Section 1102. Cooperative or condominium, homesteading and rental contracts

* 1.  Within  the  limit  of  funds  available in the housing trust fund
  account, the corporation is hereby authorized to  enter  into  contracts
  with  eligible  applicants  for  the  furnishing  by  such applicants of
  housing for persons of low income. Each such contract shall provide that
  eligible applicants rehabilitate or construct one or  more  projects  or
  convert  one  or  more  nonresidential  properties.  Such  contracts may
  provide for payments,  grants  or  loans  by  the  corporation  for  the
  activities  to  be  carried  out  by  the  eligible  applicant under the
  contract. Such contracts shall provide that a private developer make  an
  equity  investment  of  the  greater  of (i) two and one-half percent of
  project costs or (ii) five percent of project costs  less  grants  which
  are  to  be  applied  to  such costs. The foregoing shall not preclude a
  private developer from making a greater equity investment. Any payments,
  grants or loans made by the  corporation  outstanding  at  the  time  of
  resale  shall  be  subject  to repayment in whole or in part upon resale
  after termination of the regulatory period  and  as  otherwise  provided
  therein. Such repayment provisions may survive the end of the regulatory
  period. Such contracts may provide that eligible applicants shall either
  (a)  perform  activities  specified under the contract themselves or (b)
  act  as  administrators  of  a  program   under   which   projects   are
  rehabilitated  or constructed or nonresidential properties are converted
  by other eligible applicants or (c) perform both such functions. In  the
  case  of  a  municipality  acting as an administrator, funds provided to
  such municipality hereunder shall not be deemed to be  municipal  funds.
  The  corporation  shall  refer any request for payments, grants or loans
  from persons of low income to eligible applicants in the area  in  which
  such  persons reside. Loans may be in the form of participation in loans
  including but not  limited  to  participation  in  loans  originated  or
  financed by lending institutions as defined in section forty-two of this
  chapter,  the  state  of  New  York  mortgage  agency, the New York city
  housing development corporation, the  New  York  state  housing  finance
  agency  or private or public employee pension funds. Notwithstanding any
  other provision of law, payments, grants and loans may be  deposited  by
  the  corporation  directly  with  a lending institution at or before the
  time  of  initial  loan  closing  pursuant  to   an   escrow   agreement
  satisfactory  to the corporation. Payments, grants and loans shall be on
  such terms and conditions as the corporation, or the eligible  applicant
  with  the  approval  of  the  corporation,  as  the  case  may be, shall
  determine. Payments, grants and loans shall  be  used  to  pay  for  the
  actual  and  necessary cost of acquisition, construction, rehabilitation
  or conversion, provided  that  not  more  than  fifty  percent  of  such
  payments, grants and loans received for the rehabilitation, construction
  or  conversion  of  a  project may be used for the cost of the project's
  acquisition and not more than ten percent of such payments,  grants  and
  loans  may be used for the rehabilitation, construction or conversion of
  community service  facilities  and,  provided  further,  that  payments,
  grants or loans shall not be used for (i) the administrative costs of an
  eligible  applicant except as otherwise authorized by law, (ii) the cost
  of  the  acquisition,  construction,  conversion  or  rehabilitation  of
  residential  units  which, subsequent to such acquisition, construction,
  conversion or rehabilitation, are to be occupied by persons  other  than
  persons   of  low  income,  and  (iii)  the  cost  of  the  acquisition,
  construction, conversion or rehabilitation of units which, subsequent to
  such  acquisition,  construction,  conversion  or  rehabilitation,   are
  occupied  or  to be occupied for other than residential purposes, except
  for community service facilities as described above. No  such  payments,
  grants or loans shall exceed a total of one hundred twenty-five thousand

  dollars  per  dwelling  unit.  Among  the criteria the corporation shall
  consider in determining whether to provide additional funds are: average
  cost of construction in the area, location of the project and the impact
  of  the  additional  funding on the affordability of the project for the
  occupants of such project. The length of any loan  provided  under  this
  article shall not exceed thirty years. No more than fifty percent of the
  total  amount  originally  appropriated  pursuant to this article in any
  fiscal year shall be allocated to projects  located  within  any  single
  municipality.  Of  the amount originally appropriated to the corporation
  in any fiscal year, no more  than  thirty-three  and  one-third  percent
  shall be allocated to private developers for projects within a city with
  a   population  of  one  million  or  more.  Of  the  amount  originally
  appropriated to the  corporation  in  any  fiscal  year,  no  more  than
  thirty-three  and  one-third  percent  shall  be  allocated  to  private
  developers for projects in the area outside cities with a population  of
  one million or more.
