Section 576-E. Municipal housing assistance fund

1. A municipality may
  create and establish a fund  to  be  known  as  the  "municipal  housing
  assistance  fund".  Such  a fund shall be created and established in the
  supervising agency.
    2. There may be paid into such municipal housing assistance  fund  (a)
  any  moneys  appropriated and made available by the municipality for the
  purposes of such fund, (b) notwithstanding the provisions of  the  local
  finance  law  or  any  other  provisions  of law, any moneys received in
  repayment of loans from such fund, and (c) any other moneys which may be
  available for the purpose of such fund from any other source or sources.
    3. The purpose of  such  fund  shall  be  to  make  loans  to  housing
  development  fund  companies  which  have  agreed to acquire residential
  properties by deed from the commissioner of finance  of  a  municipality
  and  to  operate  and  manage  such  properties  in  accordance  with  a
  regulatory agreement with the  municipality  until  the  properties  are
  transferred to a new owner approved by the municipality.
    4.  The supervising agency may make loans from the fund to enable such
  housing development fund companies to  pay  development  costs  and  any
  other  expenses  incurred  by  the  housing development fund company and
  approved by the supervising agency.
    5. Any housing development fund company which receives a loan pursuant
  to this section shall execute a note and regulatory agreement. The  note
  may  provide that it shall be reduced to zero over a period of continued
  compliance with either the regulatory  agreement  required  pursuant  to
  this  section  or  such  other  regulatory  agreement as the supervising
  agency shall require. The loan shall be reduced to zero only if prior to
  or simultaneously with delivery of such note, the supervising agency has
  made a written determination that such reduction would be  necessary  to
  ensure the continued affordability or economic viability of the project.
  Such  written determination shall document the basis upon which the loan
  was determined eligible for evaporation.
    6. A regulatory agreement pursuant to this section may terminate  upon
  such terms and conditions as provided by the supervising agency.
    7.  A  housing development fund company which receives a loan pursuant
  to this section shall provide in its certificate of  incorporation  that
  the  supervising  agency  shall  have  the power if in its discretion it
  determines that the company has defaulted  in  its  obligations  to  the
  municipality to appoint to the board of such corporation a number of new
  directors  which  number shall be sufficient to constitute a majority of
  the board, notwithstanding any other provisions of such  certificate  or
  of any other provision of law.