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8 rental subsidy payments (the "Rental Subsidy"). If, during the Term of Agreement, there is a reduction, termination or nonrenewal of the Rental Subsidy through no fault of Developer, such that the Rental Subsidy shown on the Project Budget is no longer available (or available in a lesser amount), Developer may request approval of the City (a) to remove the PSH designation for one or more of the twenty-six (26) PSH Units, (b) to allow households with adjusted incomes that do not exceed sixty percent (60%) of AMI, adjusted for actual household size, to occupy the extremely -low income units (i.e., a unit previously restricted to households with adjusted incomes that do not exceed 30% of AMI), and (e) to increase the rent on one or more of the PBV Restricted Units, to rents that are affordable to households with an adjusted income that does not exceed sixty percent (60%) of AMI, adjusted for household size appropriate for the PBV Restricted Unit. Any requested removal of the PSH Unit designation and/or any requested rent increase is subject to the following requirements: (a) concurrently with the request, Developer shall provide the City with evidence of the anticipated reduction, termination, or nonrenewal of the Rental Subsidy, (b) a Management Plan (as defined in Section 6.1(d) of this Agreement) for the Project for the City's approval pursuant to Sections 6.1(d) and Exhibit F of this Agreement, showing the impact of the loss or reduction of the Rental Subsidy, (c) a proposed operating budget reflecting the rent increases (the "Operating Budget"), and (d) a description of efforts to obtain alternate sources of rent. The number of PBV Restricted Units subject to the rent increase and the amount of the proposed increase may not be greater than the number or amount required to ensure that the Project generates sufficient income to cover its operating costs, required deposits to replacement reserves, and debt service on approved financing as shown on the Operating Budget, and as is necessary to maintain the financial stability of the Project. In addition, upon a reduction, termination or nonrenewal of the Rental Subsidy as described above, Developer hereby agrees to the following: (a) Developer shall use good faith commercially reasonable efforts to obtain alternative sources of rental subsidies and shall provide the City with annual progress reports on efforts to obtain alternative sources of rental subsidies that would allow the rents to be reduced. Upon receipt of any alternative rental subsidies, Developer shall reduce the rents back to the original restrictions to the extent that the alternative rental subsidies provide sufficient income to cover the operating costs, required replacement reserves and debt service of the Proj ect as shown on the Operating Budget. (b) Developer shall provide tenants in the PBV Restricted Units with notice of any rent increase pursuant to this Section 7.7, and shall notify the tenant that if they have received a tenant -based voucher from the Housing Authority of the City of Santa Ana they may use the tenant -based voucher for their Restricted Unit. (c) All rent increases for the PBV Restricted Units are subject to City approval pursuant to the terms of this Section 7.7. No later than sixty (60) days prior to the proposed implementation of any rent increase, Developer shall submit to the City a schedule of any proposed increase in the rent. The City will disapprove a rent increase if it does not comply with the restrictions set forth in this Section 7.7. Notwithstanding the foregoing, rent increases for the PBV Restricted Units shall be subject to review and 18 Westview }louse City Rental Rehabilitation Program Loan Agreement