CHAPTER 2. LEASES AND RENTS

LEASE AGREEMENTS

Each property which is occupied shall be covered by a lease agreement or a written notice to the tenant which shall include at least the following items:

(1) Rent to be charged.

(2) Starting date of tenancy.

(3) Date on which rent will begin to accrue.

(4) Dates on which rent payments will be due.

(5) Identification of utilities or other services to be furnished by either party.

(6) Restrictions on use and occupancy.

(7) Rights of tenant to pro rata refund of advance rent payment in the event of a move-out before the end of a rental period.

(8) When applicable, rights of parties as to fixtures.

RENT RATES

The LPA shall establish a rent rate for each property which is occupied as follows:

Tenant-Occupied Property

Rent for property occupied by a tenant of the former owner may be continued at the previous rate only if the LPA concludes that the rate is reasonable, taking into consideration the condition of the property and conditions prevailing in the area. Adjustments of the rental rate may be made at any time, but shall not be made retroactively.

Owner-Occupied Property

The LPA shall set rent for property occupied by a former owner at a rate consistent with rents established by the LPA for comparable properties in the project area.

Nonprofit Institutions

Rent for property occupied by a nonprofit institution shall, as a minimum, compensate the LPA for out-of-pocket costs. Out-of-pocket costs shall include estimated amounts for the following items:

(1) Monthly interest on the purchase price of the property at the average interest rate being paid by the LPA for borrowed funds.

(2) Expenditures for real estate taxes or payments in lieu of taxes, or tax credits.

(3) Expenditures for utilities and maintenance.

ADJUSTMENT OF RENT FOR BUSINESS CONCERN

The LPA may reduce the rent for a business concern if the rate becomes unreasonable due to adverse conditions caused by project activities, but the rate shall not be less than that which would be charged to a nonprofit institution (see "Nonprofit Institutions" above). Adjustments shall be covered by a written notice to the occupant fixing the new rent and the date on which it is to begin. Adjustments shall not be made retroactively.

STARTING DATE OF RENT

The LPA shall establish a rent collection period in accordance with local practice.

Tenants of Former Owners

For tenants in occupancy at the time of acquisition, the LPA may establish a policy whereby rent need not be accrued or collected for the remainder of the rental period in which acquisition occurs. However, rent must be charged as of the beginning date of the succeeding rental period. The nonaccrual period shall not exceed 1 month from the date of acquisition. This policy shall be applied uniformly to all tenantoccupants.

If rent has been paid by the tenant to the former owner beyond the next rental period, the prepaid rent shall be collected from the former owner at settlement.

Former Owner-Occupants

If the land acquisition program will be facilitated and project execution expedited thereby, the LPA shall establish a beginning date not later than 60 days after acquisition for rent accrual and collection from former owner-occupants.

This policy shall be applied uniformly to all former owner-occupants. Separate uniform policies for residential and nonresidential occupants may be established.

COLLECTION OF DELINQUENT RENT

The LPA shall establish a policy with respect to delinquent rent which shall include:

(1) Fixing a time period for the institution of eviction actions, which shall not be earlier than 30 days after the rent due-date. Eviction actions shall be preceded by the sending of such notices as may be customary in the locality.

(2) Actions which will be taken to collect rent from tenants who move while owing rent.

CHARGEOFF OF DELINQUENT RENT

Delinquent rent shall be charged off only after the governing body of the LPA has found that there is no reasonable prospect of collection, that the probable cost of further efforts to collect would not be warranted, or that collection would impose undue hardship on the tenant. These findings may be made monthly or quarterly.

If failure to collect rent is caused by the negligence of the LPA, the loss is not eligible for inclusion in Gross Project Cost.

RENT REFUNDS

If a tenant moves during a period for which the LPA has received rent, he may be given a pro rata refund for the unexpired portion of the period.