N.Y. Private Housing Finance Law § 802

§ 802. Participation loans to owners. 1. Notwithstanding the\nprovisions of any general, special or local law, one or more private\ninvestors and a municipality, acting through its agency, shall have the\npower to participate and invest in making loans to the owners of\nexisting multiple dwellings or to the owners of non-residential property\nor to the owners of vacant land subject to the limitations of\nsubdivisions two through seven of this section, in such amounts as shall\nbe required for the rehabilitation of such existing multiple dwellings\nor for the conversion of such non-residential property or for the\nconstruction of a new multiple dwelling on such vacant land, and if any\nsuch owner acquires the existing multiple dwelling or the\nnon-residential property or the vacant land for the purpose of such\nrehabilitation, conversion or construction or owns the existing multiple\ndwelling or the non-residential property or the vacant land subject to\nan outstanding indebtedness, such loans may include such amounts as may\nbe required for the cost of such acquisition or for the refinancing of\nsuch outstanding indebtedness, and such private investors and a\nmunicipality may jointly participate or invest in the making of\ntemporary loans or advances to such owners in anticipation of the\npermanent participation loans for such purposes.\n 2. A municipality may utilize federal grant funds or state grant funds\nor any municipal funds to finance its participation or investment in a\nloan pursuant to this article. This subdivision shall not apply to any\nparticipation in a loan by the New York city housing development\ncorporation pursuant to section eight hundred five of this article.\n 3. (a) Each participation loan shall be secured by a bond or note and\nsingle participating mortgage or by separate bonds or notes and\nmortgages upon the existing multiple dwelling or the non-residential\nproperty and the land upon which it is situated or in the case of the\nconstruction of a new multiple dwelling, upon the vacant land and the\nmultiple dwelling to be constructed, provided that each such loan shall\nbe made upon such terms and conditions as may be approved by the agency,\nincluding but not limited to provisions that (i) priority may be given\nto the payment of the principal of and interest on that portion of the\nmortgage indebtedness attributable to participation in the loan by one\nor more private investors, (ii) the interest of the municipality created\nas a result of making such a mortgage loan may be subordinated to the\ninterest that one or more of such private investors may have upon such\nparticipation, (iii) the interest of each upon such participation need\nnot be of equal priority as to lien nor be equal as to interest rate,\ntime or rate of amortization of principal or time of payment of\ninterest, or otherwise, (iv) the bond or note and mortgage may provide\nthat the municipality's portion of a participation loan made to an owner\nshall be reduced to zero commencing in the fifteenth year after the\nexecution of the bond or note and mortgage, provided that, as of the\ndate of any such reduction, such multiple dwelling has been and\ncontinues to be owned and operated in a manner consistent with a\nregulatory agreement with the municipality. Notwithstanding such\nprovision as contained in the bond or note and mortgage, the\nmunicipality's portion of the loan shall be reduced to zero only if,\nprior to or simultaneously with delivery of such bond or note and\nmortgage, the agency made a written determination that such reduction\nwould be necessary to ensure the continued affordability or economic\nviability of the multiple dwelling. Such written determination shall\ndocument the basis upon which the loan was determined to be eligible for\nevaporation.\n (b) The aggregate amount of each such participation loan shall not\nexceed the cost of the rehabilitation, conversion or construction, plus\nthe costs of any or all undertakings necessary for the planning,\nfinancing, acquisition, satisfaction of tax liens and other municipal\nliens and encumbrances, construction, equipment and development in\nconnection therewith, provided that, if any portion of such loan is used\nfor the cost of acquisition or for refinancing, the amount of a\nmunicipality's portion of such loan shall not exceed one and one-half\ntimes the cost of rehabilitation, conversion or construction.\n (c) The amount of any such loan, together with the amount of all prior\nliens and encumbrances, shall not exceed, except in the case of a loan\nmade to a non-profit company, a mutual company, or a housing development\nfund company, ninety per centum of value unless the agency makes a\nwritten determination that the owner has insufficient resources to pay\nfor the remaining ten per centum of value, in which case such loan shall\nnot exceed ninety-five per centum of value. The amount of any such loan,\ntogether with the amount of all prior liens and encumbrances, made to a\nnon-profit company, a mutual company, or a housing development fund\ncompany shall not exceed value, provided that when after completion of\nsuch rehabilitation, conversion or construction, such multiple dwelling\nis, or is to be operated, exclusively for the benefit of persons and\nfamilies who are entitled to occupancy by reason of ownership of stock\nin the corporate owners, such loan shall not exceed ninety-eight per\ncentum of value unless the agency makes a written determination that the\nowner has insufficient resources to pay for the remaining two per centum\nof value, in which case such loan shall not exceed value.\n 4. Each such bond or note and mortgage or bonds or notes and mortgages\nshall be repaid over or within a period of thirty years in such manner\nas may be provided in such bond or note and mortgage or bonds or notes\nand mortgages but in no case shall the term of such loan exceed the\nprobable life of the multiple dwelling which is hereby determined to be\nthirty years. Such bond or note and mortgage or bonds or notes and\nmortgages and any contract in connection with such permanent and\ntemporary loans may contain such other terms and provisions not\ninconsistent with the provisions of this article as the local\nlegislative body or the agency may deem necessary or desirable to secure\nrepayment of the loan, the interest thereon and other charges in\nconnection therewith and to carry out the purposes and provisions of\nthis article.\n 5. The bond or note or the bonds or notes issued by the owner and the\nmortgage or mortgages relating thereto may authorize such owner, with\nthe consent of the agency and the private investor, to prepay the\nprincipal of the loan subject to such terms and conditions as therein\nprovided. Such bond or note and mortgage or bonds or notes and mortgages\nmay contain such other clauses and provisions as the agency shall\nrequire.\n 6. Where a municipality joins with one or more private investors in\nmaking a participation loan secured by a single participating mortgage\nor by separate mortgages, the agency may make provision, either in the\nmortgage or mortgages or by separate agreement, for the performances of\nsuch services as are generally performed by a banking institution or\ninsurance company which itself owns and holds a mortgage or by a trustee\nunder a trust mortgage and for the imposition of reasonable fees for\nfinancing, regulation, supervision and audit of such multiple dwelling.\nThe agency is hereby authorized to act as trustee or to consent to the\nappointment of a banking institution or any subsidiary thereof to act in\nsuch capacity and to provide such services as are generally performed by\nany such bank itself or its subsidiary owning and holding such a\nmortgage.\n 7. Banking organizations and insurance companies may exercise such\npower only to the extent and on such conditions as may be authorized by\nthe state superintendent of financial services.\n 8. Notwithstanding the provisions of any other law, a savings bank may\ninvest to an amount not exceeding ninety per centum of the value of any\nreal property when jointly participating or investing in a loan pursuant\nto the provisions of this article or not exceeding ninety-five per\ncentum of the value of any real property when jointly participating or\ninvesting in a loan pursuant to the provisions of article fourteen of\nthis chapter.\n