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Guest House RFP# 15-129 4. PROJECT MANAGEMENT PLAN <br />34 | Page  <br />Replacement Reserves. This account will be funded through regular contributions <br />from the Operating account. The initial contribution to this account will be <br />determined by the lenders and investors to the project in amount established in the <br />regulatory agreements. The amount of funds will be based on anticipated capital <br />improvements, project upgrading, and replacement items that the projects physical <br />assets will require. Prior approval must be obtained before withdrawal of funds. <br />Security Deposits. The Agent will maintain a Security Deposit Account. The account <br />shall be separate from the operating account. (See Section 5 for additional <br />information on the Security Deposit Account.) <br /> <br />3. Cost Control <br />Expenses in excess of $3,000 require the Owner's specific approval, except for <br />emergency repairs where Solari will communicate with the owner as soon as possible. <br />Purchase contracts in excess of $2,000 must be put out for three bids. <br />All reporting and accounting requirements shall be governed by the Management <br />Agreement. <br /> <br />4. Vacancy and Rent Loss Records <br />As outlined in the Management Agreement, Solari shall prepare, as part of the monthly <br />reports to the Owner, an income/expense statement, and a rent roll showing scheduled <br />and actual rents with a list of resident delinquencies. Delinquency reports shall indicate <br />whether residents are 30, 60, or 90 days behind in their rent. <br /> <br />5. Security Deposits <br />Security deposits will be collected in an amount equal to one (1) month's rent. Solari shall <br />establish an interest bearing account for Security Deposits. <br /> <br />The amount of any deductions from the security deposit will be determined by the <br />Solari Property Manager under guidelines established by Solari and approved by the <br />Owner. Security deposits may be used to pay for resident-caused damages, lost keys <br />or garage door remote controls, delinquent rent, late fees, legal fees and any other <br />reasonable expense caused directly as a result of a resident's actions. If no charges are <br />made against a resident's security deposit, a resident shall be entitled to a refund of a <br />security deposit. Interest shall be included in such refund to the extent required so by <br />any applicable law. Security deposit refunds will be mailed to a former resident within 21 <br />days of departure. Any accrued interest on security deposits that is not required by law to <br />3-47