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(3) Over -income Tenants - In the event that the income of a qualifying tenant household <br />increases so that the tenant no longer meets the income criteria, the Owner will be <br />allowed a variance to the income criteria of this Restriction until such time as said <br />formerly qualifying tenant vacates the unit, or another unit of comparable size in the <br />Project becomes available, at which time that unit must be rented to a qualifying tenant <br />and the restriction shall transfer to the new unit. The rent for an over -income tenant <br />whose income exceeds 80% AMI, adjusted for household size, must be calculated at <br />30% of adjusted gross income, capped at market rent for comparable unassisted units, <br />provided however, that if the tenant is occupying a unit that has been allocated low- <br />income housing tax credits pursuant to Section 42 of the Internal Revenue Code o <br />f1986 (26 USC 42), the rent will be governed by that provision. <br />(4) Subordination - The Covenant shall be subordinate to any mortgage or Deed of <br />Trust and the affordability period shall be terminated in the event of a foreclosure of <br />transfer in lieu of foreclosure if the foreclosure or transfer recognizes any contractual or <br />legal rights of the City of Redwood City to take actions that would avoid the termination <br />of low-income affordability. However, this affordability restriction shall be revived if, <br />during the original term hereof, the owner of record before the foreclosure or other <br />transfer, or any entity that includes the former owner or those with who the former <br />owner has or had family or business ties, obtains ownership interest in the property. <br />Contractor/Owner grants to the City of Redwood City the right to take any and all legal <br />action necessary to enforce the provisions of this restrictive covenant, and owner will be <br />responsible for all reasonable legal expenses incurred by the City in the enforcement of <br />this restrictive covenant. Within the HOME program guidelines, the City will have the <br />right to waive any and all breaches of the terms of the affordability restrictive covenant, <br />but any such waiver shall not be deemed a waiver of any previous or subsequent <br />breaches. <br />IN WITNESS WHEREOF, Declarant has executed this Declaration on the date first <br />written above. <br />"DECLARANT" <br />HIP Housing Development Corporation <br />r <br />