Proceedings of the Board of Regents (1936-1939)

650 SPECIAL SEPTEMBER MEETING, 1938

Article V
The term "year" as used in the succeeding Article shall have reference
to the fiscal year employed by the University of Michigan in keeping its books
of account.
The term "gross rents" or "gross room rents" shall mean and include all
sums paid by students of the University of Michigan for the right to reside and
occupy rooms in the Allen House and Rumsey House, Medical School Dormitory,
and the Union Dormitory Units when said Medical School Dormitory and Union
Dormitory Units are placed in operation, before any deductions are made therefrom.
The term "net income" shall mean and include any excess of room rents not
needed to cover the interest and principal payments to the Trustee, together with
the income from dining rooms and other service charges, after deducting from the
aggregate thereof the actual expenses, insurance premiums, and ordinary repairs
to buildings and equipment.
Section 1. The Obligor covenants and agrees as follows:
a) To set aside out of the gross room rents to be collected from students
of the University of Michigan who shall reside and occupy rooms in said Allen
House and Rumsey House, Medical School Dormitory, and Union Dormitory Units,
and out of the net income to be derived from the operation thereof, on the dates
hereinafter set forth, not less than the following sums, to-wit: On the fifteenth
day of February, 1939, and on the fifteenth day of August, 1939, the sum of
Three Thousand Forty-seven Dollars and Fifty Cents ($3,047.50); and on the
fifteenth day of February, 1940, and on the fifteenth day of February in each
year thereafter until all Dormitory Revenue Bonds issued hereunder are paid
in full the sum of Forty-one Thousand Dollars ($41,000.00); and on the fifteenth
day of August, 1940, and on the fifteenth day of August in each year thereafter
until all Dormitory Revenue Bonds issued hereunder are paid in full, the sum
of Forty-one Thousand Dollars ($41,000.00).
b) In order that there may be funds available to meet each payment of principal and interest to be made to the Trustee as provided for in the preceding paragraph, the Obligor shall set aside a sufficient sum from said gross room rents to
assure that it will have funds available to meet the next such payment which
shall become due and payable to the Trustee, before diverting or using any of
the gross room rents from said students in any semiannual period between said
payments for any other purpose.
c) That the Trustee shall have a first lien on the net income derived from
the operation of said Allen House and Rumsey House, Medical School Dormitory,
and Union Dormitory Units, when the latter two are placed in operation; and
said net income is hereby pledged to meet all payments herein provided for.
d) That it will set aside proper reserves for replacements and purchases of
necessary equipment, and for extraordinary repairs to buildings. Payments to
said depreciation reserve funds shall be omitted or reduced whenever necessary
in order that the payments to the Trustee hereinbefore provided for may be made
as they shall fall due. Provided, however, that should any default be made in
any payment to said reserve funds, the same shall be made good out of the
first surplus net income available. All reserve funds shall be maintained in cash
or invested in such securities as shall be approved by the Obligor.
Section 2. The Obligor covenants and agrees that on or before October 15 of
each year, it will pay over to the Trustee all net revenue from the operation of
said Allen House and Rumsey House, Medical School Dormitory, and Union
Dormitory Units for the preceding year, as shall remain in its possession after
meeting all payments to the Trustee and for the depreciation reserve funds hereillbefore provided for; and the sum so paid shall be held and used by said
Trustee in the same manner and for the same purposes as if the same had been a
part of one of the fixed semiannual payments herein provided for.
Section 3. The Obligor covenants and agrees as follows:
a) That it shall at all times keep said Allen House and Rumsey House,
Medical School Dormitory, and Union Dormitory Units in operation while said
University is in session, except during the summer session when one or all may
be operated or closed in its discretion.
b) That it shall at all times charge and use its best efforts to collect rates
for rooms, board, and other service charges sufficient to provide funds to meet
all payments to be made to the Trustee hereinbefore provided for and to the
reserve for depreciation funds as herein set forth.
c) That it shall, if necessary to meet payments to the Trustee herein provided
for and the payments to the depreciation reserve fund as herein set forth, adopt such
reasonable rules, regulations, and requirements relative to the residence of male