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income level for which the vacating Resident qualified, until such Affordable Unit is reoccupied, at which time the income character of the Affordable Unit (e.g., Very Low-Income Unit or Low- Income Unit) shall be redetermined. In any event, Affordable Developer shall maintain the occupancy requirements set forth in Section 2.1 above subject to adjustment periods that may result from compliance with this Section 2.3. (d) Float Up. Notwithstanding any covenant of this Agreement to the contrary, in the event of a termination or material reduction of Section 8 project-based vouchers or other rental assistance for the Units, or upon a foreclosure of any deed of trust (or transfer of the Project by deed in lieu thereof), the Parties agree that the following shall apply: (1) City agrees that, upon Affordable Developer’s or the lender's request and City's written approval, which shall not be unreasonably withheld, the maximum tenant household income and maximum annual rent for Affordable Units may be increased to amounts necessary to make operation of the Project financially feasible, including the payment of all required operating costs and debt service, but in no event may: (a) the maximum tenant household income limitation exceed eighty percent (80%) of AMI, and (b) the maximum annual rental limitation exceed thirty percent (30%) of eighty percent (80%) AMI as determined by CTCAC, (2) In the case of increases due to termination or material reduction of Section 8 project-based vouchers or other rental assistance for the Affordable Units or a foreclosure of any approved financing or deed in lieu thereof, the above increases may continue until such time that such rental assistance or comparable operating subsidy is restored. Notwithstanding anything to the contrary in this section, the Affordable Developer shall use good faith efforts to not displace tenant households and must use good faith efforts to reduce the effect of rent increases permitted to be imposed on existing tenant households by (1) the use of operating and transition reserves to the extent such funds are available, and (2) the use of other subsidy sources available that would mitigate the rent increases. Section 2.4 Marketing and Rental of Units. (a) The Affordable Developer shall market the Affordable Units to eligible households at Rents required by Section 2.2, in compliance with the “Below Market Rate (BMR) Tenant Selection and Management Plan” (the “Management Plan”) approved in advance by the City pursuant to Section 5.1 and consistent with this Agreement and the Affordable Housing Ordinance. (b) The Affordable Developer shall not discriminate against any applicants for tenancy on the basis of source of income or rent payment (for example, without limitation, Temporary Assistance for Needy Families (TANF) or Section 8), and the Affordable Developer shall consider a prospective Resident’s previous rent history of at least one (1) year, or such other time period the Owner deems reasonable, as evidence of the prospective Resident’s ability to pay the applicable Rent. The ability to pay shall be demonstrated if the prospective Resident can document that, the prospective Resident’s gross income is at least two (2) times the prospective rent. The Owner, in the reasonable exercise of its discretion, may waive the requirement that the ATTY/RESO.0029/CC RESO APPROVING ARCHITECTUAL PERMIT, TENTATIVE PARCEL MAP (920 SHASTA) - EXHIBIT C REV: 04-22-25 VR Page 175 of 224