Form_of_Property_Mgmt_Agmt.pdf

MANAGEMENT AGREEMENT

THIS MANAGEMENT AGREEMENT (“Agreement”) is made effective as of the _________________, 2025, (the “Effective Date”) by and among the County of San Mateo, a political subdivision of the State of California (“Owner”) and _____________ (the "Agent”). Owner and Agent may be collectively referred to herein as “Parties” or individually as a “Party.”

RECITALS

A. Owner is the owner of certain improved real property and the improvements thereon on a 5-acre site located at 830 Stone Pine Road in Half Moon Bay, CA 94019 (the “Property” or “Stone Pine Cove”) in the City of Half Moon Bay in San Mateo County, as further described in Exhibit A.

B. Forty-seven (47) manufactured home units shall be situated on the

Property, subject to leases for occupying space for such units on the Property, which units shall be used and occupied by residents meeting affordability criteria and other restrictions established by Owner and within the scope of a Restrictive Covenants Agreement that is or shall be recorded on the Property, and further subject to financing terms established by Owner by which the units shall be considered owner-occupied units.

C. Owner desires to obtain the services of Agent for the purpose of managing and operating the Property and Agent desires to provide such services subject to the terms and conditions set forth herein.

D. At all times during the term of this Agreement that Agent does not hold a real estate brokerage license, Agent will engage a real estate broker licensed under the laws of the State of California to perform all property management services for which Agent is responsible under this Agreement that are required by such laws to be performed by such a broker.

NOW, THEREFORE, in consideration of the promises and covenants herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, Owner and Agent agree as follows:

AGREEMENT

1. Appointment of Agent and Acceptance. Owner hereby appoints Agent and Agent hereby accepts appointment and agrees to furnish the services of its organization on the terms and conditions set forth below as Owner's exclusive agent to manage, operate, supervise, and lease the Property. Agent is authorized to ensure performance of resident services activities by third parties, with the prior written approval of Owner. Agent is also authorized to ensure the performance of any delegated property management services by third parties, and shall ensure that property management services for which Agent is responsible under this Agreement that are required to be performed by licensed real estate brokers licensed under the laws of the State of California (including but not limited to certain services described under Section 4.b.xvi – Leasing and Section 8 – Bank

Accounts) are performed by such brokers. Except as otherwise provided herein, Agent is authorized to perform actions necessary to fulfill Owner’s obligations related to the Property to government agencies with authority over the Property and to parties with interests in the Property pursuant to limited partnership agreements or other contracts, copies of which shall be provided to Agent by Owner.

2. Term. The term of this Agreement shall be set forth in Exhibit A attached hereto and incorporated herein by this reference.

3. Compensation. The compensation and reimbursement of Agent for its services and expenses hereunder shall be as provided in Exhibit A attached hereto and incorporated herein by this reference. Fees and Reimbursements shall be paid within forty-five (45) days of invoicing/billing by Agent and shall be deductible from the Operating Account as defined in Section 8 (Bank Account), as part of the operating expenses of the Property. In the event of commencement or termination of this Agreement other than on the first or last day of a month, respectively, the compensation and reimbursement of Agent shall be prorated to the effective date of such commencement or termination. Proration shall be calculated based upon a thirty (30) day month. Compensation of Agent upon termination for Management Services rendered before termination shall be based on the cost of projects completed on or before termination, without proration.

4. Duties and Responsibilities of Agent.

a. General Responsibilities of Agent. Subject to the provisions of this

Agreement, Agent is hereby authorized to manage, operate, maintain and lease the Property in a diligent, careful and professional manner in accordance with the standards of practice of professional managers of similar affordable properties in the County of San Mateo or comparable jurisdictions and to provide other customary Management Services at the Property for the ordinary and usual business and affairs of the Property as are consistent with the management, operation, leasing, and maintenance of similar properties. For the purpose of this Agreement, “similar properties” means properties or projects generally serving the same population of residents and operating pursuant to substantially the same or comparable programs or subsidies and with similar budgets.

b. Specific Duties and Responsibilities of Agent. Agent agrees and is hereby granted authority to do the following in connection with its management and accounting services with respect to the Property:

i. Implementation of Business Plan/Budget. If requested by

Owner, Agent, as part of its management services, shall implement a business plan and/or budget set in collaboration with Owner on an annual basis.

ii. Collection and Disbursement of Funds. Agent as part of its

Management Services, shall use commercially reasonable and lawful efforts and means to collect the rents and other charges due from tenants and all other revenues originated by the operations of the Property. All receipts shall be deposited into the Operating Account. When deemed appropriate by Agent and approved by Owner, Agent shall institute legal proceedings on behalf of Owner for collection in connection with the operation of the Property in accordance with Section 4.b.xiii. Owner authorizes Agent to request, demand, collect, and receive funds for collection thereof in accordance with all applicable laws, regulations, ordinances or administrative grievance procedures and for the lawful dispossession of tenants, guests, and other persons from Property. Amounts expended by Agent for use of non-employee consultants or experts, including attorneys, in the performance of these duties shall be reimbursed to Agent by Owner as an expense through the Property’s Operating Account, to the extent approved in the Annual Budget or otherwise approved in writing by Owner. Owner further authorizes Agent to disburse funds from the Operating Account in payment of expenses for the Property.

