the Local Authority. No waiver by the PHA of a specific default or breach under this Contract shall constitute a waiver of, or an agreement to waive, or a precedent for waiving, any similar default or breach subsequently occuring hereunder. (E) The execution of this Contract shall not constitute a satisfaction or waiver of any default or breach of any Contract for Purchase and Sale on the part of the Local Authority, whether known to the PHA or not, and the right of the PHA to insist upon each and every remedy, under both this Con- tract and such Contract for Purchase and Sale, for all such defaults and breaches is hereby preserved. Sec. 308. Rights of Third Parties Nothing in this Contract contained shall be construed as creating or justifying any claim against the PHA by any third party. Sec. 309. Approvals and Notices (A) Whenever under this Contract approvals, authorizations, determi- nations, satisfactions, or waivers of the PHA are required, such approvals, authorizations, determinations, satisfactions, or waivers shall be effective and valid only when given either (1) by general orders or regulations duly issued from time to time by the PHA, or (2) in specific cases, in writing, signed by a duly authorized officer of the PHA, and delivered to the Local Authority. 19 BOOK1400 PAGE558 • (B) Any notice or demand given under this Contract shall be in writing, and signed by a duly authorized officer of the party giving such notice or demand. Such notice or demand shall be deemed to have been given at the time it shall have been received at the principal office of the party to whom it is directed. Sec. 310. Waiver or Amendment Any right or remedy which the PHA may have under this Contract may be waived in writing by the PHA without the execution of a new or supplemental agreement; or by mutual agreement of the parties hereto this Contract may be amended in writing. Sec. 311. Titles and Table of Contents The titles of the several Articles and Sections of this Contract and the table of contents are inserted for convenience of reference only, and shall be disregarded in construing or interpreting any of the provisions of this Contract. Sec. 312. Severability of Provisions If any provision of this Contract is held invalid, the remainder of this Contract shall not be affected thereby if such remainder of this Con- tract would then continue to conform to the terms of the Act. Sec. 313. Interest of Members, Officers, or Employees and Former Members, Officers, or Employees No member, officer, or employee of the Local Authority, or former mem- ber, officer, or employee of the Local Authority who ceased to be a member, officer, or employee within one year, shall voluntarily acquire any in- terest, direct or indirect, in the Projects, or in any property included or planned to be included in any Project, or in any contract or subcontract or proposed contract or subcontract relating to any Project. If any such per- son involuntarily acquires any such interest or had acquired any such in- terest prior to appointment or employment as such member, officer, or em- ployee, then such person shall immediately disclose any such interest in writing to the Local Authority, and such disclosure shall be entered upon the minutes of the Local Authority and a copy thereof promptly furnished to the PHA. Upon any such disclosure, a member, officer, or employee shall not participate in any action by the Local Authority relating to the property or contract in which he may have any such interest. The provisions of this Sec. 313 shall not be applicable to the General Depositary Agreement. Sec. 314. Members of Local Authority Not Individually Liable No member or officer of the Local Authority shall be individually liable on any obligation assumed by the Local Authority hereunder. - 20 - 800I(1400 PAGE559 Sec. 315. Interest of Member of or Delegate to Congress No member of or Delegate to the Congress of the United States of America or Resident Commissioner, shall be admitted to any share or part of. this Contract or to any benefits which may arise therefrom. Sec. 316. Releases Upon Termination of Contract Upon the full performance by the PHA and the Local Authority of their respective obligations, each to the other, under this Contract, the Local Authority and the PHA shp.ii execute and deliver, each to the other, mutual releases of all further obligations under this Contract, and this Contract shall be deemed to be terminated as of the date of such mutual releases. - 21 - B00K141)0 PAGE56O INDEX OF DEFINED TERMS Act Administration Period Contract Contract for Purchase and Sale Cooperation Agreement Date of This Contract Families and Persons of Low Income Fiscal Year General Depositary Agreement General Fund Lease Local Authority Operating Budget Operating Expenditures Operating Receipts PHA Project or Projects Residual Receipts State Substantial Breach Substantial Default 22 Part One Part One Part One Part One Part One Part One Part One Sec. 204 Sec: 202(A) See. 202(B) Part One Part One Sec. 205(A) Sec. 203(B) Sec. 203(A) Part One Part One Sec. 203(D) Part One Sec. 306 Sec. 305 Hello