§ 15 — Participation by certain corporations and individuals

§ 15. Participation by certain corporations and individuals. 1. (a)\nOne or more banking organizations, foundations, labor unions, employers'\nassociations, veterans' organizations, colleges, universities,\neducational institutions, child care institutions, hospitals, medical\nresearch institutes, insurance companies, trustees, fiduciaries or any\ncombination of the foregoing, shall have the power to organize a company\npursuant to the provisions of this article, and to purchase for cash or\nto receive and hold in exchange for property, and to own the bonds of a\ncompany and to invest, singly or jointly, or with the state or a\nmunicipality or the New York state housing finance agency or the New\nYork city housing development corporation in a bond or note and single\nparticipating mortgage, or in separate bonds or notes and mortgages, in\nan amount not greater than ninety-five per centum of the total project\ncost in the case of a mutual company, urban rental company or a\nnon-profit company incorporated pursuant to the provisions of the\nnot-for-profit corporation law and this article for the purpose of\nproviding housing for staff members, employees or students of a college,\nuniversity, child care institution, or hospital and their immediate\nfamilies and in the case of a non-profit company incorporated pursuant\nto the not-for-profit corporation law and this article for the purpose\nof providing housing for aged persons of low income or in the case of a\nlow income non-profit housing company such investment shall not be\ngreater than the total project cost. Where one or more banking\norganizations, foundations, labor unions, employers' associations,\nveterans' organizations, colleges, universities, educational\ninstitutions, child care institutions, hospitals, medical research\ninstitutes, insurance companies, trustees, fiduciaries, or the state or\na municipality or the New York state housing finance agency or the New\nYork city housing development corporation, shall participate in a loan\nto a company secured by a single participating mortgage or by separate\nmortgages, the interest of each shall have equal priority as to lien in\nproportion to the amount of loan so secured, but need not be equal as to\ninterest rate, time or rate of amortization or otherwise. Banking\norganizations, foundations, labor unions, employers' associations,\nveterans' organizations, colleges, universities, educational\ninstitutions, child care institutions, hospitals, medical research\ninstitutes, insurance companies, trustees, fiduciaries or groups\nthereof, may exercise any such power on such conditions, however, as to\nbanking organizations and as to insurance companies only to the extent\nand upon such conditions as may be authorized by the state\nsuperintendent of financial services. As used in this subdivision, the\nterms "trustees" and "fiduciaries" shall include any fiduciary or\nfiduciaries holding funds for investment, and the term "banking\norganizations" shall have the same meaning as in subdivision eleven of\nsection two of the banking law.\n (b) Notwithstanding the provisions of paragraph (a) of this\nsubdivision or of any general, special or local law, for the purpose of\ncompleting the financing of project cost, in the event that a\nmunicipality has made or contracted to make a loan to a company or to a\npublic benefit corporation to provide moneys to finance the project cost\nof a project (1) the construction of which commenced prior to December\nfirst, nineteen hundred seventy-five, (2) for which a temporary or\npermanent certificate of occupancy was not issued prior to January\nfirst, nineteen hundred seventy-three, and (3) which is assisted by a\ncontract with the secretary of housing and urban development of the\nUnited States pursuant to section two hundred thirty-six of the national\nhousing act, as amended, covering all dwelling units therein, one or\nmore banking organizations as defined in paragraph (a) of this\nsubdivision, foundations, labor unions, credit unions, employers'\nassociations, veterans' organizations, colleges, universities,\neducational institutions, child care institutions, hospitals, medical\nresearch institutes, insurance companies, trustees or fiduciaries as\ndefined in paragraph (a) of this subdivision, trustees of pension and\nretirement funds and systems, corporations, partnerships, individuals,\nor other entities or any combination of the foregoing shall have the\npower to participate in such loan or make or participate in a new loan\nsecured by a bond or note and a single participating mortgage, or by\nseparate bonds or notes and separate mortgages, or to invest, singly or\njointly, with the municipality in a bond or note and single\nparticipating mortgage or in separate bonds or notes and mortgages, upon\nsuch terms and conditions as may be approved by the supervising agency,\nincluding but not limited to provisions providing that (i) priority may\nbe given to the payment of the principal of and interest on that portion\nof the mortgage indebtedness attributable to participation in a loan or\nan investment made by one or more of such entities or organizations,\n(ii) the interest of the municipality created as a result of making a\nmortgage loan may be subordinated to the interest that one or more of\nsuch organizations or entities may have upon such participation or\ninvestment, (iii) the interest of each upon such participation or\ninvestment need not be of equal priority as to lien, nor be equal