PARK PLACE RESIDENTIAL PROPERTY
PROPERTY MANAGEMENT AGREEMENT
This Agreement is made this January 1, 1994 between the undersigned Krupp Realty
Limited Partnership-V (the "Owner") and the undersigned Berkshire Realty
Enterprises Limited Partnership, a Massachusetts limited partnership (the
"Agent").
1. APPOINTMENT AND ACCEPTANCE. The Owner appoints the Agent as exclusive agent
for the management of the property described in Section 2 of this Agreement, and
the Agent accepts the appointment, subject to the terms and conditions set forth
in this Agreement.
2. DESCRIPTION OF THE PROJECT. The property (the "Project") to be managed by the
Agent under this Agreement is a housing development consisting of the land,
buildings, and other improvements located in Chicago, Illinois and known as Park
Place Towers Apartments, HUD Project No. 071-94035.
3. DEFINITIONS. As used in this Agreement:
a. "HUD" means the United States Department of Housing and Urban
Development.
b. "Secretary" means the Secretary of the United States
Department of Housing and Urban Development.
c. A "Mortgage" is an instrument between the Owner as the
mortgagor, and the mortgagee, creating a lien on the Project
as security for the payment of debt, which mortgagee is either
the Secretary or holds the Mortgage subject to HUD insurance
under the National Housing Act as from time to time amended.
d. "Mortgagee" means any holder of the Mortgage.
e. "Principal Parties" means the Owner and the Agent.
4. HUD REQUIREMENTS. The Project is subject to a mortgage which will be held by
the Secretary, under applicable provisions of the National Housing Act, and the
Owner will enter into a Regulatory Agreement with the Secretary whereby the
Owner is obligated to provide for management of the Project in a manner
satisfactory to the Secretary. The Owner has or will furnish the Agent with a
copy of the Regulatory Agreement. In performing its duties under this Agreement,
the Agent will comply with all pertinent requirements of the Regulatory
Agreement, and the lawful directives of the Secretary. In the event any
instruction from the Owner is in contravention of such requirements, such
requirements will prevail.
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5. MANAGEMENT PLAN. Attached hereto as Exhibit "A" and hereby incorporated
herein, is a copy of the Management Plan for the Project, which provides a
comprehensive and detailed description of the policies and procedures to be
followed in the management of the Project. In many of its provisions, this
Agreement briefly defines the nature of the Agent's obligations with the
intention that reference be made to the Management Plan for more detailed
policies and procedures. Accordingly the Owner and the Agent will comply with
all provisions of the Management Plan, regardless of whether specific reference
is made thereto in any particular provision of this Agreement.
6. BASIC INFORMATION. The Agent will thoroughly familiarize itself with the
character, location, construction, layout, plan and operation of the Project,
and especially the electrical, plumbing, air-conditioning and ventilation
systems, the elevators and all other mechanical equipment.
7. MARKETING. The Agent will carry out the marketing activities prescribed in
the Management Plan. Subject to the Owner's approval, advertising expenses will
be paid out of the Project Rental Account as Project expenses.
8. RENTALS. The Agent will offer for rent and will rent the commercial space and
dwelling units in the Project. Incident thereto, the following provisions will
apply:
a. The Agent will follow the tenant selection policy described in
the Management Plan.
b. The Agent will show the Project to prospective tenants.
c. The Agent will take and process applications for rentals. If
an application is rejected, the applicant will be told the
reason for rejection, and the rejected application, with
reason for rejection noted thereon, will be kept on file for
one (1) year. A current list of prospective tenants will be
maintained.
d. The Agent will prepare all dwelling leases and, unless
otherwise directed by Owner, will execute the same in its
name, identifying itself thereon as agent for the Owner. The
terms of all leases will comply with the pertinent provisions
of the Regulatory Agreement and the lawful directives of the
Secretary. Dwelling leases will be in a form approved by the
Owner and acceptable to the Secretary, but individual dwelling
leases and parking permits need not be submitted for the
approval of the Secretary.
e. The Owner will furnish the Agent with rent schedules, as from
time to time approved by the Secretary, showing contract rents
for dwelling units, and other charges for facilities and
services. In no event will such contract rents and other
charges be exceeded.
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f. The Agent will collect, deposit, and disburse security
deposits, if required, in accordance with the terms of each
tenant's lease. Security deposits will be deposited by the
Agent in an account, separate from all other accounts and
funds, with a bank or other financial institution whose
deposits are insured by an agency of the United States
Government. This account will be carried in the Owner's name
and designated of record as "Park Place Towers Security
Deposit Account", or by a name similar thereto sufficient to
identify the same as an account solely for security deposits.
