EXHIBIT 10.7
AMENDED AND RESTATED
HOUSING MANAGEMENT AGREEMENT
----------------------------
WHEREAS, CAPITOL PARK ASSOCIATES, an Illinois limited partnership
("Owner") and Interstate General Corporation, a Delaware corporation ("IGC"),
have executed those two (2) certain Restated Housing Management Agreements (the
"Restated Housing Management Agreements"), each dated December 3, 1984, covering
the apartment buildings located at 000 "X" Xxxxxx, Xxxxxxxxx, 000-000 "X"
Xxxxxx, Xxxxxxxxx, and 000 "X" Xxxxxx, Xxxxxxxxx, all in Washington, D.C. (the
"Property"); and
WHEREAS, Owner and Interstate Properties, a Maryland limited
partnership ("IP") have executed that certain Amendment to Management Agreements
(the "Amendment") dated as of December 31, 1984;
NOW, THEREFORE, Owner and INTERSTATE GENERAL COMPANY, L.P., a Delaware
limited partnership ("Agent), as successor to IP hereby enter into this AMENDED
AND RESTATED HOUSING MANAGEMENT AGREEMENT (this "Agreement") as of the 12th day
of May, 1994 subject to the following provisions:
1. APPOINTMENT AND ACCEPTANCE. The Owner appoints the Agent as
--------------------------
exclusive agent for the management of the property described in Section 2 of
this Agreement, and the Agent accepts the appointment, subject to the terms and
conditions set forth in this Agreement.
2. DESCRIPTION OF PROJECT. The Property to be managed by the Agent
----------------------
under this Agreement (the "Project") is a housing development, consisting of the
land, buildings, and other improvements which make up FHA Project No. 000-
11107PM. The Project is further described as follows:
Name: Capitol Park Apartments
Location: Washington, D.C.
Number of dwelling units: 936
3. DEFINITIONS. As used in this Agreement:
-----------
(a) "HUD" means the United States Department of Housing and Urban
Development.
(b) "Regulatory Agreement" means that certain regulatory agreement,
dated May 12, 1994, between the Owner and the Secretary and recorded
in Washington, D.C.
(c) "Secretary" means the Secretary of the United States Department
of Housing and Urban Development.
(d) "First Mortgage" means that certain Deed of Trust, dated May
12, 1994, by and between the owner of the Project as Grantor, and the
First Mortgagee as hereinafter defined, with respect to the Project,
which mortgage secures the Loan and is insured by the Secretary.
(e) "Loan" means that certain loan made by First Mortgagee to Owner
in the amount of $22, 100,000 insured by HUD under Section 207,
pursuant to Section 223(f) of the National Housing Act and the
regulations promulgated thereunder.
(f) "Loan Documents" means the Deed of Trust Note, the Deed of
Trust, and any other collateral documents entered into by the Owner
and the First Mortgagee in connection with the Loan.
(g) "First Mortgagee" means Continental Xxxxxxx Associates, Inc.,
its successors and/or assigns.
(h) "Principal Parties" means the Owner and the Agent.
4. HUD REQUIREMENTS. The Project is subject to the First Mortgage
----------------
which is insured by HUD under Section 207, pursuant to Section 223(f) of the
National Housing Act and the regulations promulgated thereunder, pursuant to
which the Owner has entered into the Regulatory Agreement. The Regulatory
Agreement obligates the Owner to provide for management of the Project in-a
manner satisfactory to the Secretary. In performing its duties under this
Management Agreement, the Agent will comply with all pertinent requirements of
the Regulatory Agreement, copies of which Owner has furnished to Agent, and the
directives of the Secretary pertaining thereto. In the event of any instruction
from the Owner which is in contravention of such requirements, such requirements
will prevail.
5. MANAGEMENT CERTIFICATION (HUD FORM-9839-B). The Owner and the Agent
------------------------------------------
hereby agree to execute and deliver to the Secretary, as required, a Management
Certification (HUD Form 9839-B) which conforms to all applicable HUD
requirements. The Principal Parties acknowledge and agree that the Secretary
shall have the right to require a termination of this Agreement due to the
failure on the part of either the Owner or the Agent to comply with the terms
and provisions of the Management Certification as further provided in Section
26(c) of this Agreement.
6. BASIC INFORMATION. The Agent hereby represents and warrants to the
-----------------
Owner that the Agent has a working knowledge of the character, location,
construction, layout, plan and operating of the Project, including, but not
limited to, the electrical, heating, plumbing, air-conditioning and ventilating
systems, the elevators, and all other mechanical equipment, which
2
such working knowledge (i) was acquired by Agent during Agent's prior management
of the Project pursuant to a previous Management Agreement and (ii) shall be
sufficient for the Agent to effectively carry out its duties and obligations in
connection with the management of the Project.
