§ 23 — Municipal loans and municipally aided projects

New York § 23

• Jurisdiction: New York
• Law PVH: Private Housing Finance
• Art. 2: Limited-profit Housing Companies

Text

§ 23. Municipal loans and municipally aided projects. 1. A\nmunicipality may make or contract to make loans to a company or to a\npublic benefit corporation providing housing for staff members,\nemployees or students of a college, university, hospital or child care\ninstitutions and their immediate families in an amount not to exceed,\nexcept in the case of a non-profit company incorporated pursuant to the\nprovisions of the not-for-profit corporation law and this article for\nthe purpose of providing housing for aged or handicapped persons of low\nincome, and except in the case of a company or public benefit\ncorporations providing housing for staff members, employees or students\nof a college, university, hospital or child care institution and their\nimmediate families, and except in the case of a municipally-aided\nnon-profit company or of a municipally-aided mutual company, and except\nin the case of a low income non-profit housing company, ninety-five per\ncentum of the project cost to be secured, except as provided in section\nfifteen of this article, by a first mortgage lien and may make temporary\nloans or advances to a company in anticipation of a permanent municipal\nloan. In the case of a non-profit company incorporated pursuant to the\nprovisions of the not-for-profit corporation law and this article for\nthe purpose of providing housing for aged or handicapped persons of low\nincome and in the case of a company or public benefit corporations\nproviding housing for staff members, employees or students of a college,\nuniversity, hospital or child care institution and their immediate\nfamilies, and in the case of a municipally-aided non-profit company or\nof a municipally-aided mutual company, and in the case of a low income\nnon-profit housing company, such loans may not exceed the total project\ncost. Notwithstanding the foregoing, such loans to a municipally-aided\nmutual company to assist in financing the acquisition of a building by\nresidents thereof may not exceed ninety-five per centum of the project\ncost. Such mortgage, or bonds or notes secured thereby and such contract\nmay contain such terms and conditions not inconsistent with the\nprovisions of this article as the local legislative body may deem\nnecessary or desirable to secure repayment of its loan, the interest\nthereon and other charges in connection therewith. In the case of a loan\nin an amount greater than ninety-five per centum of the total project\ncost the supervising agency may in its discretion require satisfactory\nindependent guarantees that the loan will be repaid according to the\nterms of the company's bond or note and mortgage.\n 1-a. Notwithstanding any other provision of this article or any other\nlaw, any such loan may be made to a company at such rate of interest, if\nany, as the local legislative body may deem necessary or desirable to\ncarry out the policy and purposes of this article.\n 2. The supervising agency shall have exclusive power to promulgate\nsuch supplementary rules and regulations with respect to a\nmunicipally-aided project and a company formed to undertake or operate\nany such project, as may be necessary to carry out the provisions of\nthis article. No assignment for collateral or pledge by a municipality\nof its mortgage interest in a municipally-aided project to the state or\nto any political subdivision thereof shall either affect the power of\nthe supervising agency granted herein or authorize the commissioner to\nexercise any powers not otherwise granted in this article.\n 3. Prior to the date of approval by the local legislative body of the\ncontract between a municipality and a company for a municipally aided\nproject, the total estimated project cost of such project, the estimated\ncapital requirements of the company formed to undertake or operate such\nproject, the initial capital structure of such company and a\nmodification of any of the foregoing items, shall be subject to the\napproval of the supervising agency and the commissioner. Any\nmodification of any of the foregoing items made after such date of\napproval of the contract shall be subject solely to the approval of the\nsupervising agency. If after such date of approval of the contract, any\nchange is made in such contract which requires the approval of the local\nlegislative body, such change shall also be subject to the prior\napproval of the commissioner.\n 4. The commissioner shall have the power, prior to the date of\napproval by the local legislative body of a contract between a company\nand the municipality for a municipally aided project, to approve the\nproposed maximum average of the rentals to be charged for the dwellings\nin the project, or any modifications thereof. After such date of\napproval of the contract, the supervising agency shall have sole power\nto increase or reduce the rental rate for the dwellings in the project\nin the manner prescribed by section thirty-one of this article for the\nvariance of the rental rates. However, if a variance in such rental rate\nis made necessary because of a change in the project which requires the\napproval of the local legislative body, the prior approval by the\ncommissioner of such variance of the rental rate shall also be obtained.