N.Y. Private Housing Finance Law § 452: Loans to owners

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

general, special or local law, a municipality 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, for the elimination of

any substandard or insanitary condition or conditions in violation of

the multiple dwelling law or local housing code, for the incorporation

of climate resiliency improvements or for such replacement and

rehabilitation of the heating, plumbing, electrical and related systems

or other improvements as shall be reasonably necessary to prolong the

useful life of such dwellings, and may make temporary loans 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

provisions 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. Each loan shall be evidenced by a note executed by the owner of the

existing multiple dwelling. The supervising agency in its discretion may

require one or more of the shareholders of a corporate owner to co-sign

such note or to otherwise guarantee or pledge security for the repayment

of the loan. Each such note shall be repaid within a period of forty

years, provided that such period may be extended as the supervising

agency may determine necessary to ensure the continued affordability or

economic viability of the existing multiple dwelling. The repayment

shall be made in such manner as may be provided in such note and

contract, if any, in connection with such loan and may authorize such

owner, with the consent of the supervising agency, to prepay the

principal of the loan subject to such terms and conditions as therein

provided. Such note and contract may contain such other terms and

provisions not inconsistent with the provisions of this article as the

local legislative body or supervising 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 provisions

ensuring availability of rents for such repayment and provisions

permitting the lien created by such note and mortgage, and, if

applicable, a regulatory agreement executed by such owner and

supervising agency, be recorded in an equal and subordinate position, or

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

private lender against such multiple dwelling.

3. The supervising agency in its discretion may require that the owner

execute a financing statement for real property improvement to be in

such form as the agency shall specify and to contain the following

information: the name and mailing address of the owner, the address of

the real property, a statement that a loan has been made by the

municipality under this article, the amount and duration thereof and the

applicable interest rate. Said financing statement shall be filed

without charge in the office for recording mortgages of real property

and from the date of such filing the municipality shall have a lien

against said real property for the amount advanced or so much thereof as

remains unpaid and interest thereon. If a financing statement is filed

as herein provided, the rights and remedies of the municipality and the

priority of its lien shall be the same as those of a holder of a lien

for the materials furnished or labor performed in the improvement of

real property pursuant to articles two and three of the lien law, except

that the lien shall be valid for one year after the maturity date of the

final installment payable under said note and thereafter as provided in

section seventeen of the lien law. Upon payment of all sums advanced by

the municipality and interest thereon and upon demand of the then record

owner of the real property, the agency shall deliver to him a copy of

the financing statement with an endorsement thereon that the lien is

satisfied; upon filing of such copy in the office where the financing

statement was filed and upon payment of the proper fee therefor, the

lien of such financing statement shall be discharged.

4. The supervising agency may require the owner to execute a mortgage

as security for a loan in lieu of a financing statement as provided in

the foregoing subsection three. Such mortgage shall contain such terms

and provisions not inconsistent with the provisions of this article as

the supervising agency shall deem necessary or desirable to secure

repayment of the loan under this article.

5. The supervising agency may require the payment of charges by the

owner of such existing multiple dwelling in consideration for the

financing, regulation, supervision and audit of such loan. Such charges

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.

6. In the case of a loan made pursuant to this article, the

supervising agency may pay any liens and charges the priority of which

is superior to its mortgage and may pay such other expenses as may be

appropriate to protect its loan or to protect the lien of the mortgage

relating thereto, provided that such expenditures shall not exceed the

total amount of such loan.

* 7. Notwithstanding the provisions of, or any regulation promulgated

pursuant to, the emergency housing rent control law, the local emergency

housing rent control act, the emergency tenant protection act of

nineteen seventy-four, or any local law enacted pursuant thereto, upon

completion of the rehabilitation of a multiple dwelling which is aided

by a loan made pursuant to this article, the supervising agency, may as

an alternative to permissible rental adjustments under such laws and

regulations, adjust the rent for each rental dwelling unit within the

multiple dwelling. The initial rental adjustment, if set by the

supervising agency, shall be established based solely on the debt

service attributable to the loan, provided, that the supervising agency

may establish rental adjustments less than such debt service, provided

further that the supervising agency may establish greater rental

adjustments for vacant dwelling units than for occupied dwelling units.

The supervising agency shall cause all tenants in occupancy of each

dwelling unit affected by the provisions of this subdivision to be

notified of and have an opportunity to comment on contemplated

rehabilitation. Such notification shall advise such tenants of the

approximate expected rent increase. Such notification and opportunity to

comment shall be provided before the rehabilitation and again after the

construction is completed and before the establishment of the rental

adjustment.

* NB Expires July 1, 2027

* 8. Notwithstanding the provisions of, or any regulation promulgated

pursuant to, the emergency housing rent control law, the local emergency

housing rent control act, the emergency tenant protection act of

nineteen seventy-four, or any local law enacted pursuant thereto, upon

completion of the rehabilitation of a class B multiple dwelling, class A

multiple dwelling used for single room occupancy purposes, lodging house

or a substantially vacant building intended to be used after

rehabilitation for single room occupancy purposes and which is aided by

a loan pursuant to this article made by the municipality on or after

September first, nineteen hundred eighty-five, the agency shall

establish the initial rent for each rental dwelling unit within the

multiple dwelling. All dwelling units within the multiple dwelling

subsequent to establishment of initial rents by the agency shall be

subject to the rent stabilization law of nineteen hundred sixty-nine.

The occupant in possession of such a dwelling unit when it is made

subject to the rent stabilization law of nineteen hundred sixty-nine

shall be offered a choice of a one or two year lease at the initial

rents established by the agency notwithstanding any contrary provisions

of, or regulations adopted pursuant to, the rent stabilization law of

nineteen hundred sixty-nine and the emergency tenant protection act of

nineteen seventy-four. The agency shall cause all tenants in occupancy

of each dwelling unit affected by the provisions of this subdivision to

be notified of and have an opportunity to comment on the contemplated

rehabilitation. Such notification shall advise such tenants of the

approximate expected rent increase and the subsequent availability of a

one or two year lease. Such notification and opportunity to comment

shall be provided before the rehabilitation and again after the

construction is completed and before the establishment of the initial

rents.

* NB Expires July 1, 2027

9. The note or note and contract issued by the owner of any such

multiple dwelling to secure such loan may provide that the loan shall be

reduced to zero commencing on the fifteenth year after the execution of

the note or note and contract, provided that, as of the date of 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 note or

note and contract, the loan shall be reduced to zero only if, prior to

or simultaneously with delivery of such note or note and contract, 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.