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Article IV Rental Affordabilitv Covenants Section 4.01. Rental Affordabilitv Covenants. A. During the Rental Affordability Covenants Term, OWNER covenants and agrees that the Affordable Units shall be made available only to "persons and families of lower income" as those terms are defined by California Health and Safety Code section 50079.5(a), whose gross incomes are between sixty percent (60%) and eighty percent (80%) of HUD's Area Median Income for San Mateo County ("AMI"), as adjusted from time to time ("Qualified Lessees") at "affordable renY' as defined in California Health and Safety Code section 50053(b)(3). B. Each Affordable Unit shall be occupied as the Principal Residence of Qualified Lessee and for no other purpose. A Qualified Lessee shall not enter into agreements for the sublease of the Affordable Unit or otherwise allow for the rental or lease of an Affordable Unit to any other person and any attempt to sublease such unit shall render the lease of such Qualified Lessee null and void. C. Affordable Units shall not exceed the maximum occupancy allowed pursuant to the general requirements of the United States Department of Housing and Urban development, which as of the date of this Agreement, is two (2) persons per bedroom, plus one (1) person. D. Affordable Units with two bedrooms shall be leased to households of no less than finro persons. E. Occupancy of Affordable Units by and qualification of eligible lower-income tenants shall be the responsibility of the OWNER or an authorized agent of the OWNER. Annual leases shall be offered to Qualified Lessees of Affordable Units. Wthin 30 days of the annual anniversary date of occupancy of an Affordable Unit by a Qualified Lessee, OWNER shall re-certify the qualifications of the Qualified Lessee in accordance with the requirements of this Article. If, upon recertification, OWNER determines that the Qualified Lessee's Gross Income, as that term is defined in section 1.02 above, has risen above the then-in-effect allowable 80% area median income, the unit shall become a Market Rate Unit and the next available, comparable unit shall become an Affordable Unit, provided, however, that in no event shall the number of Affordable Units fall below twenty two (22), with eleven (11) being one bedroom units and eleven (11) being two bedroom units. On the conversion of the tenancy of an Affordable Unit to a Market Rate Unit, the Affordable Unit shall continue to be deemed an Affordable Unit until the next comparable unit becomes available. Section 4.02. Term of Rental Affordabilitv Covenants. OWNER hereby agrees that the Rental Affordability Covenants as described in Section 4.01 above shall be effective as of the date of recordation of this Agreement, and shall remain in � effect until the fifty-fifth (55 ) anniversary of said date (the "Rental Affordability Covenants Term"). Section 4.03. Compliance with Rental Affordabilitv Covenants. In order to ensure compliance with this Article, each of the following shall occur: A. OWNER shall submit for review and approval by CITY, its Marketing Plan ATTY/AGR/2011.141/640 VETERANS WAY-AFFORDABILITY AGREEMENT REV:12/29/11 Page 4 of 20