iii. Books, Records, and Documentation. Agent, as part of its management services, shall maintain, either at its principal office or the Property as determined by Agent in its reasonable discretion, complete and separate books, records and documents relating to the management and operation of the Property, including without limitation all contracts, original leases, amendments and other agreements relating to contracts and leases, tenant files, correspondence with tenants and prospective tenants, computations of rental adjustments, maintenance and preventive maintenance records, construction records, inventories of personal property and equipment, correspondence with vendors, job descriptions, correspondence with federal, state and local authorities, brochures, and accounts held or maintained by Agent (all such books, records, and documents being referred to herein as "Books, Records, and Documents").

(a) Agent as part of its accounting services, shall maintain the records of account for the Property. Unless otherwise instructed by Owner in writing, books and records of account shall be prepared in conformity with Generally Accepted Accounting Principles. Except as approved in writing by Owner, all accounting functions shall be performed by employees of Agent whose compensation is payable solely by Agent without reimbursement by Owner. Except as otherwise provided herein, Owner shall have the right to examine, audit and make copies of said Books, Records and Documents at Agent's principal office at reasonable times and with prior reasonable notice. Agent shall supply any electronic data comprising the books and records created pursuant to this Agreement to either Owner or another property management company upon request by Owner and shall reasonably cooperate to provide Owner with any software or other technology necessary to utilize such electronic data.

(b) Upon request, and with prior reasonable notice, Agent shall make all Books, Records and Documents available for examination, audit, inspection and copying by duly authorized representatives of any public housing agency or authority with regulatory power and/or jurisdiction over the Property to the extent required by federal or state law.

(c) If requested by Owner, Agent as part of it’s accounting services, shall render to Owner, on or before the thirtieth (30th) day after the last day of a calendar quarter, such financial and management information as of the end of the prior quarter, including without limitation profit and loss statements, balance sheet, rent rolls, cash reconciliation statements, and reports as to the status of reserve accounts established pursuant to this Agreement, if any. Agent shall also, at the request of Owner and with prior reasonable notice, furnish such further accounting and fiscal information in a manner sufficient to respond to Owner's financial information requirements.

d) Extraordinary requests by Owner of Agent's accountants, as determined by Agent in its reasonable discretion, shall be considered “Additional Services” and shall be at Owner's sole cost and expense.

iv. Annual Audit. When requested by Owner in writing, at the end of each fiscal year (“Fiscal Year” means for purpose of this Agreement the period from January 1 to December 31) of the Property and as of the date of termination, Agent as part of its accounting services, shall arrange and coordinate an annual audit of the books and records of the Property made by a firm of certified public accountants assigned by Agent and approved by Owner. At the request of Owner, Agent shall also have said accountants prepare for execution by Owner all forms, reports, and returns required by any federal, state, county, or municipal authority relating to the Property. The cost of retaining the auditors to perform an audit is not included within Agent’s accounting services and is deemed to be a cost of Owner and shall be reimbursed to Agent by Owner as an expense through the Property’s Operating Account. Agent is authorized to make requests for information from attorneys performing services on behalf of Owner for the Property as required by any accountant for the audit of the books and records of the Property. In so doing, neither Owner nor Agent intends to waive the attorney-client privilege with respect to any information which is furnished to or from such attorneys. Any response by any attorneys to such requests for information should not be construed in any way to constitute a waiver of the protection of the attorney work-product privilege with respect to any files involving the Property, Owner or Agent.

v. Repairs and Maintenance. Agent, as part of its Management

Services, shall use due professional care to maintain, manage and supervise the maintenance of the Property, including exterior grounds, landscaping, trees and shrubbery; sidewalks and walkways; driveways; parking areas; private streets; residential and other structures; and all other components of the Property to ensure that the Property is well-maintained, safe and sanitary in the condition prescribed by Owner, and shall ensure that the readily accessible areas of Property are regularly inspected, shall take ordinarily prudent precautions against fire, vandalism, burglary and trespass on the Property., and shall supervise all necessary repairs. Costs incurred by Agent to perform or contract with others to perform property inspections, physical needs assessments and/or preventative maintenance inspections and/or repairs shall be reimbursed to Agent by Owner as an expense through the Property’s Operating Account subject to the requirements set forth herein. Agent shall make no expenditures for any single repair project in excess of $10,000 without the prior written consent of Owner, unless the expenditure for such repairs has been approved by the Annual Budget (as a category of expense, not necessarily a specific line item) or Agent determines in its reasonable discretion that such repairs are emergency repairs to the Property immediately necessary for the preservation or safety of the Property or for the safety of other persons or required to avoid suspension of necessary services to the Property. Agent shall notify Owner and provide a recommendation for any proposed expenditure that is not deemed an emergency repair as outlined above or approved in the Annual Budget, for any repair in excess of $10,000.

