2023 New York Laws › PVH - Private Housing Finance › Article 18 - Low Income Housing Trust Fund Program › 1102 - Cooperative or Condominium, Homesteading and Rental Contracts.

§ 1102. Cooperative or condominium, homesteading and rental contracts.
1.  Within  the  limit  of  funds  available  in  the housing trust fund
account, the corporation is hereby authorized to  enter  into  contracts
with  eligible  applicants  for  the  furnishing  by  such applicants of
housing for persons of low income. Each such contract shall provide that
eligible applicants rehabilitate or construct one or  more  projects  or
convert  one  or  more  nonresidential  properties.  Such  contracts may
provide for payments,  grants  or  loans  by  the  corporation  for  the
activities  to  be  carried  out  by  the  eligible  applicant under the
contract. Such contracts shall provide that a private developer make  an
equity  investment  of  the  greater  of (i) two and one-half percent of
project costs or (ii) five percent of project costs  less  grants  which
are  to  be  applied  to  such costs. The foregoing shall not preclude a
private developer from making a greater equity investment. Any payments,
grants or loans made by the  corporation  outstanding  at  the  time  of
resale  shall  be  subject  to repayment in whole or in part upon resale
after termination of the regulatory period  and  as  otherwise  provided
therein. Such repayment provisions may survive the end of the regulatory
period. Such contracts may provide that eligible applicants shall either
(a)  perform  activities  specified under the contract themselves or (b)
act  as  administrators  of  a  program   under   which   projects   are
rehabilitated  or constructed or nonresidential properties are converted
by other eligible applicants or (c) perform both such functions. In  the
case  of  a  municipality  acting as an administrator, funds provided to
such municipality hereunder shall not be deemed to be  municipal  funds.
The  corporation  shall  refer any request for payments, grants or loans
from persons of low income to eligible applicants in the area  in  which
such  persons reside. Loans may be in the form of participation in loans
including but not  limited  to  participation  in  loans  originated  or
financed by lending institutions as defined in section forty-two of this
chapter,  the  state  of  New  York  mortgage  agency, the New York city
housing development corporation, the  New  York  state  housing  finance
agency  or private or public employee pension funds. Notwithstanding any
other provision of law, payments, grants and loans may be  deposited  by
the  corporation  directly  with  a lending institution at or before the
time  of  initial  loan  closing  pursuant  to   an   escrow   agreement
satisfactory  to the corporation. Payments, grants and loans shall be on
such terms and conditions as the corporation, or the eligible  applicant
with  the  approval  of  the  corporation,  as  the  case  may be, shall
determine. Payments, grants and loans shall  be  used  to  pay  for  the
actual  and  necessary cost of acquisition, construction, rehabilitation
or conversion, provided  that  not  more  than  fifty  percent  of  such
payments, grants and loans received for the rehabilitation, construction
or  conversion  of  a  project may be used for the cost of the project's
acquisition and not more than ten percent of such payments,  grants  and
loans  may be used for the rehabilitation, construction or conversion of
community service  facilities  and,  provided  further,  that  payments,
grants or loans shall not be used for (i) the administrative costs of an
eligible  applicant except as otherwise authorized by law, (ii) the cost
of  the  acquisition,  construction,  conversion  or  rehabilitation  of
residential  units  which, subsequent to such acquisition, construction,
conversion or rehabilitation, are to be occupied by persons  other  than
persons   of  low  income,  and  (iii)  the  cost  of  the  acquisition,
construction, conversion or rehabilitation of units which, subsequent to
such  acquisition,  construction,  conversion  or  rehabilitation,   are
occupied  or  to be occupied for other than residential purposes, except
for community service facilities as described above. No  such  payments,
grants or loans shall exceed a total of one hundred twenty-five thousand

dollars  per  dwelling  unit.  Among  the criteria the corporation shall
consider in determining whether to provide additional funds are: average
cost of construction in the area, location of the project and the impact
of  the  additional  funding on the affordability of the project for the
occupants of such project. The length of any loan  provided  under  this
article  shall not exceed forty years. No more than fifty percent of the
total amount originally appropriated pursuant to  this  article  in  any
fiscal  year  shall  be  allocated to projects located within any single
municipality. Of the amount originally appropriated to  the  corporation
in  any  fiscal  year,  no  more than thirty-three and one-third percent
shall be allocated to private developers for projects within a city with
a  population  of  one  million  or  more.  Of  the  amount   originally
appropriated  to  the  corporation  in  any  fiscal  year,  no more than
thirty-three  and  one-third  percent  shall  be  allocated  to  private
developers  for projects in the area outside cities with a population of
one million or more.
