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12.3 Taxes and Impositions. Developer shall pay, prior to delinquency, all of the <br />following (collectively, the "Impositions"): (a) all general and special real property taxes and <br />assessments imposed on the Property; (b) all other taxes and assessments and charges of every <br />kind that are assessed upon the Property (or upon the owner and/or operator of the Property) and <br />that create or may create a lien upon the Property (or upon any personal property or fixtures used <br />in connection with the Property), including, without limitation, non-governmental levies and <br />assessments pursuant to applicable covenants, conditions or restrictions; and (c) all license fees, <br />taxes and assessments imposed on City (other than City's income or franchise taxes) which are <br />measured by or based upon (in whole or in part) the amount of the obligations secured by the <br />Property. If permitted by law, Developer may pay any Imposition in installments (together with <br />any accrued interest). <br />12.3.1 Right to Contest. Developer shall not be required to pay any Imposition <br />so long as (a) its validity is being actively contested in good faith and by appropriate <br />proceedings, (b) Developer has demonstrated to City's reasonable satisfaction that leaving such <br />Imposition unpaid pending the outcome of such proceedings could not result in conveyance of <br />the Property in satisfaction of such Imposition or otherwise impair the City's interests under the <br />Loan Documents, and (c) Developer has furnished City with a bond or other security satisfactory <br />in an amount not less than 100% of the applicable claim (including interest and penalties). <br />12.3.2 Evidence of Payment. Upon demand by City from time to time, <br />Developer shall deliver to City, within thirty (30) days following the due date of any Imposition, <br />evidence of payment reasonably satisfactory to City. <br />12.3.3 Books and Records. Developer shall maintain complete books of account <br />and other records reflecting its operations (in connection with any other businesses as well as <br />with respect to the Property), in accordance with generally accepted accounting principles <br />applied on a consistent basis or in accordance with such other principles or methods as are <br />reasonably acceptable to City, in accordance with 24 CFR 92.508. <br />12.4 Payment of Fees. Developer shall pay annually to City on December 1 of each year, <br />monitoring and administrative fees described in the Bond Regulatory Agreement between the <br />Housing Authority of the City of Santa Ana and the Developer, executed upon issuance of bonds <br />pertaining to this Project. <br />12.5 Project Operating Budget. Developer must promptly deposit all project income <br />directly into a segregated depository account established exclusively for the Project ("Project <br />Operating Account"). Withdrawals from this account may be made only in accordance with the <br />provisions of this Agreement and the approved Budget, as it may be revised from time to time <br />with City approval. Developer may make withdrawals from this account solely for the payment <br />of project expenses and project fees. Withdrawals from this account for other purposes may be <br />made only with the prior written approval of the City. <br />12.6 Replacement Reserve Account. Developer must establish or cause to be established a <br />segregated interest-bearing replacement reserve depository account ("Replacement Reserve <br />Account") no later than sixty (60) days after the Notice of Completion is filed. Developer must <br />1076\0l \1333668.1 <br />26 <br /> <br />