Commissioner, the Commissioner may require the corporation to furnish at the expense of the corporation a complete audit of its books of account duly certified by a certified public accountant. (c) Upon any default by the corporation, the president or the secretary, or either of them, as may be required by law, shall, at the request in writing of the holders of record of a majority of shares of the preferred stock, addressed to him at the office of the corporation hereinabove designated and stating the purpose of the meeting, forthwith call a special meeting to take place within 10 days after such call, of the preferred stockholders for the purpose of the removal of existing directors and the election of new directors. If such officers shall fail to issue a call for such meeting within 3 days after the receipt of such request, then the holders of a majority of the shares of the preferred stock may do so by giving notice as provided by law, or, if not so provided, then by giving 10 days' notice of the time, place, and object of the meeting by advertisement inserted in any newspaper published in the county or city in which the principal office of the corporation is situated. When such default shall have been cured, the president or the secretary, or either of them, as may be required by law, shall, at the written request of the holders of a majority of the outstanding shares of the common stock of the corporation, call, in the manner provided by law, a special meeting of the common stockholders of the corporation at which the then existing directors may be removed and new directors elected in the usual manner. Such officer shall give notice as provided by law, or, if not so provided, he shall give 10 days' notice of the time, place, and object of such meeting as above provided. Ninth. The following provisions are hereby adopted for the conduct of the affairs of the corporation and in regulation of the powers of the corporation, the directors, and stockholders: (a) (1) Dwelling accommodations of the corporation shall be rented at a maximum average rental per room per month fixed by the board of directors of the corporation and approved by the holders of the preferred stock. A schedule of rentals for the reasonable rental value of each apartment based upon the average as so determined shall be filed with the holders of the preferred stock. prior to leasing or offering for lease of any of the dwelling accommodations of the project, and when approved by them, shall thereafter be maintained except as provided in article seventh hereof. Dwelling accommodations of the corporation shall not be rented for a period in excess of 3 years nor shall the property be rented as an entirety without prior written approval of the preferred stockholder. Store accommodations shall be rented at a rental to be fixed by the directors with the prior written approval of the holders of the preferred stock. (2) The corporation shall have the right to charge to and receive from any tenant such amounts as from time to time may be mutually agreed upon between tenant and the corporation with the written approval of the holders of a majority of the share of preferred stock, for any facilities and/or services which may be furnished by the corporation to such tenant upon his request, over and above the facilities and services to which such tenant may be entitled by virtue of his lease, including, among other things, telephone operator and switchboard services, electric current, gas, air cooling and conditioning and other additional or extraordinary facilities or services which may be furnished by the corporation in connection with the operation of such housing facilities. (b) The corporation shall maintain its accommodations and the grounds and equipment appurtenant thereto in good and substantial repair and condition: Provided, That in the event all or any of the buildings covered by the mortgage shall be destroyed or damage by fire or other casualty, the money deriving from any insurance on the property shall be applied in accordance with the terms of the insured mortgage on the premises. (c) The corporation, its property, equipment, buildings, plans, offices, apparatus, devices, books, contracts, records, documents, and other papers relating thereto shall be subject to examination and inspection at any reasonable time by the Commissioner or his duly authorized agents; the corporation shall keep full and complete records of all corporate meetings of directors and stockholders and shall also keep copies of all written contracts or other instruments which affect it or any of its property, all or any of which may be subject to inspection and examination by the Commissioner or his duly authorized agents. (d) The books and accounts of the corporation shall be kept in accordance with the uniform system of accounting prescribed by the holders of the preferred stock. (e) The corporation shall furnish the Commissioner within 60 days following the end of each fiscal year a complete annual financial report. (f) At the request of the Commissioner, or of the holder of a majority of shares of the preferred stock, his or their agents, employees, or attorneys, the corporation shall give specific answers to questions upon which information is desired from time to time relative to the income, assets, liabilities, contracts, operation, and condition of the property and the status of the insured mortgage and any other information with respect to the corporation of its property which may be requested. Tenth. The duration of the corporation shall be perpetual. To be approximately evecuted, acknowledged, and filed with the proper authorities of the State where incorporated. EXHIBIT II FEDERAL HOUSING ADMINISTRATION, Section 608, Rental Housing, Letter No. 210. Title VIII, Military Housing, Letter No. 14. Subject: Establishment of maximum rents and charges in projects operating under sections 207, 608, and title VIII. This letter is for the purpose of clarifying procedures and coordinating policies with respect to the approval of rent schedules in rental projects involving mortgages insured under sections 207, 608, or title VIII, in which ceiling rents are subject to control by the Commissioner. Prior to occupancy of a project the director of the field office with jurisdiction is authorized and required to approve the initial rent schedule or revisions thereof as hereinafter provided. Subsequent to first occupancy any increase in a rent schedule requires the concurrence of this office. In establishing a rent schedule with respect to a particular project it is necessary that the director consider the section of the act under which the mortgage is insured and the amorization rate required by the terms of the insured mortgage. In section 608 and title VIII cases