2. The corporation and eligible applicants which act as administrators
of a program under this article shall deposit any  recaptured  funds  or
funds  from  the  repayment of loans and interest received on loans into
the housing trust fund account.
3. The corporation shall not enter into a contract under this  article
unless  the  eligible  applicant  has  submitted an application and such
application contains  a  plan,  acceptable  to  the  corporation,  which
provides for each project:
(a)  That  violations on the project which are classified as hazardous
or immediately hazardous shall be repaired in accordance with state  and
local  laws  and regulations of state and local agencies and the project
shall  be  brought  into  compliance  with  all  applicable   laws   and
regulations.
(b)  For  the  establishment  of  occupant  selection procedures which
provide that any lawful  occupants  who  live  in  a  project  prior  to
rehabilitation   shall   not   be   displaced   as   a  result  of  such
rehabilitation,  other  than  temporarily,  in   which   case   suitable
relocation  arrangements  shall  be  provided,  and  that any additional
occupants who move into a project are persons of low income.  Preference
in selection of such additional occupants; (i) shall be given to persons
or   families  with  the  lowest  incomes  possible,  given  the  income
requirements of the project and; (ii) shall also be given to persons  or
families  whose  current housing fails to meet basic standards of health
and safety and who have little prospect of improving  the  condition  of
their housing except by residing in a project receiving payments, grants
or loans under this article.
(c)  In  the  case  of a homesteading project that (i) the project may
only be transferred or sold to  an  eligible  applicant;  and  (ii)  the
resale  price of the project shall not exceed an amount equal to the sum
of (A) the original equity  paid  by  the  owner  for  the  project  and
rehabilitation  or  construction  thereof,  exclusive  of  any payments,
grants or loans received pursuant to this article for such purposes,  or
from  such other sources as determined by the corporation, with interest
thereon at the rate of six percent per annum, (B) the  cost  of  capital
improvements  to  the project paid by such owner after the completion of
rehabilitation or construction, exclusive of  any  payments,  grants  or
loans  received pursuant to this article for such purposes, or from such
other sources as determined by the corporation, with interest thereon at
the rate of six percent per annum, (C) the actual amortization  paid  by
such  owner in the reduction of total outstanding principal indebtedness
on all existing and prior mortgages on, or loans for, such project,  but
only  to  the  extent  that the proceeds of such mortgages or loans were

used by the owner for the project  and  rehabilitation  or  construction
thereof  or  for the cost of capital improvements thereto, with interest
thereon at the rate of six percent per annum, (D) the actual outstanding
principal  indebtedness  on all existing mortgages on, or loans or other
obligations for, such project which the owner is  required  to  satisfy,
but only to the extent that the proceeds of such mortgages or loans were
used  by  the  owner  for the project and rehabilitation or construction
thereof or for the cost of capital improvements thereto,  with  interest
thereon  at  the  rate  of  six  percent per annum, provided that if the
indebtedness is not paid in full upon the  sale  of  the  project,  such
owner  shall  not  be credited with the amount of such indebtedness, and
(E) the reasonable costs and expenses incurred in  connection  with  the
sale of such project.
