§ 576 — Regulatory agreements

§ 576. Regulatory agreements. 1. Every housing development fund\ncompany as a condition precedent to receiving an advance pursuant to\nthis article, shall enter into an agreement with the commissioner or\nwith the supervising agency, as the case may be, to be regulated as\nfollows:\n a. Maximum rentals shall be fixed by the commissioner or the\nsupervising agency, as the case may be, based upon the final gross\nproject cost, at an amount sufficient to pay the necessary costs of the\nproject.\n b. Dwellings in any such project shall be available for persons or\nfamilies whose probable aggregate annual income does not exceed six\ntimes the rental (including the value or cost to them of heat, light,\nwater and cooking fuel) of the dwellings to be furnished such persons or\nfamilies, except that in the case of persons or families with three or\nmore dependents, such ratio shall not exceed seven to one. For purposes\nof this paragraph, tenants in a housing project of a housing development\nfund company organized under the provisions of the business corporations\nlaw and this article shall have added to their total annual carrying\ncharges an amount equal to six per centum of the original investment of\nsuch person or family in the equity obligations of such housing company.\n c. Profits shall be used for capital improvements or to reduce\nrentals.\n d. Ordinary dividends may not be declared. Capital dividends may be\ndeclared only with the consent of the commissioner or the supervising\nagency, as the case may be.\n e. The property or franchises of the corporation may not be disposed\nof without the consent of the commissioner or the supervising agency, as\nthe case may be, nor may the corporation be dissolved unless payment in\nfull is made of remaining balances of principal and interest due and\nunpaid on any mortgage or mortgages, of any advances made from the fund\npursuant to this article and of any and all expenses incurred in\neffecting such dissolution.\n f. The commissioner or the supervising agency, as the case may be,\nshall have power, in his or its discretion, if he or it determines that\nany advance pursuant to this article is in jeopardy of not being repaid,\nor that the proposed housing project for which such advance was made is\nin jeopardy of not being constructed, to appoint to the board of\ndirectors of the corporation a number of new directors, which number\nshall be sufficient to constitute a majority of such board. Directors so\nappointed need not be stockholders or members or meet other\nqualifications which may be prescribed by the certificate of\nincorporation or by-laws. In the absence of fraud or bad faith\ndirectors so appointed shall not be personally liable for the debts,\nobligations or liabilities of the corporation.\n 2. A regulatory agreement pursuant to this section shall be terminated\nupon repayment in full of any and all advances made pursuant to this\narticle provided that such termination shall not take place until (a)\nassumption of the regulation of the project by the commissioner, in the\ncase of a state-aided mortgage, or by the supervising agency, in the\ncase of a municipally-aided mortgage or by the appropriate federal\nauthorities in the case of a federally-aided mortgage or (b) if the\nproject is not to be financed with a state-aided, municipally-aided or\nfederally-aided mortgage, the expiration of any exemption of the real\nproperty of the project from local and municipal taxes.\n 3. The commissioner or supervising agency may require a housing\ndevelopment fund company receiving advances under this article to\nexecute a financing statement for real property improvement. The\nfinancing statement shall be in such form as the commissioner or\nsupervising agency shall prescribe and shall include the name and\naddress of the housing development fund company and of the agency making\nthe advances, the location of the project, with a description sufficient\nto identify the property, including street address, if any, and a\nstatement that funds have or will be advanced to the company pursuant to\nthis article and the maximum amount of such advances, together with such\nother information as the form shall specify. The financing statement\nshall be filed in the office in which a mechanic's lien affecting the\nproperty would be filed, which office shall accept it for filing without\nfee and docket it in the manner of such lien. From the date of such\nfiling the state or municipality, as the case may be, shall have a lien\nfor the total of advances under this article made and not repaid. The\nprovisions of articles two and three of the lien law shall govern such\nlien, except that it shall be valid for a period of three years from the\ndate of filing, unless extended as provided in section seventeen of the\nlien law. Upon repayment of the advances, the commissioner or\nsupervising agency shall deliver to the housing development fund company\na copy of the financing statement with an endorsement thereon that the\nlien is satisfied. Upon filing of such copy, without payment of fee, in\nthe office in which the financing statement was filed, the lien shall be\ndischarged.\n