N.Y. Private Housing Finance Law § 15: Participation by certain corporations and individuals

§ 15. Participation by certain corporations and individuals. 1. (a)

One or more banking organizations, foundations, labor unions, employers'

associations, veterans' organizations, colleges, universities,

educational institutions, child care institutions, hospitals, medical

research institutes, insurance companies, trustees, fiduciaries or any

combination of the foregoing, shall have the power to organize a company

pursuant to the provisions of this article, and to purchase for cash or

to receive and hold in exchange for property, and to own the bonds of a

company and to invest, singly or jointly, or with the state or a

municipality or the New York state housing finance agency or the New

York city housing development corporation in a bond or note and single

participating mortgage, or in separate bonds or notes and mortgages, in

an amount not greater than ninety-five per centum of the total project

cost in the case of a mutual company, urban rental company or a

non-profit company incorporated pursuant to the provisions of the

not-for-profit corporation law and this article for the purpose of

providing housing for staff members, employees or students of a college,

university, child care institution, or hospital and their immediate

families and in the case of a non-profit company incorporated pursuant

to the not-for-profit corporation law and this article for the purpose

of providing housing for aged persons of low income or in the case of a

low income non-profit housing company such investment shall not be

greater than the total project cost. Where one or more banking

organizations, foundations, labor unions, employers' associations,

veterans' organizations, colleges, universities, educational

institutions, child care institutions, hospitals, medical research

institutes, insurance companies, trustees, fiduciaries, or the state or

a municipality or the New York state housing finance agency or the New

York city housing development corporation, shall participate in a loan

to a company secured by a single participating mortgage or by separate

mortgages, the interest of each shall have equal priority as to lien in

proportion to the amount of loan so secured, but need not be equal as to

interest rate, time or rate of amortization or otherwise. Banking

organizations, foundations, labor unions, employers' associations,

veterans' organizations, colleges, universities, educational

institutions, child care institutions, hospitals, medical research

institutes, insurance companies, trustees, fiduciaries or groups

thereof, may exercise any such power on such conditions, however, as to

banking organizations and as to insurance companies only to the extent

and upon such conditions as may be authorized by the state

superintendent of financial services. As used in this subdivision, the

terms "trustees" and "fiduciaries" shall include any fiduciary or

fiduciaries holding funds for investment, and the term "banking

organizations" shall have the same meaning as in subdivision eleven of

section two of the banking law.

(b) Notwithstanding the provisions of paragraph (a) of this

subdivision or of any general, special or local law, for the purpose of

completing the financing of project cost, in the event that a

municipality has made or contracted to make a loan to a company or to a

public benefit corporation to provide moneys to finance the project cost

of a project (1) the construction of which commenced prior to December

first, nineteen hundred seventy-five, (2) for which a temporary or

permanent certificate of occupancy was not issued prior to January

first, nineteen hundred seventy-three, and (3) which is assisted by a

contract with the secretary of housing and urban development of the

United States pursuant to section two hundred thirty-six of the national

housing act, as amended, covering all dwelling units therein, one or

more banking organizations as defined in paragraph (a) of this

subdivision, foundations, labor unions, credit unions, employers'

