§ 452 — Loans to owners

§ 452. Loans to owners. 1. Notwithstanding the provisions of any\ngeneral, special or local law, a municipality is hereby authorized:\n (a) to make or contract to make loans to the owners of existing\nmultiple dwellings within its territorial limits, subject to the\nlimitations in subdivision two of this section, for the elimination of\nany substandard or insanitary condition or conditions in violation of\nthe multiple dwelling law or local housing code, for the incorporation\nof climate resiliency improvements or for such replacement and\nrehabilitation of the heating, plumbing, electrical and related systems\nor other improvements as shall be reasonably necessary to prolong the\nuseful life of such dwellings, and may make temporary loans to such\nowners in anticipation of the permanent municipal loans for such\npurposes; and\n (b) to make or contract to make grants to any owner described in\nparagraph (a) of this subdivision, on the same terms as permitted under\nsuch paragraph for a loan.\n 1-a. As used in this article, the term "loan" shall include any grant\nmade by a municipality pursuant to this article, provided, however, that\nprovisions of this article concerning the repayment or forgiveness of,\nor security for, a loan shall not apply to any grant made pursuant to\nthis article.\n 2. Each loan shall be evidenced by a note executed by the owner of the\nexisting multiple dwelling. The supervising agency in its discretion may\nrequire one or more of the shareholders of a corporate owner to co-sign\nsuch note or to otherwise guarantee or pledge security for the repayment\nof the loan. Each such note shall be repaid within a period of forty\nyears, provided that such period may be extended as the supervising\nagency may determine necessary to ensure the continued affordability or\neconomic viability of the existing multiple dwelling. The repayment\nshall be made in such manner as may be provided in such note and\ncontract, if any, in connection with such loan and may authorize such\nowner, with the consent of the supervising agency, to prepay the\nprincipal of the loan subject to such terms and conditions as therein\nprovided. Such note and contract may contain such other terms and\nprovisions not inconsistent with the provisions of this article as the\nlocal legislative body or supervising agency may deem necessary or\ndesirable to secure repayment of the loan, the interest thereon and\nother charges in connection therewith and to carry out the purposes and\nprovisions of this article, including but not limited to provisions\nensuring availability of rents for such repayment and provisions\npermitting the lien created by such note and mortgage, and, if\napplicable, a regulatory agreement executed by such owner and\nsupervising agency, be recorded in an equal and subordinate position, or\nsubsequently made equal or subordinate, to a lien recorded by any\nprivate lender against such multiple dwelling.\n 3. The supervising agency in its discretion may require that the owner\nexecute a financing statement for real property improvement to be in\nsuch form as the agency shall specify and to contain the following\ninformation: the name and mailing address of the owner, the address of\nthe real property, a statement that a loan has been made by the\nmunicipality under this article, the amount and duration thereof and the\napplicable interest rate. Said financing statement shall be filed\nwithout charge in the office for recording mortgages of real property\nand from the date of such filing the municipality shall have a lien\nagainst said real property for the amount advanced or so much thereof as\nremains unpaid and interest thereon. If a financing statement is filed\nas herein provided, the rights and remedies of the municipality and the\npriority of its lien shall be the same as those of a holder of a lien\nfor the materials furnished or labor performed in the improvement of\nreal property pursuant to articles two and three of the lien law, except\nthat the lien shall be valid for one year after the maturity date of the\nfinal installment payable under said note and thereafter as provided in\nsection seventeen of the lien law. Upon payment of all sums advanced by\nthe municipality and interest thereon and upon demand of the then record\nowner of the real property, the agency shall deliver to him a copy of\nthe financing statement with an endorsement thereon that the lien is\nsatisfied; upon filing of such copy in the office where the financing\nstatement was filed and upon payment of the proper fee therefor, the\nlien of such financing statement shall be discharged.\n 4. The supervising agency may require the owner to execute a mortgage\nas security for a loan in lieu of a financing statement as provided in\nthe foregoing subsection three. Such mortgage shall contain such terms\nand provisions not inconsistent with the provisions of this article as\nthe supervising agency shall deem necessary or desirable to secure\nrepayment of the loan under this article.