2023 New York Laws › PVH - Private Housing Finance › Article 22 - Affordable Housing Development Loans › 1152 - Affordable Housing Development Loans.

§  1152.  Affordable housing development loans. 1. (a) Notwithstanding
the provisions of any general, special or local law, one or more private
lenders and the city of New York, acting through the agency, shall  have
the  power to participate and invest in making loans to sponsors for the
construction of eligible projects. Such loans may  be  made  exclusively
for  or may include such amounts as may be required for site acquisition
or the refinancing of eligible projects. Each  such  participation  loan
shall  be secured by a bond or note and single participating mortgage or
by separate bonds or notes and mortgages upon the eligible project. Such
bond or note and mortgage or bonds or notes  or  mortgages  may  contain
such  other terms and provisions not inconsistent with the provisions of
this article as the agency may deem necessary or  desirable,  including,
but  not  limited to, terms providing that the lien created by such note
and mortgage, and, if applicable, any regulatory agreement  executed  by
the  sponsor  and  such  agency or restrictive covenant approved by such
agency, may  be  recorded  in  an  equal  or  subordinate  position,  or
subsequently  made  equal  or  subordinate,  to  the lien created by any
private lender against such eligible project.
(b) Notwithstanding the provisions of any general,  special  or  local
law,  and  in  addition  to  the  power  to  make  or  contract  to make
participation loans granted by paragraph (a) of  this  subdivision,  the
city  of  New  York,  acting through the agency, shall have the power to
make or contract to make loans or  grants  to  any  owner  described  in
paragraph (a) of this subdivision without the participation of a private
lender,  on  the  same  terms  as  permitted  under such paragraph for a
participation loan.
2. The agency may enter into an agreement with  a  private  lender  to
deposit  its  share  of a loan with the private lender to be advanced by
the private lender. The portion of the loan funded by the agency may  be
equal to or subordinate in lien to the portion of the loan funded by the
private lender and may contain such terms with respect to interest rate,
if  any,  rate of amortization of principal, if any, and time of payment
of interest and principal as determined by the agency.  The  agency  may
make  provision  either  in  the  mortgage  or  mortgages or by separate
agreement for the performance by the private lender of such services  as
are  generally  performed  by a banking institution which itself holds a
mortgage, including, without  limitation,  construction  loan  advances,
construction   supervision,   initiation   of  foreclosure  proceedings,
procurement of insurance, and all other matters in connection  with  the
financing,  supervision,  regulation  and  audit of any such loan to any
such eligible project.
3. If the eligible project is to consist of one to four unit  dwelling
accommodations  or  cooperative or condominium units, the agency's share
of the loan may be  converted  after  completion  of  construction  into
mortgages  on  such  dwelling  accommodations  or  condominium  units or
financing statements filed with  respect  to  such  cooperative  shares,
provided  such units or such cooperative shares are purchased by persons
of low income. Such mortgages and any blanket mortgage that  the  agency
retains  on  any  portion  of,  or  on  all of, the eligible project may
provide that such mortgages and such blanket mortgage will automatically
be reduced to zero  over  a  period  of  continuous  compliance  by  the
mortgagor  with  a  regulatory agreement or restrictive covenant with or
approved by the agency and  upon  the  satisfaction  of  any  additional
conditions   specified   therein.   Notwithstanding  such  provision  as
contained in such mortgage, the loan shall be reduced to zero  only  if,
prior  to  or  simultaneously with delivery of such mortgage, the agency
made a written determination that such reduction would be  necessary  to
ensure the continued affordability or economic viability of the eligible