net return, calculated as hereinafter provided, shall not exceed 62 percent. In section 207 cases such net return shall not exceed 7 percent, or 71⁄2 percent in those section 207 cases in which the terms of the mortgage require amortization by level principal payments at the rate of 22 percent per annum. The director may approve a rent schedule which at 93 percent occupancy (on the basis of FHA estimates as revealed by the applicable form 2264W or 2264) will yield the appropriate net return on the actual estimated replacement cost of the residential portion of the project (including garages and land) plus required working capital. If the project contains commercial property, the net return thus established will be calculated after elimination from the estimated operating cost, taxes, and replacement reserve requirements, that portion of those expenses attributable to the commercial portion of the project. This elimination will be pro rata on the basis of the ratio of the cost of the commercial portion of the project to the residential portion. In the discretion of the director, such approval may be granted even though in underwriting processing, lesser rents have been determined as appropriate for the purpose of establishing maximum insurable mortgage amount. Rents for commercial space are subject to approval but it is not necessary that a ceiling be established on rents for commercial space. The director must determine, however, that the rents proposed for such space are sufficiently in accord with those anticipated in processing to represent an economically sound rent for such space. In the event that during the course of construction there has been an increase in replacement cost over the estimated replacement cost as revealed in the applicable form 2264W or 2264, or if subsequent to preparation of such form it has been determined that an increase in the estimate of operating cost or taxes is justified. such increase or increases may be considered by the director in establishing the rent schedule but may be considered only in the event of substantiation thereof by relevant, pertinent, and convincing evidence satisfactory to the director, concurred in by the Chief Underwriter, and on file in the Washington docket. With respect to projects involving mortgages insured under title VIII the director must, in addition to making the determinations heretofore required, also obtain from the Military Establishment with jurisdictional approval of the rent schedule if such schedule provides for rents in excess of those previously agreed upon with the Military Establishment. If the mortgagor is to provide furniture, a furniture rental may be established which will amortize the actual cost of the furniture in not less than 48 months. the monthly furniture rental to be fixed at not more than one forty-eighth of actual cost as determined by pertinent, documentary evidence substantiating such cost. In establishing the furniture rental, consideration will be given only to such basic items of furniture as rugs, chairs, sofas, beds, bureaus, etc., necessary for comfortable occupancy, as distinguished from such items as linens, china, cutlery, or similar items, necessary for complete living accommodations. No charge shall be made by the mortgagor against tenants in addition to those established by a rent schedule approved in accordance with the foregoing formulas, nor shall the owners or representatives of the mortgagor, either by themselves personally or through entities controlled by them, be permitted by way of subterfuge or otherwise to make additional charges against tenants with respect to facilities or services provided at the project. If tenants desire services in addition to those contemplated in the establishment of the rent schedule they are expected to make arrangements for the same independently and on their own behalf. Any charge for any facilities or services to be provided by the mortgagor not contemplated at the time of processing requires the approval of this office. Any proposal for charges other than those contemplated at the time of processing, if the director is of the opinion the proposal is sufficiently meritorious to warrant consideration, will be forwarded to this office with supporting information and the director's recommendations. Prior to occupancy and at a time sufficiently in advance thereof to permit possible necessary negotiation and adjustment, the director will require the mortgagor to submit the proposed rent schedule in triplicate on form 2458 (Rental Schedule and Information on Rental Project), such form to be completed with respect to the rent schedule and other information required thereby. The director will determine that the proposed schedule reveals monthly rents to be charged for all units. Prior to approval the director will determine that the rents proposed are not in excess of those permitted by the formulas above prescribed. Approvals of rent schedules will be in writing. The approval will reveal the number of rooms in the project and the approved average rent per room per month. Copies of approvals shall be distributed as follows: Original to mortgagor Copy to Assistant Commissioner, Rental Housing, with copy of completed form 2458 Copy to Washington docket, with copy of completed form 2458 Subsequent to first occupancy any increase in a rent schedule requires the concurrence of this office. Consideration will be given to increases only when it is demonstrated that a substantial increase in operating cost, taxes, or other charges has occurred, or is reasonably to be anticipated. The increase, however, must be based upon the fact that the present income of the project will no longer produce the appropriate net return. Upon receipt of a request for an increase in rents subsequent to occupancy at a project involving a mortgage insured under title VIII, the director will require prior to consideration thereof submission by the mortgagor of written evidence of concurrence in the request by the Military Establishment with jurisdiction. In cases in which it is discovered that rents exceed the limitations herein set forth and the director is unable for a period of 30 days to obtain from the mortgagor necessary adjustments, the director will forward to this office all pertinent facts respecting the case for further instructions. In considering rent schedules and methods of operation proposed by mortgagors, directors will bear in mind that the objective of this Administration is the production of housing designed for occupancy of a relatively permanent nature and that transient occupancy is contrary to policy. No approval will be granted with respect to a proposal anticipating transient occupancy. This letter supersedes and cancels section 608 Rental Housing Letters 145, 157, 162, 