    * NB Effective until July 1, 2010
    * 1.  Within  the  limit  of funds available in the housing trust fund
  account, the corporation is hereby authorized to  enter  into  contracts
  with  eligible  applicants  for  the  furnishing  by  such applicants of
  housing for persons of low income. Each such contract shall provide that
  eligible applicants rehabilitate or construct one or  more  projects  or
  convert  one  or  more  nonresidential  properties.  Such  contracts may
  provide for payments,  grants  or  loans  by  the  corporation  for  the
  activities  to  be  carried  out  by  the  eligible  applicant under the
  contract. Such contracts shall provide that a private developer make  an
  equity  investment  of  the  greater  of (i) two and one-half percent of
  project costs or (ii) five percent of project costs  less  grants  which
  are  to  be  applied  to  such costs. The foregoing shall not preclude a
  private developer from making a greater equity investment. Any payments,
  grants or loans made by the  corporation  outstanding  at  the  time  of
  resale  shall  be  subject  to repayment in whole or in part upon resale
  after termination of the regulatory period  and  as  otherwise  provided
  therein. Such repayment provisions may survive the end of the regulatory
  period. Such contracts may provide that eligible applicants shall either
  (a)  perform  activities  specified under the contract themselves or (b)
  act  as  administrators  of  a  program   under   which   projects   are
  rehabilitated  or constructed or nonresidential properties are converted
  by other eligible applicants or (c) perform both such functions. In  the
  case  of  a  municipality  acting as an administrator, funds provided to
  such municipality hereunder shall not be deemed to be  municipal  funds.
  The  corporation  shall  refer any request for payments, grants or loans
  from persons of low income to eligible applicants in the area  in  which
  such  persons reside. Loans may be in the form of participation in loans
  including but not  limited  to  participation  in  loans  originated  or
  financed by lending institutions as defined in section forty-two of this
  chapter,  the  state  of  New  York  mortgage  agency, the New York city
  housing development corporation, the  New  York  state  housing  finance
  agency  or private or public employee pension funds. Notwithstanding any
  other provision of law, payments, grants and loans may be  deposited  by
  the  corporation  directly  with  a lending institution at or before the
  time  of  initial  loan  closing  pursuant  to   an   escrow   agreement
  satisfactory  to the corporation. Payments, grants and loans shall be on
  such terms and conditions as the corporation, or the eligible  applicant
  with  the  approval  of  the  corporation,  as  the  case  may be, shall
  determine. Payments, grants and loans shall  be  used  to  pay  for  the
  actual  and  necessary cost of acquisition, construction, rehabilitation
  or conversion, provided that not more than twenty-five percent  of  such

  payments, grants and loans received for the rehabilitation, construction
  or  conversion  of  a  project may be used for the cost of the project's
  acquisition and, provided further, that payments, grants or loans  shall
  not  be  used  for (i) the administrative costs of an eligible applicant
  except as otherwise authorized by law, (ii) the cost of the acquisition,
  construction, conversion or rehabilitation of residential  units  which,
  subsequent    to   such   acquisition,   construction,   conversion   or
  rehabilitation, are to be occupied by persons other than persons of  low
  income,  and (iii) the cost of the acquisition, construction, conversion
  or rehabilitation  of  units  which,  subsequent  to  such  acquisition,
  construction,  conversion  or  rehabilitation,  are  occupied  or  to be
  occupied for other than residential purposes. No such  payments,  grants
  or  loans  shall  exceed  a  total  of seventy-five thousand dollars per
  dwelling unit provided, however, that the  corporation  shall  have  the
  discretion   to   provide  payments,  grants  and  loans  in  excess  of
  seventy-five thousand dollars provided that such additional funds  shall
  not  exceed  twenty-five  thousand  dollars per dwelling unit. Among the
  criteria the  corporation  shall  consider  in  determining  whether  to
  provide  additional funds are: average cost of construction in the area,
  location of the project and the impact of the additional funding on  the
  affordability  of  the  project  for  the occupants of such project. The
  length of any loan provided under this article shall not  exceed  thirty
  years.  No  more  than  fifty  percent  of  the  total amount originally
  appropriated pursuant to this  article  in  any  fiscal  year  shall  be
  allocated  to  projects  located  within any single municipality. Of the
  amount originally appropriated to the corporation in any fiscal year, no
  more than thirty-three and  one-third  percent  shall  be  allocated  to
  private  developers  for projects within a city with a population of one
  million  or  more.  Of  the  amount  originally  appropriated   to   the
  corporation  in any fiscal year, no more than thirty-three and one-third
  percent shall be allocated to private developers  for  projects  in  the
  area outside cities with a population of one million or more.