(d)  In  the  case  of  a  cooperative  project  that  (i)  the shares
applicable to a cooperative unit shall be transferred or sold only to an
eligible applicant; and (ii) the resale price of shares applicable to  a
cooperative  unit shall not exceed an amount equal to the sum of (A) the
original equity paid by the tenant shareholder for such shares  and  for
the  rehabilitation  or  construction  of  such  unit,  exclusive of any
payments, grants or loans received pursuant to  this  article  for  such
purposes  or  from  such other sources as determined by the corporation,
with interest thereon at the rate of six percent per annum, (B) the cost
of capital improvements to such unit paid  by  such  tenant  shareholder
after the completion of rehabilitation or construction, exclusive of any
payments,  grants  or  loans  received pursuant to this article for such
purposes or from such other sources as determined  by  the  corporation,
with  interest  thereon  at  the  rate of six percent per annum, (C) the
pro-rata portion of any capital assessments or capital contributions for
building  wide  improvements  paid  by  such  tenant  shareholder,  with
interest  thereon at the rate of six percent per annum, (D) the pro-rata
portion of actual amortization paid by such tenant  shareholder  on  all
existing  and  prior mortgages on such project in the reduction of total
outstanding principal indebtedness, with interest thereon at the rate of
six percent per annum, (E) the actual amortization paid by  such  tenant
shareholder in the reduction of total outstanding principal indebtedness
on  all  existing  and prior loans for such unit, but only to the extent
that the proceeds of such loans were used by the tenant shareholder  for
the  purchase  of  such  shares or for the cost of the rehabilitation or
construction of, or capital improvements to, such  unit,  with  interest
thereon at the rate of six percent per annum, (F) the actual outstanding
principal  indebtedness  on  all existing loans or other obligations for
such unit which the tenant shareholder is required to satisfy, but  only
to  the  extent that the proceeds of such loans were used by such tenant
shareholder for the purchase of such shares  or  for  the  cost  of  the
rehabilitation  or  construction  of,  or  capital improvements to, such
unit, provided that if such indebtedness is not paid in  full  upon  the
sale  of  such  tenant's  shares  such  tenant  shareholder shall not be
credited with the amount of such indebtedness, and  (G)  the  reasonable
costs and expenses incurred in connection with the sale of such shares.
(e)  In  the case of a condominium project that (i) a condominium unit
shall be transferred or sold only to an eligible applicant; and (ii) the
resale price of a condominium unit shall not exceed an amount  equal  to
the  sum  of (A) the original equity paid by the owner for such unit and
the rehabilitation or construction thereof, exclusive of  any  payments,
grants  or  loans received pursuant to this article for such purposes or
from such other sources as determined by the corporation, with  interest
thereon  at  the  rate of six percent per annum, (B) the cost of capital
improvements to such unit paid by such owner  after  the  completion  of

rehabilitation  or  construction,  exclusive  of any payments, grants or
loans received pursuant to this article for such purposes or  from  such
other sources as determined by the corporation, with interest thereon at
the  rate  of  six  percent  per  annum, (C) the pro-rata portion of any
capital  assessments  or  capital  contributions   for   building   wide
improvements paid by such owner to the project, with interest thereon at
the  rate  of six percent per annum, (D) the actual amortization paid by
such owner on all existing and prior mortgages on, or  loans  for,  such
unit  in  the reduction of total outstanding principal indebtedness, but
only to the extent that the proceeds of such  mortgages  or  loans  were
used  by  such owner for the unit and the rehabilitation or construction
thereof or for the cost of capital improvements  thereto  with  interest
thereon at the rate of six percent per annum, (E) the actual outstanding
principal  indebtedness on all existing mortgages on, and loans or other
obligations for, such unit which the owner is required to  satisfy,  but
only  to  the  extent  that the proceeds of such mortgages or loans were
used by such owner for the unit and the rehabilitation  or  construction
thereof  or  for the cost of capital improvements thereto, provided that
if the indebtedness is not paid in full upon the sale of such unit, such
owner shall not be credited with the amount of  such  indebtedness,  and
(F)  the  reasonable  costs and expenses incurred in connection with the
sale of such unit.
