Project Income. A sponsor shall charge rents in amounts sufficient to pay all project expenses and fund project accounts as provided in the capital assistance documents and in this chapter. Project revenues, including all income from the rental of dwelling units, parking, and laundry, shall be placed in project accounts as provided in §B of this regulation and may not be withdrawn except to pay project expenses. If the total amount in the accounts in §B of this regulation reaches a level that the Secretary and the sponsor agree exceeds the reasonable foreseeable needs of a project, the sponsor and the Secretary may enter into an agreement to use the excess moneys for the housing needs of low-income and moderate-income individuals who need not reside in the project. Project Accounts. The sponsor shall establish and maintain accounts for a project in a manner satisfactory to the Department and as required by the capital assistance documents. The accounts may include funds for: Tenant security deposits; Operating costs; Insurance; Taxes or payment in lieu of taxes; Reserves for maintenance, renovation, and improvements in amounts satisfactory to the Department; and A residual receipts account containing all project revenues in excess of allowable project expenses. The sponsor shall file periodic reports with the Department regarding those accounts required by the capital assistance documents. Tenant Selection Procedures. The sponsor may establish tenant selection preferences for applicants living or working in the area. Tenant selection preferences may not be based upon the length of time the applicant has lived or worked in the area. Local residency requirements are prohibited. Security Deposits. The sponsor may collect security deposits as permitted by Maryland law. Rental Period. For the entire period during which the capital assistance, or any part of it, is outstanding, the partnership units shall be maintained: If the project is owned by a local government or local government entity, as rental housing for households of lower income; or If the project is owned by a private sector entity, as housing for households of lower income that include one or more individuals with disabilities or special needs. Payments in Lieu of Taxes. A project owned by a local government as a governmentally owned facility is not subject to property taxes and may only be charged a payment in lieu of taxes if there is a preexisting agreement between the sponsor and the local government providing for payments instead of taxes.