N.Y. Private Housing Finance Law § 576-c: Loans to housing development companies by a municipality

* § 576-c. Loans to housing development companies by a municipality.

1. In addition to the powers granted to municipalities pursuant to this

article, a municipality, acting by its supervising agency, may make

loans for the purposes of acquisition, rehabilitation or construction of

dwelling accommodations to a non-profit housing development fund

company, a wholly-owned subsidiary of such company, a partnership the

controlling interest of which is held by such company and which has

agreed to limit profits or rate of return of investors in accordance

with a formula established or approved by the company, or a private

developer which has agreed to limit profits or rate of return of

investors in accordance with a formula established or approved by the

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 a municipality and have prior to their initial

occupancy in such accommodations resided in emergency shelter facilities

operated by or on behalf of the municipality or who are otherwise in

need of emergency shelter as determined by the municipality, providing,

however, that in the case of a building acquired by such a company,

subsidiary, partnership, or developer the obligation to provide housing

accommodations for such persons shall be applicable only to dwelling

accommodations which are or become vacant after the date of acquisition.

Such loans may be made for such period of time and pursuant to such

terms and conditions as may be required by the municipality, including,

but not limited to, terms and conditions providing that the lien created

by the note and mortgage, and, if applicable, any regulatory agreement

executed by the owner and such municipality or restrictive covenant

approved by a supervising 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 the dwelling aided by the

loan made pursuant to this article, and the supervising agency of such

municipality may provide that the amount of the note and mortgage shall

automatically be reduced to zero in five equal decrements commencing on

the tenth year after the initial occupancy date, provided that, as of

the date of such reduction, such accommodations have been and continue

to be 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. Notwithstanding such provision as contained in the

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

or simultaneously with delivery of such note and mortgage, the

supervising agency made a written determination that such reduction

would be necessary to ensure the continued affordability or economic

viability of such housing project. Such written determination shall

document the basis upon which the loan was determined to be eligible for

evaporation.

2. 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 any building used primarily for

residential purposes, in a jurisdiction in which rents are regulated

pursuant to any of the above laws and which is aided by a loan pursuant

to this section made by the municipality, the supervising agency shall

establish the initial rent for each rental dwelling unit within the

building. All dwelling units within the building subsequent to

establishment of initial rents by the supervising agency shall be

subject to either the rent stabilization law of nineteen hundred

sixty-nine or the emergency tenant protection act of nineteen

seventy-four, or both, if applicable to the locality. The tenants in

occupancy of such a dwelling unit regulated pursuant to any of the above

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

rents established by the supervising 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 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 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.

3. The supervising agency shall use its best efforts to ensure that

activities carried out pursuant to this article are structured so as to

minimize the likelihood of any involuntary economic displacement of

tenants who reside in multiple dwellings which are the subject of such

activities. However, if temporary physical displacement is required as a

direct result of rehabilitation work which is performed in such multiple

dwelling receiving a loan pursuant to this article, suitable temporary

relocation arrangements shall be provided.

* NB Effective until July 1, 2027

* § 576-c. Loans to housing development companies by a municipality.

In addition to the powers granted to municipalities pursuant to this

article, a municipality, acting by its supervising agency, may make

loans for the purposes of acquisition, rehabilitation or construction of

dwelling accommodations to a non-profit housing development fund

company, a wholly-owned subsidiary of such company, a partnership the

controlling interest of which is held by such company and which has

agreed to limit profits or rate of return of investors in accordance

with a formula established or approved by the company, or a private

developer which has agreed to limit profits or rate of return of

investors in accordance with a formula established or approved by the

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 a municipality and have prior to their initial

occupancy in such accommodations resided in emergency shelter facilities

operated by or on behalf of the municipality or who are otherwise in

need of emergency shelter as determined by the municipality, providing,

however, that in the case of a building acquired by such a company,

subsidiary, partnership, or developer the obligation to provide housing

accommodations for such persons shall be applicable only to dwelling

accommodations which are or become vacant after the date of acquisition.

Such loans may be made for such period of time and pursuant to such

terms and conditions as may be required by the municipality, including,

but not limited to, terms and conditions providing that the lien created

by the note and mortgage, and, as applicable, any regulatory agreement

executed by the owner and such municipality, may be recorded in an equal

or subordinate position, or subsequently made equal or subordinate, to

the lien recorded by any private lender against the dwelling aided by

the loan made pursuant to this article, and the supervising agency of

such municipality may provide that the amount of the note and mortgage

shall automatically be reduced to zero in five equal decrements

commencing on the tenth year after the initial occupancy date, provided

that, as of the date of such reduction, such accommodations have been

and continue to be 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. Notwithstanding such provision as

contained in the note and mortgage, the loan shall be reduced to zero

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

mortgage, the supervising agency made a written determination that such

reduction would be necessary to ensure the continued affordability or

economic viability of such housing project. Such written determination

shall document the basis upon which the loan was determined to be

eligible for evaporation.

* NB Effective July 1, 2027