N.Y. Private Housing Finance Law § 60: Housing project repair fund

§ 60. Housing project repair fund. 1. As used in this section, (a) the

term "current economic rent" shall mean the rent or carrying charges

determined by the commissioner to be sufficient, together with monies

available to the company from the state, the federal government, or any

other source, to provide for the payment of (i) all current mortgage

interest, fees, charges, and amortization, (ii) all current real

property taxes and water and sewer charges, or payments in lieu thereof,

(iii) all other current operating expenses of the project, and (iv) all

current payments into reserve funds required by the commissioner;

provided, however, that any payments required for reserves for

replacements shall be in an amount which on an aggregate annual basis is

not less than six-tenths of one percent of the cost for constructing

such project as determined by the commissioner, except that in the case

of a project receiving payments pursuant to this section which otherwise

would be made from such reserve for replacements, the commissioner shall

take such payments into account in determining the necessary amount of

payments to reserves for replacements; and

(b) the term "total economic rent" shall mean the sum of the current

economic rent, as defined in paragraph (a) of this subdivision, plus an

amount sufficient to amortize all mortgage repayment arrearages,

including fees and charges, and all real property tax arrearages,

including applicable interest, if any, and all water and sewer charge

arrearages, including applicable interest, if any, of the company.

2. The agency shall create and establish a special fund, to be known

as the housing project repair fund and shall pay into such fund all

monies appropriated and made available to the agency by the state for

the purposes of such fund and any other monies which may be made

available to the agency for the purposes of such fund from any other

source or sources.

3. Monies held in the housing project repair fund may be used by the

agency to provide for the correction of construction-related problems in

housing projects financed by the agency by means of the necessary

repair, reconstruction or replacement of any of the facilities or site

conditions, the cost of which was included in the project cost and which

form an integral part of the project, and for such other purposes which

may be necessary to effectuate the provisions of this section. A

construction-related problem shall mean any deficiency or defect in the

design, construction or site preparation of a project, its buildings,

utilities and grounds; provided, however, a deficiency which results

from conformance to design and construction standards in effect at the

time of such construction shall not constitute such a construction

related problem. The agency shall not expend monies from the fund as

payment to any housing company for the correction of a

construction-related problem unless the following conditions have been

met:

a. The agency has either (1) received a certification by an

independent consultant with appropriate qualifications engaged by the

agency certifying (i) the scope and total cost of the corrective work

required to be performed at the project after taking into consideration

emergency conditions, if any, which may exist, and such other factors as

may be appropriate; (ii) the cost effectiveness of alternative methods

of performing the corrective work; and (iii) the extent to which the

corrective work to be performed results from a construction-related

problem, or (2) equivalent findings have been made in arbitration or

other fact finding procedures established by agreement between a housing

company, the commissioner and the agency; and

b. The agency has found and determined that (i) the projected annual

aggregate rent revenues for the project and any other monies available

to the company from the state or federal government or any other source

as certified by the commissioner constitute current economic rent, or

(ii) a mortgage modification agreement has been entered into with the

housing company which operates the project, after consultation with the

commissioner and in accordance with the guidelines approved by the

director of the budget. Such a mortgage modification agreement shall be

entered into only in the event that the agency projects that the

imposition of total economic rent will require the company to vary

rental rates or carrying charges by an amount that exceeds the rental

rates or carrying charges of a company in effect immediately prior to

the date of such a modification by the greater of twenty percentum or

ten dollars per room per month. A mortgage modification agreement may

permit the variation of rental rates or carrying charges over a period

agreed upon by the agency and the housing company not to exceed

seventy-five months from the effective date of the initial variation in

rental rates or carrying charges so as to result in the imposition of a

current economic rent level at a date no later than the beginning of the

seventy-sixth month, and shall make provision for the payment by the

housing company of all current real property taxes and water and sewer

charges, or payments in lieu thereof, and for the payment by the housing

company of (i) all real property tax arrearages, including applicable

interest, if any, over a period not to exceed fifteen years from the

effective date of the initial variation in rental rates or carrying

charges, (ii) all water and sewer charge arrearages, including

applicable interest, if any, over a period not to exceed fifteen years

from the effective date of the initial variation in rental rates or

carrying charges, (iii) all mortgage repayment arrearages, including

fees and charges, over a period not to exceed the scheduled date of the

expiration of the mortgage repayment period pursuant to the provisions

of the original mortgage and (iv) any mortgage repayment deficiencies

accumulated during the term of the mortgage modification agreement over

a period not to exceed ten years from the expiration of such agreement.

4. Monies shall not be available from the fund to reimburse a housing

company for work performed or contracted on account of which such

housing company has received a credit against monies otherwise payable

to the agency as mortgage repayments prior to the effective date of this

section, nor for work required to maintain, or correct deficiencies or

defects in, construction performed or contracted for by a municipality

or public utility, nor for work for which federal monies are available

as determined by the commissioner, and the agency shall not expend

monies beyond those required to meet the portion of the cost of

correction of a condition which constitutes a construction-related

problem, as determined by the agency; provided, however, that monies

from the fund may be used to pay for the costs associated with the

hiring of an independent consultant engaged by the agency to effectuate

the purposes of this section and for otherwise administering the

provisions of this section.