vi. Capital Assets. Unless Agent has Owner’s prior approval, Agent shall make no expenditure in excess of $10,000 for any single alteration, capital improvement, renovation or replacement of furniture, fixtures or equipment, unless such expenditure is contained in the Annual Budget or deemed in Agent’s reasonable discretion to be an emergency replacement immediately necessary for the preservation or safety of the Property or for the safety of other persons or required to avoid suspension of necessary services to the Property. Other than in conjunction with replacements, Agent shall make no disposition of fixed assets, as determined in accordance with Owner's Chart of Accounts, with a value in excess of $15,000 without Owner’s prior written approval. Agent shall notify Owner and provide a recommendation for any proposed capital improvement, renovation or replacement expenditure in excess of $10,000.

vii. Service Contracts, License Agreements, Equipment Leases and Credit Accounts. Owner hereby authorizes Agent to make and enter into contracts on behalf of Owner necessary for performance of the obligations set forth herein in the ordinary course of business for the operation, maintenance and service of the Property, such as services and supplies as reflected in the approved Annual Budget or as otherwise approved by Owner in writing, equipment leases, license agreements and credit accounts. Owner shall be a third-party beneficiary to such contracts and may but shall not be obligated to enforce the terms of such contracts.

(a) Agent shall obtain Owner’s prior written consent (which shall not be unreasonably withheld, delayed, or conditioned) to enter into any such agreement with a term longer than twelve (12) months. Notwithstanding the foregoing, Agent shall obtain Owner’s prior written consent (which shall not be unreasonably withheld, delayed, or conditioned) in the event Agent deems it necessary to enter into any unbudgeted contract with an aggregate annual cost of $10,000, or higher. Owner also hereby authorizes Agent to pay amounts due under such contracts, leases, agreements and accounts on Owner’s behalf. Owner shall not use contracted services, licenses, or on-site equipment for uses outside of this Agreement. Service contracts, license agreements, and related maintenance and upgrades shall be reimbursed to Agent by Owner as an expense through the Property’s Operating Account (Internet, phone, software, computer/information technology support, etc.). Notwithstanding anything to the contrary herein, all contracts entered into by Agent, unless Agent has obtained Owner’s prior written consent, must be (a) cancelable without penalty upon not more than thirty

(30) days’ notice, (b) have terms of one (1) year or less, and (c) require the provider of such services pursuant to such contract to comply with Owner’s insurance requirements.

viii. Supplies and Inventory. Within the approved Annual Budget, Agent shall, on behalf of Owner, purchase such supplies and expendable items as are necessary to operate the Property. When taking bids or issuing purchase orders, Agent shall use commercially reasonable and prudent efforts to secure for Owner's benefit any discounts, commissions, or rebates obtainable in connection with such purchases.

ix. Insurance. Owner shall obtain and keep in force all usual and customary insurance for the ownership and operation of the Property as a manufactured home park.

(a) Agent shall not knowingly permit the use of the Property for any purpose which might void any policy of insurance relating to the Property, increase the premium otherwise payable or render any loss thereunder uncollectible.

(b) Agent, as part of its Management Services, is authorized to settle on Owner's behalf any and all claims against property insurers not in excess of $10,000, which includes authority for the execution of proof of loss, the adjustment of losses, signing of receipts, and the collection of money. If the claim is greater than $10,000, Agent shall act only with the prior written approval of Owner.

(c) Agent shall cause to be placed and kept in force workers' compensation insurance up to the statutory limit, including broad form, all-states coverage and employer's liability of at least $500,000, and Agent shall furnish Owner certificates evidencing coverage upon request by Owner. Agent certifies, as required by Section 1861 of the California Labor Code, that (i) it is aware of the provisions of Section 3700 of the California Labor Code, which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of the Labor Code, and (ii) it will comply with such provisions before commencing work under this Agreement. Owner shall reimburse Agent for Agent’s workers' compensation insurance expenses associated with employees of Agent who spend 100 percent of their time employed for the direct benefit of Owner or the Property and Agent is authorized to reimburse such costs as an expense through the Property’s Operating Account to the extent approved in the Annual Budget or otherwise approved in writing by Owner. All corporate office employees of Agent shall be covered at the expense of Agent as part of its management services.

(d) Agent, as part of its Management Services, shall obtain

Crime/Fiduciary insurance in the amount of not less than $1,000,000 per occurrence, with additional named insured status for Owner that provides Owner with 30-day prior notice of cancellations or material change in coverage.

