§ 68. State/city allocations of permanent housing projects for
homeless families. 1. No contract shall be entered into by the agency or
its designee in connection with the administration of projects,
including the payment of project costs, unless the agency is assured to
its satisfaction that the city has provided or will provide fifty
percent of such costs to the agency or its designee. Moneys received
from sources other than the city or the state may, at the agency's
discretion, be expended without regard to such limitation.
Notwithstanding any other provision of law, payments, grants and loans
may be deposited by the agency directly with a lending institution at or
before the time of initial loan closing pursuant to an escrow agreement
satisfactory to the agency.

2. Moneys expended by the agency for the purposes of this article
shall not substitute for locally funded operating or capital
expenditures which the city would have allocated through its normal
budgetary process to programs that provide permanent housing for
homeless families in the absence of the funds provided for this program.
All such moneys shall be used to increase locally funded operating or
capital expenditures for permanent housing for homeless families to a
level which is greater than the level which would have existed if such
moneys had not been provided by the state. Nothing in this subdivision
shall require the city to allocate funds for housing programs if in the
city's judgment such allocation would require an increase in taxation or
a reduction in other city services.