2013 New York Consolidated Laws
PVH - Private Housing Finance
Article 22 - (1150 - 1153) AFFORDABLE HOUSING DEVELOPMENT LOANS
1152 - Affordable housing development loans.

 
    §  1152.  Affordable housing development loans. 1. Notwithstanding the
  provisions of any general, special or local law,  one  or  more  private
  lenders  and  the city of New York, acting through the agency shall have
  the power to participate and invest in making loans to sponsors for  the
  construction  of  eligible projects. Such loans may include such amounts
  as may be required for site acquisition. Each  such  participation  loan
  shall  be secured by a bond or note and single participating mortgage or
  by separate bonds or notes and mortgages upon the eligible project. Such
  bond or note and mortgage or bonds or notes  or  mortgages  may  contain
  such  other terms and provisions not inconsistent with the provisions of
  this article as the agency may deem necessary or desirable.
    2. The portion of such loan funded by the agency shall not  exceed  an
  amount equal to sixty percent of the actual total development cost of an
  eligible  project. The agency may enter into an agreement with a private
  lender to deposit its share of a loan with  the  private  lender  to  be
  advanced  by  the  private lender. The portion of the loan funded by the
  agency may be equal to or subordinate in lien to the portion of the loan
  funded by the private lender and may contain such terms with respect  to
  interest  rate,  if  any, rate of amortization of principal, if any, and
  time of payment of interest and principal as determined by  the  agency.
  The  agency may make provision either in the mortgage or mortgages or by
  separate agreement for the performance by the  private  lender  of  such
  services  as  are  generally  performed  by  a banking institution which
  itself holds a mortgage,  including,  without  limitation,  construction
  loan  advances,  construction  supervision,  initiation  of  foreclosure
  proceedings,  procurement  of  insurance,  and  all  other  matters   in
  connection  with the financing, supervision, regulation and audit of any
  such loan to any such eligible project.
    3. If a portion of the loan is to be utilized for  acquisition  of  an
  eligible  site  such portion shall in no event exceed fifteen percent of
  the total amount of such loan  or  the  appraised  value  of  the  site,
  whichever is the lesser.
    4.  If the eligible project is to consist of one to four unit dwelling
  accommodations or cooperative or condominium units, the  agency's  share
  of  the  loan  may  be  converted  after completion of construction into
  mortgages on  such  dwelling  accommodations  or  condominium  units  or
  financing  statements  filed  with  respect  to such cooperative shares,
  provided such units or such cooperative shares are purchased by  persons
  of   eligible   income.  Such  mortgages  may  provide  that  they  will
  automatically  be  reduced  to  zero  over  a   period   of   continuous
  owner-occupancy  of  the  housing  accommodations assisted by such loan.
  Notwithstanding such provision as contained in such mortgage,  the  loan
  shall  be  reduced  to  zero  only  if,  prior to or simultaneously with
  delivery of such mortgage, the agency made a written determination  that
  such  reduction would be necessary to ensure the continued affordability
  or  economic  viability  of   the   eligible   project.   Such   written
  determination   shall  document  the  basis  upon  which  the  loan  was
  determined to be eligible for evaporation.  Such  period  of  continuous
  owner-occupancy shall not be less than fifteen years.
    5.  If the eligible project is to consist of one to four unit dwelling
  accommodations or cooperative or condominium  units,  the  agency  shall
  require  that the dwelling units be offered only to bona fide purchasers
  who intend to occupy a unit  as  their  principal  place  of  residence;
  provided,  however,  that  in  the  case  of  two  to four unit dwelling
  accommodations the bona fide purchaser may occupy only a single unit  as
  a  principal  place  of residence. If the purchaser ceases to occupy the
  unit as a principal place of  residence,  the  agency  may  provide  for
  recapture of all or a portion of the agency's share of the loan.

