Operator Agreement

Agreement Summary

PART 1 - SUMMARY

Pursuant to a Lease of even date, the Co-op has leased the Development from the City for a term of 60 years.
This Agreement supplements the Lease by setting forth details of the agreed day-to-day and long-term operational requirements applicable to the Development.
The goal of this Agreement and the Lease is to provide housing for people who meet the criteria set forth in this Agreement and the Lease, as part of the affordable housing legacy of the Vancouver 2010 Winter Olympics committed to by the City's Council.
The Development consists of 84 Residential Units that will be made available for persons who are qualified Occupants, and does not include any commercial or retail space.
The Co-op assumes financial and operational responsibility for management and administration of the Development, subject to paragraph 6 immediately below.
The City has allocated contingency funds to provide the Co-op with short-term operating budget support for specified purposes and for a limited period of time, if such support is required to make the Development financially viable, and has provided the Guarantee.
It is intended that as and when operating surpluses allow, further to Schedule "B", affordable Below Market housing in the Development and elsewhere in Vancouver will be increased.
The City, the Co-op and CHF BC will work together in good faith to openly confront issues and challenges, and attempt to resolve them expeditiously, always keeping the best interests of the parties to this Agreement and the Occupants in mind.

AGREEMENT

The parties agree as follows for the Term of the Agreement which is dated for reference January 25, 2011.

PART 2 - SERVICE DESCRIPTION

The City and the Co-op have agreed that the Co-op will manage the day-to-day and long-term operations of the Development, will preserve and protect the Development, will collect Operating Income and will pay Operating Expenses on the terms and conditions of this Agreement.
The City and the Co-op have agreed that the Co-op will abide by the terms and conditions of the Lease with the City.
The common goal of the parties is to provide safe, secure, well managed and fairly priced accommodation on a co-operative basis, for qualified Occupants as set out in this Agreement.

PART 3-AGREEMENT

TERM. This Agreement is for a term of 60 years commencing on the Commencement Date.
PERFORMANCE STANDARDS. The Co-op will meet the Performance Standards and will provide written reports on its achievement of the Performance Standards as required by this Agreement or as otherwise requested from time to time by the City
FINANCIAL SUPPORT. The City will provide limited financial support to the Co-op as contemplated by the Lease, the Guarantee and this Agreement.
ENTIRE AGREEMENT. All of the Schedules described in the Table of Contents and attached to this Agreement are an integral part of this Agreement.
This Agreement, the Lease and the Guarantee constitute the entire agreement between the parties with respect to the subject matter of this Agreement.
No amendment or modification to this Agreement will be effective unless it is in writing and duly executed by the parties except where this Agreement allows for otherwise.

IN WITNESS of which the duly authorized signatories of each of the Co-op, CHF BC and the City have executed this Agreement effective as of the Commencement Date:

FIRST AVENUE ATHLETES VILLAGE HOUSING CO-OPERATIVE

Per its authorized signatory:

[Signature] Thom Armstrong, Executive Director. May 4, 2011

CO-OPERATIVE HOUSING FEDERATION OF BRITISH COLUMBIA

Per its authorized signatory:

[Signature] Thom Armstrong, Executive Director. May 4, 2011

CITY OF VANCOUVER

Per its authorized signatory:

