Section 802. Participation loans to owners

1.  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 the rehabilitation of such existing  multiple  dwellings
  or  for  the  conversion  of  such  non-residential  property or for the
  construction of a new multiple dwelling on such vacant land, 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 include such amounts as  may
  be  required  for the cost of such acquisition or for the refinancing of
  such  outstanding  indebtedness,  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.
    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. (a) 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, provided 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 (i) 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, (ii) 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,  (iii)  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, (iv) 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.
    (b) The aggregate amount of each such  participation  loan  shall  not
  exceed  the cost of the rehabilitation, conversion or construction, plus

  the costs of  any  or  all  undertakings  necessary  for  the  planning,
  financing,  acquisition,  satisfaction  of tax liens and other municipal
  liens and  encumbrances,  construction,  equipment  and  development  in
  connection therewith, provided that, if any portion of such loan is used
  for  the  cost  of  acquisition  or  for  refinancing,  the  amount of a
  municipality's portion of such loan shall not exceed  one  and  one-half
  times the cost of rehabilitation, conversion or construction.
    (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  value  unless  the  agency  makes  a
  written  determination  that the owner has insufficient resources to pay
  for the remaining ten per centum of value, in which case such loan shall
  not exceed ninety-five per centum of value. 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 value, provided that when after  completion  of
  such  rehabilitation, conversion or construction, such multiple dwelling
  is, or is to be operated, exclusively for the  benefit  of  persons  and
  families  who  are entitled to occupancy by reason of ownership of stock
  in the corporate owners, such loan shall  not  exceed  ninety-eight  per
  centum of value unless the agency makes a written determination that the
  owner has insufficient resources to pay for the remaining two per centum
  of value, in which case such loan shall not exceed value.
    4. Each such bond or note and mortgage or bonds or notes and mortgages
  shall  be  repaid over or within a period of thirty years in such manner
  as may be provided in such bond or note and mortgage or bonds  or  notes
  and  mortgages  but  in  no  case shall the term of such loan exceed the
  probable life of the multiple dwelling which is hereby determined to  be
  thirty  years.  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 may exercise such power on such conditions as
  may  be prescribed by the banking board of the state banking department,
  and insurance companies may exercise such power only to the  extent  and
  on  such  conditions as may be authorized by the state superintendent of
  insurance.
    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.