9. COLLECTION OF RENTS AND OTHER RECEIPTS. The Agent will collect, when due, all
rents, charges and other amounts receivable for the Owner's account in
connection with the management and operation of the Project. Such receipts
(except for tenant's security deposits which will be handled as specified above)
will be deposited in an account, separate from all other accounts and funds,
with a bank whose deposits are insured by the Federal Deposit Insurance
Corporation. This account will be carried in the Owner's name and designated of
record as "Park Place Towers Rental Account", or by a name similar thereto
sufficient to identify the same as a Project receipts account.
10. ENFORCEMENT OF LEASES. The Agent will secure full compliance by each tenant
with the terms of such tenant's lease. Voluntary compliance will be emphasized,
and the Agent will assist tenants and make referrals to community agencies in
cases of financial hardship, or under other circumstances deemed appropriate by
the Agent, to the end that involuntary termination of tenancies may be avoided
to the maximum extent consistent with sound management of the Project.
Nevertheless, the Agent may lawfully terminate any tenancy when, in the Agent's
judgment, sufficient cause (including but not limited to non-payment of rent)
for such termination occurs under the terms of the tenant's lease. For this
purpose, the Agent is authorized to consult with legal counsel to be designated
by the Owner, to bring actions for eviction and to execute notices to vacate and
judicial pleadings incident to such actions; provided, however, the Agent shall
keep the Owner informed of such actions and shall follow such instructions as
the Owner may prescribe for the conduct of any such action. Subject to the
Owner's approval, attorney fees and other necessary costs incurred in connection
with such actions will be paid out of the Project Rental Account as Project
expenses.
11. MAINTENANCE AND REPAIR. The Agent will maintain the Project in good repair
in accordance with the Management Plan and local codes, and in a condition at
all times acceptable to the Owner and the Secretary, including but not limited
to cleaning, painting, decorating, plumbing, carpentry, grounds care, and such
other maintenance and repair work as may be necessary, subject to any
limitations imposed by the Owner in addition to those contained herein. Incident
thereto, the following provisions will apply:
a. Special attention will be given to preventive maintenance, and
to the extent feasible, the services of regular maintenance
employees will be used.
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b. Subject to the Owner's prior approval, the Agent will contract
with qualified independent contractors for the maintenance and
repair of heating and air-conditioning systems and elevators,
and for extraordinary repairs beyond the capability of regular
maintenance employees.
c. The Agent will systematically and promptly receive and
investigate all service requests from tenants, take such
action thereon as may be justified, and will keep records of
the same. Emergency requests will be received and serviced on
a twenty-four (24) hour basis. Complaints of a serious nature
will be reported to the Owner after investigation.
d. The Agent is authorized to purchase all materials, equipment,
tools, appliances, supplies and services necessary to proper
maintenance and repair.
e. Notwithstanding any of the foregoing provisions, the prior
approval of the Owner will be required for any expenditure
which exceeds Five Hundred Dollars ($500) in any one instance
for labor, materials or otherwise, in connection with the
maintenance and repair of the Project, except for recurring
expenses within the limits of the operating budget and
emergency repairs involving manifest change to persons or
property or required to avoid suspension of any necessary
service to the Project. In the latter event, the Agent will
inform the Owner of the facts as promptly as possible.
12. UTILITIES AND SERVICES. In accordance with the operating budget, the Agent
will make arrangements for water, electricity, gas, sewage and trash disposal,
vermin extermination, decorating, laundry facilities, and telephone service.
Subject to the Owner's prior approval, the Agent will make such contracts as may
be necessary to secure such utilities and services.
13. EMPLOYEES. Except as otherwise agreed, all on-site personnel will be
employees of the Project and not the Agent, but will be hired, paid, supervised,
and discharged through the Agent, subject to the following conditions:
a. As more particularly described in the Management Plan, the
Resident Manager will have duties of the type usually
associated with this position. Such person will be directly
responsible to the Agent's Project Management and other
officials.
b. Compensation of bookkeeping, clerical, and other managerial
personnel will be within the Agent's sole discretion, provided
minimum wage standards are met.
c. The Owner will reimburse the Agent for compensation (including
fringe benefits) payable to the on-site management and
maintenance employees, and
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for all local, state and federal taxes and assessments
(including but not limited to Social Security taxes,
unemployment insurance, and Workman's Compensation insurance)
incident to the employment of such personnel. Such
reimbursements will be paid out of the Project Rental Account
and will be treated as Project expenses.
d. Compensation (including fringe benefits) payable to the
on-site staff, and all bookkeeping, clerical and other
managerial personnel, plus all local, state and federal taxes
and assessments incident to the employment of such personnel
will be borne solely by the Project, and will not be paid out
of the Agent's management fee. The rental value of any
dwelling unit furnished rent-free to on-site personnel will be
treated as a cost of the Project.
