N.Y. Public Housing Law § 402-b: Power of authority to enter into mixed-finance transactions to continue viability of public housing

§ 402-b. Power of authority to enter into mixed-finance transactions

to continue viability of public housing. 1. Legislative findings and

declaration. The legislature finds and declares that the state has a

vital interest in the continued viability of public housing. It is

necessary to ensure that public housing continues to serve low-income

individuals and families who would otherwise face homelessness or be

forced into unsafe or unsanitary housing. Public housing functions as a

safety net for persons most in need of safe, decent and affordable

housing. The legislature further finds that the New York city housing

authority has made, and continues to make, a concerted effort to provide

public housing to individuals and families in need. Certain projects

owned by the New York city housing authority have suffered deterioration

over time, and the housing authority does not have sufficient resources

to address this deterioration. An infusion of private capital is

necessary to ensure the continued success and long term viability of

these projects. The legislature further finds that bringing state

financed public housing operated by the New York city housing authority

within the public housing subsidized by the federal government, by

utilizing the federal American Recovery and Reinvestment Act of 2009,

will allow the New York city housing authority to enter into mixed

finance transactions, which will result in receiving new operating and

capital subsidies from the federal government and preserve the units as

public housing. The legislature also finds that tenants living in the

projects that have been financed by the city of New York, commonly known

as Marble Hill Houses, St. Mary's Park Houses, Bay View Houses,

Boulevard Houses, Linden Houses and Samuel Houses, located in the city

of New York, counties of Bronx, Kings and New York, will, through

multiple contracts and agreements among the New York city housing

authority, investment partners and the federal government, be afforded

the same protections as tenants living in the projects listed in

subdivision two of this section. The legislature therefore finds and

declares that enactment of this section would enable redevelopment and

rehabilitation of those certain New York state and New York city

financed projects owned by the New York city housing authority, and the

continued operation of said projects for persons and families of low

income.

2. Upon approval by the commissioner of the division of housing and

community renewal, the New York city housing authority is hereby

authorized to sell or lease all or part of the residential buildings

within the projects commonly known as Marlboro Houses, Chelsea Houses,

Castle Hill Houses, 344 East 28th Street, Amsterdam Addition, Bushwick

Houses, Stephen Wise Towers, Arthur H. Murphy Houses, Baychester Houses,

Jonathan Williams Plaza, Drew-Hamilton Houses, Independence Towers,

Rutgers Houses, Stapleton Houses and Manhattanville Houses, located in

the city of New York, counties of Bronx, Kings, New York and Richmond,

upon such terms and conditions and in such manner as the New York city

housing authority may deem appropriate and in compliance with the

provisions of this section. The commissioner of the division of housing

and community renewal shall not grant such approval unless he or she

makes a finding that such sale or lease will enable the projects to be

redeveloped and operated in such manner as to provide decent, safe and

sanitary housing within the financial reach of persons and families of

low income and a further finding that new federal assistance is

significantly more likely to be available to the projects listed in this

section if such approval is granted. There shall be no requirement for a

finding by the commissioner of the division of housing and community

renewal that provisions have been made to pay or otherwise assure

payment or retirement of all bonds, notes and other obligations

heretofore issued to finance the projects or a portion thereof, provided

that the sale or lease of the projects is part of a comprehensive plan

of rehabilitation and/or restructuring which includes the provision of

housing for persons and families of low income. The sale or lease of all

or part of the residential buildings within the projects enumerated in

this section shall be made subject to all pertinent federal statutory,

executive orders, consent orders and regulatory requirements, as those

requirements may be amended from time to time, and contracts and

agreements which shall be recorded against and which shall run with the

land, including a regulatory and operating agreement and a declaration

of restrictive covenants requiring the operation and maintenance of such

residential projects in compliance with federal requirements, and

amendments to a certain mixed-finance amendment to the consolidated

annual contributions contract between the New York city housing

authority and the United States department of housing and urban

development (collectively, the "applicable public housing

requirements").

3. (a) All applicable public housing requirements pertaining to

federal public housing projects shall apply to the projects listed in

subdivision two of this section, including but not limited to all

procedural and substantive due process requirements, restrictions on

evictions except for just cause, the right to automatic renewals of

leases, and the right to meaningful input in matters concerning tenants;

Section 8 units shall be subject to the voluntary conversion agreement

and management plan approved by the United States department of housing

and urban development on September eleventh, two thousand eight, and as

it may be amended from time to time. The public housing and Section 8

leases of tenants in occupancy of the projects listed in subdivision two

of this section on the date of sale or lease of such projects shall

remain in effect, except as such leases may be modified or assigned to

reflect changes in the ownership of project buildings. Each such tenant

shall enjoy the same rights and obligations as other tenants with public

housing leases occupying dwelling units in the housing projects owned

and operated by the New York city housing authority that are not listed

in subdivision two of this section, or pursuant to Section 8 leases

supported by Section 8 vouchers, except as provided by paragraph (b) of

this subdivision. Each project owner and the New York city housing

authority shall be jointly and severally obligated to provide and

protect the rights set forth herein.

