N.Y. Private Housing Finance Law § 35: Voluntary dissolution

§ 35. Voluntary dissolution. 1. A company aided by a loan made prior

to May first, nineteen hundred fifty-nine, may voluntarily be dissolved,

with the consent of the commissioner or of the supervising agency, as

the case may be, not less than thirty-five years after the occupancy

date upon the payment in full of the remaining balance of principal and

interest due and unpaid upon the mortgage held by the state or a

municipality pursuant to this article and payment to the municipality of

a sum equal to the total of all accrued taxes for which tax exemption

was granted and received pursuant to section thirty-three of this

article, provided however that such payment of accrued taxes shall be

waived if a company is voluntarily dissolved subsequent to the original

maturity date of any mortgage held by the state or a municipality

pursuant to this article.

2. A company aided by a loan made after May first, nineteen hundred

fifty-nine, may voluntarily be dissolved, without the consent of the

commissioner or of the supervising agency, as the case may be, not less

than twenty years after the occupancy date upon the payment in full of

the remaining balance of principal and interest due and unpaid upon the

mortgage or mortgages and of any and all expenses incurred in effecting

such voluntary dissolution.

3. Upon such dissolution, title to the project may be conveyed in fee

to the owner or owners of its capital stock or to any corporation

designated by it or them for the purpose, or the company may be

reconstituted pursuant to appropriate laws relating to the formation and

conduct of corporations, provided, however, that prior to any such

dissolution and conveyance or reconstitution, payment shall be made of

all current operating expenses, taxes, indebtedness and all accrued

interest thereon and the par value of and accrued dividends on the

outstanding stock of such company. If after making such payments, and

after conveyance of the project, a surplus remains in the treasury of

the company, such surplus, except in the case of a project aided by a

state loan made after May first, nineteen hundred fifty-nine, shall upon

dissolution, be paid into the general fund of the municipality which

granted tax exemption. After such dissolution and conveyance, or such

reconstitution, the provisions of this article shall become and be

inapplicable to any such project and its owner or owners and any tax

exemption granted with respect to such project pursuant to section

thirty-three hereof shall cease and terminate.

4. (a) Notwithstanding any contrary provision of subdivision one or

three of this section or of any other law or local law, consent to

dissolve a company aided by a loan made prior to May first, nineteen

hundred fifty-nine shall be given by the commissioner or the supervising

agency, as the case may be, thirty-five years or more after the

occupancy date, provided that:

(i) such company's project or projects is or are located in a city of

less than one million and more than three hundred thousand persons;

(ii) the dissolution of such company is part of a refinancing plan to

continue the operation of the existing project or projects under this

chapter by a new company organized pursuant to the provisions of this

article in corporate, partnership, or individual ownership form as the

existing stockholders shall agree;

(iii) if the refinancing is done by a new first mortgage, the new

company shall be bound to pay from the proceeds of such refinancing the

remaining balance of the principal and interest on the original mortgage

and any interest due to debenture holders if such interest cannot first

be paid out of the original company's surplus or reserves; or if the

refinancing is done by a second mortgage, the new company shall be bound

to pay from the proceeds of such refinancing the interest due to

debenture holders if such interest cannot first be paid out of the

original company's surplus or reserves; and

(iv) the new company shall be bound to use at least fifty percent of

the net proceeds, which remain from such refinancing after having paid

the legal fees and development costs connected therewith and after

having made the payments required by subparagraph (iii) of this

paragraph, to finance the costs of refurbishing the existing housing

units of the project, or to build and operate under this chapter

additional housing units for persons of low or moderate income or for

disabled persons, within the same municipality wherein the original

project is or projects are located, or to do both such refurbishing of

existing units and such building and operating of such additional units;

any portion of the net proceeds remaining after utilization of at least

fifty percent thereof for the foregoing purposes shall be distributed or

used as the stockholders, partners or sole owner (as the case may be) of

the new company shall decide.

(b) The New York state housing finance agency and the state of New

York mortgage agency are hereby authorized and empowered to finance such

first or second mortgages for the foregoing refinancing purposes upon

such terms and conditions as each such agency deems appropriate.

(c) A company which is voluntarily dissolved in accordance with this

subdivision shall not be required to pay the taxes referred to in

subdivision one of this section nor any surplus remaining in its

treasury as referred to in subdivision three of this section to the

municipality which grants the tax abatement for such project or

projects, but instead, such surplus and all reserve accounts and

debenture rights, titles, interests, contracts, accounts receivable,

accounts payable, and all other assets and liabilities of the dissolved

company shall be transferred to the new company organized for such

refinancing purposes pursuant to such refinancing plan, and such new

company shall be considered for all the purposes of this chapter as a

company aided by a loan made subsequent to May first, nineteen hundred

fifty-nine, with the first date of occupancy deemed to be the date of

the closing of the new first or the second mortgage entered into as part

of the refinancing plan described in subparagraphs (ii), (iii) and (iv)

of paragraph (a) of this subdivision; and any tax abatement granted by

such municipality for such project or projects shall continue to be

applied unless or until such municipality shall act to extend, modify,

enlarge or remove such tax abatement.