5. Notwithstanding any other provision of this section the agency

shall allocate fifteen per centum of the monies from the fund as payment

to housing companies financed by the agency or the state for energy

conservation improvements or tenant health and safety improvements

provided that the following conditions are met:

a. The agency has received a certification from the commissioner that

energy saving or other modifications to the project will either (i)

result in savings projected over a seven year term or (ii) rectify an

imminent threat to tenant health and safety, and there is no alternative

source of funding to make such modifications.

b. The agency has reviewed the findings of the commissioner and is in

agreement with such findings.

c. The agency has determined that the requirements of paragraph b of

subdivision three of this section have been satisfied.

d. The agency has determined that a plan for performing energy

conservation or tenant health and safety improvements as submitted by

the housing company is the most cost-effective alternative available to

the housing company.

The agency shall apportion such allocations among housing companies in

an equitable manner and shall not make any such allocation in a given

year to a housing company which will, in such year, receive ten percent

or more of the monies available in the fund for the correction of

construction-related problems.

6. To assist in the administration of this section, the agency is

authorized to request the assistance of and utilize the services of any

state department, agency, board, commission or public benefit

corporation, and any such department, agency, board, commission or

public benefit corporation is authorized to provide such assistance and

service.

7. Nothing contained in this section or in the administration or

application hereof shall be construed as creating any private right of

action on the part of any persons, firm or corporation against the state

of New York, the agency, the division of housing and community renewal,

or any officer or employee thereof based upon a construction-related

problem and neither the certification or finding of the existence of a

construction-related problem as provided in this section nor the

implementation of the provisions of this section may be asserted as a

defense by way of answer, counterclaim, or otherwise in any action or

proceeding brought to enforce the provisions of a mortgage or any

related agreement made by the agency with respect to a project, or

brought by the commissioner with respect to a project, or brought by the

commissioner to enforce any of the provisions of this chapter or any

order made by him pursuant to this chapter. In any case where monies

held in the housing project repair fund have been expended to provide

for the correction of any construction-related problem, the agency shall

accede to any and all rights and remedies which the housing company on

whose behalf such payment was made may have against any third party with

respect to any such construction-related problem to the extent of such

payment.

8. Notwithstanding any other provisions of this section, no monies

shall be expended from the housing project repair fund unless the agency

has submitted a plan to the director of the budget and the comptroller

describing the work required to repair the construction-related or other

problem, or problems, which also describes the method to be used for the

awarding of contracts for such work, and the director of the budget and

the comptroller have approved the plan and all contracts let pursuant

thereto as being in accordance with the provisions of this section and

in accordance with subdivision two of section one hundred twelve of the

state finance law. In addition, no monies shall be expended from the

housing project repair fund unless the director of the budget has

approved a plan detailing the scheduling of the work to be performed to

repair any such construction-related or other problem or problems and

the scheduling of the payments for total cost of the work to be

performed. In addition, no monies in excess of the total cost of any

corrective work certified in accordance with paragraph a of subdivision

three of this section shall be expended from such fund without the

approval of the director of the budget.

9. Notwithstanding any other law, no monies shall be provided pursuant

to this section unless a company shall require the tenants and occupants

residing in the housing project or projects to submit an annual income

affidavit as prescribed by the commissioner or the supervising agency,

as the case may be, together with proper documentation as and if

prescribed by the commissioner or the supervising agency, as the case

may be. Upon submission of such affidavit and documentation, if any, the

company shall assess such tenant or occupant the rental surcharge, if

applicable, prescribed pursuant to section thirty-one of this chapter on

the basis of the verified income of such tenant or occupant. If the

tenant or occupant shall fail to submit such affidavit and

documentation, or if such verification shall result in a disagreement

caused by understatement of income and the tenant shall have failed to

correct such original affidavit and documentation on forms specified by

the commissioner within sixty days of notification by certified mail by

the commissioner addressed to the tenant, the commissioner shall so

notify the company. Thereupon, the company shall assess such tenant or

occupant the maximum rental surcharge permitted pursuant to section

thirty-one of this chapter, and provided further, that the company, with

the approval of the commissioner or the supervising agency, as the case

may be, may proceed to remove said tenant or occupant from occupancy on

the ground that said tenant or occupant has materially misrepresented

income. The failure of the tenant to accurately verify such income shall

be prima facie evidence that such material misrepresentation was made by

the tenant. The provisions of any other law to the contrary

notwithstanding, solely for the purpose of verification of income, the

commissioner or the supervising agency, as the case may be, may contract

with the department of taxation and finance for services performed by

such department in verifying income information forwarded by a company,

the commissioner, or the supervising agency to such department. Nothing

contained herein shall be construed to authorize the commissioner to

contract with such department to provide any income information

whatsoever and such agreement shall be limited solely to the

verification of income information. No officer or employee of the

division of housing and community renewal, the supervising agency, or a

company shall be subject to any civil or criminal liability by reason of

his forwarding to the department of taxation and finance of any income

information pursuant to this subdivision, unless (i) such information is

knowingly and willfully materially misrepresented by such officer or

employee or (ii) such information is knowingly and willfully divulged to

any person, except in the discharge of such officer's or employee's

duties solely for the purpose of verification of income, for any reason

whatsoever. The commissioner or the supervising agency as the case may

be, shall promulgate rules and regulations to effect the provisions of

this subdivision. The provisions of the state freedom of information act

shall not apply to any income information obtained by a company, the

commissioner, or the supervising agency, as the case may be, pursuant to

the provisions of this subdivision.