as to\ninterest rate, time or rate of amortization of principal or time of\npayment of interest, or otherwise, provided, however, that the aggregate\namount of the loan or loans or investment made by one or more of such\norganizations or entities shall not exceed thirty per centum of total\nproject cost and, further provided that the aggregate amount of the loan\nor loans to a company does not exceed such amount as is authorized\npursuant to paragraph (a) of this subdivision. All or part of the\nproceeds of such participation or investment pursuant to this paragraph\n(b) may be applied to reduce or prepay the loan made by the\nmunicipality. The provisions of subdivisions one and five of section\ntwenty-six of this article shall not apply to such participation in a\nloan or investment pursuant to this paragraph (b) if undertaken in\nconnection with a project theretofore approved pursuant to said section\ntwenty-six.\n Notwithstanding the provisions of this article or of any general,\nspecial or local law, in the event that a municipality has made a loan\npursuant to this article prior to any participation pursuant to this\nparagraph, the supervising agency shall have the power, upon the\nmortgagor's consent, to modify the terms and conditions of the original\nbond or bonds or note or notes and mortgage and any other documents\nexecuted in connection with such initial loan, as the supervising agency\nmay deem necessary or desirable, to provide for such participation,\nincluding but not limited to modification of the rate and time of\npayment of the interest on the initial loan or rate of amortization of\nprincipal thereof, and provision for the additional borrowing cost, if\nany, with respect to that portion of the mortgage indebtedness\nattributable to such participation, provided, that except to the extent\nof any increase in the maximum principal amount of the original mortgage\nloan, with regard to a company that has obtained a temporary or\npermanent certificate of occupancy for part or all of a project financed\nby a loan pursuant to this article before such participation in a loan\nor investment is made, the sum of the payments of interest and principal\non the mortgage loan or loans which the company is obligated to make in\nany year as a result of such modification and participation in a loan or\ninvestment made pursuant to this paragraph, shall not exceed the sum of\nthe payments of interest and principal that such company would have been\nobligated to make in such year under the original mortgage loan\nagreement if the project had been fully financed under the original\nmortgage loan agreement by the municipality at an interest rate equal to\nthe maximum rate per annum prescribed by the superintendent of financial\nservices pursuant to section fourteen-a of the banking law as of\nDecember nineteenth, nineteen hundred seventy-five, or such higher rate\nof interest as the secretary of housing and urban development of the\nUnited States shall approve pursuant to an agreement to make interest\nreduction payments pursuant to section two hundred thirty-six of the\nnational housing act, as amended, with respect to such project and that\nthe rental or carrying charges in such projects shall not be increased\nas a result of such participation in a loan or investment and further\nprovided, that the company shall not seek or accept from the\nmunicipality any subsidy, direct or indirect, excluding existing tax\nexemption, to offset any increased borrowing costs, if any.\n (c) Where the state or a municipality shall join with one or more\norganizations of the kind hereinabove mentioned, in making a loan\nsecured by a single participating mortgage or by separate mortgages, the\nstate or a municipality is authorized, through the commissioner of\nhousing, or the supervising agency, as the case may be, to make\nprovision, either in the mortgage or mortgages or by separate agreement,\nfor the performance of such services as are generally performed by a\nbanking institution or insurance company which itself owns and holds a\nmortgage or by a trustee under a trust mortgage. The commissioner and\nthe supervising agency are hereby authorized to act as trustee or to\nconsent to the appointment of a banking institution to act in such\ncapacity. Any agreement made by the commissioner under this provision\nshall be subject to the approval by the state comptroller and the\nattorney general as to form.\n (d) In connection with any participation in a loan or investment\npursuant to paragraph (b) of this subdivision the municipality shall\nhave the power to assign or pledge, in whole or in part, to one or more\nof the organizations or entities participating in such loan its right,\ntitle and interest in and to any mortgage held pursuant to this article\nand any contract or arrangement for the payment of subsidy with respect\nto such loan and the right to receive and apply to repayment of such\nloan and the interest thereon any payments made under such mortgage or\nunder such contract or arrangement.\n 2. Notwithstanding any other provision of law, any banking institution\nor insurance company or a group thereof operating a company, or owning\nall of the bonds of a company may exercise all the powers conferred by\nthis section and may enter into contracts contemplated by this article\nand agree with the commissioner not to sell, assign, or otherwise\ntransfer such project or bonds or bond and mortgage or interest therein\nof such company provided for pursuant to this article without the\nconsent of the commissioner.\n