\n 5. The commissioner and the supervising agency shall each have full\npower to investigate into and order a company undertaking or operating a\nmunicipally aided project to furnish such reports and information as\neach may require concerning the planning, construction, acquisition,\nrehabilitation, management or operation of the project.\n 6. The commissioner shall have the power to audit the books of a\ncompany undertaking or operating a municipally aided project solely as\nto the legality of the expenditures and to disallow any expenditure\nwhich the commissioner shall find has been made in violation of law or\nany rule or regulation duly issued pursuant to this article. The\nsupervising agency shall have the full power to audit the books of any\nsuch company as to the legality, reasonableness or necessity of its\nexpenditures. Any expenditure disallowed by the commissioner or the\nsupervising agency on such audits shall not be included in any\nconstruction, management or operating costs in connection with any\napplication to increase or reduce the rents or carrying charges in a\nproject.\n 7. (a) At the direction of the supervising agency, with the consent\nand approval of the mayor the municipality shall establish and keep a\nseparate fund known as the limited-profit mortgage reserve fund for the\npurposes of insuring the municipality against any loss resulting from\nthe making of a mortgage loan, temporary loan or advance to a\nmunicipality-aided project and to protect the municipality in the event\nof delinquency in the repayment of such mortgage loan, temporary loan or\nadvance.\n (b) There shall be paid into such fund the portions of fees allocated\nto and directed to be deposited in such fund by the supervising agency\nwith the consent and approval of the mayor as provided for in\nsubdivision seven of this section. In addition, there shall be credited\nto and deposited in such fund any portion of the unexpended balance\nremaining in the housing fund as the supervising agency with the consent\nand approval of the mayor may determine to be in excess of the amounts\nneeded to meet expenditures required to be paid from the housing fund.\n (c) The monies in the limited-profit mortgage reserve fund shall be\ndeposited in one or more of the banks or trust companies designated, in\nthe manner provided by law, as depositories of the funds of such\nmunicipal corporation. The comptroller or the chief fiscal officer may\ninvest the monies in such fund in obligations specified in paragraph d\nof this subdivision. Any interest earned or capital gain realized on the\nmoney so deposited or invested shall accrue to and become part of such\nfund. The separate identity of such fund shall be maintained whether its\nassets consist of cash or investments or both.\n (d) Monies in such fund may be invested (1) in special time deposit\naccounts in, or certificates of deposit issued by, a bank or trust\ncompany located and authorized to do business in this state, provided,\nhowever, that such time deposit account or certificate of deposit shall\nbe payable within such time as the proceeds may be needed to meet\nexpenditures for which such monies were obtained and provided further\nthat such time deposit account or certificate of deposit be secured by a\npledge of obligations of the United States of America or obligations of\nthe state of New York or obligations of any municipal corporation,\nschool district or district corporation of the state of New York; or (2)\nin obligations of the United States of America, obligations of the state\nof New York or obligations of the municipal corporation which has\nestablished such mortgage insurance fund provided: (i) such obligations\nare not tax exempt; (ii) such obligations shall be payable or redeemable\nat the option of the owner within such times as the proceeds may be\nneeded to meet expenditures for purposes for which the monies so\ninvested were obtained, and (iii) such obligations, unless registered or\ninscribed in the name of the municipal corporation for which such\ninvestment is made, shall be purchased through, delivered to and held in\ncustody of a bank or trust company in this state and shall be sold or\npresented for redemption or payment only by such bank or trust company\nupon written instructions from the comptroller or chief fiscal officer.