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the ninety (90) day period for that year's books, Developer shall pay to the City the full amount of such additional amounts owed within thirty (30) days after the error is discovered. Notwithstanding the foregoing, no previous action or inaction by the City shall prohibit the City from requesting repayment of any unpaid, owed amounts of Residual Receipts at any time during the term of this Agreement or thereafter. The Developer shall pay to the City the full amount of such additional amounts owed within thirty (30) days of notice of such errors for periods prior to the previous year. 12.8. Project Operating Account. Developer shall establish an interest bearing account to be known as the Operating Reserve Account. Within sixty (60) months after the Conversion Date, Developer shall deposit an amount into the Operating Reserve Account sufficient to pay three (3) months of operating expenses and three (3) months of mandatory debt service payments ("Target Balance"). Funds shall be invested subject to the prior written approval of the City, and any earnings shall become and remain a part of the Operating Reserve. Funds may be drawn only when revenue is insufficient to pay operating expenses and may be used as permitted under Borrower's Partnership Agreement. At the time of any withdrawals from the Operating Reserve Account, written notice shall be provided to the City which provides a detailed narrative of the nature of the operating deficits that are being cured, including all necessary amounts to cure them. If the balance in the Operating Reserve Account falls below the amount required to pay three (3) months of operating expenses and three (3) months of mandatory debt service payments, then Developer shall apply Residual Receipts, when and if available, or other (ands, to the replenishment of Operating Reserves until the Target Balance is achieved. 12.9. Replacement Reserve Account. At or before the Conversion Date, Developer shall establish an interest bearing account to be known as the Replacement Reserve Account. Annually prior to March 31 of each year, Developer shall deposit into the Replacement Reserve Account an arnount equal to a minimum of two hundred fifty dollars ($250) per unit but shall not exceed five hundred dollars ($500) per unit, which amounts may increase by 3% annually, or such higher amount as may be required by the Tax Credit Investor or Senior Lender and approved by City; provided, however, that City acknowledges that the Tax Credit Investor and/or Senior Lender will require an annual deposit of fiords into the Replacement Reserve Account for all units, and City hereby approves such requirement and agrees that any replacement reserve established by Developer and held by the Tax Credit Investor and/or Senior Lender shall satisfy the requirements of this Section 12.9. The funds in the Replacement Reserve Account shall be held in an interest bearing account, subject to the prior written approval of the City, and any earnings shall become and remain a part of the Replacement Reserve. The Developer shall not draw funds from the Replacement Reserve Account without the prior written approval of the City. Funds may only be drawn from the Replacement Reserve Account to replace or maintain Project assets that have a useful life of more than one (1) year in accordance with Generally Accepted Accounting Principles ("GAAP"), and have been or will be 32 Westview House City Rental Rehabilitation Progmm Loan Agreement