7. MARKETING. The Agent will carry out the marketing activities in
---------
connection with the management of the Project as requested by Owner from time to
time, observing all requirements of the Affirmative Fair Housing Marketing Plan
for the Project approved by the Secretary. Subject to the Owner's prior
approval, advertising expenses will be paid out of the Rental Agency Account as
Project expenses.
8. RENTALS. The Agent will offer for rent and will rent the dwelling
-------
units, parking spaces, commercial space and other rental facilities and
concessions in the Project. Incident thereto, the following provisions will
apply:
(a) The Agent will follow the tenant selection policy described in
the Regulatory Agreement and the directives of the Secretary.
(b) The Agent will follow the marketing plan as approved by the
Owner, which marketing plan shall include, but may not be limited to,
credit and other tenant eligibility criteria for the Project.
(c) The Agent will show the premises to prospective tenants.
(d) The Agent will take and process applications for rentals. If an
application is rejected, the applicant will be told the reason for
rejection, and the rejected application, with reason for rejection
noted thereon, will be kept on file for one (1) year. A current list
of prospective tenants will be maintained.
(e) The Agent will prepare all dwelling leases and parking permits,
and will execute the same in its name, identified thereon as agent for
the Owner. The terms of all leases will comply with the pertinent
provisions of the Regulatory Agreement and the directives of the
Secretary. Dwellingleases will be in a form approved by the Owner and
the Secretary, but individual dwelling leases and parking permits need
not be submitted for the approval of the Owner or the Secretary
provided the Agent adheres to the rental plan and the marketing plan
approved by Owner.
(f) The Agent will furnish the Owner with rent schedules, in a form
from time to time approved by the Secretary, showing fair market rents
and basic rents for dwelling units, and other charges for facilities
and services. In no event will such fair market rents and other
charges be exceeded. Agent shall not agree to charge an amount less
than such rents and other charges set forth on any rent schedule then
in effect without obtaining Owner's prior written consent. Eligibility
for dwelling rents which are less
3
than such fair market rents, and the amount of such lesser rents, will
be determined in accordance with the Regulatory Agreement and the
directives of the Secretary.
(g) The Agent will collect, deposit, and disburse security
deposits, if required, in accordance with the terms of each tenant's
lease. The amount of each security deposit will be as specified in the
Regulatory Agreement and the directives of the Secretary. Security
deposits will be deposited by the Agent in an interest-bearing account
(hereinafter referred to as the "Security Deposit Account") separate
from all other accounts and funds, with a bank or other financial
institution whose deposits are insured by an agency of the United
States Government, and a pro-rata share of interest earned will be
credited to each tenant's security deposit and administered in
accordance with all applicable Federal, State and local laws. This
account will be carried in the Agent's name and designated of record
as "Capitol Park Security Deposit Account." The Owner shall at all
times during the term of this Agreement be a permitted signatory on
the Security Deposit Account; provided, however, Agent shall not be
required to obtain Owner's signature to any checks or other
disbursements made by Agent from the Security Deposit Account except
as otherwise provided in this Agreement or as Owner may hereafter
direct. The Owner shall designate the financial institutions in which
the Security Deposit Account shall be maintained; provided that Owner
shall give consideration in making such designation to the convenience
of location of any such financial institution and to the requirements
of applicable law, if any, pertaining to the maintenance of the
Security Deposit Account in a financial institution located in the
District of Columbia.
9. COLLECTION OF RENTS AND OTHER RECEIPTS. The Agent will collect when
--------------------------------------
due all rents, charges and other amounts receivable on the Owner's account in
connection with the management and operation of the Project. Such receipts
(except for tenants' security deposits which will be handled as specified in
Subsection 8(f) above) will be deposited in an account (hereinafter referred to
as the "Rental Agency Account"), separate from all other accounts and funds,
with a bank whose deposits are insured by the Federal Deposit Insurance
Corporation. This account will be carried in the Agent's name and designated of
record as "Capitol Park Rental Agency Account"; provided, however, Agent shall
not be required to obtain Owner's signature to any checks or other disbursements
made by Agent from the Rental Agency Account except as otherwise provided in
this Agreement or as Owner may hereafter direct. Owner shall at all times during
the term of this Agreement be a permitted signatory on the Rental Agency
Account. The Owner shall designate the financial institutions in which the
Rental Agency Account shall be maintained; provided that Owner shall give
consideration in making such designation to the convenience of location of any
such financial institution and to the requirements of applicable law, if any,
pertaining to the maintenance of the Rental Agency Account in a financial
institution located in the District of Columbia.