    * NB Effective July 1, 2010
    2. The corporation and eligible applicants which act as administrators
  of  a  program  under this article shall deposit any recaptured funds or
  funds from the repayment of loans and interest received  on  loans  into
  the housing trust fund account.
    3.  The corporation shall not enter into a contract under this article
  unless the eligible applicant has  submitted  an  application  and  such
  application  contains  a  plan,  acceptable  to  the  corporation, which
  provides for each project:
    (a) That violations on the project which are classified  as  hazardous
  or  immediately hazardous shall be repaired in accordance with state and
  local laws and regulations of state and local agencies and  the  project
  shall   be   brought  into  compliance  with  all  applicable  laws  and
  regulations.
    (b) For the  establishment  of  occupant  selection  procedures  which
  provide  that  any  lawful  occupants  who  live  in  a project prior to
  rehabilitation  shall  not  be   displaced   as   a   result   of   such
  rehabilitation,   other   than   temporarily,  in  which  case  suitable
  relocation arrangements shall  be  provided,  and  that  any  additional
  occupants  who move into a project are persons of low income. Preference
  in selection of such additional occupants; (i) shall be given to persons
  or  families  with  the  lowest  incomes  possible,  given  the   income
  requirements  of the project and; (ii) shall also be given to persons or
  families whose current housing fails to meet basic standards  of  health
  and  safety  and  who have little prospect of improving the condition of

  their housing except by residing in a project receiving payments, grants
  or loans under this article.
    (c)  In  the  case  of a homesteading project that (i) the project may
  only be transferred or sold to  an  eligible  applicant;  and  (ii)  the
  resale  price of the project shall not exceed an amount equal to the sum
  of (A) the original equity  paid  by  the  owner  for  the  project  and
  rehabilitation  or  construction  thereof,  exclusive  of  any payments,
  grants or loans received pursuant to this article for such purposes,  or
  from  such other sources as determined by the corporation, with interest
  thereon at the rate of six percent per annum, (B) the  cost  of  capital
  improvements  to  the project paid by such owner after the completion of
  rehabilitation or construction, exclusive of  any  payments,  grants  or
  loans  received pursuant to this article for such purposes, or from such
  other sources as determined by the corporation, with interest thereon at
  the rate of six percent per annum, (C) the actual amortization  paid  by
  such  owner in the reduction of total outstanding principal indebtedness
  on all existing and prior mortgages on, or loans for, such project,  but
  only  to  the  extent  that the proceeds of such mortgages or loans were
  used by the owner for the project  and  rehabilitation  or  construction
  thereof  or  for the cost of capital improvements thereto, with interest
  thereon at the rate of six percent per annum, (D) the actual outstanding
  principal indebtedness on all existing mortgages on, or loans  or  other
  obligations  for,  such  project which the owner is required to satisfy,
  but only to the extent that the proceeds of such mortgages or loans were
  used by the owner for the project  and  rehabilitation  or  construction
  thereof  or  for the cost of capital improvements thereto, with interest
  thereon at the rate of six percent  per  annum,  provided  that  if  the
  indebtedness  is  not  paid  in  full upon the sale of the project, such
  owner shall not be credited with the amount of  such  indebtedness,  and
  (E)  the  reasonable  costs and expenses incurred in connection with the
  sale of such project.