[Signature] David McLellan, General Manager, Community Services. May 4, 2011

A. Definitions

"Alterations" means all alterations, changes, replacements, substitutes, additions and improvements to the Development.
"Assets" of an Occupant (where "Occupant" includes all persons for whom the Residential Unit serves as the principal residence) means all tangible personal and real property of a potential income earning nature and includes without limitation, accounts in banks, trust companies, etc; stocks and bonds; real estate; equity in a business; Registered Retirement Savings Plans; and cash.
"Below Market Occupant" means a Household comprised of one or more cohabiting adults, with or without co-habiting children, whose collective Income is such that the Market Housing Charge payable for the Residential Unit proposed to be occupied by such Household exceeds a level set by the City, which, as of the Commencement Date, is 30% of such Household's collective Income. This level will be reviewed periodically by the City and may be increased.
"Below Market Occupant Housing Charge Contribution" means the amount an Occupant is obliged to contribute monthly to the Co-op for a Residential Unit based on the Housing Charge Scale.
"Capital Maintenance Reserve" means a reserve to be established, funded and managed by the Co-op of not less than of $60 per Residential Unit per month, as more particularly described in Schedule 8, Clause C.1.
"CHF BC Personnel" means each of the directors, officers, employees, contractors and agents of CHF BC, and their respective heirs, executors, administrators, personal representatives, successors and assigns.
"City Personnel" means each of the elected officials, officers, employees, contractors and agents of the City, and their respective heirs, executors, administrators, personal representatives, successors and assigns.
"Commencement Date" means the date as of which this Agreement and the Lease have both been executed by all parties, and the Lease has been registered in the Land Title Office.
"Consumer Price Index" means the consumer price index published by Statistics Canada (or by a successor or other governmental agency, including a provincial agency, if Statistics Canada stops to publish such data), in respect of the historical cost of the construction of apartment buildings in the Vancouver metropolitan area, or if such consumer price index is no longer published, an index published in substitution for the consumer price index or a replacement index designated by the City, or if no comparative calculation can reasonably be made by reference to any such consumer price index, then by reference to such other analysis which, in the City's opinion, most accurately indicates the changes in the cost of the construction of apartment buildings in the Vancouver metropolitan area during the period in question.
"Co-op Operating Reserve" means a reserve to be established, funded and managed by the Co-op from operating surpluses, in an amount equivalent to:
1. in the first year of the Term, the annual Operating Budget for that year (exclusive of Leasehold Mortgage costs and Capital Maintenance Reserve contributions); and
2. thereafter, the total operating costs for the Fiscal Year most recently completed based on the Co-op's audited financial statements (exclusive of Leasehold Mortgage costs and Capital Maintenance Reserve contributions), as more particularly described in Schedule 8, Clause C.2.
"Co-op Personnel" means each of the directors, officers, employees, contractors and agents of the Co-op, and their respective heirs, executors, administrators, personal representatives, successors and assigns.
"Core Need Income Threshold" or "CNIT" is based on the cost of housing in the City of Vancouver such that the tenant/occupant cannot obtain rental/co-op housing in good condition meeting Occupancy Guidelines without paying an amount which, as of the Commencement Date, is more than 30% of Income. This threshold will be reviewed periodically by the City, and if revised, will be communicated to the Co-op.
"Declaration of Income and Assets" means the declaration to be completed by an Occupant as evidence of the Income and Assets of that Occupant as required for the Housing Charge assessment.
"Development" means the multiple unit residential building(s) and all other structures constructed on, and forming part of, the lands comprising the strata corporation known as The Owners, Strata Plan 3905, together with all Alterations or repairs thereto and all improvements from time to time constructed upon or affixed or appurtenant thereto, and includes all 84 strata lots, the civic addresses of which are 153, 155, 157, 159, 161 and 163 West 1st Avenue and 156, 158, 160 and 162 Walter Hardwick Avenue (for the town homes), and 151 West 1st Avenue (for the apartment complex), and all related common property, including five bicycle storage rooms on the P1 level and part of one level of underground parking with 90 parking spaces, of which not less than eight are required by the City's Parking By-law to be set aside for visitors and two for use as class A loading bays.
"Event of Default" has the meaning set out in this Schedule A, Clause I.
"First Year Contingency Fund" means a fund to be established and managed by the City of not more than $380,241, for the purpose of assisting the Co-op in offsetting operating cash flow shortfalls experienced between the Commencement Date and the one year anniversary of the Commencement Date due to insufficient revenue to meet expenses when due, which may result from delays in achieving full occupancy and one time start-up costs, as more particularly described in Schedule 8, Clause 8.1.a.
"Fiscal Year" means the fiscal year of the Co-op, to be determined in accordance with Schedule A, Clause E. 1.
"Five Year Contingency Fund" means a non-cumulative fund to be established and managed by the City of not more than $1,100 per Residential Unit per year to help offset operating deficits experienced by the Co-op between the Commencement Date and the five year anniversary of the Commencement Date, as more particularly described in Schedule 8, Clause 8.1.b.
"Guarantee" means the guarantee by the City of the Co-op's financial obligations (as mortgagor) under the Leasehold Mortgage
"Household" means one or more cohabiting adults (19 years of age or older), with or without co-habiting children, whose collective Income, divided by 12, does not exceed the income maximums set by the City, which as of the Commencement Date is set at not more than six times the Housing Charge payable, as of the date of occupancy, for the unit occupied by such Occupant(s). The City may increase the income maximums from time to time, and if it does so, will communicate this to the Co-op.
"Housing Charge" means the charge, determined and assessed by the Co-op from time to time, payable monthly by an Occupant pursuant to an Occupancy Agreement for the right to occupy a Residential Unit and maintain membership in the Co-op.
"Housing Charge Scale" means the Housing Charge scale attached as Schedule G as amended pursuant to this Agreement from time to time.
"Housing Registry" means a partnership between the British Columbia Housing Management Commission and other affiliated housing organizations to provide a centralized database with current application information.
"Income" of an Occupant (where "Occupant" includes all persons for whom the Residential Unit serves as the principal residence) means the total annual income before income tax from all sources of the Occupant, calculated as of the date when the Occupant becomes a resident of the Development, and includes without limitation, all income from earnings, including commissions and tips; all income from all public and private pension plans, Old Age Security and Guaranteed Income Supplement; all income received under the Employment and Assistance Act, the Employment and Assistance for Persons with Disabilities Act, or successor legislation; Disabled Veteran's Allowance; alimony; child support; workers' compensation benefits; employment insurance; and actual income from assets; but excludes, the items listed in Schedule G, Clause 8.
"Income Assistance" means income received under the Employment and Assistance Act, the Employment and Assistance for Persons with Disabilities Act, or successor legislation.
"Lease" means the lease agreement entered into concurrently with this Agreement by the City and the Co-op pursuant to which the City agreed to lease the Development to the Co- op for 60 years.
"Leasehold Mortgage" means the mortgage of the Co-op's interest (as lessee) in the Development pursuant to the Lease, and includes all financing agreements entered into by the Operator with the mortgagee related thereto.
"Maintenance Plan" means the maintenance standards and practices required to preserve the Development, both short-tern and long-term, in form and contents pre-approved by the City (see also Schedule A, Clause 8.15 and Schedule 8, Clauses 8.13.h, 8.15 and C.1).
"Market Housing Charge" means the rates charged for the Residential Unit that reflects the prevailing market rent for comparable units.
"Market Occupant" means a Household that pays the Market Housing Charge for a Residential Unit.
"Occupancy Agreement" means an Agreement, lease, license or other right of an Occupant to occupy a Residential Unit that complies with the Schedule E.
"Occupancy Guidelines" means the guidelines for household sizes of a Below Market Occupant relative to the number of bedrooms in a Residential Unit. Unless otherwise agreed in writing by the City, the following guidelines apply:
1. no more than two and no less than one person per bedroom;
2. spouses and couples may share a bedroom;
3. parents do not share a bedroom with their children;
4. dependents aged 18 or over do not share a bedroom; and
5. dependents of the opposite sex age five or over do not share a bedroom.
"Occupant" means the person or persons legally entitled to reside in a Residential Unit pursuant to an Occupancy Agreement, including any person residing in a Residential Unit who is not named in the Occupancy Agreement.
"Operating Budget" means the annual budget for the Development prepared by the Co-op in accordance with Schedule 8, Clause A.
"Operating Expenses" means all sums, costs, expenses, outgoings and other amounts, other than Basic Rent (as defined in the Lease), payable in respect of the Development, including, without limitation, Realty Taxes, payments in lieu of Realty Taxes, Utilities, insurance, salaries and benefits paid to staff engaged in providing services to the Development or an Occupant pursuant to this Agreement or the Lease, principal, interest and fees payable pursuant to the Mortgage, amounts payable by the Lessee under Permitted Encumbrances (each as defined in the Lease), amounts payable pursuant to the Strata Property Act (British Columbia) in respect of the Strata Corporation, contributions to the Capital Maintenance Reserve and such other items as are described in Schedule 8, Clause A.3.a.
"Operating Income" means all gross income, revenue, sums and other amounts, directly or indirectly, collected by or credited to the Co-op pursuant to this Agreement or the Lease (other than the First Year Contingency Fund or the Five Year Contingency Fund or pursuant to the Mortgage), including, without limitation, Housing Charges, Utilities, parking fees, vending machine revenue, laundry machine revenue and other lees and charges payable by Occupants for use of the Development, amounts payable to the City (other than in its regulatory capacity as a municipal corporation) under Permitted Encumbrances (as defined in the Lease) which by the terms of this Lease are payable to the Lessee instead.
"Operating Surplus" means any surplus Operating Income remaining after payment of all Operating Expenses as more particularly described in Schedule 8, Clause D.
"Performance Standards" means those required practices and standards of performance that the Co-op must meet in accordance with this Agreement.
"Realty Taxes" means all assessments for taxes, rates, duties (including school taxes, local improvement rates and other charges levied pursuant to the Hospital District Finance Act (British Columbia), the Municipal Finance Authority Act (British Columbia) or otherwise, including by or for Translink, BC Assessment and Metro Vancouver) and all other charges for services used in or supplied to the Development (including penalties and interest) that now are or will or may be levied, rated, charged or assessed against the Development, and all other structures, machinery, equipment, facilities and other property of any nature whatsoever located thereon or therein, charged by any municipal, parliamentary, legislative, regional, school or other authority during the Term.
"Reciprocal Easements Agreement" means the Reciprocal Easements for Support, Access, Utility Systems and Other Uses, Section 219 Covenant, Equitable Charges, and Cost Sharing Agreement dated for reference May 5, 2010 between, among others, the City as registered and beneficial owner of the Development and the predecessor in title to the air space parcel from which the strata corporation known as The Owners, Strata Plan BCS3818 was created, registered in the Land Title Office under numbers BB1660410 to BB1660418 on may 13, 2010, and under further numbers BB1660657 to BB16600671 of May 14, 2010.
"Residential Unit" means a self-contained residential dwelling within the Development.
"Strata Corporation" means the strata corporation known as The Owners, Strata Plan BCS3905, including all strata lots and common property contained therein.
"Term" means the 60 year period from the Commencement Date.
"Utilities" means all charges, rates and levies on account of utilities, including for heat, electricity, gas, telephone, television, internet and other costs and expenses of a similar nature, and, if not included in Realty Taxes, for water and garbage collection.
"WorkSafeBC" means the Workers' Compensation Board of British Columbia, an agencycreated in 1917 to promote workplace safety, and is that agency's familiar name.