10. ENFORCEMENT OF LEASES. The Agent will secure full compliance by
---------------------
each tenant with the terms of such tenant's lease. Voluntary compliance will be
emphasized, and the Agent
4
will counsel tenants and make referrals to community agencies in cases of
financial hardship or under other circumstances deemed appropriate by the Agent,
to the end that involuntary termination of tenancies may be avoided to the
maximum extent consistent with sound management of the Project. Nevertheless,
and subject to pertinent procedures, the Agent may lawfully terminate any
tenancy when, in the Agent's judgment, sufficient cause (including, but not
limited to, nonpayment of rent) for such termination occurs under the terms of
the tenant's lease. For this purpose, the Agent is authorized to consult with
legal counsel to be designated by the Owner, to bring actions for eviction and
to execute notices to vacate and judicial pleadings incident to such actions;
provided, however, that the Agent will keep the Owner informed of such actions
and will follow such instructions as the Owner may prescribe for the conduct of
any such action. Subject to the Owner's approval, attorney's fees and other
necessary costs incurred in connection with such actions will be paid out of the
Rental Agency Account as Project expenses.
11. MAINTENANCE AND REPAIR. The Agent will cause the Project to be
-----------------------
maintained and repaired in accordance with local codes, and in a condition at
all times acceptable to the Owner and the Secretary, including, but not limited
to, cleaning, painting, decorating, plumbing, carpentry, grounds care, and such
other maintenance and repair work as may be necessary, subject to any
limitations imposed by the Owner in addition to those contained herein.
Incident thereto, the following provisions will apply:
(a) Special attention will be given to preventive maintenance, and
to the greatest extent feasible, the services of regular maintenance
employees will be used.
(b) Subject to the Owner's prior approval the Agent will contract
with qualified independent contractors for the maintenance and repair
of building systems and elevators, and for extraordinary repairs
beyond the capability of regular maintenance employees.
(c) The Agent will systematically and promptly receive and
investigate all service requests from tenants, take such action
thereon as may be justified, and will keep records of the same.
Emergency requests will be received and serviced on a twenty-four (24)
hour basis. Complaints of a serious nature will be reported to the
Owner after investigation.
(d) The Agent is authorized to purchase all materials, equipment,
tools, appliances, supplies and services necessary to effectuate
proper maintenance and repair.
(e) Notwithstanding any of the foregoing provisions, the prior
approval of the Owner will be required for any expenditure which
exceeds Fifteen Thousand Dollars ($15,000.00) in any one instance for
labor, materials, or otherwise in connection with the maintenance and
repair of the Project; provided, however, that Owner's prior
5
approval shall not be required for any expenditure in connection with
maintenance and repair which exceeds Fifteen Thousand Dollars
($15,000.00), so long a such expenditure is for (i) recurring expenses
within the limits of the operating budget, (ii) emergency repairs
involving manifest danger to persons or property or (iii) repair or
maintenance work required to avoid suspension of any necessary service
to the Project. In the latter event, the Agent will inform the Owner
of the facts necessitating the excessive expenditure as promptly as
possible.
12. UTILITIES AND SERVICES. In accordance with the operating budget,
----------------------
the Agent will make arrangements for water, electricity, gas, fuel oil, sewage
and trash disposal, vermin extermination, decorating, laundry facilities, and
telephone service. Subject to the Owner's prior approval, the Agent will make
such contracts as may be necessary to secure such utilities and services.
13. EMPLOYEES. The Agent will prescribe the number, qualifications and
---------
duties of the personnel to be regularly employed in the management of the
Project, including a maintenance superintendent. All such personnel will be
employees of the Agent, and will be hired, supervised, and discharged by the
Agent, subject to the following conditions; provided, however, the Agent shall
obtain the Owner's prior written approval of any and all decisions or actions
which materially impact the staffing of the Project:
(a) Agent shall develop a staffing plan for the Project, which
plan shall require the Owner's prior written approval, and shall be
included in the annual budget for the Project developed by Agent, and
approved by Owner, pursuant to Section 16 of this Agreement.
(b) The compensation (including fringe benefits) of maintenance
employees will be as approved by Owner. Compensation of bookkeeping,
clerical, and other managerial personnel will be within the Agent's
sole discretion provided that minimum wage standards will be met;
however, Owner may determine the compensation for certain key
employees in Owner's sole discretion without Agent's approval which
such key employees shall also be determined in Owner's sole
discretion.
(c) The Owner will reimburse the Agent for compensation (including
fringe benefits) payable to the maintenance employees and for all
local, State, and Federal taxes and assessments (including, but not
limited to, Social Security taxes, unemployment insurance, and
xxxxxxx'x compensation insurance) incident to the employment of such
personnel. Such reimbursements will be paid out of the Rental Agency
Account and will be treated as Project expenses.