(e) Agent shall during the term of this Agreement, maintain

Comprehensive General Liability (CGL) insurance with respect to the Property and its operations and in amounts not less than $1,000,000 per occurrence of bodily injury and property damage and not less than $3,000,000 policy general aggregate, with additional named insured status for Owner that provides Owner with 30-day prior notice of cancellations or material change in coverage.

(f) Agent shall during the term of this Agreement, maintain

Professional Services insurance with respect to the Property and its operations and in amounts not less than $1,000,000 per occurrence.

(g) Agent shall during the term of this Agreement, maintain motor vehicle insurance with respect to the Property and its operations and in amounts not less than $1,000,000 per occurrence.

(h) Agent agrees that any policies of insurance provided by a commercial insurer to satisfy the requirements hereof shall be provided by a commercial insurer rated A- or better by AM Best Rating.

(i) Agent may use a combination of primary and excess insurance policies that provide coverage as broad as the underlying policies to satisfy its insurance requirements in this Section 4.b.xi. If coverage or limits under Agent’s insurance policies greater than those shown in this Section (“Excess Coverage”), are required during the term of this Agreement by Owner or a regulatory agency or other authority, the additional premiums for such Excess Coverage will be deemed a reimbursable expense for Agent and included in the Annual Budget, subject to Owner’s prior approval; provided that Agent shall not be required to purchase such Excess

Coverage unless Owner provides its approval.

x. Debt Service, Taxes and Assessments. If requested or authorized by Owner in writing, Agent, as part of its Management Services, shall pay debt service, taxes, impositions, or assessments relating to the ownership or operation of the Property, including, without limitation, improvement assessments, real estate taxes, personal property taxes, taxes on income or rents, or any charges similar to or in lieu of any of the foregoing, provided that Agent or Owner has deposited such amounts in the Property’s Operating Account or otherwise made such funds available to Agent. Upon request by Owner, Agent shall:

(a) verify bills for real estate, personal property or other taxes, improvement assessments, and other similar charges which are or may become liens against the property or which may be levied on the basis of ownership or operation of the Property,

(b) render advice and assistance to Owner in the negotiation and prosecution of all claims for the reduction or equalization of property tax assessments and other tax assessments affecting the Property. The parties agree, however, that such advice and assistance go beyond the ordinary management responsibilities contemplated by this Agreement and, as such, if Agent provides such services, they shall be at an additional cost to Owner and shall be reimbursed to Agent by Owner at an hourly rate of $150 per hour as an expense through the Property’s Operating Account.

(c) timely file all personal property tax returns after execution of such returns by Owner. Agent reserves the right to assess a fee for the filing of annual welfare exemption forms to exempt the Property from state property taxes, which fee shall not exceed $500 per filing.

xi. Compliance with Legal Requirements. Agent shall ensure that the Property and Agent comply with any laws, orders, public housing agency plans or requirements affecting the use or operation of the Property by any federal, state, county, or municipal agency of authority, including but not limited to compliance with and participation in administrative grievance procedures. Costs incurred by Agent to perform or contract with others to perform the necessary compliance monitoring or compliance remediation shall be reimbursed to Agent by Owner as an expense through the Property’s Operating Account, provided that if the cost of compliance in any instance exceeds $10,000, Agent shall not expend funds for compliance without Owner's prior written consent. Owner shall provide Agent with all information necessary for Agent to be fully informed as to the nature and extent of all programs applicable to the Property, including but not limited to providing copies of regulatory agreements, restrictive covenants or other instruments, whether or not recorded, against the Property which contain operating covenants or restrictions. Agent shall promptly notify Owner in writing of any orders, notices, plans or requirements requiring expenditure of non-budgeted amounts. Agent, however, shall not take any action as long as Owner is contesting, or has affirmed its intention to contest and promptly institutes proceedings contesting any law, order, plan or requirement. Agent shall prepare, execute, and, after obtaining the written approval of Owner, thereby file any customary and standard reports and documents required by an applicable governmental authority. Agent covenants and agrees, as part of its Management Services, to obtain and maintain all licenses and permits necessary for the conduct of its business as Agent of the Property or to engage licensed and permitted subcontractors to perform any such Management Services for which Agent does not maintain the required license or permit. Owner is responsible for payment of all licenses and permits necessary for operation of the Property. Reasonable and necessary amounts expended by Agent for use of non-employee consultants or experts, including attorneys, in the performance of these compliance duties shall be reimbursed to Agent by Owner as an expense through the Property’s Operating Account to the extent approved in the Annual Budget or otherwise approved in writing by Owner subject to the $10,000 threshold set forth above.

xii. Initiation of Legal Proceedings and Defense of Claims. Agent shall attempt to secure full compliance by each tenant with the terms of the tenant’s lease.

