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are measured by or based upon (in whole or in part) the amount of the obligations secured <br />by the Property. If permitted by law, Developer may pay any Imposition in installments <br />(together with any accrued interest). <br />12.1.3.1 _Right to Contest. Developer shall not be required to pay any <br />Imposition so long as (a) its validity is being actively contested in good faith and by <br />appropriate proceedings, (b) Developer has demonstrated to Agency's reasonable <br />satisfaction that leaving such Imposition unpaid pending the outcome of such <br />proceedings could not result in conveyance of the Property in satisfaction of such <br />Imposition or otherwise impair Agency's interests under the Loan Documents, and (c) <br />Developer has furnished Agency with a bond or other security satisfactory in an amount <br />not less than 100% of the applicable claim (including interest and penalties). <br />12.1.3.2 Evidence of Payment. Upon demand by Agency from <br />time to time, Developer shall deliver to Agency, within thirty (30) days following the due <br />date of any Imposition, evidence of payment reasonably satisfactory to Agency. <br />12.1.3.3 Books and Records. Developer shall maintain complete books of <br />account and other records reflecting its operations (in connection with any other <br />businesses as well as with respect to the Property), in accordance with generally accepted <br />accounting principles applied on a consistent basis or in accordance with such other <br />principles or methods as are reasonably acceptable to Agency, in accordance with 24 <br />CFR 92.508. <br />12.4 Project Operating Account. Subject to the requirements of the Senior <br />Lender, Developer must promptly deposit all project income directly into a segregated <br />depository account established exclusively for the Project ("Project Operating Account"). <br />Withdrawals from this account may be made only in accordance with the provisions of <br />this Agreement and the approved Project Budget, as it may be revised from time to time <br />with Agency approval. Prior to the repayment of the Housing Successor Agency Loan in <br />full, Developer may make withdrawals from this account solely for the payment of <br />project expenses (including, without limitation, funding reserves and the malting of debt <br />service payments), project fees and permitted distributions to the partners of the <br />Developer. Withdrawals from this account for other purposes may be made only with the <br />prior written approval of the Agency. <br />12.5 Replacement Reserve Account. Developer must establish or cause to be <br />established a segregated interest -bearing replacement reserve depository account <br />("Replacement Reserve Account") no later than the date of the Senior Loan converts <br />from a construction loan to a permanent loan. Developer must make monthly deposits <br />from project income into the Replacement Reserve in the amount of one -twelfth (1/12) <br />$350 per unit per year (the $350 is an annual fee paid on a monthly basis). Developer <br />may withdraw funds from the Replacement Reserve Account solely to fund capital <br />improvements for the Project, such as replacing or repairing structural elements, <br />furniture, fixtures or equipment of the Project that are reasonably required to preserve the <br />Project. Developer may not withdraw funds from the Replacement Reserve Account for <br />any other purpose without the prior written approval of the Agency. <br />21 <br />