194, and section V, paragraph 10, of section 207 RH Letter 123. Very truly yours, Commissioner's Clearance No. 2316. CLYDE L. POWELL, Assistant Commissioner. EXHIBIT III FEDERAL HOUSING ADMINISTRATION, Section 608, Rental Housing, Letter No. 214. To: Directors of all field offices. Subject: Furniture rentals and transient occupancy. Reference is made to section 207, letter RH-136; section 608, rental housing letter No. 210; and title VIII, military housing letter No. 14, issued August 10, 1951, regarding the establishment of maximum rents and charges in rental housing projects. Those letters stated that the objective of FHA in its rental housing program is the production of housing designed and operated for relatively permanent occupancy and that transient occupancy is contrary to FHA policy. Those letters also provided formulas for the establishment of maximum rents for living units and a formula for furniture rentals if the mortgagor provides furniture. It was further stated that charges by a mortgagor against tenants in addition to those approved by FHA would not be permitted and that no approval would be granted for charges for services or facilities not contemplated at the time of processing without the prior approval of this office. There has now been received at Washington evidence that some mortgagors are catering to transient occupancy, engaging in operations approximating those of a hotel or motel, and in some such instances there is evidence of violation of approved ceiling rents and charges. It is obvious, of course, that transient occupancy is not feasible in a rental housing project unless living units are furnished. It is also apparent in most of the cases in question that an operation involving transient occupancy is not economically feasible unless charges are made against occupants in addition to the rents and charges approved by FHA. In view of the foregoing, it is necessary to supplement and expand the instructions contained in the administrative letters hereinbefore cited. Effective upon receipt of this letter, no approval will be granted for furniture rentals in any rental housing project unless the director, after analysis appropriate to the particular case, is firmly of the opinion that furniture is essential to obtain satisfactory occupancy, and approval of furniture rentals will be given then only in the event of prior agreement by the mortgagor not to accept any tenancy for a period of less than 30 days. The agreement of the mortgagor shall be in the form of a letter addressed to the Commissioner in accordance with the exhibit attached hereto. The original and an executed duplicate copy of such agreement will be obtained. The original of such agreement will be filed in the field office docket and the executed duplicate copy will be forwarded to the Assistant Commissioner, Rental Housing, Washington, with a copy of the letter of approval. If approved, furniture rentals shall not be in excess of those prescribed in the administrative letters hereinbefore cited, and in the establishment of such rentals there shall be considered only basic items of furniture necessary for comfortable occupancy (as distinguished from complete living facilities), as prescribed in said administrative letters. Cases involving transient occupancy and probable violation of FHA-approved rents and charges, of which this office is apprised, are not numerous but are sufficient in number ot warrant vigilance on the part of each director with respect to rental housing projects in his jurisdiction in which rents and charges are subject to control by FHA to prevent operations in violation of policy as expressed in this letter. If, therefore, a director is or hereafter becomes aware of operations in any such rental housing project involving transient occupancy, he will immediately require submission by the mortgagor of a current schedule of all rents and charges against tenants or occupants. In examining such schedule, the director will bear in mind that any charge in addition to those approved by FHA made against tenants by the mortgagor or by the owners or representatives of the mortgagor, either by themselves personally or through entities controlled by them, constitutes a violation of the approved maximum rents and charges. Upon discovery of any such violation, the director will immediately notify this office with detailed information regarding the case in order that appropriate instructions may be issued. If upon examination of the schedule submitted the director is of the opinion that such schedule does not truly reflect the rents and charges actually being made by the mortgagor, or if such schedule be in conflict with other evidence available to the director of rents and charges actually being made, the director will notify this office with full information regarding the case in order that appropriate instructions may be issued. Very truly yours, Commissioner's clearance No. 2489. CLYDE L. POWELL, Asisstant Commissioner. (Date) The above-identified rental housing project is subject to a mortgage insured by you under the provisions of the National Housing Act and all rents and charges of any nature against tenants of said project are subject to your approval. The undersigned proposes to furnish certain living units in the project and to make a monthly charge for such furniture, all as shown by the schedule of furniture rentals attached hereto, which monthly charge for furniture will be in addition to the maximum monthly rent for unfurnished living units you are being requested to approve or which you heretofore have approved. The undersigned represents to you and agrees that if furniture rentals as proposed are approved or are approved in any other amounts, no tenants for the project will be accepted for any period of tenancy of less than 30 days. Very truly yours, In accordance with the stated intent of Congress and with the provisions of the Housing Act of 1954 as set forth in part on the reverse hereof the undersigned hereby certifies that so long as the mortgage covering the above numbered project is insured or held under the provisions of the National Housing Act, as amended, no part of any building will be rented for a period of less than 30 days or operated in such a manner as to offer any hotel services to any tenant in the building or buildings; and that the property will not be sold while the mortgage insurance is in effect or the mortgage is held by the Commissioner unless the purchaser files with the Federal Housing Commission a like certification executed by such purchaser under oath. corporation organized and existing under the law of the State of and that he has authority to execute under oath and has so executed the above certification for and on behalf of such corporation. (Notary Public) |