Mandatory compliance shall be emphasized as and to the extent consistent with the requirement of the Restrictive Covenants Agreement recorded against the Property. Agent may lawfully terminate any tenancy when, in Agent’s judgment, sufficient cause (including but not limited to non-payment of rent) for such termination occurs under the terms of the tenant’s lease. Agent is authorized to consult with and retain legal counsel of its choosing for such legal actions as Agent reasonably believes to be necessary, including, but not limited to bringing actions for eviction and executing notices to vacate and judicial pleading incident to such actions. Such actions may be brought in the name of Agent as agent for Owner. Agent further is authorized to consult and retain legal counsel for the defense of any claims relating to the Property in any way. Attorney’s fees and other necessary costs incurred in connection with the prosecution, defense or settlement of any claims related to the Property, including attorneys’ fees and, where necessary, the retention of experts, shall be reimbursed to Agent by Owner as an expense through the Property’s Operating Account, to the extent approved in the Annual Budget or otherwise reasonably approved in writing by Owner. With respect to any action or claim brought by Agent or any other party that results from or arises out of any eviction of tenants at the Property, Agent is authorized to pay out of the Property’s Operating Account all deductibles incurred by Agent under its insurance policies (including deductibles with respect to settlements of such eviction claims, to the extent that such claims did not arise out of Agent’s gross negligence or intentional misconduct), and such amounts will be treated as operating expenses of the Property.

xiii. Advertising. INTENTIONALLY OMMITTED

xiv. Employment of Personnel. Agent shall hire, train, supervise, direct the work of, pay, and discharge all personnel necessary for operation of the Property, subject to the following terms and conditions:

a. Such personnel shall in every instance be employees of Agent.

Owner shall have no right nor obligation to supervise or direct Agent’s employees who are engaged in the services provided by Agent in accordance with this Agreement. All costs associated with the employment of personnel necessary for the on-site operation of the Property, including, but not limited to, salaries, wages, other compensation, fringe benefits, travel, equipment, entertainment, training, and other expenses (including without limitation social security, taxes, worker's compensation insurance, unemployment insurance and the like), shall be reimbursed to Agent by Owner as an expense through the Property’s Operating Account to the extent approved in the Annual Budget. The terms "employees" or "personnel" shall be deemed to mean and include employment of a casual, temporary, or part-time nature.

b. The salaries, wages, other compensation, benefits, travel, equipment, entertainment, training, and other expenses (including but not limited to social security, taxes, worker's compensation insurance, funding of annuity benefits, payroll processing fees and the like), of all on-site, field, or maintenance employees of Agent working on or with respect to the Property shall be reimbursed to Agent by Owner as an expense through the Property’s Operating Account to the extent approved in the Annual Budget. Owner and Agent understand that Prevailing Wage requirements under California Labor Code §§ 1770, 1173, and 1773.1 may apply to the maintenance employees of Agent if such employees are performing “covered work”, as defined in Lab. Code, § 1720, et seq., at the Property. Owner agrees to reimburse Agent as an expense through the Property’s Operating Account for the payment of the applicable prevailing wage rates and fringe benefits paid to any maintenance employees or contractors of Agent in accordance with the prevailing wage classification applicable to the type of “covered work” performed. It is understood by Owner and Agent that Agent may retain a third-party prevailing wage consultant (“Prevailing Wage Consultant”) to assist Agent in the administration of prevailing wage compliance for Agent’s maintenance employees and any third-party hired by Agent to perform “covered work” on the Property. Owner agrees to reimburse Agent for the reasonable and necessary cost of the Prevailing Wage Consultant’s services which shall be reimbursed to Agent by Owner as an expense through the Property’s Operating Account to the extent approved in the Annual Budget.

c. The salaries, wages, other compensation, benefits, travel, entertainment, and other expenses shall be non-reimbursable expenses of Agent with respect to the following persons working on or in respect to the Property:

i. executive personnel of Agent charged with general administration of Agent's performance of this Agreement;

and

ii. off-site record-keeping personnel (except for the costs associated with the Prevailing Wage Consultant’s services as defined in Section 4.xv.(b) of this Agreement); and

iii. All overhead and general expenses attributable to Agent’s corporate and/or regional offices.

xvi. Leasing. Agent, as part of its management services, shall develop and maintain a resident selection criteria, leases and leasing practices and policies for the Property consistent with the laws ordinances, regulations, and regulatory agreements applicable to the Property, so long as the agreements have been provided to Agent by Owner. Agents shall supervise Property site staff to ensure compliance with resident selection criteria, leases and leasing practices and policies for the Property. Costs of customary financial responsibility, criminal background, or general reputation investigations of prospective residents shall be reimbursed to Agent by Owner as an expense through the Property’s Operating Account in connection with the Annual Budget.

