N.Y. Private Housing Finance Law § 1112: Affordable home ownership development contracts

§ 1112. Affordable home ownership development contracts. 1. Within

the limit of funds available in the affordable housing development

account, the corporation is hereby authorized to enter into contracts

with eligible applicants to provide grants which such applicants shall

use to finance affordable home ownership development programs subject to

the terms and conditions of this article. Any grants received by a

municipality hereunder shall not be deemed to be municipal funds.

Grantees shall utilize funds provided pursuant to this article solely as

payments, grants and loans to owners to reduce the costs of new

construction, rehabilitation or home improvement or the cost of

acquisition, but only where such acquisition is part of an affordable

home ownership development program or project to construct or

rehabilitate homes, or as otherwise authorized by law. Such financial

assistance may be in the form of loans, participation in loans including

but not limited to participation in loans originated or financed by

lending institutions as defined in section forty-two of this chapter,

private or public employee pension funds or the state of New York

mortgage agency, or grants, on such terms and conditions as the grantee

with the approval of the corporation shall determine, provided that no

such payments, grants and loans shall exceed the lesser of (i) sixty

percent of the project cost for projects involving acquisition or one

hundred percent of rehabilitation programs without an acquisition

component or (ii) the following per dwelling unit limitations (A) fifty

thousand dollars for projects except as provided in subparagraph (B) of

this paragraph or (B) up to seventy-five thousand dollars for a high

cost project or a project which will receive a loan from the federal

farmers home administration. Up to ten percent of the program or project

cost may be used for grantee operating expenses including expenses

related to the organization operating support and administration of the

contract. Among the criteria the corporation shall consider in

determining whether a project is a high cost project are: average cost

of construction in the area, location of the project, and the impact of

the additional funding on the affordability of the project for the

occupants of such project. No more than fifty percent of the total

amount appropriated pursuant to this article in any fiscal year shall be

allocated to homes located within any single municipality.

2. The corporation shall not enter into a contract under this article

except with an eligible applicant which has submitted an application

pursuant to a request for proposals issued by the corporation which

application contains a plan acceptable to the corporation which provides

that:

(a) The proposed project or program will make home ownership,

rehabilitation or home improvement affordable to persons who cannot

afford to own, rehabilitate or improve homes by relying upon the

ordinary unaided operation of private enterprise.

(b) There shall be criteria, satisfactory to the corporation, which

provide for maximum income limitations or a system of income targeting

designed to ensure that home buyers who benefit from financial

assistance provided pursuant to this article would be unable to acquire,

rehabilitate or improve homes by relying upon the ordinary unaided

operation of private enterprise.

(c) The payments, grants and loans provided by grantees pursuant to

this article will be supplemented by private or other public investment

and the payments, grants and loans provided by the grantee are the least

necessary to make home ownership, rehabilitation or home improvement

affordable to the income group to be served by the proposed project or

program.

(d) The proposed project or projects, if not built or rehabilitated by

a not-for-profit corporation, will be built or rehabilitated by a

private developer/builder who has agreed to limit his profit in

accordance with a formula, satisfactory to the corporation, which has

been established by the grantee.

(e) The proposed project or program will provide assistance in an area

which is blighted, deteriorated or deteriorating, or has a blighting

influence on the surrounding area, or is in danger of becoming a slum or

a blighted area because of the existence of substandard, insanitary,

deteriorating or deteriorated conditions, an aged housing stock, or

vacant non-residential property, or other factors indicating an

inability or unwillingness of the private sector unaided to cause the

construction, rehabilitation or home improvement for which payments,

grants and loans under this article is provided.

(f) Home buyers will occupy homes as their principal place of

residence and funds provided for the benefit of the home buyer will be

recaptured by the grantee if the home buyer does not occupy the home as

the home buyer's principal place of residence under the terms and

conditions of a formula established or approved by the corporation.

(g) In the case of a rehabilitation or home improvement program, the

majority of payments, grants and loans provided for each home shall be

used to perform work which prolongs the useful life of the home or shall

be used to correct basic structural defects or to repair basic building

systems which threaten or if not corrected or repaired could threaten

the health and safety of the dwelling's residents.

(h) The corporation shall provide the applicant with a list of

conditions that must be met prior to entering into a contract pursuant

to this article. Within fifteen working days of receipt by the

corporation of all documents in satisfaction of the list, the

corporation shall notify the applicant of the sufficiency or

insufficiency of the documents. After satisfaction by the applicant of

all conditions required by the corporation prior to entering into a

contract the corporation shall enter into the contract within forty-five

working days of satisfaction of such conditions.

(i) Eligible applicants receiving awards pursuant to this article for

homes located in cities with a population of one hundred thousand or

more shall provide preference to homebuyers who are members of a police

force of such city, provided that such city has adopted a local law

authorizing such preference.

(j) In the case of projects that receive an award of over forty

thousand dollars, the grantee may establish resale restrictions

requiring the sale of the unit or units receiving such funding through a

grant from the corporation be purchased only by qualified low-income

homebuyers extending for a period of at least sixty years, but no more

than ninety-nine years, and the grantee may ensure this resale

restriction by use of deed restrictions, community land trusts, or

limited-equity cooperative ownership structure.

3. In determining awards pursuant to this article the corporation

shall give preference to applications based upon the extent to which the

proposed program or project will:

(a) Serve the lowest income households in the applicable region and is

designed to continue to be affordable to such households for a

substantial period of time.

(b) Leverage private and other public investment so as to reduce the

amount of assistance provided pursuant to this article which is

necessary to operate or establish the program or project.

(c) Contribute to the development of the neighborhood or community in

which the program or project is located.

(d) Not directly displace current low and moderate income residents of

such neighborhood or community.

(e) Be undertaken and completed in a timely fashion.

(f) Utilize innovative, cost effective design techniques and building

materials, which reduce construction, rehabilitation or operating costs

including, but not limited to factory built or modular homes.

(g) Be located on a brownfield site that has received a certificate of

completion.

3-a. In determining awards pursuant to this article, the corporation

shall establish tiered project funding levels based on length and depth

of affordability.

4. The corporation shall not provide a grant to an eligible applicant

pursuant to this article unless the corporation determines that there is

a strong probability that the private investment in the applicant's

proposed program would not be made without the grant and that the grant

will not substitute for private funds which would be otherwise available

to the program.

5. The corporation shall provide for the review, at periodic intervals

not less than annually, of the performance of grantees receiving

financial assistance pursuant to this article. Such review shall, among

other things, be for the purposes of ascertaining conformity to

contractual provisions, the financial integrity and efficiency of

grantees and the evaluation of the grantees' activities. Contracts

entered into pursuant to this article may be terminated, funds may be

withheld and unspent funds recaptured by the corporation upon a finding

of substantial nonperformance or breach by the grantee of its

obligations under its contract.