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(a) Unless otherwise approved by the Agency, rental charges to Qualified Tenants shall include all utilities except telephone; provided however, that where the Agency approves direct payment of utilities (in addition to telephone) by such tenants, such rental charges shall be calculated as if the estimated expense of such utilities were to be paid by the Borrower or the City, as applicable, but the amounts actually collected from such tenants shall be decreased by the estimated expense of such utilities approved by the Agency. (b) The Borrower or the City, as applicable, shall require every tenant in the Development to execute a lease in a form prescribed or approved by the Agency and shall not lease any dwelling unit in the Development for less than thirty (30) days nor more than two (2) years. The form of lease shall provide for tenant grievance and eviction procedures conforming to California law and Agency policies and procedures. (c) Neither the Borrower shall discriminate against tenants recipients of federal rent subsidies United States Housing Act of 1937, as subsidy program. CHFA 53SLP.RIDGE.VIEW 12/14/89 Q02189 -7- nor the City, as applicable, or applicants who are pursuant to Section 8 of the amended, or any successor (d) Utilization of the commercial facilities of the Development, if any, shall be compatible with the residential uses of the Development. Any commercial tenants, improvements and lease provisions must be approved by the Agency. All commercial leases shall include provisions to the effect that in the event of the foreclosure of the Loan, the Agency shall have the option of either continuing in effect or terminating the commercial lease. The Borrower, the City and each commercial tenant agree to do any acts and execute any documents necessary to effectuate the Agency's rights in this regard. (e) The Borrower or the City, as applicable, shall establish a grievance process for rejected prospective tenants which conforms to Agency policies and procedures. (f) Neither the Borrower nor the City, as applicable, shall permit any interest to be charged nor to accrue on any advances to the Development from the Borrower or any partner of the Borrower or the City, as applicable, except upon the following conditions: (1) prior written notice of such advance and the terms thereof shall be given to the Agency; (2) interest shall be limited to the rate on the first mortgage Note; (3) the amount of such advance shall be no greater than necessary to pay current expenses; and (4) such advances shall be repaid after payment of, or the reservation of funds for payment of, all Operating Expenses of the Development and prior to any Distributions from the Development. Failure of any of these conditions shall render the