N.Y. Private Housing Finance Law § 402: Loans to owners

§ 402. Loans to owners. 1. Notwithstanding the provisions of any

general, special or local law, a municipality, by such officer or agency

as determined by its local legislative body, is hereby authorized:

(a) to make or contract to make loans to the owners of existing

multiple dwellings within its territorial limits, subject to the

limitations in subdivision two of this section, in such amounts as may

be required for the installation of proper heating facilities, the

incorporation of climate resiliency improvements, or elimination of

conditions dangerous to human life or detrimental to health, including

nuisances as defined in section three hundred nine of the multiple

dwelling law, or other rehabilitation, preservation or improvement of

such multiple dwellings, and if such owner acquires the multiple

dwelling for the purposes of such rehabilitation, preservation or

improvement or owns the multiple dwelling subject to an outstanding

indebtedness, such loans may be made exclusively for or may include such

amounts as may be required for the cost of such acquisition or for the

refinancing of such outstanding indebtedness, and may make temporary

loans or advances to such owners in anticipation of the permanent

municipal loans for such purposes; and

(b) to make or contract to make grants to any owner described in

paragraph (a) of this subdivision, on the same terms as permitted under

such paragraph for a loan.

1-a. As used in this article, the term "loan" shall include any grant

made by a municipality pursuant to this article, provided, however, that

any provision of this article concerning the repayment or forgiveness

of, or security for, a loan shall not apply to any grant made pursuant

to this article.

2-a. (a) Each permanent loan shall be secured by a bond and mortgage

or note and mortgage upon the multiple dwelling and the land upon which

it is situated, provided that where the multiple dwelling is held in the

condominium form of ownership, such loan shall be secured by a bond and

mortgage or note and mortgage upon the condominium units rehabilitated

or improved with such loan; where the loan is made to an owner who is a

lessee, such loan shall be secured by a leasehold interest in such

property.

(b) Each such bond and mortgage or note and mortgage shall be repaid

over or within a period of forty years, provided that such period may be

extended as the agency may determine necessary to ensure the continued

affordability or economic viability of the multiple dwelling, in such

manner as may be provided in such bond and mortgage or note and mortgage

and contract. Such bond and mortgage or note and mortgage and the

contract in connection with such permanent and temporary loans may

contain such other terms and provisions not inconsistent with the

provisions of this article as the local legislative body or the agency

may deem necessary or desirable to secure repayment of the loan, the

interest thereon and other charges in connection therewith and to carry

out the purposes and provisions of this article, including, but not

limited to, providing that the lien created by such bond and mortgage or

note and mortgage, and, if applicable, any regulatory agreement executed

by the owner and the agency or restrictive covenant approved by such

agency, may be recorded in an equal or subordinate position, or

subsequently made equal or subordinate, to a lien recorded by any

private lender against such multiple dwelling.

2-b. If a loan pursuant to this article is made to a non-profit

company or a housing development fund company which agrees to provide

housing accommodations exclusively for persons and families of low

income, at least thirty percent of whom are referred to it by the

municipality and have prior to their initial occupancy in such

accommodations resided in emergency shelter facilities operated by or on

behalf of the municipality, the agency may provide that the note and

mortgage shall automatically be reduced to zero in five equal annual

decrements commencing on the tenth year after the initial occupancy

date, provided that such accommodations have been owned and operated in

a manner consistent with an agreement with the municipality contained in

such note and mortgage to provide housing for such persons.

3. The bond or note issued by the owner of such multiple dwelling and

the mortgage relating thereto may authorize such owner, with the consent

of the agency, to prepay the principal of the loan subject to such terms

and conditions as therein provided. Such bond or note and mortgage may

contain such other clauses and provisions as the agency shall require.

4. The agency may require the payment of charges by an owner of such

multiple dwelling in consideration for the financing, regulation,

supervision and audit of such loan. Such fees shall be paid into the

treasury of the municipality requiring the charges and shall be paid and

deposited in the general fund of any such municipality.

5. Whenever reference is made in this article to a municipal loan, a

loan by a municipality, a loan from a municipality, a contract for a

loan between a municipality and an owner, or any similar term, with

respect to the territorial limits of the city of New York such terms

shall be construed to refer to a loan made or to be made either by such

municipality or by the New York city housing development corporation,

whichever is applicable.

6. The bond and mortgage or note and mortgage issued by the owner of

any such multiple dwelling may provide that the loan shall be reduced to

zero commencing on the fifteenth year after the execution of the bond

and mortgage or note and mortgage, provided that, as of the date of any

such reduction, the multiple dwelling has been and continues to be owned

and operated in a manner consistent with a regulatory agreement with the

municipality. Notwithstanding such provision as contained in the bond

and mortgage or note and mortgage, the loan shall be reduced to zero

only if, prior to or simultaneously with delivery of such bond and

mortgage or note and mortgage, the agency made a written determination

that such reduction would be necessary to ensure the continued

affordability or economic viability of the multiple dwelling. Such

written determination shall document the basis upon which the loan was

determined to be eligible for evaporation.