N.Y. Public Housing Law § 76-a: Private financing

§ 76-a. Private financing. To facilitate the enlistment of private

capital through the sale by authorities or municipalities of their bonds

and other obligations to persons, firms or corporations other than

governments, in financing state projects, and to maintain the low-rent

character of such projects---

(a) Every contract entered into by the state with an authority and a

municipality, or solely with a municipality, to make loans or periodic

subsidies or both (including contracts which amend or supersede

contracts previously made, provided that such amending or superseding

contracts do not relate to state projects with respect to which

definitive housing bonds of the state have been sold pursuant to section

sixty of the state finance law, and do not relate to state projects with

respect to which serial bonds of a municipality have been sold pursuant

to sections ten and eleven of the local finance law) may provide that---

(1) upon the occurrence of a substantial default in respect to the

covenants or conditions to which the authority or municipality is

subject (as such substantial default shall be defined in such contract),

the authority or municipality shall be obligated at the option of the

commissioner, either to convey title to the state in any case where, in

the determination of the commissioner (which determination shall be

final and conclusive), such conveyance of title to the state is

necessary to achieve the purposes of this chapter, or to deliver

possession to the state of the project, as then constituted, to which

such contract relates;

(2) the state shall be obligated to reconvey or to redeliver

possession of the project, as constituted at the time of reconveyance or

redelivery, to such authority or municipality upon such terms as shall

be prescribed in such contract and as soon as practicable: (i) after the

commissioner shall be satisfied that all defaults with respect to the

project have been cured, and that the project will, in order to fulfill

the purposes of this chapter, thereafter be operated in accordance with

the terms of such contract; or (ii) after the termination of the

obligation to make periodic subsidies available unless there are any

obligations or covenants of the authority or municipality which are then

in default. Any prior conveyances and reconveyances, deliveries and

redeliveries of possession shall not exhaust the right to require a

conveyance or delivery of possession of the project to the state

pursuant to sub-paragraph (1) of subdivision (a), upon the subsequent

occurrence of a substantial default.

(b) Whenever such contract to make loans or periodic subsidies or both

shall include provisions which the commissioner, in said contract,

determines are in accordance with the provisions authorized by

subdivision (a) hereof, and the periodic subsidies, pursuant to such

contract, have been pledged by the authority or the municipality as

security for the payment of the principal and interest on the

obligations of the authority or municipality, the commissioner

(notwithstanding any other provisions of this chapter) shall continue to

make periodic subsidies available for the project so long as any of such

obligations remain outstanding. Acquisition of title to a project by the

state, or delivery of possession thereof to the state, as provided in

subdivision (a) hereof, shall not constitute an assumption of liability

by the state of the bonds or notes of the authority or municipality for

which the periodic subsidies or loans have been pledged. The

commissioner may covenant in such contract (in lieu of retaining the

right to reduce or terminate periodic subsidies under section eighteen

of this chapter and notwithstanding any other provisions of law) that in

any event such periodic subsidies shall in each year be at least equal

to an amount which, together with such income or other funds as are

actually available from the project for the purpose at the time such

periodic subsidy is made, will suffice for the payment of all

installments, falling due within the said year, of principal and

interest on the obligations for which the periodic subsidies provided

for in the contract shall have been pledged as security; provided that

such periodic subsidies shall not exceed the amounts and shall not be

made for a period longer than the amounts and period specified in

section seventy-three of this chapter and provided further that such

periodic subsidies shall not exceed the amounts and shall not be made

for a period longer than the amounts and period specified in the

contract.

(c) Obligations of an authority or municipality which (1) are secured

either (A) by a pledge of a state loan under an agreement between such

authority or municipality and the state, or (B) by a pledge of periodic

subsidies to be made by the state and (2) bear, or are accompanied by, a

certificate of the commissioner that such obligations are so secured,

shall be incontestable in the hands of a bearer. The full faith of the

state is pledged to the payment of all loans and periodic subsidies

contracted for by the commissioner as security for such obligations.