associations, veterans' organizations, colleges, universities,

educational institutions, child care institutions, hospitals, medical

research institutes, insurance companies, trustees or fiduciaries as

defined in paragraph (a) of this subdivision, trustees of pension and

retirement funds and systems, corporations, partnerships, individuals,

or other entities or any combination of the foregoing shall have the

power to participate in such loan or make or participate in a new loan

secured by a bond or note and a single participating mortgage, or by

separate bonds or notes and separate mortgages, or to invest, singly or

jointly, with the municipality in a bond or note and single

participating mortgage or in separate bonds or notes and mortgages, upon

such terms and conditions as may be approved by the supervising agency,

including but not limited to provisions providing that (i) priority may

be given to the payment of the principal of and interest on that portion

of the mortgage indebtedness attributable to participation in a loan or

an investment made by one or more of such entities or organizations,

(ii) the interest of the municipality created as a result of making a

mortgage loan may be subordinated to the interest that one or more of

such organizations or entities may have upon such participation or

investment, (iii) the interest of each upon such participation or

investment need not be of equal priority as to lien, nor be equal as to

interest rate, time or rate of amortization of principal or time of

payment of interest, or otherwise, provided, however, that the aggregate

amount of the loan or loans or investment made by one or more of such

organizations or entities shall not exceed thirty per centum of total

project cost and, further provided that the aggregate amount of the loan

or loans to a company does not exceed such amount as is authorized

pursuant to paragraph (a) of this subdivision. All or part of the

proceeds of such participation or investment pursuant to this paragraph

(b) may be applied to reduce or prepay the loan made by the

municipality. The provisions of subdivisions one and five of section

twenty-six of this article shall not apply to such participation in a

loan or investment pursuant to this paragraph (b) if undertaken in

connection with a project theretofore approved pursuant to said section

twenty-six.

Notwithstanding the provisions of this article or of any general,

special or local law, in the event that a municipality has made a loan

pursuant to this article prior to any participation pursuant to this

paragraph, the supervising agency shall have the power, upon the

mortgagor's consent, to modify the terms and conditions of the original

bond or bonds or note or notes and mortgage and any other documents

executed in connection with such initial loan, as the supervising agency

may deem necessary or desirable, to provide for such participation,

including but not limited to modification of the rate and time of

payment of the interest on the initial loan or rate of amortization of

principal thereof, and provision for the additional borrowing cost, if

any, with respect to that portion of the mortgage indebtedness

attributable to such participation, provided, that except to the extent

of any increase in the maximum principal amount of the original mortgage

loan, with regard to a company that has obtained a temporary or

permanent certificate of occupancy for part or all of a project financed

by a loan pursuant to this article before such participation in a loan

or investment is made, the sum of the payments of interest and principal

on the mortgage loan or loans which the company is obligated to make in

any year as a result of such modification and participation in a loan or

investment made pursuant to this paragraph, shall not exceed the sum of

the payments of interest and principal that such company would have been

obligated to make in such year under the original mortgage loan

agreement if the project had been fully financed under the original

mortgage loan agreement by the municipality at an interest rate equal to

the maximum rate per annum prescribed by the superintendent of financial

services pursuant to section fourteen-a of the banking law as of

December nineteenth, nineteen hundred seventy-five, or such higher rate

of interest as the secretary of housing and urban development of the

United States shall approve pursuant to an agreement to make interest

reduction payments pursuant to section two hundred thirty-six of the

national housing act, as amended, with respect to such project and that

the rental or carrying charges in such projects shall not be increased

as a result of such participation in a loan or investment and further

provided, that the company shall not seek or accept from the

municipality any subsidy, direct or indirect, excluding existing tax

exemption, to offset any increased borrowing costs, if any.

(c) Where the state or a municipality shall join with one or more

organizations of the kind hereinabove mentioned, in making a loan

secured by a single participating mortgage or by separate mortgages, the

state or a municipality is authorized, through the commissioner of

housing, or the supervising agency, as the case may be, to make

provision, either in the mortgage or mortgages or by separate agreement,

for the performance of such services as are generally performed by a

banking institution or insurance company which itself owns and holds a

mortgage or by a trustee under a trust mortgage. The commissioner and

the supervising agency are hereby authorized to act as trustee or to

consent to the appointment of a banking institution to act in such

capacity. Any agreement made by the commissioner under this provision

shall be subject to the approval by the state comptroller and the

attorney general as to form.

(d) In connection with any participation in a loan or investment

pursuant to paragraph (b) of this subdivision the municipality shall

have the power to assign or pledge, in whole or in part, to one or more

of the organizations or entities participating in such loan its right,

title and interest in and to any mortgage held pursuant to this article

and any contract or arrangement for the payment of subsidy with respect

to such loan and the right to receive and apply to repayment of such

loan and the interest thereon any payments made under such mortgage or

under such contract or arrangement.

2. Notwithstanding any other provision of law, any banking institution

or insurance company or a group thereof operating a company, or owning

all of the bonds of a company may exercise all the powers conferred by

this section and may enter into contracts contemplated by this article

and agree with the commissioner not to sell, assign, or otherwise

transfer such project or bonds or bond and mortgage or interest therein

of such company provided for pursuant to this article without the

consent of the commissioner.