14. DISBURSEMENTS FROM PROJECT RENTAL ACCOUNT.
a. From the funds collected and deposited by the Agent in the
Project Rental Account, the Agent will make the following
disbursements when payable.
(1) Reimbursement to the Agent for compensation payable
to the employees specified in Section 13c above, and
for the taxes and assessments payable to local, state
and federal personnel.
(2) The single aggregate payment required to be made
monthly by the Owner to the Mortgagee, including the
amounts due under the mortgage for principal
amortization, interest, mortgage insurance premium,
ground rents, taxes and assessments, fire and other
hazard insurance premiums, and the amount specified
in the Regulatory Agreement for allocation to the
Reserve for Replacements.
(3) All sums otherwise due and payable to the Owner as
expenses of the Project authorized to be incurred by
the Agent under the terms of this Agreement,
including compensation payable to the Agent for its
services hereunder.
b. Except for the disbursements mentioned above, funds will be
disbursed or transferred from the Project Rental Account only
as the Owner may from time to time direct.
c. In the event the balance in the Project Rental Account is at
any time insufficient to pay disbursements due and payable
under Section 14a above, the Agent will inform the Owner of
that fact. In no event will the Agent be required to use its
own funds to pay such disbursements.
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15. BUDGET. Annual operating budgets for the Project will be approved by the
Owner. Except as the Owner otherwise permits, annual disbursements for each type
of operating expenses itemized in the budget will not exceed the amount
authorized by the approved budget. In addition to preparation and submission of
a recommended operating budget for the initial fiscal year of the Project, the
Agent will prepare a recommended operating budget for each subsequent fiscal
year beginning during the term of this Agreement, and will submit the same to
the Owner at least thirty (30) days before the beginning of the fiscal year. The
Owner will promptly inform the Agent of any changes to be incorporated in the
approved budget, and the Agent will keep the Owner informed of any anticipated
deviation from the receipts or disbursements stated in the approved budget.
16. RECORDS AND REPORTS. The Agent will have the following responsibilities with
respect to records and reports.
a. The Agent will establish and maintain a comprehensive system
of records, books, and accounts in a manner conforming to the
lawful directives of the Secretary, and otherwise satisfactory
to the Owner.
b. With respect to each fiscal year ending during the term of
this Agreement, the Agent will be furnished with an annual
financial report prepared by a Certified Public Accountant, or
other person acceptable to the Owner and Secretary, based upon
the preparer's examination of books and records of the Owner
and the Agent. The report will be prepared in accordance with
the lawful directives of the Secretary, will be certified by
the preparer and will be submitted to the Owner within sixty
(60) days after the end of the fiscal year for the Owner's
submission to the Secretary and the Mortgagee, if other than
the Secretary. Compensation for the preparer's services will
be paid out of the Project Rental Account as an expense of the
Project.
c. The Agent will prepare at least a quarterly report comparing
actual and budgeted figures for receipts and disbursements,
and will submit each such report to the owner within fifteen
(15) days after the end of the quarter covered.
d. The Agent will furnish such information (including occupancy
reports) as may be lawfully requested by the Owner of the
Secretary from time to time with respect to the financial,
physical, or operational condition of the Project.
e. By the fifteenth (15) day of each month, the Agent will
furnish the Owner with a statement of receipts and
disbursements during the previous month, together with a
schedule of accounts receivable and payable, and reconciled
bank statements for the Project Rental Account and Security
Deposit Account as of the end of the previous month.
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f. Except as otherwise provided in this Agreement, and in Owner's
Partnership Agreement under which Owner has been informed, all
off-site bookkeeping, clerical, and other management overhead
expenses (including but not limited to costs of office
supplies and equipment, data processing services, postage,
transportation of managerial personnel, and telephone
services) will be borne by the Agent out of his own funds and
will not be treated as Project expenses, subject always to the
requirements, limitations and allowances contained in the
Regulatory Agreement and in the applicable HUD regulations and
directives.
17. BIDS, DISCOUNTS, REBATES, ETC. The Agent will obtain contracts, materials,
supplies, utilities, and services on the most advantageous terms available to
the Project, and the Agent may solicit bids, either formal or informal, for
items that can be obtained from more than one source. The Agent will secure and
credit to the Owner all discounts, rebates or commissions obtained with respect
to purchases, service contracts, and any other transactions entered into on the
Owner's behalf.
18. TENANT MANAGEMENT RELATIONS. The Agent will encourage residents of the
Project in forming and maintaining representative organizations to promote their
common interests, and will maintain good-faith communications with such
organizations to the end that problems affecting the Project and its residents
may be avoided or solved on the basis of mutual self-interest.
