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SECTION 402
Loans to owners
Private Housing Finance (PVH) CHAPTER 44-B, ARTICLE 8
§ 402. Loans to owners. 1. Notwithstanding the provisions of any
general, special or local law, a municipality, by such officer or agency
as determined by its local legislative body, is hereby authorized to
make or contract to make loans to the owners of existing multiple
dwellings within its territorial limits, subject to the limitations in
subdivision two of this section, in such amounts as may be required for
the installation of proper heating facilities, or elimination of
conditions dangerous to human life or detrimental to health, including
nuisances as defined in section three hundred nine of the multiple
dwelling law, or other rehabilitation or improvement of such multiple
dwellings, and if such owner acquires the multiple dwelling for the
purposes of such rehabilitation or improvement or owns the multiple
dwelling subject to an outstanding indebtedness, such loans may include
such amounts as may be required for the cost of such acquisition or for
the refinancing of such outstanding indebtedness, and may make temporary
loans or advances to such owners in anticipation of the permanent
municipal loans for such purposes.

2-a. As used in this section the term "value" shall mean the "as is"
value of the multiple dwelling and the land upon which it is situated
prior to such installation, elimination, other rehabilitation or
improvement referred to in subdivision one of this section plus the
total of all costs of such installation, elimination, rehabilitation or
improvement including, but not limited to, the costs of any or all
undertakings necessary for the planning, financing, tenant relocation,
acquisition, construction, equipment and development in connection
therewith.

2-b. (a) Each permanent loan shall be secured by a bond and mortgage
or note and mortgage upon the multiple dwelling and the land upon which
it is situated; where the loan is made to an owner who is a lessee, such
loan shall be secured by a first lien on such property.

(b) The amount of any such loan shall not exceed the cost of the
installation of proper heating facilities, or elimination of conditions
dangerous to human life or detrimental to health, including nuisances as
defined in section three hundred nine of the multiple dwelling law, or
other rehabilitation or improvement provided that, if any portion of
such loan is used for the cost of acquisition of the land and the
multiple dwelling or for re-financing, the total amount of such loan
shall not exceed two times the cost of such installation, elimination of
such conditions, rehabilitation or improvement.

(c) The amount of any such loan, together with the amount of all prior
liens and encumbrances, shall not exceed, except in the case of a loan
made to a non-profit company, a mutual company, or a housing development
fund company, ninety per centum of the value of the property, after
completion of the installation of proper heating facilities, or
elimination of such conditions or other rehabilitation or improvement,
as estimated by the agency, unless the agency makes a written
determination that the owner has insufficient resources to pay for the
remaining ten per centum of the value of the property, after completion
of such installation, elimination, or other rehabilitation or
improvement, as estimated by the agency, in which case such loan shall
not exceed ninety-five per centum of the value of the property, after
completion of the installation of proper heating facilities, or
elimination of such conditions or other rehabilitation or improvement,
as estimated by the agency. The amount of any such loan, together with
the amount of all prior liens and encumbrances, made to a non-profit
company, a mutual company, or a housing development fund company shall
not exceed the value of the property after completion of such
installation, elimination, or other rehabilitation or improvement, as
estimated by the agency provided that when after completion of such
installation, elimination or other rehabilitation or improvement, such
project is, or is to be operated exclusively for the benefit of persons
or families who are entitled to occupancy by reason of ownership of
stock in the corporate owners, such loan shall not exceed ninety-eight
percentum of the value of the property, after completion of such
installation, elimination, or other rehabilitation or improvement, as
estimated by the agency, unless the agency makes a written determination
that the owner has insufficient resources to pay for the remaining two
per centum of the value of the property, after completion of such
installation, elimination, or other rehabilitation or improvement, as
estimated by the agency, in which case such loan shall not exceed the
value of the property, after completion of such installation,
elimination, or other rehabilitation or improvement, as estimated by the
agency.

(d) Each such bond and mortgage or note and mortgage shall be repaid
over or within a period of thirty years in such manner as may be
provided in such bond and mortgage or note and mortgage and contract but
in no case to exceed the probable life of the multiple dwelling which is
hereby determined to be thirty years. Such bond and mortgage or note and
mortgage and the 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; notwithstanding the foregoing, a loan made prior to
January first, nineteen hundred seventy-eight may, in the discretion of
the agency, be extended to a term up to forty-five years. The agency may
modify the rate and time of payment of interest on the original loan and
the rate and time of amortization of principal in such manner as
required to secure payment of the loan within the extended term.

2-c. If a loan pursuant to this article is made to a non-profit
company or a housing development fund company which agrees to provide
housing accommodations exclusively for persons and families of low
income, at least thirty percent of whom are referred to it by the
municipality and have prior to their initial occupancy in such
accommodations resided in emergency shelter facilities operated by or on
behalf of the municipality, the agency may provide that the note and
mortgage shall automatically be reduced to zero in five equal annual
decrements commencing on the tenth year after the initial occupancy
date, provided that such accommodations have been owned and operated in
a manner consistent with an agreement with the municipality contained in
such note and mortgage to provide housing for such persons.

3. The bond or note issued by the owner of such multiple dwelling and
the mortgage relating thereto may authorize such owner, with the consent
of the agency, to prepay the principal of the loan subject to such terms
and conditions as therein provided. Such bond or note and mortgage may
contain such other clauses and provisions as the agency shall require.

4. The agency may charge the owner of such multiple dwelling
reasonable fees for financing, regulation, supervision and audit. Such
fees shall be kept by the municipality in a separate fund to be known as
the housing rehabilitation fund and shall be used to pay for the
expenses of the municipality in administering and carrying out the
provisions of this article.

5. Whenever reference is made in this article to a municipal loan, a
loan by a municipality, a loan from a municipality, a contract for a
loan between a municipality and an owner, or any similar term, with
respect to the territorial limits of the city of New York such terms
shall be construed to refer to a loan made or to be made either by such
municipality or by the New York city housing development corporation,
whichever is applicable.

6. The bond and mortgage or note and mortgage issued by the owner of
any such multiple dwelling may provide that the loan shall be reduced to
zero commencing on the fifteenth year after the execution of the bond
and mortgage or note and mortgage, provided that, as of the date of any
such reduction, the 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
and mortgage or note and mortgage, the loan shall be reduced to zero
only if, prior to or simultaneously with delivery of such bond and
mortgage 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.