B. Responsibilities of the Co-op and CHFBC

Co-op's Acknowledgements. The Co-op acknowledges that it is entering into thisAgreement to manage and operate the Development, that it will do so in a proper, efficient and timely manner as would a prudent owner/operator of similar property and that its purpose in managing and operating the Development is to benefit the public interest. Further, the Co-op will maintain membership in CHF BC and the Co-operative Housing Federation of Canada (CHF Canada), or these organizations' successors.
CHF BC's Acknowledgements. CHF BC acknowledges that it is entering into this Agreement for the purpose of acquiring the rights granted to it hereunder, and agrees to perform its obligations hereunder and to use its reasonable best efforts to cause the Co-op to strictly comply with its obligations and agreements contained in this Agreement, the Lease and the Leasehold Mortgage.
Corporate Organization. The Co-op and CHF BC will each establish a well-organized corporate structure, and, in particular, will each:
1. conduct business in accordance with its constating documents and in a manner that does not permit personal gain, directly or indirectly, by any director, officer, member or employee of the Co-op or CHF BC or any of their associates or family members; and
2. maintain accurate and complete records of all aspects of its operations under thisAgreement.
City Lease. The Co-op and CHF BC each acknowledges that its rights and obligations hereunder are subject to the Lease.
Leasehold Mortgage. The Co-op will strictly comply with its obligations in the Leasehold Mortgage and not effect or agree to any amendment of the Leasehold Mortgage without the prior written consent of the City.
Co-op/CHF BC Restrictions. During the Term, the Co-op and CHF BC will each remain in good standing under all applicable legislation in British Columbia and Canada and will use substantially all its income, gains and accretions to promote its main purposes and activities.
Restrictions on Authority. The Co-op and CHF BC must not commit or otherwise obligate the City in any manner whatsoever, except to the extent specifically provided in this Agreement or the Lease, or as specifically authorized in writing by the City and in particular, without limiting the generality of the foregoing, the Co-op and CHF BC must not take any action, expend any sum, make any decision, give any consent, approval or authorization or incur any obligation with respect to any of the following matters except with the prior written approval of the City:
1. charging or allowing any encumbrance to charge title to all or any part of the Development; and
2. executing any lease or any other arrangement involving the rental, use or occupancy of all or part of the Development other than an Occupancy Agreement in accordance with this Agreement.
Agency. This Agreement shall not be construed as creating any partnership or agency between the City and the Co-op or between the City and CHF BC, and no party shall be deemed to be the legal representative of any other party for the purposes of this Agreement. None of the City, CHF BC or the Co-op shall have, and shall not represent itself as having, any authority to act for, to undertake any obligation on behalf of any other party, except as expressly provided in this Agreement or the Lease.
Use of Development. The Co-op and CHF BC will not use the Development for any purpose that is not authorized by this Agreement.
Conflict of Interest. The Co-op and CHF BC will not, during the Term, perform a service for or provide advice to any person or entity where the performance of such service or the provisions of the advice may, in the reasonable opinion of the City, give rise to a conflict of interest between the obligations of the Co-op or CHF BC to the City under this Agreement or the Lease, as applicable, and the obligations of the Co-op or CHF BC to such other person or entity. In addition, the Co-op covenants with the City that:
1. it will not pay directly or indirectly to any of its directors or their relatives by blood or marriage (including common-law marriage) any money obtained from the operation of the Development, or from the operation of other premises leased from the City, or otherwise received from the City, without the express written consent of the City;
2. it will not, by contract or otherwise, pay to any of its former directors or their relatives by blood or marriage (including common-law marriage), pursuant to any contract or arrangement made when the former director was a director of the Co-op, money obtained from the operation of the Development, or from the operation of other premises leased from the City, or otherwise received from the City, without the express written consent of the City;
3. subject to sub-paragraphs (a) and (b) immediately above, the Co-op may enter into bona fide arm's length contracts with occupants of the Development for the provision of services in furtherance of the good management of the Development; and
4. notwithstanding the foregoing, the Co-op may reimburse its directors or occupants of the Development for out-of-pocket expenses incurred for the proper management of the Development but only upon the proof of such expenditure by the production of bona fide receipts.
  
  Notwithstanding the foregoing, the City acknowledges that the subcontracting of some of the Co-op's obligations under this Agreement and/or the Lease in the normal course of its business and in keeping with the other provisions of this Agreement, to affiliates or subsidiaries of the Co-op, CHF BC or CHF Canada and to COHO Repair Services Inc. and COHO Management Services Society, will not amount to a contravention of this restriction
Constating Documents. The Co-op and CHF BC will not alter its constating documents in any way that would render the Co-op or CHF BC unable to fulfill its obligations under this Agreement or the Lease, as applicable.
Management of the Development. The Co-op will manage and operate the Development in a proper, efficient and timely manner as would a prudent owner/operator of similar property and will:
1. meet all statutory and corporate obligations applicable to the Co-op in performing its obligations under this Agreement, including but not limited to, the requirements of the Personal Information Protection Act, Freedom of Information and Protection of Privacy Act, Workers Compensation Act, Tobacco Control Act, Human Rights Code, and associated regulations, and obligations under all contracts the Co-op enters into in connection with the Development and the requirements of any insurer of the Development;
2. contract with COHO Repair Services Inc. or COHO Management Services Society or another qualified professional management and maintenance services company, for the management of the Development, including building maintenance services.
3. ensure that the Development complies with all applicable statutory health and safety standards to ensure the health and safety of persons at or near the workplace;
4. abide by the terms and conditions of all Schedules hereto;
5. ensure that employees and contractors who carry out repairs and maintenance on behalf of the Co-op do so in compliance with all WorkSafeBC and other statutory requirements, acquiring environmental or other building assessments by accessing known inventories or through hazmat surveys prior to renovation/repair work;
6. conduct risk assessments prior to commencing work and make reasonable best efforts to ensure that employees and/or contractors follow safe work procedures which control any hazards to the health and safety of persons at the Development;
7. use its reasonable best efforts to maintain full occupancy of the Residential Units and select Occupants as set out in Schedule D;
8. implement the recapitalization/life cycle replacement of building systems, including equipment, structures, surfaces or fixtures installed in the Development, that have reached or exceed their life expectancy, have failed, or have become a maintenance liability, and perform major repairs, major inspections and overhauls on a cycle of three years or greater, all in accordance with the Maintenance Plan and Operating Budget pre-approved by the City (see also Schedule 8, Clause A.2 and Schedule 8, Clauses 8.13.h, 8.15 and C.1);
9. >manage the Development and Development systems and equipment in an efficient and effective manner to ensure that these elements meet or exceed their anticipated life expectancy;
10. perform inspections and servicing and implement a formal preventive maintenance program of systems and equipment in accordance with manufacturer recommendations and industry best practices;
11. repair Development systems, equipment and surfaces to restore them to functional operation, as and when needed; and
12. not enter into a contract for the management of all or part of the Development by any person or organization, unless approved by the City acting reasonably. In this context, the City acknowledges that the Co-op intends to subcontract certain management functions to its affiliate COHO Management Services Society and certain repair functions to its affiliate COHO Repair Services Inc.
Communication with the City. The Co-op as soon as reasonably possible will:
1. provide the City with details on all incidents that are significant enough to threaten the continuous operation of the Development as contemplated by this Agreement and the Lease, including but not limited to, fire, flood, outbreaks of infectious diseases and/or the death of Occupants and staff on site;
2. notify the City before making any changes that could diminish the Co-op's ability to fulfill its obligations under this Agreement, the Lease or the Leasehold Mortgage; and
3. submit for review by the City all material policy changes related to the Development.
Maintenance and Capital Repair and Replacement. The Co-op, utilizing qualified professionals, will meet the Performance Standards, and will:
1. maintain the Development in a satisfactory state of repair and fit for habitation and perform all maintenance and repair work including that maintenance and repair work described in the Maintenance Plan;
2. establish one and five year plans within the Maintenance Plan and maintenance procedures, to be pre-approved by the City before implementation, that are updated and revised prior to expiry, to maintain the value of the Development, prolong the life of the Development, reduce replacement costs and eliminate/reduce safety hazards;
3. establish a Capital Maintenance Reserve that must be maintained and used only for the purposes identified in the Maintenance Plan or otherwise approved in writing by the City;
4. advise the City immediately if it becomes aware of any structural deficiency in the Development, which requires the intervention of the City; and
5. ensure that all work and services provided by third parties is competitively priced and represents best value for the Development, and the City as the owner thereof, including using requests for proposals or invitations to tender to obtain multiple competitive proposals or bids for comparison purposes where considered appropriate. Written records of proposals and bids so obtained must be retained for not less than seven years and made available to the City upon reasonable request.
Preservation of Assets. The Co-op will ensure that all grounds, landscaping, buildings, Development related equipment and other Development related chattels belonging to the City, or acquired by the Co-op on behalf of the City during the Term, are maintained in good repair throughout the Term. At the end of the Term, the Co-op will return all Development related equipment and other Development related chattels to the City in the same condition as at the start of this Agreement, normal wear and tear excepted.
Family Day Care. Two of the ground floor three bedroom units in the Development are suitable for use as a family home daycare, and the Co-op agrees to use its reasonable best efforts to find qualified Occupants for those units throughout the Term who intend to use those units for that purpose.
Strata Property Act The Co-op acknowledges that the lands comprising the Development were subdivided by the deposit of a strata plan, resulting in the creation of the Strata Corporation. The Co-op will at all times operate and manage the Strata Corporation, and the strata lots and common property contained therein, in compliance with the applicable requirements of the Strata Property Act.
Green Building Technologies. The Co-op acknowledges that the Development has been constructed using state of the art green building technologies to meet high standards of energy performance, which includes real time energy monitoring in each Residential Unit The Co-op, within six months of Commencement Date, will enter into an agreement with an individual or company in respect of the green building technologies and systems in the Development, relating to monitoring and recording usage and billing for consumption and for the repairing and replacement of such equipment necessary for the monitoring and recording usage and billing for consumption, such services to be performed and provided at the Co- op's cost. The Co-op further acknowledges that the City, and/or third parties on its behalf, may need ongoing and regular access to the Development to install and maintain equipment for the purpose of monitoring and measuring energy consumption and billing for use of the same, and to conduct tours and occupant surveys with respect to these green building technologies, and the Co-op will cooperate with the City and such third parties to facilitate the same. If requested by the City, the Co-op will, at the Co-op's cost, enter into contracts with third parties to perform related functions, including monitoring environmental comfort and air quality within each strata lot and the common property in the Development and assessing waste production and recycling.
Promotion of Smoke-Free Housing. Noting the social, environmental and general health benefits of smoke-free housing, the Co-op is encouraged to manage the Development throughout the Term in a manner which includes "smoke-free housing" areas within the Development, though eligible Occupants will include both smokers and non-smokers.

