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occupied by Low Income Tenants before any Available Units are rented or leased to any other tenants and
(2) after initial rental occupancy of such dwelling units by Low Income Tenants, at least 40% of the
Available Units in the Project at all times shall be rented to and occupied (or held available for rent if
previously rented to and occupied by a Low Income Tenant) by Low Income Tenants as required by Section
142(d) of the Code. For the purpose of the requirement that not less than 40% of the Available Units be
occupied by Low Income Tenants, if a tenant qualified as a Low Income Tenant upon occupancy, the
income of that tenant shall be treated as continuing to not exceed the applicable income limit,
notwithstanding that such tenant's income may subsequently exceed the applicable income limit; provided,
however, that such person shall no longer be qualified as a Low Income Tenant as of the most recent
determination (as provided in Section 4(e) below) if the tenant's Adjusted Family Income exceeds 140% of
the then applicable income limit. If it is determined that a tenant's Adjusted Family Income exceeds 140%
of the applicable income limit, the Borrower may avoid non-compliance with the rules set forth herein if
the next available unit of comparable or smaller size not counted as occupied by a Low Income Tenant is
rented to a qualifying Low Income Tenant;
(ii) notwithstanding Section 4(a)(i) above, if the proceeds of the Bonds are financing
the acquisition and rehabilitation of an existing residential rental project (other than Substantial
Rehabilitation, to which Section 4(a)(i) above will apply), the Borrower shall have twelve months beginning
on the date of issuance of the Bonds (the "Transition Period") to satisfy the requirement that at least 40%
of the Available Units are occupied by Low Income Tenants. The failure to satisfy the set-aside requirement
of this Section 4(a)(ii) by the last day of the Transition Period will cause the Project not to be a Qualified
Residential Rental Project as of the issue date of the Bonds issued to finance the Project unless the Bonds
issued to finance the Project are redeemed as soon as possible, but in no event later than eighteen months
after the issue date of the Bonds;
(b) the income of all tenants who occupy or will occupy the units in the Project will be verified
by the Borrower by obtaining an Income Certification and with respect to Low Income Tenants, (i) if the
occupant is employed, an employer's written verification of current anticipated annual income or (ii) if the
occupant is self-employed, the occupant shall provide an annualized profit and loss statement or (iii) if the
occupant is not employed, the occupant shall provide evidence of governmental income or rental assistance
and of any other income. Each such certification shall be dated (1) not later than the date of execution of
the lease, but in no event more than five days prior to the initial occupancy of such tenant in the Project
(and the Borrower shall require such tenant to notify the Borrower of any material change of information
in the Income Certification between execution thereof and initial occupancy of such tenant in the Project),
and (2) at least annually thereafter, in each case in the form and containing such information as may be
required by Section 142(d) of the Code (initially in the form attached hereto as Exhibit "A", as the same
may be from time to time amended by the Issuer on the advice of Bond Counsel (a copy of which
amendments shall be provided to the Issuer, the Trustee and the Mortgage Lender), or in such other form
and manner as may be required by applicable rules, rulings, procedures, official statements, regulations or
policies now or hereafter promulgated or proposed by the Department of the Treasury or the Internal
Revenue Service with respect to obligations issued under Section 142(a)(7) of the Code;
(c) during the Qualified Project Period, the Borrower shall maintain complete and accurate
records pertaining to the Dwelling Units occupied or to be occupied by Low Income Tenants, including
Income Certifications, and will permit any duly authorized representative of the Issuer, the Trustee, the
Department of the Treasury or the Internal Revenue Service to inspect the books and records of the
Borrower pertaining to the Income Certifications of Low Income Tenants residing in the Project for the
purpose of verifying compliance by the Borrower hereunder upon reasonable notice and at reasonable times.
The Borrower agrees that in the event of an Internal Revenue Service, Department of Treasury or Issuer
audit of compliance with this Regulatory Agreement as authorized by this Section 4(c), the Borrower will
pay all reasonable fees and expenses of the Issuer, its authorized representatives, and its counsel in
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