project.  Such written determination shall document the basis upon which
the loan was determined to be eligible for evaporation. Such  period  of
continuous  compliance  with  such  regulatory  agreement or restrictive
covenant shall not be less than fifteen years.
4.  If the eligible project is to consist of one to four unit dwelling
accommodations or cooperative or condominium  units,  the  agency  shall
require  that the dwelling units be offered only to bona fide purchasers
who intend to occupy a unit  as  their  principal  place  of  residence;
provided,  however,  that  in  the  case  of  two  to four unit dwelling
accommodations the bona fide purchaser may occupy only a single unit  as
a  principal  place  of residence. If the purchaser ceases to occupy the
unit as a principal place of  residence,  the  agency  may  provide  for
recapture of all or a portion of the agency's share of the loan.
5.  If the eligible project is a rental project, the agency's share of
the loan may be  converted  after  completion  of  construction  into  a
permanent loan with a term of forty years, provided that such period may
be  extended  as  the  agency  may  determine is necessary to ensure the
continued affordability or economic viability of the  eligible  project,
payable  in  such manner as may be provided in the note and any mortgage
in connection with such loan. Such note and mortgage  may  contain  such
terms  and  conditions  as the agency may deem necessary or desirable to
effectuate the purposes and provisions of this article. The  sponsor  or
any  subsequent  owner  or  owners of such a project shall agree to rent
such units only to persons of low income for such period as  the  agency
may  determine.  All such units shall be subject to the emergency tenant
protection act of nineteen seventy-four and the rent  stabilization  law
of  nineteen  hundred  sixty-nine,  as  amended,  unless  converted to a
cooperative  or  condominium  pursuant  to  subdivision  seven  of  this
section.  Initial  rentals  for  all  rental  units  shall be set by the
agency.
6. If the eligible project is a rental project annual profits shall be
limited to an amount set by the agency  for  as  long  as  the  loan  is
outstanding. Excess profits shall be used to establish project reserves,
provide  capital  improvements  or  reduce  the  principal amount of the
agency's loan, as determined by the agency.
7. If the eligible project is a rental project,  no  conversion  to  a
cooperative  or  condominium  shall  be permitted for a period of twenty
years after initial occupancy, and unless (i) the agency's share of  the
loan  is prepaid upon such conversion, (ii) the conversion shall be done
pursuant to section three hundred fifty-two-eeee of the general business
law  as  a  non-eviction  plan,  and  (iii)   apartments   occupied   by
non-purchasing  tenants continue to be subject to the rent stabilization
law of nineteen hundred sixty-nine as amended, until the occurrence of a
vacancy.
8. A loan made pursuant to this  article  shall  be  exempt  from  the
mortgage recording taxes imposed by article eleven of the tax law.
9. Notwithstanding the provisions of any general, special or local law
or  charter,  the  agency shall have power, without soliciting competing
bids, to contract with any sponsor or to make provision in  a  loan  for
the  construction  or reconstruction of any site improvements located in
the public right-of-way or on the eligible site which are necessary  for
the  development  of  an  eligible  project.  Such site improvements may
include, but shall not be limited to, streets,  sidewalks,  landscaping,
parks   and   open  space,  social,  recreational,  communal  and  other
non-residential  facilities  and  the   outfitting   thereof,   lighting
fixtures,  and  water  and sewer lines, incidental or appurtenant to the
construction of such eligible projects.
10. No loan shall be made pursuant to the provisions of  this  article
unless  the  agency  finds  that:  (a)  the construction of the eligible
project does not directly  displace  current  low  and  moderate  income
residents  of  the  eligible  site;  (b)  the eligible project leverages
private  and other public investment, if any, so as to reduce the amount
of assistance provided pursuant to this article to  the  minimal  amount
which  is  necessary  for  construction of the eligible project; (c) the
eligible project will be built by a private  developer/builder  who  has
agreed  to limit its profit in accordance with a formula satisfactory to
the agency; (d) the eligible project will provide assistance to an  area
which  is  blighted  or deteriorated or has a blighting influence on the
surrounding area, or is in danger of becoming a slum or a blighted  area
because   of   neighborhood   conditions   indicating  an  inability  or
unwillingness of the private sector to cause the  type  of  construction
for  which  a  loan is to be provided; and (e) the eligible project will
make home ownership or rental housing affordable to persons  who  cannot
presently  afford  the housing available based upon the ordinary unaided
operation of private enterprise.
11. a. The agency may make non-interest bearing advances  to  sponsors
to  defray  the pre-development costs of eligible projects in accordance
with the provisions of this chapter.
b. No such advances shall be made unless the agency  finds  that:  (i)
the sponsor proposes to finance the eligible project in whole or in part
by  a  loan  granted  pursuant  to  this article or that the project, if
otherwise financed, will provide housing for persons or families of  low
income,  and that such project is otherwise consistent with the purposes
of this article; (ii) the project site is suitable, there is a need  for
the  housing  type  proposed in the area to be served and the project is
feasible; and (iii) it is reasonable to anticipate that  financing  will
be obtained and the agency makes a finding to that effect.
c.  No  such  advances  may  be  made to a sponsor unless such sponsor
enters into an agreement  with  the  agency  which  provides  that  such
sponsor shall be regulated with respect to rents, profits, dividends and
disposition  of  its  property  or  franchise,  in  accordance  with the
provisions of this article.
d. An advance granted pursuant to this section shall be used  only  to
defray  the  pre-development costs of eligible projects. For purposes of
this subdivision, the term  pre-development  costs  shall  include,  but
shall  not  be  limited  to:  the  reasonable  and  necessary  costs for
planning,  site  preparation,  developing  architectural  drawings   and
conducting  engineering and environmental studies, but shall not include
acquisition of land or buildings, drainage  and  landscaping  of  vacant
land,   construction   of   new   buildings  or  the  reconstruction  or
rehabilitation of existing buildings.
e. Each such advance shall be repaid in full  to  the  agency  by  the
sponsor. Such repayment shall be made upon receipt by the sponsor or its
successor  in  interest  of the proceeds of its mortgage or construction
loan for the eligible project, unless the agency extends the period  for
the  repayment of such advances. In no event shall the time of repayment
be extended to a date later than the date  of  final  advance  of  funds
pursuant  to  such  mortgage  or construction loan. Notwithstanding this
paragraph, the agency may reduce such advance to zero over a  period  of
continued  compliance  with  the  agency's  agreement  with  the sponsor
pursuant to paragraph c of this subdivision if the  agency  has  made  a
written  determination  that such reduction would be necessary to ensure
the continued  affordability  or  economic  viability  of  the  eligible
project.  Such written determination shall document the basis upon which

the agency's non-interest bearing advance was  determined  eligible  for
evaporation.
f.  If  the  agency,  in  its  discretion, determines at any time that
mortgage or construction financing for the eligible project may  not  be
obtained,  then  all  advances  made  to  the  sponsor  pursuant to this
subdivision shall become immediately due and payable upon the demand  of
the agency.
12.  If the eligible project is a rental project, the bond or note and
mortgage or bonds or notes or mortgages issued by  the  sponsor  of  any
eligible  project  to  secure  a participation loan may provide that the
city's portion of such loan shall be reduced to zero commencing  on  the
fifteenth  year after the execution of such bond or note and mortgage or
bonds or notes or mortgages, provided that, as of the date of  any  such
reduction,  the  eligible project has been and continues to be owned and
operated in a manner consistent with a  regulatory  agreement  with  the
city.  Notwithstanding  such  provision as contained in the bond or note
and mortgage or bonds or notes or mortgages, the loan shall  be  reduced
to  zero  only if, prior to or simultaneously with delivery of such bond
or note and mortgage or bonds or notes or mortgages, the agency  made  a
written  determination  that such reduction would be necessary to ensure
the continued  affordability  or  economic  viability  of  the  eligible
project.  Such written determination shall document the basis upon which
the loan was determined to be eligible for evaporation.