C. Rights and responsibilities of the City

Responsibilities. The City will:
1. provide the Guarantee;
2. provide the operating reserve contemplated by Schedule B, Clause B;
3. assign a person to act as liaison with the Co-op;
4. provide advice and guidance to the Co-op in managing the Development to meet the objectives and provisions in this Agreement;
5. monitor the operation of the Development and the use by the Co-op of the First Year Contingency Fund and the Five Year Contingency Fund in accordance with this Agreement, to ensure that the standards, objectives and expectations in this Agreement are met;
6. provide timely responses to issues raised by the Co-op to ensure the Co-op receives adequate support; and
7. except in the event of an emergency which in the City's reasonable opinion requires entry without waiting for expiry of the below notice period in order to prevent potential loss or damage including loss of life, the City will give the Co-op 48 hours notification of its intent to enter the Development.
Naming Rights. Without limiting the other rights of the City as set forth elsewhere in this Agreement, the City hereby expressly retains all rights in respect of naming the Development or any portion(s) thereof, with the exception of the Co-op's name, and the placing of plaques, signs or other means of displaying such names or other means of recognition, as well as all financial and other benefits that may derive directly or indirectly from those rights. The Co-op is expressly prohibited from displaying, or allowing to be displayed, any signs, plaques or other means of identifying or advertising any goods or services on or in the Development, without the prior express written consent of the City. The Co-op may display signs identifying the Co-op by name, location, number, etc. with the permission of the City.

D. Financial management

Finances. The Co-op will establish written policies and procedures for effective control of finances for the Development and, in particular, will:
1. establish and maintain books of account and retain invoices, receipts and vouchers for all expenses incurred in form and content satisfactory to the City, to be used as the basis for the calculation of the payment as set out in Schedule B;
2. prepare an Operating Budget in advance of each Fiscal Year and regularly review the financial affairs in accordance with Schedule B;
3. ensure that sound written financial operating policies and procedures are in place, including record keeping and financial statements in accordance with Generally Accepted Accounted Principles (GAAP); and
4. provide annual financial statements indicating that the Co-op has properly funded and maintained the Capital Maintenance Reserve and other reserves, as applicable, and that all interest accruing to the Capital Maintenance Reserve and other reserves, as applicable, has been recorded.
Auditor. The Co-op will appoint an auditor of the Co-op in compliance with the Cooperative Association Act who will be in good standing in accordance with the laws of the Province of British Columbia and will not be a member of the Co-op. The Co-op will cause the auditor to audit the financial statements of the Co-op. The City reserves the right to decrease these requirements at its sole discretion.
Audited Financial Statements to be submitted. The Co-op will submit audited financial statements to the City within four months after the end of each Fiscal Year.

E. Books and accounts

Fiscal Year. The Co-op's Fiscal Year end will be the day preceding the Interest Adjustment Date for the Co-op's mortgage. The Co-op will provide this date to the City upon execution of the Letter of Commitment for the Leasehold Mortgage.
Operating Income. All Operating Income received by the Co-op from whatever source with respect to the Development will be collected by the Co-op, held by the Co-op and used by the Co-op solely for the purpose of and to the extent authorized by this Agreement.
City Audit. The City reserves the right to audit the books, records and accounts of the Co-op pertaining to its operation of the Development at any reasonable time.

F. Records

Records, Retention and Access. The Co-op will maintain adequate operational records for the Development and the following apply:
1. the Co-op will retain all documents, vouchers, records and accounts that pertain to the Development for not less than seven years following the date of receipt or production of those records;
2. the City or its agents may inspect all records maintained by the Co-op for the Development after giving reasonable notice, at any reasonable time, and may make extracts from and take photocopies of those records; and
3. upon reasonable notice, in accordance with the City's obligations pursuant to the Freedom of Information and Protection of Privacy Act, the Co-op will, upon request:
  1. disclose to an Occupant the Co-op's file for the Occupant; and
  2. cooperate with the City if the City has a request to disclose third party information under the Freedom of Information and Protection of Privacy Act,
    
    subject to the Co-op's compliance with its obligations under that Act and any other applicable legislation.
Information Management. The Co-op will:
1. collect information and, if applicable, create and retain records in relation to Occupants during the Term of this Agreement, as required by this Agreement, all in accordance with the requirements of the Personal Information Protection Act as applicable;
2. notify the City immediately upon becoming aware of any breach of security involving the unauthorized collection, use, disclosure or destruction of information relating to the Development;
3. treat as confidential all information or material provided to the Co-op by the City, by Occupants, or by third parties if the information concerns Occupants and is relevant to this Agreement;
4. keep all documents and records produced or received by the Co-op in relation to this Agreement segregated from other documents to the extent it is practical to do so; and
5. safeguard records and not permit their disposition or destruction without the prior written consent of the City, except as required by applicable law, including the Document Disposal Act.

G. Liability

Indemnity of the City. The Co-op will indemnify and save harmless the City and City Personnel, from all claims and costs incurred by the City or City Personnel to the extent the same arise from a breach of this Agreement by, or the negligence of, the Co-op or Co-op Personnel or other persons for whom at law the Co-op is responsible, as applicable.
Indemnity of the Co-op. The City will indemnify and save harmless the Co-op and Co-op Personnel, from all claims and costs incurred by the Co-op or Co-op Personnel to the extent the same arise from a breach of this Agreement by, or the negligence of, the City or City Personnel or other persons for whom at law the City is responsible, as applicable.
Survival. The indemnities set out in Schedule A, Clause G. 1 and G.2 survive termination of this Agreement.
Assignment and Subcontracting.
1. The Co-op will not assign, either directly or indirectly, this Agreement or any right or obligation of the Co-op, respectively, under this Agreement, without the prior written consent of the City;
2. no subcontract entered into by the Co-op will relieve the Co-op of any of its obligations under this Agreement or impose upon the City any obligation or liability arising from any such subcontract. The Co-op must ensure that any subcontractor fully complies with this Agreement in performing the subcontracted services; and
3. this Agreement will be binding upon the City and its assigns and the Co-op and CHF BC and their respective successors, and permitted assigns.
4. The City will provide 90 days notice of intent to assign or subcontract its responsibilities under this Agreement; provided, however, that the City will not assign its responsibilities under the Guarantee or in respect of the operating reserves comprised of the First Year Contingency Fund and the Five Year Contingency Fund without the prior written consent of the mortgagee under the Leasehold Mortgage.
5. CHF BC will provide 90 days notice of intent to assign or subcontract its responsibilities under this Agreement.