    (d) In  the  case  of  a  cooperative  project  that  (i)  the  shares
  applicable to a cooperative unit shall be transferred or sold only to an
  eligible  applicant; and (ii) the resale price of shares applicable to a
  cooperative unit shall not exceed an amount equal to the sum of (A)  the
  original  equity  paid by the tenant shareholder for such shares and for
  the rehabilitation or  construction  of  such  unit,  exclusive  of  any
  payments,  grants  or  loans  received pursuant to this article for such
  purposes or from such other sources as determined  by  the  corporation,
  with interest thereon at the rate of six percent per annum, (B) the cost
  of  capital  improvements  to  such unit paid by such tenant shareholder
  after the completion of rehabilitation or construction, exclusive of any
  payments, grants or loans received pursuant to  this  article  for  such
  purposes  or  from  such other sources as determined by the corporation,
  with interest thereon at the rate of six  percent  per  annum,  (C)  the
  pro-rata portion of any capital assessments or capital contributions for
  building  wide  improvements  paid  by  such  tenant  shareholder,  with
  interest thereon at the rate of six percent per annum, (D) the  pro-rata
  portion  of  actual  amortization paid by such tenant shareholder on all
  existing and prior mortgages on such project in the reduction  of  total
  outstanding principal indebtedness, with interest thereon at the rate of
  six  percent  per annum, (E) the actual amortization paid by such tenant
  shareholder in the reduction of total outstanding principal indebtedness
  on all existing and prior loans for such unit, but only  to  the  extent
  that  the proceeds of such loans were used by the tenant shareholder for
  the purchase of such shares or for the cost  of  the  rehabilitation  or
  construction  of,  or  capital improvements to, such unit, with interest
  thereon at the rate of six percent per annum, (F) the actual outstanding

  principal indebtedness on all existing loans or  other  obligations  for
  such  unit which the tenant shareholder is required to satisfy, but only
  to the extent that the proceeds of such loans were used by  such  tenant
  shareholder  for  the  purchase  of  such  shares or for the cost of the
  rehabilitation or construction of,  or  capital  improvements  to,  such
  unit,  provided  that  if such indebtedness is not paid in full upon the
  sale of such tenant's  shares  such  tenant  shareholder  shall  not  be
  credited  with  the  amount of such indebtedness, and (G) the reasonable
  costs and expenses incurred in connection with the sale of such shares.
    (e) In the case of a condominium project that (i) a  condominium  unit
  shall be transferred or sold only to an eligible applicant; and (ii) the
  resale  price  of a condominium unit shall not exceed an amount equal to
  the sum of (A) the original equity paid by the owner for such  unit  and
  the  rehabilitation  or construction thereof, exclusive of any payments,
  grants or loans received pursuant to this article for such  purposes  or
  from  such other sources as determined by the corporation, with interest
  thereon at the rate of six percent per annum, (B) the  cost  of  capital
  improvements  to  such  unit  paid by such owner after the completion of
  rehabilitation or construction, exclusive of  any  payments,  grants  or
  loans  received  pursuant to this article for such purposes or from such
  other sources as determined by the corporation, with interest thereon at
  the rate of six percent per annum,  (C)  the  pro-rata  portion  of  any
  capital   assessments   or   capital  contributions  for  building  wide
  improvements paid by such owner to the project, with interest thereon at
  the rate of six percent per annum, (D) the actual amortization  paid  by
  such  owner  on  all existing and prior mortgages on, or loans for, such
  unit in the reduction of total outstanding principal  indebtedness,  but
  only  to  the  extent  that the proceeds of such mortgages or loans were
  used by such owner for the unit and the rehabilitation  or  construction
  thereof  or  for  the cost of capital improvements thereto with interest
  thereon at the rate of six percent per annum, (E) the actual outstanding
  principal indebtedness on all existing mortgages on, and loans or  other
  obligations  for,  such unit which the owner is required to satisfy, but
  only to the extent that the proceeds of such  mortgages  or  loans  were
  used  by  such owner for the unit and the rehabilitation or construction
  thereof or for the cost of capital improvements thereto,  provided  that
  if the indebtedness is not paid in full upon the sale of such unit, such
  owner  shall  not  be credited with the amount of such indebtedness, and
  (F) the reasonable costs and expenses incurred in  connection  with  the
  sale of such unit.