(d) The Agent will establish and follow an employment policy which
affords residents of the Project maximum opportunities for employment
in the management and operation of the Project and, to the extent
consistent with that consideration, affords
6
employment opportunities to lower-income persons in the area. While
personnel will be employed primarily on the basis of ability, the
Agent will make conscientious effort to provide special assistance and
training for Project residents and members of minority groups who are
not initially qualified.
14. DISBURSEMENTS FROM RENTAL AGENCY ACCOUNT.
----------------------------------------
(a) From the funds collected and deposited by the Agent in the
Rental Agency Account pursuant to Section 9 above, the Agent will make
the following disbursements promptly when payable:
(1) Reimbursement to the Agent for compensation payable to
the employees specified in Subsection 13(c) above, and for the
taxes and assessments payable to local, state, and federal
governments in connection with the employment of such personnel.
(2) The aggregate payments required to be made monthly by the
Owner to the First Mortgagee, including the amounts due under the
mortgage for principal amortization, interest, mortgage insurance
premium, taxes and assessments, fire and other hazards insurance
premiums, and the amount specified in the Regulatory Agreement for
allocation to the Reserve for Replacements.
(3) Expenses of operation and maintenance, including repairs
and other improvements, to the Project due and payable by the
Owner or by the Agent as directed by Owner under the terms of this
Agreement, including compensation payable to the Agent, pursuant
to Section 26 below, for its services hereunder.
(b) Except for the disbursements mentioned in Subsection 14(a)
above, funds will be disbursed or transferred from the Rental Agency
Account only as the Owner may from time to time direct in writing. All
disbursements or transfers of any funds made by Agent shall be
undertaken strictly in accordance with this Agreement and the
Regulatory Agreement.
(c) In the event that the balance in the Rental Agency Account is
at any time insufficient to pay disbursements due and payable under
Subsection 14(a) above, the Agent will inform the Owner of that fact
and the Owner shall advise the Agent as to the disposition and
utilization of the balance of funds remaining in the Rental Agency
Account. In no event will the Agent be required to use its own funds
to pay such disbursements nor shall the Owner be obligated to provide
its own funds to cover any deficiency in the Rental Agency Account.
15. EXPENDITURES. Notwithstanding any other provisions in this
------------
Agreement. any expenditure in connection with the Project which exceeds fifteen
thousand dollars ($15,000.00)
7
shall require the prior written approval by Owner; provided, however, that
Owner's prior approval shall not be required for any expenditure which exceeds
Fifteen Thousand Dollars ($15,000) so long as such expenditure is for recurring
operating expenses within the limits of the operating budget.
16. BUDGETS. Annual operating budgets for the Project will be as
-------
approved by the Owner. Except as permitted under Subsection 11(e) above, annual
disbursements for each type of operating expenses itemized in the budget will
not exceed the amount authorized by the approved budget. The Agent will prepare
a recommended operating budget for each subsequent fiscal year beginning during
the term of this Agreement, and will submit the same to the Owner at least
thirty (30) days before the beginning of the fiscal year. The Owner will
promptly inform the Agent of changes, if any, incorporated in the approved
budget, and the Agent will keep the Owner informed of any anticipated deviation
from the receipts or disbursements stated in the approved budget. The budget
shall contain a management and maintenance plan for the Project for the ensuing
year.
17. RECORDS AND REPORTS. The Agent will have the following
-------------------
responsibilities with respect to records and reports:
(a) The Agent will establish and maintain a-comprehensive system
of records, books, and accounts in a manner conforming to the
directive of the Secretary, and otherwise satisfactory to the Owner,
the Secretary and the First Mortgagee, as applicable. All records,
books, and accounts will be subject to examination at reasonable hours
by any authorized representative of the Owner, the Secretary or the
First Mortgagee, as applicable.
(b) With respect to each fiscal year ending during the term of
this agreement, the Agent will cause an annual financial report of the
Project and partnership tax returns of the Owner (including Capitol
Park Land Corporation) to be prepared by a Certified Public Accountant
or other person acceptable to the Owner and Secretary, based upon the
preparer's examination of the books and records of the Owner and the
Agent. The report will be prepared in accordance with the directives
of the Secretary, will be certified by the preparer and the Agent, and
will be submitted to the Owner within (60) days after the end of the
fiscal year, for the Owner's further certification and submission to
the Secretary and the First Mortgagee as required. Compensation for
the preparer's services will be paid out of the Rental Agency Account
as an expense of the Project
(c) The Agent will prepare a monthly report comparing actual and
budgeted figures for receipts and disbursements, and will submit each
such report to the Owner within fifteen (15) days after the end of the
month covered.
