* § 576-c. Loans to housing development companies by a municipality.
1. In addition to the powers granted to municipalities pursuant to this
article, a municipality, acting by its supervising agency, may make
loans for the purposes of acquisition, rehabilitation or construction of
dwelling accommodations to a non-profit housing development fund
company, a wholly-owned subsidiary of such company, a partnership the
controlling interest of which is held by such company and which has
agreed to limit profits or rate of return of investors in accordance
with a formula established or approved by the company, or a private
developer which has agreed to limit profits or rate of return of
investors in accordance with a formula established or approved by the
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 a municipality and have prior to their initial
occupancy in such accommodations resided in emergency shelter facilities
operated by or on behalf of the municipality or who are otherwise in
need of emergency shelter as determined by the municipality, providing,
however, that in the case of a building acquired by such a company,
subsidiary, partnership, or developer the obligation to provide housing
accommodations for such persons shall be applicable only to dwelling
accommodations which are or become vacant after the date of acquisition.
Such loans may be made for such period of time and pursuant to such
terms and conditions as may be required by the municipality, including,
but not limited to, terms and conditions providing that the lien created
by the note and mortgage, and, if applicable, any regulatory agreement
executed by the owner and such municipality or restrictive covenant
approved by a supervising agency, may be recorded in an equal or
subordinate position, or subsequently made equal or subordinate, to a
lien recorded by any private lender against the dwelling aided by the
loan made pursuant to this article, and the supervising agency of such
municipality may provide that the amount of the note and mortgage shall
automatically be reduced to zero in five equal decrements commencing on
the tenth year after the initial occupancy date, provided that, as of
the date of such reduction, such accommodations have been and continue
to be 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. Notwithstanding such provision as contained in the
note and mortgage, the loan shall be reduced to zero only if, prior to
or simultaneously with delivery of such note and mortgage, the
supervising agency made a written determination that such reduction
would be necessary to ensure the continued affordability or economic
viability of such housing project. Such written determination shall
document the basis upon which the loan was determined to be eligible for
evaporation.

2. Notwithstanding the provisions of, or any regulation promulgated
pursuant to, the emergency housing rent control law, the local emergency
housing rent control act, the emergency tenant protection act of
nineteen seventy-four, or any local law enacted pursuant thereto, upon
completion of the rehabilitation of any building used primarily for
residential purposes, in a jurisdiction in which rents are regulated
pursuant to any of the above laws and which is aided by a loan pursuant
to this section made by the municipality, the supervising agency shall
establish the initial rent for each rental dwelling unit within the
building. All dwelling units within the building subsequent to
establishment of initial rents by the supervising agency shall be
subject to either the rent stabilization law of nineteen hundred
sixty-nine or the emergency tenant protection act of nineteen
seventy-four, or both, if applicable to the locality. The tenants in
occupancy of such a dwelling unit regulated pursuant to any of the above
laws shall be offered a choice of a one or two year lease at the initial
rents established by the supervising agency notwithstanding any contrary
provisions of, or regulations adopted pursuant to, the rent
stabilization law of nineteen hundred sixty-nine and the emergency
tenant protection act of nineteen seventy-four. The supervising agency
shall cause all tenants in occupancy of each dwelling unit affected by
the provisions of this subdivision to be notified of and have an
opportunity to comment on the contemplated rehabilitation. Such
notification shall advise such tenants of the approximate expected rent
increase and the subsequent availability of a one or two year lease.
Such notification and opportunity to comment shall be provided before
the rehabilitation and again after the construction is completed and
before the establishment of the initial rents.

3. The supervising agency shall use its best efforts to ensure that
activities carried out pursuant to this article are structured so as to
minimize the likelihood of any involuntary economic displacement of
tenants who reside in multiple dwellings which are the subject of such
activities. However, if temporary physical displacement is required as a
direct result of rehabilitation work which is performed in such multiple
dwelling receiving a loan pursuant to this article, suitable temporary
relocation arrangements shall be provided.

* NB Effective until July 1, 2024

* § 576-c. Loans to housing development companies by a municipality.
In addition to the powers granted to municipalities pursuant to this
article, a municipality, acting by its supervising agency, may make
loans for the purposes of acquisition, rehabilitation or construction of
dwelling accommodations to a non-profit housing development fund
company, a wholly-owned subsidiary of such company, a partnership the
controlling interest of which is held by such company and which has
agreed to limit profits or rate of return of investors in accordance
with a formula established or approved by the company, or a private
developer which has agreed to limit profits or rate of return of
investors in accordance with a formula established or approved by the
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 a municipality and have prior to their initial
occupancy in such accommodations resided in emergency shelter facilities
operated by or on behalf of the municipality or who are otherwise in
need of emergency shelter as determined by the municipality, providing,
however, that in the case of a building acquired by such a company,
subsidiary, partnership, or developer the obligation to provide housing
accommodations for such persons shall be applicable only to dwelling
accommodations which are or become vacant after the date of acquisition.
Such loans may be made for such period of time and pursuant to such
terms and conditions as may be required by the municipality, including,
but not limited to, terms and conditions providing that the lien created
by the note and mortgage, and, as applicable, any regulatory agreement
executed by the owner and such municipality, may be recorded in an equal
or subordinate position, or subsequently made equal or subordinate, to
the lien recorded by any private lender against the dwelling aided by
the loan made pursuant to this article, and the supervising agency of
such municipality may provide that the amount of the note and mortgage
shall automatically be reduced to zero in five equal decrements
commencing on the tenth year after the initial occupancy date, provided
that, as of the date of such reduction, such accommodations have been
and continue to be 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. Notwithstanding such provision as
contained in the note and mortgage, the loan shall be reduced to zero
only if, prior to or simultaneously with delivery of such note and
mortgage, the supervising agency made a written determination that such
reduction would be necessary to ensure the continued affordability or
economic viability of such housing project. Such written determination
shall document the basis upon which the loan was determined to be
eligible for evaporation.

* NB Effective July 1, 2024