Agent shall also develop and implement tenant screenings and eligibility verifications;

perform income certifications as needed; coordinate the execution of leases, rental agreements, lease renewals, lease extensions, and other documents associated with leasing the units on forms agreed to by the Owner; perform move-in and move-out inspections and administer unit turnovers in a timely and efficient manner; collect all rents and other charges for services provided in connection with the use of the Property due from any tenant, subtenant, resident, sub-resident, licensee or from others, and deposit such amount in the Operating Account; collect, deposit, disburse and manage security deposits, if applicable, in accordance with applicable state, local and federal laws and regulations;

coordinate with on-site service providers to resolve problems or crises, and assist occupants to get the care that they need to maintain housing stability; issue lease violation notices; after reasonable attempts have been made to maintain housing stability, conduct evictions of those occupants who violate the terms of their lease; make timely and accurate rent adjustments with all required noticing and documentation; manage the marketing of vacant units and exercise reasonable diligence to relet vacant units; execute other leasing functions as appropriate. Any services in this paragraph that are required under California law to be performed by a licensed real estate broker shall be performed by such a broker engaged by Agent rather than by Agent itself, provided that Agent shall remain responsible for ensuring the satisfactory performance of these obligations and services in compliance with all legal requirements.

xvii. Onsite Supportive Services and Resident Services. If requested by Owner, Agent will be responsible for causing the provision of on-site resident and supportive services by entering into a contract with a third party, on behalf of Owner, with Owner named as third-party beneficiary to such contract.

xviii. Quarterly Operations Report. Within 15 days after each quarter and in connection with quarterly budget reconciliations described in Section 9.e of this Agreement, Agent shall provide to Owner a quarterly report of key figures, statistics and information concerning its management, operation, and maintenance of the Property including number of unit turns, number of vacant and leased units, period of vacancy for any units that were vacant during the quarter, description of any incidents at the Property that resulted in the arrival of police, fire, EMS, or other emergency response, notices served to tenants regarding lease violations; status of any eviction proceedings, number and description of any stipulated agreements with tenants, number and description of any evictions, description of the utilization of resident and supportive services, and any other qualitative or quantitative information Agent may wish to provide to best characterize its fulfillment of duties as Agent, or other information reasonably requested by Owner to understand Agent’s performance and the Property’s operations.

xix. Compliance with Restrictive Covenants Agreement. Agent agrees to comply with all requirements of the Restrictive Covenants Agreement recorded on the Property and such other requirements as may be required under the State Serna Grant program and any other funding sources for the Property. Agent hereby acknowledges that it has been provided with a copy of such Restrictive Covenants Agreement and the applicable requirements under the funding programs for the Property, and Owner will provide Agent with updated applicable requirements from time to time as necessary. Agent covenants and agrees that it will cooperate with Owner to ensure compliance with the Restrictive Covenants Agreement and California Department of Housing and Community Development requirements.

xx. Additional Services. If Owner requests Agent to perform services beyond the ordinary and usual business and affairs of the Property (“Additional Services”), Agent shall be entitled to additional reasonable compensation for same, which shall be negotiated by the parties in good faith before the Additional Services are performed by Agent. Notwithstanding the foregoing, if Agent in good faith begins performing Additional Services before a compensation structure is agreed upon with written notice to Owner of same, Owner hereby agrees to pay Agent a reasonable value for said Additional Services unless and until Owner specifically instructs Agent, in writing, to stop performing such Additional Services.

5. Duties and Responsibilities of Owner.

a) General Responsibilities of Owner. In addition to the specific obligations set forth elsewhere in this Agreement, Owner agrees to cooperate with Agent in the fulfillment of Agent’s obligations under this Agreement including, but not limited to, engaging in reasonable, good faith efforts to provide timely approvals of improvement plans and Annual Budget and to provide and/or execute all certificates, documents, information, and funding necessary for Agent’s management of the Property. Further, Owner shall not require Agent to act in a manner that would violate any applicable laws, regulations, software license agreements, telecommunications agreements or program requirements and requiring such conduct is an express violation of this Agreement by Owner. Owner hereby represents and warrants that it is the owner of fee title to the Property and that it understands, acknowledges, and agrees to comply with the applicable legal and financial duties and responsibilities of property ownership. Owner further represents and warrants that its entity status with the jurisdiction in which it was formed/incorporated is as described in the recitals of this Agreement and that it is authorized to do business in the State of California.

b) Specific Duties and Responsibilities of Owner. Owner agrees to do the following:

i. Contact with Regulatory Agencies. Owner shall timely submit certificates, documents, and information to appropriate regulatory agencies, with copies to Agent. Owner shall also copy Agent on correspondence or other communications with regulatory agencies with respect to the Property. Agent shall provide reasonable cooperation with Owner in connection with Owner’s communications and compliance obligations to regulatory agencies.

