account to ensure the owner's commitment to the housing. Such amount shall be used only to cover operating deficits during the first three years of operations and shall not be used to cover construction shortfalls or inadequate initial project rental assistance amounts. (B) Reduction of requirement (i) In general The Secretary may reduce or waive the owner deposit specified under subparagraph (A) for individual applicants if the Secretary finds that such waiver or reduction is necessary to achieve the purposes of this section and the applicant demonstrates to the satisfaction of the Secretary that it has the capacity to manage and maintain the housing in accordance with this section. (ii) Nonprofits The Secretary may reduce or waive the requirement of the owner deposit under subparagraph (A) in the case of a nonprofit applicant that is not affiliated with a national sponsor, as determined by the Secretary. (4) Notice of appeal (A) In general The Secretary shall notify an owner not less than 30 days prior to canceling any reservation of assistance provided under this section. (B) Appeal (i) filing deadline During the 30-day period following the receipt of any notice required under subparagraph (A), an owner may appeal the proposed cancellation. (ii) timing of decision Any appeal undertaken under clause (i), including review by the Secretary, shall be completed not later than 45 days after the appeal is filed. (5) Labor (A) In general The Secretary shall take such action as may be necessary to ensure that all laborers and mechanics employed by contractors and subcontractors in the construction of housing with 12 or more units assisted under this section shall be paid wages at rates not less than the rates prevailing in the locality involved for the corresponding classes of laborers and mechanics employed on construction of a similar character, as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code. (B) Exemption Subparagraph (A) shall not apply to any