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<br />4.2 Start-Up Budget. A Start-Up Budget is attached to this Agreement <br />as Exhibit B. The Start-Up Budget represents the Manager's transition costs to <br />assume its Property management obligations under this Agreement. The <br />Agency will reimburse Manager for its costs up to the amounts shown in the <br />Start-Up Budget for each line item. The Agency's obligation to reimburse <br />Manager will not exceed the total budget show in the Start-Up Budget, except for <br />any additional start-up costs to which the City has previously approved in writing. <br /> <br />4.3 (a) Management Fee. The first year Management Fee for <br />Manager is set at $1750.00 per month for the first six months, and $1005 per <br />month for the second six months for a maximum annual first year fee not to <br />exceed $12,060. <br /> <br />(b) Operating Budget. An Operating Budget is attached to this <br />Agreement as Exhibit C. The Agency will reimburse Manager for the difference <br />between its Total Operating Expenses and its Net Operating Income. In <br />requesting reimbursement, Manager must provide the Agency with a current <br />accounting of its Total Operating Expenses and its Net Operating Income for the <br />period for which Manager is seeking reimbursement. The Agency's <br />reimbursement obligation will not exceed a total of $70,000 for the term of this <br />Agreement, unless additional reimbursement in agreed to in writing by the <br />Agency. <br /> <br />4.4 Interim Repair Budget. The parties' preliminary inspections have <br />determined that interim repair work may be required to make the Property <br />habitable, and to address health and safety hazards. After Manager has <br />assumed management responsibility for the Property, Manager may submit a <br />budget to the Agency for additional interim repairs Manager has identified. The <br />Agency will determine whether each interim repair is required, and whether the <br />budget for that repair is reasonable. The Agency will issue a written notice to <br />Manager of which repair costs will be reimbursed by the Agency. Manager has <br />no obligation to perform an interim repair for which the Agency has declined to <br />reimburse Manager for that repair. Manager will not be reimbursed for any repair <br />that has not received the Agency's prior written approval, except for emergency <br />repair work necessary to ensure the Property remains habitable, and for which <br />the urgency to make the repair does not allow for Manager to seek the Agency's <br />prior written approval. The Agency's reimbursement obligation will not exceed a <br />total of $200,000 for the term of this Agreement unless additional reimbursement <br />is agreed to in writing by the Agency. The Agency's Executive Director may <br />enter into a supplemental agreement with Mercy if the interim rehabilitation work <br />proves to be beyond the ability of the Manager to handle or the Manager may <br />contract with Mercy directly with Agency's approval of the contract between <br />Manager and Mercy. <br /> <br />776633-4 Final <br />