(d) The Agent will furnish weekly such information (including
occupancy reports, checks paid and accounts payable) as may be
requested by the Owner or the
8
Secretary from time to time with respect to the financial, physical,
or operational condition of the Project.
(e) By the fifteenth (15th) day of each month, the Agent will
furnish the Owner with an itemized list of all delinquent accounts,
including rental accounts, as of the tenth (10th) day of the same
month.
(f) By the fifteenth (15th) day of each month, the Agent will
furnish the Owner with a statement of receipts and disbursements
during the previous month, and with a schedule of accounts receivable
and payable, and reconciled bank statements for the Rental Agency
Account and Security Deposit Account as of the end of the previous
month.
(g) Except as otherwise provided in this Agreement, Agent's
overhead expenses, including, but not limited to, costs in connection
with the operation of any of the Agent's offices not located on the
Project, compensation of Agent's employees (other than those employed
exclusively to service the Project), compensation of any other
off-site personnel of the Agent, bookkeeping expenses, clerical
expenses, and other management overhead expenses (including, but not
limited to, costs of office supplies and equipment, data processing
services, postage, transportation for managerial personnel, and
telephone services) will be borne by the Agent out of his own funds
and will not be treated as Project expenses.
18. FIDELITY BOND. The Agent will furnish, at its own expense, a
-------------
fidelity bond in an amount, which is at least equal to the gross potential
income for two months and is conditioned to protect the Owner, the Secretary and
the First Mortgagee, as is applicable, against misapplication of Project funds
by the Agent and its employees. The other terms and conditions of the bond, and
the surety thereof, will be subject to the approval of the Owner, the Secretary
and the First Mortgagee, as applicable. The Agent agrees to maintain such
fidelity bond coverage at all times in accordance with the requirements of the
Secretary and the First Mortgagee.
19. ACCOUNTS. In addition to any other requirements set forth in this
--------
Agreement, Owner shall be a permitted signatory on any and all accounts with
respect to the Project and subject to this Agreement. All such accounts shall
remain separate and no funds in any account provided for herein shall be
permitted to be commingled with any funds from another account provided for
under this Agreement or otherwise.
20. BIDS AND PURCHASE DISCOUNTS OR COMMISSIONS. The Owner and Agent
------------------------------------------
agree to obtain contract materials, supplies and services, including the
preparation of the annual audit, at the lowest possible cost and on the terms
most advantageous to the Project and to secure and credit to the Project all
discounts, rebates or commissions obtainable with respect to purchases, service
contracts and other transactions on behalf of the Project. The Owner and the
Agent
9
agree that all goods and services purchased from individuals or companies having
an identity-of-interest with Owner or Agent shall be purchased at costs not in
excess of those that would be incurred in making arms-length purchases on the
open market. In addition, Agent shall obtain Owner's approval prior to entering
into any contract with any party having an identity-of-interest with Agent.
The Agent shall solicit written cost estimates (i.e., bids) from at
least three contractors or suppliers for any work items which the Owner or the
Secretary estimates will cost 55,000 or more and for any contract or ongoing
supply or service arrangement which is estimated to exceed $5,000 per year. The
Agent agrees to accept the bid which represents the lowest price taking into
consideration the bidder's reputation for quality of workmanship or materials
and timely performance, and the time frame within which the service or goods are
needed. For any contract or ongoing supply or service arrangement obtainable
from more than one source and estimated to cost less than $5,000, the Agent
shall solicit verbal or written cost estimates, as necessary to assure that the
Project is obtaining services, supplies and purchases at the lowest possible
cost. The Agent must make a written record of any verbal estimate obtained.
Copies of all required bids and documentation of all other written or verbal
cost comparisons made by the Agent shall be made part of the Project's records
and shall be retained for three years from the date the work was completed. This
documentation shall be subject to inspection by the Secretary or his/her
designee and the Agent agrees to submit such documentation upon request.
The Agent further agrees to include the following clause in any
contract entered into with any provider of goods or services to the
Project, the cost of which services are to be paid from Project funds:
"Upon request by (Owner or Agent) or the Secretary, (name of
contractor or supplier) will make available to the Secretary at a
reasonable time and place: (name of contractor or supplier's) records which
relate to goods or services provided to the project. Records and
information will be sufficient to permit the Secretary to determine the
services performed, the location at which the services were performed, the
time consumed in providing the services, the charges made for
materials, and the per unit and total charges levied for said services."
The Agent agrees to request such records from the contractor or
supplier within seven days of receipt of a written request
from the Secretary or his/her designee.
