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- 10/02/97 THU 17:07 FAX 16122889400 HOLMES&GALEY,LTD 0012 <br /> • (a) all ordinary and necessary expenses of operations of Silver Lake <br /> shown as line items on Form HUD-92547-A (Budget Worksheet), <br /> exclusive of real estate taxes and debt service requirements of any <br /> lender and exclusive of utility expenses which are the direct <br /> responsibility of tenants; provided, however, that if the Partnership <br /> shall be required to borrow funds for repairs, replacements or <br /> improvements not funded from a Silver Lake reserve fund for <br /> replacements, debt service requirements for any such borrowing <br /> approved by the MPHA (which approval shall not unreasonably be <br /> withheld) shall be included in Allowed Project Expenses; provided, <br /> further, that MHOP Unit Expenses (as hereinafter defined) shall be <br /> reduced by any amounts contributed by the MPHA, on a grant <br /> basis, for repairs,replacements or improvements.; <br /> (b) management fees payable pursuant to the Management Agreement; <br /> (c) legal expenses associated with the operation of Silver Lake as well <br /> as accounting and audit expenses, including tax return preparation <br /> expenses, permitted to be charged as project expenses pursuant to <br /> HUD Handbook 4370.2 REV-i, Financial Operations and <br /> Accounting Procedures for Insured Multifamily Projects, or any <br /> successor thereto; and <br /> • <br /> (d) reserves for replacements and for any other purposes, as required <br /> by any lender and approved by the MPHA. <br /> 2. "MHOP Percentage" shall mean the higher of (i) the number of MHOP <br /> Units, divided by the total number of units at Silver Lake, or (ii) the net <br /> rentable square feet of the MHOP Units (assuming 5 two-bedroom units, 1 <br /> three-bedroom unit and 4 four-bedroom units), divided by the net rentable <br /> square feet of all units at Silver Lake. <br /> 3. "MHOP Unit Expenses" shall mean (A) Allowed Project Expenses, <br /> multiplied by the MHOP Percentage, plus (B) the payment in lieu of real <br /> estate taxes made in respect of the MHOP Units, if any, plus (C) amounts <br /> paid to MHOP Unit occupants as utility reimbursement (i.e., "negative <br /> rent"); provided, however, that if any line item expense shall be included <br /> in Estimated MHOP Unit Expenses on the basis of a percentage other than <br /> the MHOP Percentage pursuant to the second sentence of Section VII B <br /> (1) hereof, such expense shall be included in MHOP Unit Expenses on the <br /> basis of the same percentage; <br /> 4. "MHOP Unit Income" shall mean all income received in respect of MHOP <br /> Units, including tenant rents ("Tenant Rent" as defined in 24 CFR § <br /> • 913.102) and any other sources of income received in respect of MHOP <br /> Units, including all types of revenue shown as line items on Form HUD <br /> 92547-A, but exclusive of operating subsidy. <br /> D:\MNNI25,01 I\DOCS\INITIAL.DOC 5 INITIAL AGREEMENT <br /> MPHA/CITY OF MOUNDS VIEW <br /> SILVER LAKE DEVELOPMENT <br />