\n (e) An expenditure shall be made from such fund only by an\nauthorization of the supervising agency with the consent and approval of\nthe mayor and only for one or more of the following purposes:\n (i) Payment of expenses of establishing and administering the fund;\n (ii) Payment of a delinquent installment or installments of interest\nand principal due to the municipality under a mortgage loan, temporary\nloan or advance to a municipally-aided project;\n (iii) Payment of any loss sustained by the municipality as a result of\nthe making of a loan, temporary loan or advance to a municipally-aided\nproject, whether such loss consists of a deficiency upon a mortgage,\nforeclosure sale as authorized by sections thirty-four and ninety-four\nof this chapter or otherwise; except that in the event the municipality\nacquires title to the project, payment for any loss or deficiency shall\nbe deferred until such time when the municipality shall dispose of title\nto the project; any such loss or deficiency shall be diminished by the\nmunicipality to the extent of the amount derived by the municipality\nfrom such disposition plus any net operating income derived by the\nmunicipality during its period of ownership or less any net operating\nloss sustained by the municipality during such period and less any\namount of interest paid by the municipality to retire any bonded\nindebtedness incurred in connection with the loan made to such project.\n (iv) Payment of all costs entailed in procuring mortgage insurance in\nsuch amounts, and from such insurers as the supervising agency deems\ndesirable to insure the municipality against any loss resulting from the\nmaking of a mortgage loan to a municipality-aided project.\n The payment from such fund of any delinquent installment or\ninstallments due the municipality under a mortgage as provided in\nsubsection (ii) of this paragraph e shall not be deemed either a\nremission or waiver of the right to such installment or installments and\nsuch installment or installments shall continue to be due and payable to\nthe municipality and shall be deposited, together with interest accrued,\nin the mortgage insurance fund when paid.\n (f) The comptroller or chief fiscal officer shall keep a separate\naccount for the mortgage insurance fund. Such account shall show:\n (i) The date and amount of each sum paid into the fund;\n (ii) The interest earned by the fund;\n (iii) The capital gains or losses resulting from the sale of\ninvestments of the fund;\n (iv) The interest or capital gains which have accrued to the fund;\n (v) The amount and date of each withdrawal from the fund;\n (vi) The assets of the fund indicating the cash balance therein and a\nschedule of the amounts invested.\n The comptroller or chief fiscal officer shall render a detailed report\nof the operation and condition of such fund to the supervising agency\nannually each fiscal year and at such other times as the supervising\nagency or the mayor may require.\n 8. Whenever reference is made in this article to a municipal loan, a\nloan by a municipality, a loan from a municipality, a contract for a\nloan between a municipality and a company, or any similar term, with\nrespect to the territorial limits of the city of New York such term\nshall be construed to refer to a loan made or to be made either by such\nmunicipality or by the New York city housing development corporation,\nwhichever is applicable.\n 9. The city of New York shall have the power to invest jointly or\nparticipate in a loan with the New York city housing development\ncorporation or with one or more organizations or entities mentioned in\nsection fifteen in a bond or note and single participating mortgage, or\nin separate bonds or notes and separate mortgages of a company organized\npursuant to the provisions of this article upon such terms and\nconditions as are provided in said section fifteen of this article.\n 10. A municipality with a population of less than one million may, by\naction of its local legislative body concurred in by the commissioner,\nprovide for the supervision and regulation of any municipally-aided\nproject and the company carrying out such project by the commissioner in\nlieu of the supervising agency. With respect to any such project and\ncompany, the commissioner shall have, from and after the effective date\nof such action, all of the powers and duties of a supervising agency\npursuant to this article. The company shall pay to the commissioner\nfees, as prescribed by the commissioner, to cover the expenses of\nexamination, audit, and supervision of the company and the project.\nNotwithstanding any other provision of law, funds collected pursuant to\nsuch fees shall be deposited to the credit of the general fund.\n The provisions of subdivisions one and eight of this section shall\napply only to projects financed in whole or in part by a mortgage loan,\ntemporary loan or advance by a municipality. The provisions of\nsubdivisions two, three, four, five, six and seven hereof shall apply to\nall municipally-aided projects including projects financed in whole or\nin part by a mortgage loan from the federal government or any agency or\ninstrumentality thereof or by a mortgage or mortgage bonds insured by\nthe federal government or any agency or instrumentality thereof.\n