The Agent agrees to make available to the Secretary, the General
Accounting Office and their respective representatives, all records of the
Agent's management company and its identity-of-interest company(s), if any,
which relate to the provision of goods or services to the Project whenever
Project funds have been used to pay for such goods and/or services (other
than management services).
10
In the event charges levied by an identity-of-interest firm exceed
charges which were or would have been levied by an identity-of-interest firms
taking into consideration the quality of work and materials and timely
performance for similar services or materials, the Agent, at the request of the
Secretary, shall refund, at its sole cost and expense, any excessive amounts
which were paid from the Project funds; provided, however, the Owner shall
refund, at its sole cost and expense, any excessive amounts which were paid from
the Project funds if and only if such excessive amounts were paid to an
identity-of-interest firm pursuant to a contract for which Owner granted its
prior written approval. If the Agent or Owner, as the case may be, and the
appropriate HUD Field Office acting on behalf of the Secretary cannot agree as
to the amount of refund due, the Chief of the Loan Management Branch of such HUD
Field Office shall request HUD's Office of the Inspector General to review the
Agent's, Owner's or identity-of-interest firm's records related to the
transactions under review. The Inspector General shall provide the Chief of the
Loan Management Branch of the HUD Field Office with an estimate of the amount of
refund due. The Deputy Director for Housing Management and the Chief of the Loan
Management Branch of the HUD Field Office shall review the Inspector General's
report and shall notify the Owner or Agent, as the case may be, in writing of
the amount of refund due. Within 20 days of receipt of the HUD Field Office's
letter, the Owner or Agent, as the case may be, shall refund any amounts found
to be excessive.
21. TENANT-MANAGEMENT RELATIONS. The Agent will encourage and assist
---------------------------
residents of the Project in forming and maintaining representative organizations
to promote their common interest, and will maintain good-faith communication
with such organizations to the end that problems affecting the Project and its
residents may be avoided or solved on the basis of mutual self-interest.
22. ON-SITE MANAGEMENT FACILITIES. Subject to the further agreement of
-----------------------------
the Owner and Agent as to more specific terms, the Agent will maintain a
management office within the Project to be located in 000 "X" Xxxxxx, X.X.,
Xxxxxxxxxx, X.X.
23. INSURANCE. The Owner will inform the Agent of insurance to be
---------
carried with respect to the Project and its operations, and the Agent will cause
such insurance to be placed and kept in effect at all times. The Agent will pay
premiums out of the Rental Agency Account, and premiums will be treated as
operating expenses. All insurance will be placed with such companies, on such
conditions, in such amounts, and with such beneficial interests appearing
thereon as shall be acceptable to the Owner, the Secretary and the First
Mortgagee, as applicable, and shall be otherwise in conformity with the First
Mortgage; provided that the same will include public liability coverage, with
the Agent designated as one of the insured, in amounts acceptable to the Agent
as well as the Owner, the Secretary and the First Mortgagee, as applicable. The
Agent will investigate and furnish the Owner with full reports as to all
accidents, claims, and potential claims for damage relating to the Project, and
will cooperate with the Owner's insurers in connection therewith.
11
24. COMPLIANCE WITH GOVERNMENTAL ORDERS. The Agent will take such
-----------------------------------
actions as may be necessary to comply promptly with any and all governmental
orders or other requirements affecting the Project, whether imposed by federal,
state, county or municipal authority, subject, however, to the limitation stated
in Subsection 11(e) with respect to repairs. Nevertheless, the Agent shall take
no such action so long as the Owner is contesting, or has affirmed its intention
to contest, any such order or requirement. The Agent will notify the Owner in
writing of all notices of such orders or other requirements within seventy-two
(72) hours from the time of Agent's receipt of such notices.
25. NON-DISCRIMINATION. In the performance of its obligations under
------------------
this Agreement, the Agent will comply with the provisions of any Federal, State
or local law prohibiting discrimination against any persons on grounds of race,
color, creed, sex, national origin, handicap or age, including Title VI of the
Civil Rights Act of 1964. Title VIII of the Civil Rights Act of 1968, Executive
Order 11063, Section 504 of the Rehabilitation Act of 1973, the Age
Discrimination Act of 1975, and all regulations and administrative instructions
implementing those Jaws, as applicable.
