§ 802 — Participation loans to owners

New York § 802

• Jurisdiction: New York
• Law PVH: Private Housing Finance
• Art. 15: Participation Loans to Owners of Multiple Dwellings By Private Investors and Municipalities Utilizing Federal Grant Funds

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§ 802. Participation loans to owners. 1. (a) Notwithstanding the\nprovisions of any general, special or local law, one or more private\ninvestors and a municipality, acting through its agency, shall have the\npower to participate and invest in making loans to the owners of\nexisting multiple dwellings or to the owners of non-residential property\nor to the owners of vacant land subject to the limitations of\nsubdivisions two through seven of this section, in such amounts as shall\nbe required for (i) the rehabilitation of such existing multiple\ndwellings or for the conversion of such non-residential property or for\nthe construction of new multiple dwellings on such vacant land, provided\nthat such rehabilitation, conversion or construction may include climate\nresiliency improvements, and if any such owner acquires the existing\nmultiple dwelling or the non-residential property or the vacant land for\nthe purpose of such rehabilitation, conversion or construction or owns\nthe existing multiple dwelling or the non-residential property or the\nvacant land subject to an outstanding indebtedness, such loans may be\nmade exclusively for or may include such amounts as may be required for\nthe cost of such acquisition or for the refinancing of such outstanding\nindebtedness, (ii) providing site improvements located on the property\non which such existing multiple dwellings are located or on such\nnon-residential property or vacant land or in a public right-of-way,\nincidental or appurtenant to such rehabilitation, conversion or\nconstruction, including, but not limited to, water and sewer facilities,\nsidewalks, landscaping, parks and open space, social, recreational,\ncommunal and other non-residential facilities and the outfitting\nthereof, the curing of problems caused by abnormal site conditions,\nexcavation and construction of footings and foundations and other\nimprovements associated with the provision of infrastructure for housing\naccommodations, or (iii) providing for other costs of developing housing\naccommodations, and such private investors and a municipality may\njointly participate or invest in the making of temporary loans or\nadvances to such owners in anticipation of the permanent participation\nloans for such purposes.\n (b) Notwithstanding the provisions of any general, special or local\nlaw, and in addition to the power to make or contract to make\nparticipation loans granted by paragraph (a) of this subdivision, the\nmunicipality, acting through its agency, and the New York city housing\ndevelopment corporation shall each have the power to make or contract to\nmake loans or grants to any owner described in paragraph (a) of this\nsubdivision without the participation of a private investor, on the same\nterms as permitted under such paragraph for a participation loan.\n 2. A municipality may utilize federal grant funds or state grant funds\nor any municipal funds to finance its participation or investment in a\nloan pursuant to this article. This subdivision shall not apply to any\nparticipation in a loan by the New York city housing development\ncorporation pursuant to section eight hundred five of this article.\n 3. Each participation loan shall be secured by a bond or note and\nsingle participating mortgage or by separate bonds or notes and\nmortgages upon the existing multiple dwelling or the non-residential\nproperty and the land upon which it is situated or, in the case of the\nconstruction of a new multiple dwelling, upon the vacant land and the\nmultiple dwelling to be constructed, or, in the case of a multiple\ndwelling held in the condominium form of ownership, a note and mortgage\nupon the condominium units rehabilitated with such participation loan,\nprovided that a participation loan to an owner who is a lessee shall be\nsecured by a leasehold interest in such property, and provided, further,\nthat each such loan shall be made upon such terms and conditions as may\nbe approved by the agency, including but not limited to, provisions that\n(a) priority may be given to the payment of the principal of and\ninterest on that portion of the mortgage indebtedness attributable to\nparticipation in the loan by one or more private investors, (b) the\ninterest of the municipality created as a result of making such a\nmortgage loan may be subordinated to the interest that one or more of\nsuch private investors may have upon such participation, (c) the\ninterest of each upon such participation need not be of equal priority\nas to lien nor be equal as to interest rate, time or rate of\namortization of principal or time of payment of interest, or otherwise,\n(d) the bond or note and mortgage may provide that the municipality's\nportion of a participation loan made to an owner shall be reduced to\nzero commencing in the fifteenth year after the execution of the bond or\nnote and mortgage, provided that, as of the date of any such reduction,\nsuch multiple dwelling has been and continues to be owned and operated\nin a manner consistent with a regulatory agreement with the\nmunicipality. Notwithstanding such provision as contained in the bond or\nnote and mortgage, the municipality's portion of the loan shall be\nreduced to zero only if, prior to or simultaneously with delivery of\nsuch bond or note and mortgage, the agency made a written determination\nthat such reduction would be necessary to ensure the continued\naffordability or economic viability of the multiple dwelling. Such\nwritten determination shall document the basis upon which the loan was\ndetermined to be eligible for evaporation.\n 4. Each such bond or note and mortgage or bonds or notes and mortgages\nshall be repaid over or within a period of forty years, provided that\nsuch period may be extended as the agency may determine necessary to\nensure the continued affordability or economic viability of the multiple\ndwelling, in such manner as may be provided in such bond or note and\nmortgage or bonds or notes and mortgages. Such bond or note and mortgage\nor bonds or notes and mortgages and any contract in connection with such\npermanent and temporary loans may contain such other terms and\nprovisions not inconsistent with the provisions of this article as the\nlocal legislative body or the agency may deem necessary or desirable to\nsecure repayment of the loan, the interest thereon and other charges in\nconnection therewith and to carry out the purposes and provisions of\nthis article.\n 5. The bond or note or the bonds or notes issued by the owner and the\nmortgage or mortgages relating thereto may authorize such owner, with\nthe consent of the agency and the private investor, to prepay the\nprincipal of the loan subject to such terms and conditions as therein\nprovided. Such bond or note and mortgage or bonds or notes and mortgages\nmay contain such other clauses and provisions as the agency shall\nrequire.\n 6. Where a municipality joins with one or more private investors in\nmaking a participation loan secured by a single participating mortgage\nor by separate mortgages, the agency may make provision, either in the\nmortgage or mortgages or by separate agreement, for the performances of\nsuch services as are generally performed by a banking institution or\ninsurance company which itself owns and holds a mortgage or by a trustee\nunder a trust mortgage and for the imposition of reasonable fees for\nfinancing, regulation, supervision and audit of such multiple dwelling.\nThe agency is hereby authorized to act as trustee or to consent to the\nappointment of a banking institution or any subsidiary thereof to act in\nsuch capacity and to provide such services as are generally performed by\nany such bank itself or its subsidiary owning and holding such a\nmortgage.\n 7. Banking organizations and insurance companies may exercise such\npower only to the extent and on such conditions as may be authorized by\nthe state superintendent of financial services.\n 8. Notwithstanding the provisions of any other law, a savings bank may\ninvest to an amount not exceeding ninety per centum of the value of any\nreal property when jointly participating or investing in a loan pursuant\nto the provisions of this article or not exceeding ninety-five per\ncentum of the value of any real property when jointly participating or\ninvesting in a loan pursuant to the provisions of article fourteen of\nthis chapter.\n