H. General provisions and interpretation

Reasonableness. Wherever in any provision of this Agreement the City is required or empowered to give its consent or approval or exercise its discretion, the City agrees not to withhold such consent or approval nor exercise such discretion unreasonably or arbitrarily, unless the contrary intent is specifically expressed in such provision.
Determination by the City Binding. Wherever in this Agreement the City's approval is required for a decision or action of the Co-op, the City's determination, designation or decision, acting reasonably, with regard to that approval is conclusive and binds the Co-op.
Notices. All notices, demands or requests of any kind, which any party may be required or permitted to serve on another party in connection with this Agreement, will be in writing and may be served on the parties by mail, by telecopied transmission, or by personal service, addressed as follows:

If to the Co-op:

First Avenue Athletes Village Housing Co-operative
Suite 205 - 5550 Fraser Street
Vancouver, British Columbia V5W 2Z4
Attention: Thom Armstrong, Director

If to CHF BC: Co-operative Housing Federation of British Columbia

Suite 205 - 5550 Fraser Street
Vancouver, British Columbia VSW 2Z4
Attention: Thom Armstrong, Executive Director

If to the City:

The City of Vancouver
453 West 12th Avenue
Vancouver, British Columbia V5Y 1V4
Attention: City Clerk
cc: Assistant Director of Business Operations Social Development, Community Services Group,
And: Director of Real Estate Services

or at such other address as the parties may from time to time advise by notice in writing. The date of receipt of any such notice, approval or request will be deemed to be the date of delivery of such notice, approval or request if served personally or, on the fifth business day next following the date of such mailing if mailed as aforesaid, provided that if mailed should there be, between mailing and the actual receipt of such notice, approval or request, a mail strike, slowdown or other labour dispute which might affect the delivery of such notice, approval or request, such notice, approval or request will only be effected if actually delivered. This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors, administrators and permitted assigns.

Whole Agreement. There are no warranties, representations, conditions or collateral Agreements that pertain to this Agreement, except as set forth in this Agreement.
Enuring Effect. This Agreement enures to the benefit of and binds each of the City and the Co-op and their respective successors and permitted assigns.
Definitions. The meanings of terms used in this Agreement are set out in Schedule A, Clause A.
Time. Time is of the essence of this Agreement. If any party expressly or impliedly waives this requirement, that party may reinstate it by delivering notice to the other parties. Any time specified in this Agreement for observing or performing an obligation is local time in Vancouver, British Columbia.
Governing Law. This Agreement is to be governed by and construed and enforced in accordance with the laws of the Province of British Columbia.
References. If the singular, masculine, feminine or neutral is used in this Agreement, the reference is to the plural, masculine, feminine or body corporate according to the context in which it is used.
Construction. The division of this Agreement into sections and the use of headings are for convenience of reference only and are not intended to govern, limit or aid in the construction of any provision. In all cases, the language in this Agreement is to be construed simply, according to its fair meaning and not strictly for or against any party.
No Limitation. The word "including" when following any general statement, term or matter is not to be construed to limit that general statement, term or matter to the specific items set forth immediately following that word or to similar items. That general statement, term or matter is to be construed to refer to all other items that could reasonably fall within the broadest possible scope of that general statement, term or matter.
Document Written in Present Tense. The word "will", where the subject is either or both of the parties, denotes a present obligation.
Validity of Provisions. If a court of competent jurisdiction finds that any part of this Agreement is invalid, illegal or unenforceable, that invalidity, illegality or unenforceability does not affect any other provisions of this Agreement. The balance of the Agreement is to be construed as if that invalid, illegal or unenforceable provision had never been included and is enforceable to the fullest extent permitted at law or at equity.
Waiver. No consent or waiver, expressed or implied, by a party of any default by another party in observing or performing its obligations under this Agreement is effective unless given in writing, nor is it a consent or waiver of any other default. Failure on the part of any party to complain of any act or failure to act by another party or to declare such other party in default, irrespective of how long that failure continues, is not a waiver by that party of its rights under this Agreement or at law or at equity.
Consents and Approvals. Except as otherwise expressly set out in this Agreement, where this Agreement provides for any approval, consent or Agreement with respect to any matter:
1. it will be obtained before any action is taken on it;
2. it will be requested and responded to in writing; and
3. it will not be unreasonably withheld, except if this Agreement otherwise expressly stipulates, or delayed.
Extent of Obligations and Costs. Every obligation of each party in this Agreement extends throughout the Term. To the extent an obligation ought to have been observed or performed before or upon the expiry or earlier termination of the Term, that obligation, including any indemnity and release, survives the expiry or earlier termination of the Term until it has been observed or performed.
Financial Terms. All accounting terms not otherwise defined in this Agreement have the meanings assigned to them, and all calculations to be made under this Agreement are to be made in accordance with Canadian Generally Accepted Accounting Principles consistently applied.
Statutes. Any reference in this Agreement to a provincial or federal statute includes the statute as it exists on the reference date of this Agreement and any subsequent amendments or replacements.

