2023 New York Laws › PVH - Private Housing Finance › Article 15 - Participation Loans to Owners of Multiple Dwellings by Private Investors and Municipalities Utilizing Federal Grant Funds › 802 - Participation Loans to Owners.

§  802.  Participation  loans  to owners.   1. (a) Notwithstanding the
provisions of any general, special or local law,  one  or  more  private
investors  and a municipality, acting through its agency, shall have the
power to participate and  invest  in  making  loans  to  the  owners  of
existing multiple dwellings or to the owners of non-residential property
or  to  the  owners  of  vacant  land  subject  to  the  limitations  of
subdivisions two through seven of this section, in such amounts as shall
be required  for  (i)  the  rehabilitation  of  such  existing  multiple
dwellings  or for the conversion of such non-residential property or for
the construction of new multiple dwellings on such vacant land, provided
that such rehabilitation, conversion or construction may include climate
resiliency improvements, and if any such  owner  acquires  the  existing
multiple dwelling or the non-residential property or the vacant land for
the  purpose  of such rehabilitation, conversion or construction or owns
the existing multiple dwelling or the non-residential  property  or  the
vacant  land  subject  to an outstanding indebtedness, such loans may be
made exclusively for or may include such amounts as may be required  for
the  cost of such acquisition or for the refinancing of such outstanding
indebtedness, (ii) providing site improvements located on  the  property
on  which  such  existing  multiple  dwellings  are  located  or on such
non-residential property or vacant land or  in  a  public  right-of-way,
incidental   or   appurtenant  to  such  rehabilitation,  conversion  or
construction, including, but not limited to, water and sewer facilities,
sidewalks, landscaping, parks  and  open  space,  social,  recreational,
communal   and  other  non-residential  facilities  and  the  outfitting
thereof, the curing of problems  caused  by  abnormal  site  conditions,
excavation  and  construction  of  footings  and  foundations  and other
improvements associated with the provision of infrastructure for housing
accommodations, or (iii) providing for other costs of developing housing
accommodations, and  such  private  investors  and  a  municipality  may
jointly  participate  or  invest  in  the  making  of temporary loans or
advances to such owners in anticipation of the  permanent  participation
loans for such purposes.
(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
municipality, acting through its agency, and the New York  city  housing
development corporation shall each 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 investor, on the same
terms as permitted under such paragraph for a participation loan.
2. A municipality may utilize federal grant funds or state grant funds
or any municipal funds to finance its participation or investment  in  a
loan  pursuant  to this article. This subdivision shall not apply to any
participation in a  loan  by  the  New  York  city  housing  development
corporation pursuant to section eight hundred five of this article.
3.  Each  participation  loan  shall  be secured by a bond or note and
single  participating  mortgage  or  by  separate  bonds  or  notes  and
mortgages  upon  the  existing  multiple dwelling or the non-residential
property and the land upon which it is situated or, in the case  of  the
construction  of  a  new multiple dwelling, upon the vacant land and the
multiple dwelling to be constructed, or,  in  the  case  of  a  multiple
dwelling  held in the condominium form of ownership, a note and mortgage
upon the condominium units rehabilitated with such  participation  loan,
provided  that a participation loan to an owner who is a lessee shall be
secured by a leasehold interest in such property, and provided, further,
that each such loan shall be made upon such terms and conditions as  may
be approved by the agency, including but not limited to, provisions that

(a)  priority  may  be  given  to  the  payment  of the principal of and
interest on that portion of the mortgage  indebtedness  attributable  to
participation  in  the  loan  by  one or more private investors, (b) the
interest  of  the  municipality  created  as  a  result of making such a
mortgage loan may be subordinated to the interest that one  or  more  of
such  private  investors  may  have  upon  such  participation,  (c) the
interest of each upon such participation need not be of  equal  priority
as  to  lien  nor  be  equal  as  to  interest  rate,  time  or  rate of
amortization of principal or time of payment of interest, or  otherwise,
(d)  the  bond  or note and mortgage may provide that the municipality's
portion of a participation loan made to an owner  shall  be  reduced  to
zero commencing in the fifteenth year after the execution of the bond or
note  and mortgage, provided that, as of the date of any such reduction,
such multiple dwelling has been and continues to be owned  and  operated
in   a   manner   consistent   with  a  regulatory  agreement  with  the
municipality. Notwithstanding such provision as contained in the bond or
note and mortgage, the municipality's  portion  of  the  loan  shall  be
reduced  to  zero  only  if, prior to or simultaneously with delivery of
such bond or note and mortgage, the agency made a written  determination
that   such  reduction  would  be  necessary  to  ensure  the  continued
affordability or economic  viability  of  the  multiple  dwelling.  Such
written  determination  shall document the basis upon which the loan was
determined to be eligible for evaporation.
4. Each such bond or note and mortgage or bonds or notes and mortgages
shall be repaid over or within a period of forty  years,  provided  that
such  period  may  be  extended as the agency may determine necessary to
ensure the continued affordability or economic viability of the multiple
dwelling, in such manner as may be provided in such  bond  or  note  and
mortgage or bonds or notes and mortgages. Such bond or note and mortgage
or bonds or notes and mortgages and any contract in connection with such
permanent   and  temporary  loans  may  contain  such  other  terms  and
provisions not inconsistent with the provisions of this article  as  the
local  legislative body or the agency may deem necessary or desirable to
secure repayment of the loan, the interest thereon and other charges  in
connection  therewith  and  to  carry out the purposes and provisions of
this article.
5. The bond or note or the bonds or notes issued by the owner and  the
mortgage  or  mortgages  relating thereto may authorize such owner, with
the consent of the agency  and  the  private  investor,  to  prepay  the
principal  of  the  loan subject to such terms and conditions as therein
provided. Such bond or note and mortgage or bonds or notes and mortgages
may contain such other  clauses  and  provisions  as  the  agency  shall
require.
6.  Where  a  municipality joins with one or more private investors in
making a participation loan secured by a single  participating  mortgage
or  by  separate mortgages, the agency may make provision, either in the
mortgage or mortgages or by separate agreement, for the performances  of
such  services  as  are  generally performed by a banking institution or
insurance company which itself owns and holds a mortgage or by a trustee
under a trust mortgage and for the imposition  of  reasonable  fees  for
financing,  regulation, supervision and audit of such multiple dwelling.
The agency is hereby authorized to act as trustee or to consent  to  the
appointment of a banking institution or any subsidiary thereof to act in
such capacity and to provide such services as are generally performed by
any  such  bank  itself  or  its  subsidiary  owning  and holding such a
mortgage.
7. Banking organizations and insurance  companies  may  exercise  such
power  only to the extent and on such conditions as may be authorized by
the state superintendent of financial services.
8. Notwithstanding the provisions of any other law, a savings bank may
invest  to an amount not exceeding ninety per centum of the value of any
real property when jointly participating or investing in a loan pursuant
to the provisions of this  article  or  not  exceeding  ninety-five  per
centum  of  the value of any real property when jointly participating or
investing in a loan pursuant to the provisions of  article  fourteen  of
this chapter.