ii. Provision of Working Capital. Within ten (10) business days of the Effective Date of this Agreement or by such other date as the Parties may mutually agree in writing, Owner shall fund the Operating Account (if established, and if not yet established, promptly thereafter) with working capital (“Working Capital”) in a minimum amount equal to one-twelfth (1/12th) of the Property’s total Annual Budget (i.e., $______) based on the Property’s total Annual Budget as prepayment of such operating expenses to be incurred, which amount shall be subject to quarterly review and reconciliation as provided in Section 9(e). Agent may use Working Capital to pay for expenses in accordance with the approved Annual Budget. Upon reasonable request by Agent, Owner shall within a commercially reasonable time deposit a sum equal to any portion of Working Capital used by Agent to ensure a sufficient amount of Working Capital is available in the Operating Account at all times, in an amount determined by Owner in its sole discretion. Agent shall not be obligated to contribute any of its own funds in order to maintain positive cash flow on the Project. Agent agrees to cooperate with Owner to provide such reasonable information and documentation as may be required by Owner to process and reconcile Working Capital funding.

iii. Asset Management. Owner shall act as a responsible owner and asset manager for the Property and take commercially reasonable steps to ensure sufficient financing is in place for the benefit of the Property.

iv. Property Condition. Owner shall provide sufficient funds to address any material property condition, habitability and disability access, accommodation and modification issues at the Property to the extent approved in the Annual Budget or otherwise approved in writing by Owner.

6. Expenses of Owner. Except as otherwise provided in this Agreement, all contractual obligations incurred to third parties in the course of managing the Property pursuant to this Agreement, which are approved in the Annual Budget or otherwise approved in writing by Owner, shall be obligations of Owner and shall be for its account. Agent is authorized but is in no event obligated to advance funds on behalf of Owner. All expenses, including fees for necessary legal and consultant advice, incurred by Agent in its performance under this Agreement shall be reimbursed to Agent by Owner as an expense through the Property’s Operating Account in accordance with the provisions regarding such fees and costs provided for in this Agreement. Owner's responsibility for such expenses, including future attorneys' fees and costs relating to actions, claims, issues or incidents arising during the term of this Agreement, shall remain in full force and effect until resolution of the issues even if this

Agreement is terminated before such resolution.

7. Expenses of Agent. Agent agrees to pay all salaries, wages and other compensation and fringe benefits of all personnel described in Section 4.b.xiv.d (Duties and Responsibilities of Agent; Specific Duties and Responsibilities of Agent; Employment of Personnel) above as an expense of Agent without reimbursement by Owner, except as otherwise provided therein. Agent shall pay expenses which are expressly not reimbursable hereunder, such as costs of providing corporate office facilities and supplies for such off-site corporate personnel and other expenses incurred by Agent which are not incurred in the performance of duties and obligations required by this Agreement.

8. Bank Accounts.

a. Agent shall, as part of its accounting services, maintain a

"General Account" which is an account owned and managed by Agent containing Agent’s funds, including, without limitation, Agent's compensation. The General Account may also be used to pay other expenses, including but not limited to, insurance premiums, ad valorem taxes on real and personal property, and debt service relating to the Property. The General Account shall not be considered or construed as a account. The Agent shall seek reimbursement as determined by Agent from the Operating Account, as specified in 8.c.

below, for payments made by the Agent from the General Account. If Owner does not request Agent to establish a General Account, such expenses as described in this paragraph shall be paid from the Operating Account.

b. Agent shall, as part of its accounting services, establish the following bank or money fund accounts (as designated by Owner).

i. A "Security Deposit Account" is a Restricted Cash account and may be an interest-bearing account if required by applicable law, in an account approved by Owner for the retention of security deposits delivered in connection with leases of any portion of the Property. “Restricted Cash” refers to cash funds that are restricted by purpose or by law and are not available for payment of operational expenses pursuant to this Agreement. The Security Deposit Account is to be established solely for the Property and shall contain no funds other than money collected from or intended for use in connection with security deposits for the Property, and Agent shall not commingle any of its own funds with the funds of Owner. All funds of Owner deposited in this account is the property of Owner held in an account for Owner by Agent. This account shall be subject to the control of both Agent and Owner, either of whom may draw checks thereon.

ii. Agent may also maintain a petty cash fund and make payments from such account in a manner consistent with the usual course of dealing with such funds in the property management business. Such petty cash fund shall be subject to the same rules and restrictions set forth above as are applicable to the bank accounts.

c. Agent shall open and maintain an account on behalf of Owner, known as the "Operating Account" which shall be used for the deposit from Owner of all funds for the operation of the Property, including Unrestricted Cash and funds provided by a public housing agency or authority, and any deposits of rents and other charges due from tenants and paid by or on behalf of tenants at the Property. The Operating Account shall also be used as the account for payment of reimbursements to Agent for funds used from

Agent’s General Account (if any), and other costs and expenses to be paid by Agent on behalf of Owner including but not limited to taxes and insurance. “Unrestricted Cash” refers to cash funds that are not restricted by purpose or by law and are available for payment of operational expenses pursuant to this Agreement. Owner is to deposit funds in the Operating Account maintained by Agent to ensure that there are sufficient funds to pay authorized expenses/reimbursements which have been invoices/billed by Agent to Owner. All funds in the Operating Account maintained pursuant to the terms of this Agreement shall be the property of Owner. In no event shall any funds of Agent’s be commingled with funds in the Operating Account. Disbursements from the Operating Account shall be made pursuant to written authorization by Owner in connection with the Annual Budget or as otherwise approved in writing by Owner.

d. Reserve Accounts. If requested by Owner, Agent shall maintain (or

Owner may establish and exclusively control) accounts known as reserve accounts for the Property (i.e., operating reserves or replacement reserves) on behalf of Owner, for which deposits (if any) shall be made according to the amounts approved in the Annual Budget, notwithstanding any amounts required by any lender, agency, or regulation.