(b) All units in projects listed in subdivision two of this section

where there has been an allocation of federal low-income housing tax

credits, during the required federal regulatory compliance periods

applicable to such federal low-income housing tax credits, shall upon

vacancy be rented by persons or families whose income does not exceed

sixty percent of area median income at a rent, including utilities, not

to exceed thirty percent of the household's adjusted gross income. All

other units shall upon vacancy be rented by persons or families whose

income does not exceed eighty percent of area median income at a rent,

including utilities, not to exceed thirty percent of the household's

adjusted gross income. All income guidelines applicable to federal

public housing projects shall apply to projects listed in subdivision

two of this section. Each such tenant shall enjoy the same rights and

obligations as other tenants with public housing leases occupying

dwelling units in the housing projects owned and operated by the New

York city housing authority that are not listed in subdivision two of

this section, or pursuant to Section 8 leases supported by Section 8

vouchers, except as provided by this paragraph.

(c) All tenants who reside in the housing projects listed in

subdivision two of this section prior to the sale or lease of such

project shall be entitled to remain in their current apartments,

provided that such tenant or tenants comply with the terms and

conditions of their leases and meet all applicable federal income

guidelines. Each such tenant shall enjoy the same rights and obligations

as other tenants with public housing leases occupying dwelling units in

the housing projects owned and operated by the New York city housing

authority that are not listed in subdivision two of this section, or

pursuant to Section 8 leases supported by Section 8 vouchers, except as

provided by paragraph (b) of this subdivision.

(d) For each project listed in subdivision two of this section, all

units occupied by persons of low income shall be physically integrated

with all other units in the project. They shall share common means of

access, services and amenities equally with all other units and shall in

no way be physically or otherwise set apart from all other units in the

project.

(e) All prospective public housing and Section 8 tenants shall be

selected from a waiting list which shall be maintained by the New York

city housing authority in compliance with the federal public housing and

Section 8 laws and all applicable rules and regulations. The New York

city housing authority and each respective project owner shall screen

tenants and jointly have final approval over tenant selection all in

accordance with aforementioned laws, rules and regulations. All

prospective public housing tenants shall be taken from the waiting list

in the order in which they applied for the size appropriate unit,

subject however to preferences and priorities provided for in the public

housing law and all applicable rules and regulations.

(f) The entity that acts as the managing member or general partner of

the respective owner of each project listed in subdivision two of this

section following transfer of such project, shall at all times be a

not-for-profit housing development fund corporation wholly owned by the

New York city housing authority and shall be established under article

eleven of the private housing finance law. The board of directors of

such housing development fund corporation shall be composed of the

chairperson of the New York city housing authority and the duly

appointed members of such authority.

(g) The entity that owns any project or assists in the management of

any project may include an entity exempt from federal income taxes under

section 501(c)3 of the Internal Revenue Code of 1986 as amended, or its

wholly owned subsidiary.

(h) The provisions of this section may be enforced by any party

aggrieved by a violation of such provisions.

(i) In the case where there is an allocation of federal low income

housing tax credits in connection with a sale or lease of the project,

the fee payable to the project developer shall not exceed twelve percent

of the total development cost, provided however, that the fee payable to

such developer may be increased to the maximum percentage permitted

under regulations promulgated by the division of housing and community

renewal if the developer assumes additional financial risk. Such

increase shall not be granted (i) for risk the developer is customarily

required to assume or guarantees which the developer is customarily

required to provide by industry practice, (ii) for any risks or

guarantees which parties other than the developer would ultimately bear,

or (iii) if the cost of such risks or guarantees would be paid from

governmental grants, loans, subsidies or other governmental funds. The

foregoing limitation shall not apply to any portion of a developer fee

paid to the housing authority.

(j) The provisions of this section shall be applicable to each of the

projects delineated in subdivision two of this section commencing on the

closing date of the sale or lease of each respective project in

compliance with applicable law and shall be binding on all owners and

operators of such project.

4. State subsidies available to the projects listed in subdivision two

of this section in connection with the bonds, notes or other obligations

heretofore issued to finance the cost thereof may, subject to annual

appropriation and upon compliance with the provisions of this section,

continue to be used to pay the debt service on such bonds, notes or

other obligations, subject to such terms and conditions as the

commissioner of the division of housing and community renewal may deem

appropriate.

5. The New York city housing authority shall be required to develop

and circulate a notice to all tenants of public housing projects listed

in subdivisions one and two of this section. The notice shall contain

information regarding the transfer and federalization process, as well

as notice that tenants' rights to occupancy and due process shall

continue as they existed prior to the transfer.

6. The New York city housing authority, shall provide the commissioner

of the division of housing and community renewal, the speaker of the

assembly, the temporary president of the senate, the minority leader of

the assembly, the minority leader of the senate, the chair of the

assembly housing committee, and the chair of the senate housing,

construction, and community development committee copies of the annual

project activity report or any substantially similar annual report that

it is required to submit to the United States department of housing and

urban development that is related to the projects listed in subdivisions

one and two of this section.