26. AGENT'S COMPENSATION. The Agent will be compensated for its
--------------------
services under this Agreement by monthly fees, to be paid out of the Rental
Agency Account and treated as Project expenses. Such fees will be payable on the
10th day of each month of the term of this Agreement. Each monthly fee will be
in (a) an amount equal to three and one-half percent (3-1/2%) of gross
collections of the Project received during the preceding month, and (b) an
amount not to exceed Five Thousand Five Hundred and 00/100 Dollars ($5,500) on a
monthly basis in reimbursement of such documented expenses which Agent may incur
during the preceding month in connection with its management of the Project in
accordance with this Agreement. For purposes hereof, gross collections shall be
deemed to include residential rental income received from Project residents and
income of the Project from other sources, as permitted under the Regulatory
Agreement, such as coin-operated laundry equipment, and the rental of parking
spaces located within the Project. The Agent, from its fee hereunder, shall pay
to Multistate Realty Services, Inc. or such other consulting service designated
by Owner a fee not to exceed one percent (1%) of gross collections for such
consultant's advice with respect to the management of the Project.
27. Term of Agreement. The initial term of this Agreement (the
-----------------
"Initial Term") shall be in effect for a period of approximately two (2) years,
beginning on and ending on the last day of the calendar month which is twenty-
four (24) calendar months after the calendar month in which the term of this
Agreement begins (unless the term of this Agreement begins on the first day of a
calendar month, in which case the term of this Agreement shall end on the last
day of the calendar month which is twenty-four (24) calendar months from the
beginning of the Term). Thereafter, the term shall be from year to year unless
otherwise terminated pursuant to this Agreement. Notwithstanding anything
contained herein to the contrary, this Agreement and the obligations of the
Principal Parties hereunder shall be subject to the following conditions:
12
(a) This Agreement may be terminated by Owner upon thirty (30)
days written notice for any reason with or without cause after the
"Initial Term.
(b) This Agreement may be terminated by Agent upon sixty (60) days
written notice for any reason with or without cause after the "Initial
Term".
(c) It is expressly understood and agreed by and between the
Principal Parties that the Secretary shall have the right to terminate
this Agreement at the end of any calendar month for failure on the
part of either the Owner or the Agent to comply with the provisions of
the Management Certification, or other good cause, on thirty (30) days
advance written notice to the Owner and the Agent, except in the event
of a default by the Owner under the First Mortgage, the Regulatory
Agreement or any subsidy contract for the Project in which case this
Agreement shall be deemed terminated immediately upon the issuance by
the Secretary of written notice of termination to the Owner and the
Agent. If the Secretary terminates the Agreement as aforesaid, the
Owner will promptly make arrangements for providing management
satisfactory to the Secretary and no liability will attach to either
of the Principal Parties in the event of such termination.
(d) It is expressly understood and agreed by and between the
Principal Parties that the First Mortgagee shall have the right to
terminate this Agreement upon thirty (30) days written notice to the
Principal Parties in the event of a default under the Loan Documents
by the Owner.
(e) Upon termination, the Agent will submit to the Owner any
financial statements required by the Secretary, and will turn over to
the Owner all of the Project's cash, trust accounts, investments and
records within five (5) days of the termination of this Agreement.
After the Principal Parties have accounted to each other with respect
to all matters outstanding as of the date of termination, the Owner
will furnish the Agent security, in form and principal amount
satisfactory to the Agent, against any obligations or liabilities
which the Agent may properly have incurred on behalf of the Owner
hereunder.
(f) Agent hereby waives any contractual, statutory or other
management lien on the Project which such right to lien Agent may hold
as of the date hereof and hereafter.
28. INDEMNIFICATION. Agent shall indemnify and hold harmless Owner,
---------------
its officers, directors, and employees from and against any and all claims,
damages, losses, and expenses (including attorney fees) arising out of or
resulting from negligence or misconduct on the part of Agent, its officers,
agents and employees in the performance of Agent's duties under this Agreement,
except when same occurs as a result of the express direction of Owner, or
Multistate Realty Services, Inc. or such other consulting service designated by
Owner and engaged by Agent pursuant to Section 26 of this Agreement with respect
to any matters undertaken by any
13
such consultant pursuant to its applicable written agreement with Agent, as
approved by Owner; provided, however, the foregoing exculpation shall not apply
in the event of any negligence or misconduct of Agent in carrying out the
express direction of Owner, Multistate Services, Inc. or any other applicable
consulting service engaged by Agent as aforesaid.
29. INTERPRETATIVE PROVISIONS.
-------------------------
(a) In the event of a conflict between any provision of this
Agreement and any rights and requirements as may be imposed by the
Secretary, the rights and requirements of the Secretary shall prevail
and the conflicting provision in this Agreement shall be deemed to
have no further force or effect.
(b) At all times, this Agreement will be subject and subordinate
to all rights of the Secretary, and will inure to the benefit of and
constitute a binding obligation upon the Principal Parties and their
respective successors and assigns.
(c) This Agreement constitutes the entire agreement between the
Owner and the Agent with respect to the management and operation of
the Project, and no change will be valid, unless made by supplemental
written agreement, executed and approved by the Principal Parties.
