N.Y. Private Housing Finance Law § 26: Conditions and security for loans

§ 26. Conditions and security for loans. 1. No loan shall be made by

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

the New York city housing development corporation unless the

commissioner, with respect to a project aided by a state loan or New

York state housing finance agency loan, or the supervisory agency, with

respect to a municipally-aided project, finds that:

(a) The municipality has approved the project as provided in

subdivision five of this section and has enacted or will enact

regulations or appropriate restrictions adequately protecting the

project against future uses likely to depreciate unduly the value of

such project;

(b) The estimated revenues of the project will be sufficient to cover

all probable costs of operation and maintenance, of fixed charges and

operating reserves and depreciation reserves if any;

(c) The plans and specifications conform to the requirements of all

laws applicable thereto, and assure adequate light, air, sanitation and

fire protection;

(d) If the project is aided by a state loan, or a New York state

housing finance agency loan, the commissioner shall also find that the

project is in conformity with a plan or undertaking for providing low

rent housing facilities for persons of low income and for the clearance,

replanning, reconstruction or rehabilitation of a substandard and

insanitary area or areas, and for other facilities incidental or

appurtenant thereto as may be approved by the commissioner.

1-a. No company may be aided pursuant to this article by a mortgage

loan or tax exemption or both to finance the acquisition of a building

by residents thereof unless the commissioner or the supervising agency,

as the case may be, finds that:

(a) the condition of such building is deteriorating and the building

is located in a deteriorating area or in an area threatened with

deterioration by reason of economic, social or physical changes

occurring therein or in nearby areas;

(b) the building is not yielding sufficient revenues to cover costs of

operation and maintenance, of fixed charges and of reserves, if any, and

also a reasonable profit to the owner;

(c) the making of such loan will prevent further deterioration and

abandonment;

(d) at least two-thirds of the present residents consent to such

acquisition;

(e) financing for such acquisition is otherwise unavailable because of

the neighborhood, the age of the buildings, or other factors indicating

an inability of the private sector unaided to cause such acquisition to

be effected;

(f) the proceeds of such loan will not be used to refinance existing

debt in excess of a reasonable relationship to current value; and

(g) the term for repayment of such loan does not exceed the remaining

useful life of the building.

2. The principal of a loan made by the state shall be repaid by the

company over a period of not to exceed fifty years except in the case of

a loan to rehabilitate an existing building, in which case the period

shall not exceed thirty-five years, or the estimated life of the

project, whichever is shorter, in annual installments equal to the

amount payable by the state on the moneys borrowed for the project.

Such annual installment of principal need not be uniform in amount, but

may be so varied that the total payment of principal and interest shall

be approximately equal and constant during the period of the loan. Each

payment of principal and interest shall be made to the state comptroller

not later than five days before each payment by the state is required.

The loan shall bear the same rate of interest paid or to be paid by the

state for the definitive housing bonds issued on account of such loan.

The company shall pay to the state comptroller a proportionate share of

the cost of borrowing not later than thirty days after the state

comptroller has certified the amount of such share.

3. Any bonds or notes issued by the company and any mortgages relating

thereto may authorize the company, with the consent of the state

comptroller in the case of a state-aided project, or the supervising

agency in the case of a municipally-aided project, to prepay the

principal of the loan. Such bonds or notes and mortgages may contain

such other clauses and provisions as the commissioner in the case of a

state-aided project or the supervising agency in the case of a

municipally-aided project, shall require. Notwithstanding the provisions

of any general, special or local law, the principal of any loans made

pursuant to subdivision one of section fifteen of this article or the

principal of a loan made by a municipality pursuant to this article and

secured by a mortgage lien subordinate to the lien of a first mortgage

made pursuant to paragraph (b) of subdivision one of section fifteen of

this article may be amortized at such time or times or at such rate as

the supervising agency shall approve.

4. With respect to a state-aided project the commissioner may charge

the company reasonable fees for financing, regulation, supervision and

audit. Fees collected for such services shall be paid into and disbursed

from such fund or funds as may be provided by law.

5. (a) In a municipality where there is a planning commission, the

project shall first be submitted to it for approval. Where changes in

the city map and zoning amendments or variances are necessitated by such

project, such amendments, variances and changes shall be submitted

together with such project and considered as a part thereof. Such

planning commission, not later than ten weeks from the date of the

referral of the project to it, after a public hearing held on due

notice, notice of which shall be published at least ten days prior

thereto in the official publication of the municipality, or if none

exists, in a newspaper circulating in the municipality, shall submit its

report to the local legislative body certifying its unqualified

approval, its disapproval, or its qualified approval with

recommendations for modifications therein.

After public hearing held on due notice and after the report is

received or due from the planning commission, the local legislative body

may:

(i) if the planning commission shall have certified its unqualified

approval, approve the project by a majority vote;

(ii) if the planning commission shall have certified its disapproval

or shall have failed to make its report within ten weeks from the date

such project was submitted to it, nevertheless approve the project, but

only by a three-fourths vote;

(iii) if the planning commission shall have certified its qualified

approval together with recommendations for modifications, approve the

project together with the modifications recommended by the planning

commission by a majority vote, or approve the project without such

modifications but only by a three-fourths vote.

(b) In a municipality where there is no planning commission the

project shall be submitted to the local legislative body which, after

public hearing held on due notice, may either approve or disapprove the

project.

(c) Notwithstanding any other provision of law, changes in the city

map, zoning amendments, or variances contained in the plan shall be

deemed approved by the local legislative body when it approves the

project. Any such changes in the city map, zoning amendments, or

variances shall become effective on the date on which the supervising

agency shall file a resolution with the local legislative body in

implementation thereof.

6. The provisions of subdivisions one and five of this section shall

not apply to a state urban development corporation project or to any

loan made by the state or the state housing finance agency to such

project, notwithstanding anything to the contrary contained herein.

7. Notwithstanding anything to the contrary contained therein, the

provisions of subdivisions one and five of this section shall not apply

to a Battery Park city project or to any loan made by the state or the

New York state housing finance agency to such project.