I. Default, intervention and remedies

Event of Default by CHF BC. Any of the following events will constitute an Event of Default by CHF BC under this Agreement:
1. failure to materially meet the provisions of this Agreement that are the responsibility of CHF BC;
2. CHF BC fails to remain in good standing under the Cooperative Association Act, or becomes insolvent or otherwise acknowledges its insolvency, or commits an act of bankruptcy, or makes an assignment for the benefit of its creditors, or an order is made or a resolution is passed, or a petition is filed for the liquidation or winding up of CHF BC. or a receiver is appointed to manage any of the assets of CHF BC, or CHF BC ceases, in the opinion of the City, to operate;
3. CHF BC is in breach of or fails to comply with any law. by-law or regulation applicable to the performance of its obligations hereunder;
4. any material representation or warranty made by CHF BC in accepting this Agreement is found to be untrue or incorrect; and
5. if CHF BC knew or ought to have known any significant information. statement, certificate, report or other document furnished or submitted by, or on behalf of. CHF BC pursuant to, or as a result of. this Agreement is untrue or incorrect.
Event of Default by the Co-op. Any of the following events will constitute an Event of Default by the Co-op under this Agreement:
1. the Co-op is in breach of the Lease;
2. the Co-op is in breach of the Leasehold Mortgage;
3. failure to materially meet the Performance Standards or any other material provision of this Agreement;
4. the Co-op fails to remain in good standing under the Cooperative Association Act, or becomes insolvent or otherwise acknowledges its insolvency, or commits an act of bankruptcy, or makes an assignment for the benefit of its creditors, or an order is made or a resolution is passed, or a petition is filed tor the liquidation or winding up of the Co-op, or a receiver is appointed to manage any of the assets of the Co-op, or the Co-op ceases, in the opinion of the City, to operate;
5. the Co-op is in breach of or fails to comply with any law, by-law or regulation applicable to the performance of its obligations hereunder;
6. the Co-op permits any sum which is not disputed to be due by it to the City or pursuant to the Leasehold Mortgage, to remain unpaid after legal proceedings have been commenced to enforce payment thereof;
7. any material representation or warranty made by the Co-op in accepting this Agreement is found to be untrue or incorrect; and
8. if the Co-op knew or ought to have known any significant information, statement, certificate, report or other document furnished or submitted by, or on behalf of, the Co- op pursuant to, or as a result of, this Agreement is untrue or incorrect.
9. If the Co-op fails to maintain its membership in good standing in CHF BC and CHF Canada or their successor organization.
Event of Default by the City. Any of the following events will constitute an Event of Default by the City under this Agreement:
1. failure to materially perform the provisions of this Agreement that are the responsibility of the City;
2. the City is in breach of or fails to comply with any law, by-law or regulation applicable to the performance of its obligations hereunder;
3. any material representation or warranty made by the City in accepting this Agreement is found to be untrue or incorrect; and
4. if the City knew or ought to have known any significant information, statement, certificate, report or other document furnished or submitted by, or on behalf of, the City pursuant to, or as a result of, this Agreement is untrue or incorrect
Subject to Clause J. 1 below, the following is the procedure for intervention by the City upon the occurrence of an Event of Default by the Co-op or CHF BC (subject to the provisions of the Lease or the Leasehold Mortgage, as applicable, where the Event of Default arises from a breach of either of those agreements):
1. Communication. The City will give the Co-op and CHF BC written notice of the Event of Default, which notice will provide for a reasonable time for the Co-op or CHF BC, as applicable, to respond to the notice of Event of Default by providing further information concerning the Event of Default.
2. Action Plan. The City, the Co-op and CHF BC will agree on an action plan to cure the Event of Default, including a schedule for implementation of the action plan, identification of the resources available to the Co-op and CHF BC to implement the action plan, and the dates on which the City will review progress on implementation of the action plan.
3. On Watch. If the Co-op or CHF BC, as applicable, does not cure the Event of Default within a reasonable time, the City may place the Co-op or CH FBC, as applicable, "On Watch", which means that:
  1. this is a warning that the City will intervene further if the Event of Default is not cured;
  2. the City will monitor the operation of the Development and the performance of obligations under this Agreement by the Co-op or CHF BC, as applicable, more often and in more depth, including a management audit before the end of a Review Period; and
  3. if the Co-op or CHF BC, as applicable, makes progress in curing the Event of Default, the City will lessen its monitoring and the On Watch status may be withdrawn.
4. Co-management. The City may appoint a manager to work with and supervise the Co-op, in operating the Development and in curing the Event of Default, in order to:
  1. improve the Co-op's, management of the Development and return operation of the Development to the Co-op, as applicable, at some future date; and
  2. provide education, training and other necessary resources to the Co-op to cure the Event of Default.
Mediation. If the parties have a dispute arising out of or in connection with this Agreement, or in respect of any defined legal relationship associated with it or from it (other than the Lease or the Leasehold Mortgage), the parties agree to try to resolve the dispute by participating in a structured negotiation conference with a mediator agreed upon by the parties or, failing Agreement, under the Commercial Mediation Rules of the British Columbia International Commercial Arbitration Centre, in which case the appointing authority is the British Columbia International Commercial Arbitration Centre.
Dispute Resolution. If the process of mediation above fails, the parties agree that the following dispute resolution process will be used:
1. a meeting will be held promptly between the parties, attended by individuals with decision making authority regarding the dispute, to attempt in good faith to negotiate a resolution of the dispute;
2. if, within fourteen (14) days after such meeting or such further period agreed to by the parties in writing, the parties have not succeeded in negotiating a resolution of the dispute, the parties will submit the dispute to arbitration; and
3. the remaining issues in dispute will be determined by arbitration under the Commercial Arbitration Act, and the decision of the Arbitrator will be final and binding and will not be subject to appeal on a question of fact, law or mixed fact and law.

J. Termination

Early Termination by the City. Notwithstanding anything stated to the contrary in this Agreement, the parties agree that the City will have the right at any time, by giving 24 hours written notice to the Co-op and CHF BC, to terminate this Agreement in any of the following events, unless the parties otherwise agree in writing:
1. upon the bankruptcy and/or receivership of the Co-op;
2. upon termination of the Lease, except upon the City's default;
3. upon an Event of Default by the Co-op having occurred (see Clause 1.2above);
4. upon the Co-op ceasing to carry out its operations without profit to itself or its members;
5. upon the failure by the Co-op to maintain its corporate status and remain in good standing under the applicable laws of the Province of British Columbia;
6. upon the failure by the Co-op to restrict its activities and undertakings to those authorized or permitted under its constating documents; or
7. upon the failure of the Co-op without adequate justification, to comply with the requirements of any applicable law, regulations, bylaw or other directive having the force of law and enacted or promulgated by or under the authority of the Government of Canada and/or the Province of British Columbia.
Early Termination by the Co-op and CHF BC. Notwithstanding anything stated to the contrary in this Agreement, the parties agree that the Co-op and CHF BC will each have the right at any time, by giving 24 hours written notice to the City, to terminate this Agreement in any of the following events, unless the parties otherwise agree in writing:
1. upon termination of the Lease, except upon the Co-op's default;
2. upon an Event of Default by the City having occurred without curing following ten days' notice of default by the Co-op or CHF BC;
3. upon the failure of the City, without adequate justification, to comply with the requirements of any applicable law, regulations by-law or other directive having the force of law and enacted or promulgated by or under the authority of the Government of Canada and/or the Province of British Columbia.
Adjustments on Termination. Upon the termination of this Agreement, however effected, the parties will forthwith complete all necessary accounting and adjustments between them to effectively reconcile and finalize their obligations pursuant to this Agreement. Such adjustments will include. without limitation:
1. the delivery or transfer by the Operator to the City. effective as of the termination date. of the Capital Maintenance Reserve and the Co-op Operating Reserve, in each case including all accumulated interest; after payment of any Co-op expenses or liabilities contemplated by this Agreement; and
2. use or division of any unexpended surplus accrued pursuant to Schedule B, Clause 0. 1.c, including all accumulated interest, in accordance with Schedule B, Clause C.3.b.i or C.3.b.ii, as applicable.
Costs Resulting From Termination. All Development resident relocation costs, if any, resulting from termination of this Agreement will be borne by the Operator, unless otherwise specified in this Agreement or the Lease.

A. Operating Budget

Operating Budget: Promptly after the Commencement Date and thereafter at least 4 months prior to the end of each Fiscal Year, the Co-op will submit to the City for approval, having regard to the Performance Standards set out in Schedule F, an Operating Budget for the upcoming Fiscal Year, in a format approved by the City, showing the anticipated gross Operating Income for the Development together with all anticipated Operating Expenses. The City will endeavour to approve the first Operating Budget prior to the Commencement Date, and then each subsequent Operating Budget at least two months prior to the end of the applicable Fiscal Year. The Operating Budget submission will follow the format agreed to by the City and may be amended by mutual consent.
Budget Deviations: The Co-op will make reasonable efforts not to exceed the total approved Operating Budget without the prior authorization of the City.
Income and Expenses.
1. The Co-op will be responsible for collecting all Operating Income for the Development, and the Co-op will be responsible for paying out of such Operating Income all Operating Expenses. Such Operating Expenses will include, but are not limited to, the following:
  1. the insurance required by the Lease;
  2. sewer, water and garbage and recycling pickup;
  3. Utilities;
  4. staffing costs;
  5. funding the Capital Maintenance Reserve;
  6. maintenance and repair of the structure, including the roof, roof membrane, bearing walls, foundations and floors of the buildings in the Development, and seismic upgrades;
  7. maintenance and repair of the exterior of the buildings in the Development;
  8. maintenance, repair and replacement of the fire alarm and safety systems;
  9. maintenance, repair and replacement of the heating, hot water, plumbing. electrical, sanitary and storm drainage systems;
  10. maintenance, repair and replacement of capital items such as stoves, refrigerators, drapes, blinds, floor coverings, hot water tanks, washers, dryers and common area furniture and equipment;
  11. maintenance, repair and replacement of other capital items;
  12. maintenance and repair of all other components and parts of the Development;
  13. carpet cleaning, fumigation and pest control;
  14. Realty Taxes and amounts payable in lieu of Realty Taxes pursuant to the Lease;
  15. administration costs, including accounting and legal fees;
  16. and all equipment. materials and supplies required to perform any of the foregoing.
2. The Co-op will ensure payments are made to contracted service providers within pre- established payment periods. Any fines, penalties, surcharges, incurred by the Co-op or by the City as an expense related to Co-op error or negligence will be the responsibility of the Co-op.
3. The Co-op may generate revenue from sources such as vending machines and laundry machines. Income generating opportunities will be reflected in the annual Operating Budget. The City reserves the right to review income generating opportunities in terms of impact on resident service, feasibility of the physical plant etc.