19. ON-SITE MANAGEMENT FACILITIES. Subject to further agreement of the Owner and
the Agent as to more specific terms, the Agent will maintain a management office
within the Project, and the owner will make no rental charge for the same.
20. INSURANCE. The Owner will inform the Agent of insurance to be carried with
respect to the Project and its operations, and the Agent, when authorized by the
Owner, will cause such insurance to be placed and kept in effect at all times.
The Agent will pay premiums out of the Project Rental Account, as an expense of
the Project. All insurance will be placed with such companies, on such
conditions, in such amounts, and with such beneficial interests appearing
thereon as shall be acceptable to the Owner and shall be otherwise in conformity
with the Mortgage, provided that the same will include public liability
coverage, with the Agent designated as one of the insurers, in amounts
acceptable to the Principal Parties. The Agent will investigate and furnish the
owner with full reports as to all accidents, claims, and potential Claims for
damage relating to the Project, and will cooperate with the Owner's insurers in
connection therewith.
21. COMPLIANCE WITH GOVERNMENTAL ORDERS. The Agent will take such actions as may
be necessary to comply promptly with any and all governmental orders or other
requirements affecting the Project whether imposed by Federal, State, County or
Municipal authority, subject, however, to the limitations contained in this
Agreement with respect to repairs. Nevertheless, the Agent shall take no such
action so long as the Owner is
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contesting, or has affirmed its intention to contest, any such order or
requirement. The Agent will notify the Owner in writing of all notices of such
orders or requirements, within seventy-two (72) hours from the time of their
receipt.
22. NON-DISCRIMINATION. In the performance of its obligations under this
Agreement, the Agent will comply with the provisions of any present or future
Federal, State or local law prohibiting discrimination in housing on the ground
of race, color, sex, creed or national origin, including Title VI of the Civil
Rights Act of 1964 (Public Law 88-352, 78 Stat. 241), all requirements imposed
by or pursuant to the Regulations of the Secretary (24 CFR, Subtitle A, Part I)
issued pursuant to that Title, and regulations issued pursuant to Executive
Order 11063 and Title VIII of the 1968 Civil Rights Act.
23. AGENT'S COMPENSATION. The Agent will be compensated for its services under
this Agreement by monthly fees to be paid out of the Project Rental Account to
be treated as Project expenses. Such fees will be payable monthly. Each such
monthly fee will be in an amount equal to five percent (5%) of gross collections
received during the preceding month, subject always to the provisions of the
Regulatory Agreement and the lawful directives of the Secretary.
24. TERM OF AGREEMENT. This Agreement shall be in effect for a period of two
years commencing from the date hereof subject, however, to the following
conditions:
a. In the event a petition in bankruptcy is filed by or against
either of the Principal Parties, or in the event either makes
an assignment for the benefit of creditors, the other party
may terminate this Agreement without notice to the other.
b. The Secretary shall have the right to terminate this Agreement
at the end of any calendar month, with or without cause, on
thirty (30) days' advance* written notice to each of the
Principal Parties, except that in the event of a default by
the Owner under the obligations of the Mortgage, the Secretary
may terminate this Agreement immediately upon the issuance of
a notice of cancellation to each of the Principal Parties. It
is further understood and agreed that no liability will attach
to either of the Principal Parties in the event of such
termination.
c. Upon termination, the Agent will submit to the Owner any
financial statements required by the Secretary and, after the
Principal Parties have accounted to each other with respect to
all matters outstanding as of the date of termination, the
Owner will furnish the Agent security, in form and principal
amount satisfactory to the Agent, against any obligations or
liabilities the Agent may property have incurred on behalf of
the Owner hereunder.
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25. INTERPRETATIVE PROVISIONS.
a. At all times, this Agreement will be subject and subordinate
to all rights of the Secretary, and will insure to the benefit
of and constitute a binding obligation upon the Principal
Parties and their respective successors and assigns.
b. This Agreement constitutes the entire agreement between the
Owner and the Agent with respect to the management and
operation of the Project, and no change will be valid, unless
made by supplemental written agreement, executed and approved
by the Principal Parties.
c. This Agreement has been executed in several counterparts, each
of which shall constitute a complete original Agreement, which
may be introduced in evidence or used for any other purpose
without production of any of the other counterparts.
IN WITNESS WHEREOF, the Principal Parties (by their duly authorized officers)
have executed this Agreement as of the date first above written.
OWNER: AGENT:
KRUPP REALTY LIMITED BERKSHIRE REALTY ENTERPRISES
PARTNERSHIP-V LIMITED PARTNERSHIP
By: The Berkshire Corporation,
its general partner
By: /s/ Laurence Gerber By: /s/ Tom Austin
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Laurence Gerber Tom Austin
President Vice President Operations
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