    6.  If the eligible project is a rental project, the agency's share of
  the loan may be  converted  after  completion  of  construction  into  a
  non-interest bearing, non-amortizing thirty year loan payable at the end
  of  its  term,  provided  that  such  loan  shall be also payable out of
  profits  upon any sale or refinancing of the project prior to the end of
  such thirty year period. The sponsor or any subsequent owner  or  owners
  of  such  a  project  shall  agree to rent such units only to persons of
  eligible income for such thirty year period and  shall  agree  that  all
  units shall be subject to the rent stabilization law of nineteen hundred
  sixty-nine,  as  amended  for  a  period  of  thirty years after initial
  occupancy, unless converted to a cooperative or condominium pursuant  to
  subdivision  eight  of this section. At the end of such period each unit
  shall continue to be subject to such  law  thereafter  until  the  first
  vacancy  occurs  at  which  time the unit shall be decontrolled. Initial
  rentals for all rental units shall be set by the agency.
    7. If the eligible project is a rental project annual profits shall be
  limited to an amount set by the agency  for  as  long  as  the  loan  is
  outstanding. Excess profits shall be used to establish project reserves,
  provide  capital  improvements  or  reduce  the  principal amount of the
  agency's loan, as determined by the agency.
    8. If the eligible project is a rental project,  no  conversion  to  a
  cooperative  or  condominium  shall  be permitted for a period of twenty
  years after initial occupancy, and unless (i) the agency's share of  the
  loan  is prepaid upon such conversion, (ii) the conversion shall be done
  pursuant to section three hundred fifty-two-eeee of the general business
  law  as  a  non-eviction  plan,  and  (iii)   apartments   occupied   by
  non-purchasing  tenants continue to be subject to the rent stabilization
  law of nineteen hundred sixty-nine as amended, until the occurrence of a
  vacancy.
    9. A loan made pursuant to this  article  shall  be  exempt  from  the
  mortgage recording taxes imposed by article eleven of the tax law.
    10.  Notwithstanding  the  provisions of any general, special or local
  law  or  charter,  the  agency  shall  have  power,  without  soliciting
  competing  bids,  to contract with any sponsor or to make provision in a
  loan for the construction or reconstruction  of  any  site  improvements
  located   in  the  public  right-of-way  which  are  necessary  for  the
  development of an eligible project. Such site improvements may  include,
  but  shall not be limited to, streets, sidewalks, lighting fixtures, and
  water and sewer lines.
    11. No loan shall be made pursuant to the provisions of  this  article
  unless  the  agency  finds  that:  (a)  the construction of the eligible
  project does not directly  displace  current  low  and  moderate  income
  residents  of  the  eligible  site;  (b)  the eligible project leverages
  private and other public investment, if any, so as to reduce the  amount
  of  assistance  provided  pursuant to this article to the minimal amount
  which is necessary for construction of the  eligible  project;  (c)  the
  eligible  project  will  be built by a private developer/builder who has
  agreed to limit its profit in accordance with a formula satisfactory  to
  the  agency; (d) the eligible project will provide assistance to an area
  which is blighted or deteriorated or has a blighting  influence  on  the
  surrounding  area, or is in danger of becoming a slum or a blighted area
  because  of  neighborhood  conditions   indicating   an   inability   or
  unwillingness  of  the  private sector to cause the type of construction
  for which a loan is to be provided; and (e) the  eligible  project  will
  make  home  ownership or rental housing affordable to persons who cannot
  presently afford the housing available based upon the  ordinary  unaided
  operation of private enterprise.

    12.  a.  The agency may make non-interest bearing advances to sponsors
  to defray the pre-development costs of eligible projects  in  accordance
  with the provisions of this chapter.
    b.  No  such  advances shall be made unless the agency finds that: (i)
  the sponsor proposes to finance the eligible project in whole or in part
  by a loan granted pursuant to this  article  or  that  the  project,  if
  otherwise  financed, will provide housing for persons or families of low
  income, and that such project is otherwise consistent with the  purposes
  of  this article; (ii) the project site is suitable, there is a need for
  the housing type proposed in the area to be served and  the  project  is
  feasible;  and  (iii) it is reasonable to anticipate that financing will
  be obtained and the agency makes a finding to that effect.
    c. No such advances may be made  to  a  sponsor  unless  such  sponsor
  enters  into  an  agreement  with  the  agency  which provides that such
  sponsor shall be regulated with respect to rents, profits, dividends and
  disposition of  its  property  or  franchise,  in  accordance  with  the
  provisions of this article.
    d.  An  advance granted pursuant to this section shall be used only to
  defray the pre-development costs of eligible projects. For  purposes  of
  this  subdivision,  the  term  pre-development  costs shall include, but
  shall not  be  limited  to:  the  reasonable  and  necessary  costs  for
  planning,   site  preparation,  developing  architectural  drawings  and
  conducting engineering and environmental studies, but shall not  include
  acquisition  of  land  or  buildings, drainage and landscaping of vacant
  land,  construction  of  new  buildings   or   the   reconstruction   or
  rehabilitation of existing buildings.
    e.  Each  such  advance  shall  be repaid in full to the agency by the
  sponsor. Such repayment shall be made upon receipt by the sponsor or its
  successor in interest of the proceeds of its  mortgage  or  construction
  loan  for the eligible project, unless the agency extends the period for
  the repayment of such advances. In no event shall the time of  repayment
  be  extended  to  a  date  later than the date of final advance of funds
  pursuant to such mortgage or  construction  loan.  Notwithstanding  this
  paragraph,  the  agency may reduce such advance to zero over a period of
  continued compliance  with  the  agency's  agreement  with  the  sponsor
  pursuant  to  paragraph  c  of this subdivision if the agency has made a
  written determination that such reduction would be necessary  to  ensure
  the  continued  affordability  or  economic  viability  of  the eligible
  project. Such written determination shall document the basis upon  which
  the  agency's  non-interest  bearing advance was determined eligible for
  evaporation.
    f. If the agency, in its  discretion,  determines  at  any  time  that
  mortgage  or  construction financing for the eligible project may not be
  obtained, then all  advances  made  to  the  sponsor  pursuant  to  this
  subdivision  shall become immediately due and payable upon the demand of
  the agency.
    13. If the eligible project is a rental project, the bond or note  and
  mortgage  or  bonds  or  notes or mortgages issued by the sponsor of any
  eligible project to secure a participation loan  may  provide  that  the
  city's  portion  of such loan shall be reduced to zero commencing on the
  fifteenth year after the execution of such bond or note and mortgage  or
  bonds  or  notes or mortgages, provided that, as of the date of any such
  reduction, the eligible project has been and continues to be  owned  and
  operated  in  a  manner  consistent with a regulatory agreement with the
  city. Notwithstanding such provision as contained in the  bond  or  note
  and  mortgage  or bonds or notes or mortgages, the loan shall be reduced
  to zero only if, prior to or simultaneously with delivery of  such  bond
  or  note  and mortgage or bonds or notes or mortgages, the agency made a

  written determination that such reduction would be necessary  to  ensure
  the  continued  affordability  or  economic  viability  of  the eligible
  project. Such written determination shall document the basis upon  which
  the loan was determined to be eligible for evaporation.