\n 5. The supervising agency may require the payment of charges by the\nowner of such existing multiple dwelling in consideration for the\nfinancing, regulation, supervision and audit of such loan. Such charges\nshall be paid into the treasury of the municipality requiring the\ncharges and shall be paid and deposited in the general fund of any such\nmunicipality.\n 6. In the case of a loan made pursuant to this article, the\nsupervising agency may pay any liens and charges the priority of which\nis superior to its mortgage and may pay such other expenses as may be\nappropriate to protect its loan or to protect the lien of the mortgage\nrelating thereto, provided that such expenditures shall not exceed the\ntotal amount of such loan.\n * 7. Notwithstanding the provisions of, or any regulation promulgated\npursuant to, the emergency housing rent control law, the local emergency\nhousing rent control act, the emergency tenant protection act of\nnineteen seventy-four, or any local law enacted pursuant thereto, upon\ncompletion of the rehabilitation of a multiple dwelling which is aided\nby a loan made pursuant to this article, the supervising agency, may as\nan alternative to permissible rental adjustments under such laws and\nregulations, adjust the rent for each rental dwelling unit within the\nmultiple dwelling. The initial rental adjustment, if set by the\nsupervising agency, shall be established based solely on the debt\nservice attributable to the loan, provided, that the supervising agency\nmay establish rental adjustments less than such debt service, provided\nfurther that the supervising agency may establish greater rental\nadjustments for vacant dwelling units than for occupied dwelling units.\nThe supervising agency shall cause all tenants in occupancy of each\ndwelling unit affected by the provisions of this subdivision to be\nnotified of and have an opportunity to comment on contemplated\nrehabilitation. Such notification shall advise such tenants of the\napproximate expected rent increase. Such notification and opportunity to\ncomment shall be provided before the rehabilitation and again after the\nconstruction is completed and before the establishment of the rental\nadjustment.\n * NB Expires July 1, 2027\n * 8. Notwithstanding the provisions of, or any regulation promulgated\npursuant to, the emergency housing rent control law, the local emergency\nhousing rent control act, the emergency tenant protection act of\nnineteen seventy-four, or any local law enacted pursuant thereto, upon\ncompletion of the rehabilitation of a class B multiple dwelling, class A\nmultiple dwelling used for single room occupancy purposes, lodging house\nor a substantially vacant building intended to be used after\nrehabilitation for single room occupancy purposes and which is aided by\na loan pursuant to this article made by the municipality on or after\nSeptember first, nineteen hundred eighty-five, the agency shall\nestablish the initial rent for each rental dwelling unit within the\nmultiple dwelling. All dwelling units within the multiple dwelling\nsubsequent to establishment of initial rents by the agency shall be\nsubject to the rent stabilization law of nineteen hundred sixty-nine.\nThe occupant in possession of such a dwelling unit when it is made\nsubject to the rent stabilization law of nineteen hundred sixty-nine\nshall be offered a choice of a one or two year lease at the initial\nrents established by the agency notwithstanding any contrary provisions\nof, or regulations adopted pursuant to, the rent stabilization law of\nnineteen hundred sixty-nine and the emergency tenant protection act of\nnineteen seventy-four. The agency shall cause all tenants in occupancy\nof each dwelling unit affected by the provisions of this subdivision to\nbe notified of and have an opportunity to comment on the contemplated\nrehabilitation. Such notification shall advise such tenants of the\napproximate expected rent increase and the subsequent availability of a\none or two year lease. Such notification and opportunity to comment\nshall be provided before the rehabilitation and again after the\nconstruction is completed and before the establishment of the initial\nrents.\n * NB Expires July 1, 2027\n 9. The note or note and contract issued by the owner of any such\nmultiple dwelling to secure such loan may provide that the loan shall be\nreduced to zero commencing on the fifteenth year after the execution of\nthe note or note and contract, provided that, as of the date of such\nreduction, the multiple dwelling has been and continues to be owned and\noperated in a manner consistent with a regulatory agreement with the\nmunicipality. Notwithstanding such provision as contained in the note or\nnote and contract, the loan shall be reduced to zero only if, prior to\nor simultaneously with delivery of such note or note and contract, the\nagency made a written determination that such reduction would be\nnecessary to ensure the continued affordability or economic viability of\nthe multiple dwelling. Such written determination shall document the\nbasis upon which the loan was determined to be eligible for evaporation.\n