    (f)  In  the  case of a rental project that (i) the rental project may
  only be transferred or sold to  an  eligible  applicant;  and  (ii)  the
  resale  price  of the rental project shall not exceed an amount equal to
  the sum of (A) the original equity paid by the owner for the project and
  rehabilitation or  construction  thereof,  exclusive  of  any  payments,
  grants  or  loans received pursuant to this article for such purposes or
  from such other sources as determined by the corporation, with  interest
  thereon  at  the  rate of six percent per annum, (B) the cost of capital
  improvements to the project paid by the owner after  the  completion  of
  rehabilitation  or  construction,  exclusive  of any payments, grants or
  loans received pursuant to this article for such purposes or  from  such
  other sources as determined by the corporation, with interest thereon at
  the  rate  of six percent per annum, (C) the actual amortization paid by
  such owner on all existing and prior mortgages on, or  loans  for,  such
  project  in  the  reduction of total outstanding principal indebtedness,
  but only to the extent that the proceeds of such mortgages or loans were
  used by such owner for the project and rehabilitation thereof or for the
  cost of capital improvements thereto, with interest thereon at the  rate

  of   six  percent  per  annum,  (D)  the  actual  outstanding  principal
  indebtedness on all existing mortgages on, or loans or other obligations
  for, such project which the owner is required to satisfy,  but  only  to
  the extent that the proceeds of such mortgages or loans were used by the
  owner  for  the  project  and  rehabilitation thereof or for the cost of
  capital improvements thereto, provided that if the indebtedness  is  not
  paid  in  full  upon  the  sale  of the project, such owner shall not be
  credited with the amount of such indebtedness, and  (E)  the  reasonable
  costs and expenses incurred in connection with the sale of such project.
    (g)  In  the  case  of  a  rental  project,  that the project shall be
  operated initially as a rental property, and when located in the city of
  New York shall be subject to the  rent  stabilization  law  of  nineteen
  hundred sixty-nine, and when located in a municipality which has elected
  to  be  covered by the provisions of the emergency tenant protection act
  of nineteen seventy-four, be subject to the provisions of such act.  Any
  subsequent conversion to cooperative or condominium ownership during the
  period  in which such property remains subject to the provisions of this
  article shall only be allowed with the consent of the corporation and if
  done pursuant to section three hundred fifty-two-eeee or  three  hundred
  fifty-two-eee of the general business law shall only be allowed pursuant
  to   a  non-eviction  plan.  The  conversion  of  a  rental  project  to
  cooperative or condominium  ownership  shall  make  the  cooperative  or
  condominium subject to the provisions of this article for cooperative or
  condominium projects for the remaining term which the rental project was
  to be subject to the provisions of this article.
    (h)  To  be  located  in  an  area  which is blighted, deteriorated or
  deteriorating, or has a blighting influence on the surrounding area,  or
  is  in  danger  of  becoming  a  slum  or a blighted area because of the
  existence of  substandard,  insanitary,  deteriorating  or  deteriorated
  conditions,  an  aged housing stock, or vacant non-residential property,
  or other factors indicating an inability or unwillingness of the private
  sector unaided to cause the rehabilitation, construction  or  conversion
  which is contracted for under this article.
    3-a.  The  corporation  shall  provide  the  applicant  with a list of
  conditions that must be met prior to entering into a  contract  pursuant
  to  this  article.  Within  fifteen  working  days  of  receipt  by  the
  corporation  of  all  documents  in  satisfaction  of  the   list,   the
  corporation   shall   notify   the   applicant  of  the  sufficiency  or
  insufficiency of the documents. After satisfaction by the  applicant  of
  all  conditions  required  by  the  corporation prior to entering into a
  contract the corporation shall enter into the contract within forty-five
  working days of satisfaction of such conditions.
