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Development and may be used for the correction of such construction defects or related damages which are not corrected by the contractor or the Borrower /Developer within a reasonable time following the demand by the Agency for such correction. (b) Replacement Reserve. A Replacement Reserve (the "RR ") shall be established and maintained until the termination of this Agreement. The RR shall be funded in the amount of Six Thousand Six Hundred Sixty -Three and No /100 Dollars ($6,663.00) per month, due on the first day of each and every month. The Agency may increase, at any time, the amount of the monthly payments to be made into the RR as necessary to, in its sole discretion, keep pace with increases in the costs of replacing major structural elements and equipment of the Development. The RR shall be used to replace major structural elements or equipment of the Development or for any other purpose consistent with maintaining the financial and physical integrity of the Development. 7. Application of Funds if Default. In the event of a default under this Agreement, or any of the other Loan Documents, the Agency in its sole discretion may apply or authorize the application of the funds in any of the accounts provided for in Section 6, to any amounts then due under this Agreement or the other Loan Documents, or use such funds for the continued operation of the Development. 8. Non - Discrimination and Equal Opportunity. Occupancy of the Development shall be open to all regardless of race, sex, marital status, age [except for senior citizen housing pursuant to California Civil Code Sections 51.2 and 51.3], color, religion, national origin or ancestry. The Borrower shall require that contractors and subcontractors engaged in the construction of the Development provide an equal opportunity for employment without discrimination as to race, sex, marital status, color, religion, national origin or ancestry. In addition, the Borrower agrees to conduct its own affirmative action and affirmative marketing programs as approved by the Agency. 9. Qualified Tenant's Rent Increase Procedure. (a) The Agency will, from time to time, revise the maximum rental limits applicable to dwelling units reserved for Qualified Tenants by a percentage equal to any percentage change in county median income. Until such time as the Agency mails a notice of such change to the Borrower, the previously existing charges shall apply. (b) Upon receipt of new rental charge schedules, the Borrower may increase, and shall, if necessary, decrease the rental charges. Any increase in rental charges must comply with the terms of the lease as to the time and manner of such changes, CHFA 53SLP /RIDGEVIEW 12/2/88 V01517(DNB) -9-