(d) This Agreement has been executed in several counterparts, each
of which shall constitute a complete original Agreement, which may be
introduced in evidence or used for any other purpose without
production of any of the other counterparts.
30. EFFECT OF AGREEMENT ON PRIOR HOUSING MANAGEMENT AGREEMENT. This
Agreement is intended to and shall be deemed to supersede in its entirety that
certain Restated Housing Management Agreements and the Amendment. Pursuant to
the terms of this Agreement, the Amended and Restated Housing Management
Agreement is hereby terminated.
Notwithstanding the execution of this Agreement by the Principal
Parties, this Agreement shall only become effective upon the execution of a
consulting agreement for the Project by and between the Principal Parties.
14
IN WITNESS WHEREOF, the Principal Parties by their duly
authorized officers have executed this Agreement as of the
12th day of May, 1994.
OWNER:
CAPITOL PARK ASSOCIATES, an
Illinois limited partnership
BY: A.I.M. Partnership No. 1, an Illinois
limited partnership, Managing
General Partner
By: /s/ Xxxxx X. Xxxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxxx,
General Partner
15
AGENT:
INTERSTATE GENERAL COMPANY,
L.P., a Delaware limited partnership
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxxxx
----------------------------
Its: Vice President
----------------------------
16
ADDENDUM TO
AMENDED AND RESTATED
HOUSING MANAGEMENT AGREEMENT
----------------------------
This Addendum is entered into this _____ day of May, 1994 between
Interstate General Company, L.P., as Agent and Capitol Park Associates, an
Illinois limited partnership, as Owner for the purpose of amending that certain
Amended and Restated Housing Management Agreement of even date herewith (the
"Management Agreement").
The Management Agreement is amended and modified as follows;
1. In Section 8(d) of the Management Agreement, the second sentence
shall be deleted.
2. Whenever the Management Agreement provides for Owner to be a
permitted signatory on the Security Deposit Account and the Rental Agency
Account, Owner 'nay exercise such right to draw monies from such accounts only
to pay the same amounts and for the same purposes as Agent may draw monies from
said accounts under the Management Agreement or in the event that Agent shall be
in default under the Management Agreement.
3. In Section 13(b) of the Management Agreement, the determination of
compensation for certain key employees shall be made in Owner's discretion with
Agent's approval, which approval shall not he unreasonably withheld.
4. In Section 17(b) of the Management Agreement, the cost for
partnership tax returns of Owner shall not exceed Five Thousand Dollars
($5,000.00) per year and agent shall not have any responsibility for preparing
Owner's partnership tax returns.
5. In Section 26 of the Management Agreement, the monthly
reimbursement shall be increased to Six Thousand Dollars ($6,000.00).
6. Owner shall indemnify, defend and hold Agent and its officers,
directors and employees harmless from any claims, damages, losses and expenses
asserted against Agent as a result of any matters undertaken by Agent at the
specific direction of Owner or Multi-State Realty Services, Inc. (or any other
consultant designated by Owner) in violation of the Management Agreement or
applicable HUD regulations.
7. In all other respects, the Management Agreement shall be unmodified
and in full force and effect.
CAPITOL PARK ASSOCIATES, INTERSTATE GENERAL COMPANY,
an Illinois limited partnership L.P., a Delaware limited partnership
By: A.I.M. Partnership No. 1, By: /s/ Xxxxxxxx X. Xxxxxxx
Managing General Partner ------------------------------
Name: Xxxxxxxx X. Xxxxxxx
By: /s/ Xxxxx X. Xxxxxxxxxx -----------------------
-------------------------- Its: Vice President
Name: Xxxxx X. Xxxxxxxxxx -----------------------
---------------------
Its: General Partner
----------------------
HOUSING MANAGEMENT AGREEMENT AMENDMENT
As of January 1, 1998, the Management Agreement for Capitol Park
Associates, dated December 31, 1984, is to be amended as follows:
1. Delete Interstate General Company L.P. as Managing Agent.
2. Add American Rental Management Company as Managing Agent.
IN WITNESS WHEREOF, the Principal Parties (by their duly authorized Officers)
have executed this Amendment to the Agreement on the 1st day of December, 1997.
WITNESS: INTERSTATE GENERAL COMPANY L.P.
SPONSOR:
/s/ Xxxx X. Xxxxxxx
--------------------- By: /s/ Xxxxx X. Xxxxx
--------------------------
Xxxxx X. Xxxxx, President
MANAGING AGENT: AMERICAN RENTAL
WITNESS: MANAGEMENT COMPANY
/s/ Xxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxx
-------------------- --------------------------
Xxxxx X. Xxxxx, President