(f) In the case of a rental project that (i) the  rental  project  may
only  be  transferred  or  sold  to  an eligible applicant; and (ii) the
resale price of the rental project shall not exceed an amount  equal  to
the sum of (A) the original equity paid by the owner for the project and
rehabilitation  or  construction  thereof,  exclusive  of  any payments,
grants or loans received pursuant to this article for such  purposes  or
from  such other sources as determined by the corporation, with interest
thereon at the rate of six percent per annum, (B) the  cost  of  capital
improvements  to  the  project paid by the owner after the completion of
rehabilitation or construction, exclusive of  any  payments,  grants  or
loans  received  pursuant to this article for such purposes or from such
other sources as determined by the corporation, with interest thereon at
the rate of six percent per annum, (C) the actual amortization  paid  by
such  owner  on  all existing and prior mortgages on, or loans for, such
project in the reduction of total  outstanding  principal  indebtedness,
but only to the extent that the proceeds of such mortgages or loans were
used by such owner for the project and rehabilitation thereof or for the
cost  of capital improvements thereto, with interest thereon at the rate
of  six  percent  per  annum,  (D)  the  actual  outstanding   principal
indebtedness on all existing mortgages on, or loans or other obligations
for,  such  project  which the owner is required to satisfy, but only to
the extent that the proceeds of such mortgages or loans were used by the
owner for the project and rehabilitation thereof  or  for  the  cost  of
capital  improvements  thereto, provided that if the indebtedness is not
paid in full upon the sale of the  project,  such  owner  shall  not  be
credited  with  the  amount of such indebtedness, and (E) the reasonable
costs and expenses incurred in connection with the sale of such project.
(g) In the case of  a  rental  project,  that  the  project  shall  be
operated initially as a rental property, and when located in the city of
New  York  shall  be  subject  to the rent stabilization law of nineteen
hundred sixty-nine, and when located in a municipality which has elected
to be covered by the provisions of the emergency tenant  protection  act
of  nineteen seventy-four, be subject to the provisions of such act. Any
subsequent conversion to cooperative or condominium ownership during the
period in which such property remains subject to the provisions of  this
article shall only be allowed with the consent of the corporation and if

done  pursuant  to section three hundred fifty-two-eeee or three hundred
fifty-two-eee of the general business law shall only be allowed pursuant
to  a  non-eviction  plan.  The  conversion  of  a  rental  project   to
cooperative  or  condominium  ownership  shall  make  the cooperative or
condominium subject to the provisions of this article for cooperative or
condominium projects for the remaining term which the rental project was
to be subject to the provisions of this article.
(h) To be located in  an  area  which  is  blighted,  deteriorated  or
deteriorating,  or has a blighting influence on the surrounding area, or
is in danger of becoming a slum  or  a  blighted  area  because  of  the
existence  of  substandard,  insanitary,  deteriorating  or deteriorated
conditions, an aged housing stock, or vacant  non-residential  property,
or other factors indicating an inability or unwillingness of the private
sector  unaided  to cause the rehabilitation, construction or conversion
which is contracted for under this article.
3-a. The corporation shall  provide  the  applicant  with  a  list  of
conditions  that  must be met prior to entering into a contract pursuant
to  this  article.  Within  fifteen  working  days  of  receipt  by  the
corporation   of   all  documents  in  satisfaction  of  the  list,  the
corporation  shall  notify  the  applicant   of   the   sufficiency   or
insufficiency  of  the documents. After satisfaction by the applicant of
all conditions required by the corporation  prior  to  entering  into  a
contract the corporation shall enter into the contract within forty-five
working days of satisfaction of such conditions.
4.  Notwithstanding  the  provisions of, or any regulation promulgated
pursuant to, the emergency housing rent control law, the local emergency
housing rent control act, or local law  enacted  pursuant  thereto,  the
rent  stabilization law of nineteen hundred sixty-nine, or the emergency
tenant protection act of nineteen seventy-four, the  eligible  applicant
with  the  approval  of  the corporation shall have the power to set the
initial rent level of any rental housing accommodation which is  located
in  a rental or homesteading project receiving payments, grants or loans
under this article.