B. City Funded Operating Reserve

Contingency Funds. The City will fund and manage an operating reserve. This reserve will be comprised of:
1. a First Year Contingency Fund of not more than $380,241, which will be available to help offset budget shortfalls experienced by the Co-op between the Commencement Date and the one year anniversary of the Commencement Date due to revenue short falls resulting from delays in achieving full occupancy and one time start-up costs; and
2. a Five Year Contingency Fund of not more than $1,100 per unit per year, which will be available to help offset operating deficits experienced by the Co-op between the Commencement Date and the five year anniversary of the Commencement Date; provided, however, that any amount of the Five Year Contingency Fund not used in a given year (where "year" means a 12 month period commencing on the Commencement Date or an anniversary thereof) will not be carried forward to the next year.

If any operating subsidy is required by the Co-op at any time prior to five year anniversary of the Commencement Date, and there are funds in the Co-op Operating Reserve, the First Year Contingency Fund or Five Year Contingency Fund will be used only after the Co-op Operating Reserve has been depleted. Disbursements from either such Contingency Fund will be at the discretion of the City, and in any event will only be made after such supporting evidence as the City may request of the shortfall or deficit has been presented by the Co-op to the City.

C. Co-op Funded Maintenance and Operating Reserves

Capital Maintenance Reserve. The Co-op, with the cooperation of the City, will prepare a Maintenance Plan setting out projected capital repairs and improvements over a 60 year period, in a format to be approved by the City. It will also create a reserve for capital repairs and replacements to the Development based on the items and life in years as set out in the Maintenance Plan as amended by the City from time to time and the following apply:
1. the Co-op will deposit $60 per unit per month, adjusted annually to reflect changes in the Consumer Price Index from the Commencement Date (subject to Clause D.1.a below), or such other amount as may be agreed to by the Co-op and the City from time to time during the Term, in a Capital Maintenance Reserve fund; and
2. the Co-op will use or dispose of the Capital Maintenance Reserve only for capital repairs and replacements to the Development in accordance with the Maintenance Plan, or to pay for other payments as may be approved by the City.
Co-op Operating Reserve. The Co-op will also fund, as contemplated by Clause D.1.b below, and manage the Co-op Operating Reserve.
Transfer of Reserves Upon Termination. At the termination of this Agreement, regardless of cause, all funds in the Capital Maintenance Reserve and the Co-op Operating Reserve, in each case including all accumulated interest, but after payment of any Co-op expenses or liabilities contemplated by this Agreement, will transferred to the City, and a reconciliation of the operating balance will be forwarded.

D. Operating Surpluses

Once the Capital Maintenance Reserve has been fully funded, any remaining operating surplus will be used as follows:
1. first, to top up the Capital Maintenance Reserve by an additional $20 per unit per month, or by any additional amount determined to be required as a result of a future capital maintenance reserve study; and
2. second, to fund the Co-op Operating Reserve, to a maximum of an amount equivalent:
  1. in the first year of the Term, to the annual Operating Budget for that year (exclusive of Leasehold Mortgage costs and Capital Maintenance Reserve contributions); and
  2. thereafter, to the total operating costs for the Fiscal Year most recently completed based on the Co-op's audited statements (exclusive of Leasehold Mortgage costs and Capital Maintenance Reserve contributions), with any balance remaining thereafter to be used as follows:
3. in accordance with a plan, to be agreed upon between the Co-op and the City concurrent with the annual Operating Budget review and approval process, that balances the objective of increasing the percentage of units in the Development occupied by Below Market Occupants (up to 50%), and the operational and financial feasibility of the Co-op implementing the plan. Any surplus funds available for use pursuant to this Clause D.1.c, not used for such purposes within twenty-four (24) months of the date when the plan approving use of the subject surplus was approved by the City, will be used in accordance with Clause D.1.d below; and
4. promptly following the end of such twenty-four (24) month period, any Clause D.1.c funds not by then used to increase Below Market housing units in the Development, will be divided on a 50%/50% basis between the CHF BC and the City, with the CHF BC's portion to be used to create new non-market co-op housing in Vancouver.
Transfer of Surpluses Upon Termination. At the termination of this Agreement, regardless of cause, any unexpended surplus accrued pursuant to Clause D.1.c above, including all accumulated interest:
1. will be used to increase affordability in the Development as contemplated by Clause D.1.c above, if the rights and obligations of the Co-op hereunder are then assumed by another Operator or the City; or
2. will be divided and used in accordance with Clause D.1.d above, if the City's objective of increasing the percentage of units in the Development occupied by Below Market Occupants to 50% has already been met, or termination results from the Development ceasing to be operated to provide housing to Occupants as contemplated by this Agreement.

E. Income and Housing Charge

Occupant Mix. The Occupant mix in the Development will be as set forth and described in Schedule D.
Proof of Income and Assets. The Co-op will establish policies and procedures for establishing rent and asset calculations and submit these to the City for approval. As part of this the Co-op will obtain a declaration ("Declaration of Income and Assets") and supporting documentation as evidence of the Income and Assets of the Below Market Occupant at the time of the initial occupancy and annually thereafter. The Co-op will obtain a declaration of income ("Declaration of Income") and supporting documentation as evidence of the Income of the Market Occupant at the time of the initial occupancy. The declaration will be in a form approved by the City as may be amended from time to time. The Co-op will maintain a copy of each Occupant's documentation in a file available to the City on request.
Housing Charge. The Housing Charge for each Residential Unit payable by the first Occupants will be not less than the amounts set forth below, unless otherwise agreed to in writing by the City; provided, however, that in the case of Market Occupants, the rates charged should be based on actual market rates as and when the first Occupancy Agreements are entered into, with the objective of maximizing the income generated by the Development.

Unit Type	Below Market Occupant Housing Charge (maximum average per month)	Market Occupant Housing Charge (average per month)
1BR	$750	$1,501
2BR	$1,069	$1,902
3BC	$1,275	$2,096

Increases. The Co-op will increase the monthly Housing Charges, parking and other fees charged by such amounts and at such times as applicable law and market circumstances allow, both when Occupancy changes and during the currency of an Occupancy Agreement, with the objective of maximizing the income generated by the Development.
Parking. The Co-op may rent, or impose other usage charges for the use of, the parking spaces within the Development, other than those that are required by the City's Parking By- law to be set aside for visitors or reserved for use as Class A loading bays, to such third parties and at such rates as the Co-op may in its sole discretion decide.
Application of Housing Charges. The Co-op will collect Housing Charges, parking usage fees and other fees and amounts payable by Occupants or third parties for use of the Development, and apply this income to the cost of operating the Development.
City not Responsible. It is understood that the City will not be responsible to the Co-op for any breach or failure of the Occupant to observe any of the terms of the Occupancy Agreement between the Occupant and the Co-op, including the covenant to pay the Housing Charge. The same relationship will apply as between the Co-op and renters/users of parking spaces in the Development, and as between the Co-op and the City in respect of the same.

G. Investment of Funds

The Co-op will deposit and keep the Capital Maintenance Reserve and the Co-op Operating Reserve and accumulated interest in a separate bank account or in accounts or instruments as follow:
1. in an account insured by the Canadian Deposit Insurance Corporation or by the Credit Union Deposit Insurance Corporation;
2. in an investment in accordance with the Cooperative Association Act or the Vancouver Charter;
3. in an investment guaranteed by a Canadian government; or
4. in other investment instruments as the City approves.