Withdrawals (if any) shall be made according to the amounts approved in the Annual Budget, subject to any review and approval of any lender, agency, partner, or member as required by this agreement and such approvals must be obtained by the Owner. All funds in any reserve account maintained pursuant to the terms of this Agreement shall be the property of Owner. In no event shall any funds of Agent’s be commingled with funds in the reserve accounts.

e. Any accounts in this Section 8 that are required under California law to be maintained and/or controlled by a licensed real estate broker, or that Agent determines is in the best interest of Agent operations, shall be maintained and/or controlled by such a broker engaged by Agent, rather than by Agent itself.

9. Annual Budget.

a. Submission of Annual Budget. At the commencement of this

Agreement, and thereafter, at least sixty (60) days prior to the beginning of each Fiscal Year, Agent shall prepare and submit to Owner for Owner's approval proposed budget of

(i) the estimated income and expenses of the Property and (ii) the estimated capital expenditures for the Property for the next Fiscal Year or other operating period as may be agreed by the parties (“Annual Budget”). The Annual Budget shall be made assuming accrual basis accounting or such basis as prescribed, in writing, by Owner. Agent shall provide an explanation for the numbers used in such Annual Budget. Agent shall at all times act diligently, in good faith and in a commercially reasonable manner to maximize revenues, minimize expenses and losses in respect of the Property. The Annual Budget for the first Fiscal Year of this Agreement, pro rated as appropriate, is attached hereto as Exhibit C.

b. Submission of Other Reports. Owner may request that Agent submit the following additional reports when submitting Annual Budget: rental rate recommendations with analysis if appropriate; a listing of all capital improvement and all repair, maintenance, renovation and replacement expenditures (together with estimated costs for each item) anticipated to be made in the upcoming operating period; a payroll analysis including a salary or wage description for every on-site employee, including any fringe benefits reimbursable hereunder, of Agent whose compensation is reimbursable hereunder.

c. Approval of Annual Budget. Owner agrees that if objection to the

Annual Budget is not given within thirty (30) days after Owner's receipt of said Annual Budget, Agent shall send written notice to Owner that it is assuming approval and will operate within the Annual Budget until notified otherwise by Owner in writing. To the extent reasonable, Agent shall eliminate or revise any item or amount in the Annual Budget which is disapproved by Owner to the extent necessary to obtain Owner's approval.

d. Compliance with Annual Budget. Agent shall make commercially reasonable efforts to manage and operate the Property in accordance with the Annual Budget approved by Owner. Notwithstanding the foregoing, Agent is hereby authorized to make any expenditure necessary for the habitability, maintenance or operation of the Property according to the parameters and limits set forth in Section 4 (Duties and Responsibilities of Agent). Owner’s prior written approval will not be required in the cases of emergencies where Agent determines in its reasonable discretion that prompt action is required to prevent further or increased injury to property or person.

e. Quarterly Reconciliation of Annual Budget. Agent’s submissions of the Annual Budget to Owner and the Owner’s provision of Working Capital shall be subject to quarterly reconciliation as provided herein. Within thirty (30) days after each quarter, Agent shall review and report to Owner regarding the actual quarterly income, operating and capital expenses for the Property incurred during the preceding quarter as compared to actual gross revenues received for the Property. Gross Revenues shall mean all receipts from tenant rentals actually collected pursuant to tenant leases and all other revenues received from the operation of the Property during the preceding quarter. To the extent that Gross Revenues exceed actual operating and capital expenses for the preceding quarter, the parties shall meet and confer to discuss the extent to which such surplus cash should be deposited into reserve accounts. To the extent that actual expenses materially deviate from the estimates provided in the Annual Budget, Agent shall upon Owner’s reasonable request prepare and submit a revised Annual Budget for Owner’s approval for the remainder of the Fiscal Year, which may include recommended amounts for reserve account deposits. Agent shall submit reports on a monthly basis to Owner sufficient to show the amounts of Working Capital expended and accounting for such expenditures, provided that Agent shall keep and maintain records of costs incurred for which Working Capital is applied and, upon request by the County, promptly provide supporting documentation substantiating such expenses, including line-item accounting for expenses and evidence of work performed, or costs incurred, including, but not limited to, timesheets, copies of bills and receipts.