5. Any cooperative or condominium or  rental  project  which  receives
payments,  grants  or loans pursuant to this article shall be subject to
its provisions for a period of  twenty  years  following  completion  of
rehabilitation work, construction or conversion or for the period during
which  any  loan  or  indebtedness  received  under this article remains
outstanding, whichever is greater  provided  however  that  all  housing
accommodations  in  rental  projects shall continue to be subject to the
rent stabilization law of nineteen hundred sixty-nine or  the  emergency
tenant protection act of nineteen seventy-four, as provided in paragraph
(g)  of  subdivision  three  of this section as the case may be, for the
period specified in this subdivision and thereafter the applicability of
such laws shall terminate  as  to  each  accommodation  upon  the  first
vacancy which occurs in each accommodation.
6.  Any  homesteading project which receives payments, grants or loans
under this article shall be subject to its provisions for  a  period  of
fifteen  years following completion of rehabilitation work, construction
or conversion, or for the period during which any loan  or  indebtedness
received under this article remains outstanding, whichever is greater.
6-a.  Notwithstanding  any  provisions of subdivisions five and six of
this section to the contrary, in the  case  of  projects  subject  to  a
mortgage made by any lender:
(a)  such  lender,  if not the corporation, shall give the corporation
notice when an owner has  defaulted  on  any  payment  of  principal  or
interest on such mortgage loan for a project for a consecutive period of
sixty days.
(b)  following  receipt of such notice, or at such earlier time as the
corporation deems appropriate, the corporation shall seek to  cure  such
default  and make the project economically viable by assisting the owner
in entering into a mortgage  modification  agreement  with  the  lender,
finding  a  new  eligible  applicant  to  own the project and assume the
obligations under the mortgage or taking such other actions,  consistent
with   the   provisions  of  this  article,  as  the  corporation  deems
appropriate.
(c) notwithstanding the provisions of paragraphs (a) and (b)  of  this
subdivision,  with respect to any lender other than the corporation, the
corporation may provide in agreements respecting any project that  where
a  lender  shall  have  foreclosed  or  obtained  title  to a project in
accordance with law and the provisions of its mortgage, the  project  or
particular residential units therein shall not be subject to one or more
provisions  of  this article, other than the rent stabilization coverage
provisions of paragraph (g) of subdivision three of  this  section.  Any
agreement  pursuant  to this paragraph shall only be made upon a finding
by the corporation that such agreement is necessary in order to enable a
project owner to obtain a mortgage loan from a  lender  other  than  the
corporation.
7. The corporation shall provide for the review, at periodic intervals
at  least  annually,  of  the  performance  of eligible applicants under
contract pursuant to  this  article.  Such  review  shall,  among  other
things,  be  for  the purposes of ascertaining conformity to contractual
provisions,  the  financial  integrity  and   efficiency   of   eligible
applicants  and  the  evaluation  of the project. Contracts entered into
pursuant to this article may be terminated, funds may  be  withheld  and
unspent  funds  may  be  recaptured by the corporation upon a finding of
substantial nonperformance or breach by the eligible  applicant  of  its
obligations under its contract.
8.  Within  each  of  the three categories of projects (cooperative or
condominium, rental, or homesteading), preference  in  the  awarding  of
contracts shall be given to economically feasible projects which contain
a  substantial  number  of  persons  of low income whose income does not
exceed  fifty  percent  of  the  median  income  for  the   metropolitan
statistical  area  in which the project is located, or if the project is
located outside such an area, to projects which  contain  a  substantial
number  of  persons  of  low  income  whose  incomes do not exceed fifty
percent of the median income for the county  in  which  the  project  is
located,  additional  preference shall be given to economically feasible
projects located on a brownfield site that has received a certificate of
completion.