H. Unauthorized Expenditures and Acts

With regard to its occupation and operation of the Development, the Co-op will not, without the approval of the City:
1. borrow money other than pursuant to the Leasehold Mortgage, if it encumbers the Co-op's leasehold interest in the Development, it creates any liability for the City or, in the reasonable opinion of the City or the Mortgagee, it compromises the Co-op's ability to strictly fulfill and perform its obligations under the Leasehold Mortgage;
2. guarantee or underwrite the repayment of any obligation assumed by a third party;
3. pay to a person or organization any amount for the purpose of supporting activities the objective of which is to make representations to any government body on any subject matter not directly related to the operation of the Development. This provision does not apply to annual membership fees to sector organizations;
4. release, compromise, assign or transfer any claim, right or benefit of the City in connection with or arising out of the City's interest in the Development; or
5. confess a judgement against it.

A. Regular Reporting

The Co-op will, on an annual basis except in the first year of the Term when this will apply after the first six months, make information related to its operation and management of the Development available to the City, to assist the City in:
1. identifying occupancy and service trends;
2. monitoring income earned and expenses incurred; and
3. monitoring the Co-op's compliance with the requirements of this Agreement and the Lease.
The City, acting reasonably, reserves the right to change the reporting requirements from time to time, with at least 30 days' written notice to the Co-op provided that, if there are additional costs to the Co-op in complying with new requirements, the City will adjust the Operating Budget to reflect the increased costs as agreed to by both parties.

B. Annual Reporting

The Co-op will submit an annual operator report to the City no later than four months after the Co-op's Fiscal Year end in the format provided by the City. The Co-op's report will include:
1. gas, electricity, and water consumption in the Development;
2. copies of relevant licenses and inspection reports;
3. completed checklists as per the Maintenance Plan;
4. completed checklists related to quality assurance;
5. list and explanation of repair, maintenance and capital expenditures;
6. explanation for any variance in expenditure greater than 10% in completing the Maintenance Plan in respect of the year in question;
7. a short report on current operational challenges, issues and successes; and
8. rental mix, broken down between Market and Below Market Occupants and by unit type.

A. Occupant Selection and Occupancy Agreements

Occupant Mix. The Co-op will at all times during the Term, use its best efforts to ensure that not more than 75% of the Residential Units in the Development are occupied by Market Occupants. The remaining 25% will be occupied by Below Market Occupants; provided, however, that, as contemplated by Schedule B, Clause D.1.c., the percentage of Below Market Occupants in the Development may increase over time as its financial viability allows. It is understood and agreed that in respect of the Below Market Occupants an average CNIT rate of 75% will be applied, unless otherwise agreed by the City.
Market Occupants. In respect of the Residential Units set aside for occupancy by Market Occupants, the Co-op will focus as much as possible on providing units to members whose work is in Vancouver with an emphasis on those serving citizens of Vancouver in the areas of public healthcare, education and safety.
Below Market Occupants. Unless otherwise agreed by the City, Below Market Occupants will be selected from names on the Housing Registry or from lists maintained by CHF BC or by the Co-op.
Occupancy Agreements. All Occupancy Agreements entered into by prospective Occupants will be, in compliance with the Cooperative Association Act, and will contain additional clauses as set out in Schedule E.
Security Deposits. The Co-op collects and keeps membership shares in lieu of security deposits. All funds collected and held by the Co-op must be handled in accordance with the Rules of the Co-op and the Occupancy Agreement.
Occupant Selection. The Co-op will use its best efforts to maintain full occupancy of the Development.
Below Market Occupants Household Size. All Below Market Occupants must be placed in a Residential Unit appropriate to their household size in accordance with the Occupancy Guidelines. Exceptions may be made for persons designated by mutual agreement between the City and the Co-op.
Selection Intent. Where the Co-op is unable to find Below Market Occupants for all the Residential Units agreed to be set aside for such Occupants, the Co-op will work with the City to select Occupants in such a way as to maintain the intent of housing persons in need in such Units.

A-F. Performance Standards

The Co-op is required to operate the Development to a professional standard that is acceptable to the City. The City may request performance plans from the Co-op on an annual basis or as deemed necessary if an Event of Default occurs in respect of the Co-op and the City elects to intervene as contemplated by Schedule A, Clause 1.3, rather than to terminate this Agreement. The management areas to be included in the annual performance plan include but are not limited to:

RISK MANAGEMENT
MAINTENANCE (subject to any contrary agreement or obligation in the Reciprocal Easements Agreement), including:
1. Grounds keeping and Landscaping
2. Building Maintenance.
3. Janitorial.
4. Energy Management.
5. Building Services.
HUMAN RESOURCES
FINANCIAL MANAGEMENT AND ADMINISTRATION
OCCUPANT MANAGEMENT
MAINTAINING A LIST OF EQUIPMENT USED IN OPERATING THE DEVELOPMENT

A. Occupant Income

The Below Market Occupant Housing Charge Contribution will not exceed a set percentage¹, as determined from time to time by the City, of the Income of the Occupant, including any person residing in a Residential Unit who is not named in the Occupancy Agreement and the following will apply:
1. "Income" is defined in Schedule A, Clause A;
2. a minimum Below Market Occupant Housing Charge Contribution for the applicable family size will be set at:
  1. the amount of the current maximum Provincial monthly shelter allowance calculated in accordance with Schedule A of the Employment and Assistance Regulation passed pursuant to the Employment and Assistance Act, as amended or replaced from time to time;
  2. minus an allowance for utility costs, the amount of which allowance will be determined by the Co-op from time to time; and
3. the Below Market Occupant Housing Charge Contribution of an Occupant in receipt of Income Assistance will be fixed at an amount as set out in part D below or as may be determined from time to time by the City.
The Housing Charge payable by a Market Occupant will be based on the rental rates charged to market tenants for similar rental units in other similar developments. Applicable Income criteria are contained within the definition of "Household".

¹Currently: 30% of income

B. Exemptions from Income

The following are exempt from inclusion in Income:
1. Child Tax Benefit;
2. capital gains, such as insurance settlements, inheritances, disability awards and sale of effects in the year they are received;
3. the earnings of a person aged 18 and under;
4. student loans, student loan equalization payments and student grants (Note: non-repayable training allowances, research fellowships or similar grants are not excluded);
5. living out or traveling allowances;
6. Shelter Aid for Elderly Renters ("SAFER") or Rental Assistance Program ("RAP") payments received prior to moving into the Development (Note: Occupants where the Housing Charge Scale applies are not eligible for SAFER or RAP);
7. Goods and Services Tax (GST) and Harmonized Sales Tax (HST) rebates;
8. government provided daycare allowance; and
9. payments for foster children, or Child in Home of Relative (CIHR) income under the Employment and Assistance Act, except for the housing allowance portion.

D. Determination of Below Market Occupant Housing Charge Contribution for Occupants Receiving Income Assistance

The Below Market Occupant Housing Charge Contribution for each Residential Unit where the Occupant is in receipt of Income Assistance for the applicable family size will be set at:
1. the amount of the current maximum Provincial monthly shelter allowance calculated in accordance with Schedule A of the Employment and Assistance Regulation passed pursuant to the Employment and Assistance Act, as amended or replaced from time to time;
2. minus an allowance for utility costs, the amount of which allowance will be determined by the Co-op from time to time.
For greater clarity:
1. only one allowance for utilities per Residential Unit can be used in calculation of the Below Market Occupant Housing Charge Contribution;
2. if the Occupant is a single person, the Below Market Occupant Housing Charge Contribution will be based on the Income Assistance shelter component for a single person;
3. if the Occupant consists of two related persons (e.g. married, common-law relationships), the Below Market Occupant Housing Charge Contribution will be based on the Income Assistance shelter component provided for two related persons;
4. if the Occupant consists of two unrelated persons, the Below Market Occupant Housing Charge Contribution will be based on two times the Income Assistance shelter component for single persons;
5. if the Occupant consists of more than two persons, the Below Market Occupant Housing Charge Contribution will be calculated based on the number of Occupants and their relationship as per Clauses E.4 and E.5 above; and
6. if the maximum shelter component of Income Assistance changes, the Below Market Occupant Housing Charge Contribution will be changed at the same time after reasonable notice to the Occupant.

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Operator Agreement