    4. Notwithstanding the provisions of, or  any  regulation  promulgated
  pursuant to, the emergency housing rent control law, the local emergency
  housing  rent  control  act,  or local law enacted pursuant thereto, the
  rent stabilization law of nineteen hundred sixty-nine, or the  emergency
  tenant  protection  act of nineteen seventy-four, the eligible applicant
  with the approval of the corporation shall have the  power  to  set  the
  initial  rent level of any rental housing accommodation which is located
  in a rental or homesteading project receiving payments, grants or  loans
  under this article.
    5.  Any  cooperative  or  condominium or rental project which receives
  payments, grants or loans pursuant to this article shall be  subject  to
  its  provisions  for  a  period  of twenty years following completion of
  rehabilitation work, construction or conversion or for the period during
  which any loan or  indebtedness  received  under  this  article  remains
  outstanding,  whichever  is  greater  provided  however that all housing
  accommodations in rental projects shall continue to be  subject  to  the

  rent  stabilization  law of nineteen hundred sixty-nine or the emergency
  tenant protection act of nineteen seventy-four, as provided in paragraph
  (g) of subdivision three of this section as the case  may  be,  for  the
  period specified in this subdivision and thereafter the applicability of
  such  laws  shall  terminate  as  to  each  accommodation upon the first
  vacancy which occurs in each accommodation.
    6. Any homesteading project which receives payments, grants  or  loans
  under  this  article  shall be subject to its provisions for a period of
  fifteen years following completion of rehabilitation work,  construction
  or  conversion,  or for the period during which any loan or indebtedness
  received under this article remains outstanding, whichever is greater.
    6-a. Notwithstanding any provisions of subdivisions five  and  six  of
  this  section  to  the  contrary,  in  the case of projects subject to a
  mortgage made by any lender:
    (a) such lender, if not the corporation, shall  give  the  corporation
  notice  when  an  owner  has  defaulted  on  any payment of principal or
  interest on such mortgage loan for a project for a consecutive period of
  sixty days.
    (b) following receipt of such notice, or at such earlier time  as  the
  corporation  deems  appropriate, the corporation shall seek to cure such
  default and make the project economically viable by assisting the  owner
  in  entering  into  a  mortgage  modification agreement with the lender,
  finding a new eligible applicant to  own  the  project  and  assume  the
  obligations  under the mortgage or taking such other actions, consistent
  with  the  provisions  of  this  article,  as  the   corporation   deems
  appropriate.
    (c)  notwithstanding  the provisions of paragraphs (a) and (b) of this
  subdivision, with respect to any lender other than the corporation,  the
  corporation  may provide in agreements respecting any project that where
  a lender shall have  foreclosed  or  obtained  title  to  a  project  in
  accordance  with  law and the provisions of its mortgage, the project or
  particular residential units therein shall not be subject to one or more
  provisions of this article, other than the rent  stabilization  coverage
  provisions  of  paragraph  (g) of subdivision three of this section. Any
  agreement pursuant to this paragraph shall only be made upon  a  finding
  by the corporation that such agreement is necessary in order to enable a
  project  owner  to  obtain  a mortgage loan from a lender other than the
  corporation.
    7. The corporation shall provide for the review, at periodic intervals
  at least annually, of  the  performance  of  eligible  applicants  under
  contract  pursuant  to  this  article.  Such  review  shall, among other
  things, be for the purposes of ascertaining  conformity  to  contractual
  provisions,   the   financial   integrity  and  efficiency  of  eligible
  applicants and the evaluation of the  project.  Contracts  entered  into
  pursuant  to  this  article may be terminated, funds may be withheld and
  unspent funds may be recaptured by the corporation  upon  a  finding  of
  substantial  nonperformance  or  breach by the eligible applicant of its
  obligations under its contract.
    8. Within each of the three categories  of  projects  (cooperative  or
  condominium,  rental,  or  homesteading),  preference in the awarding of
  contracts shall be given to economically feasible projects which contain
  a substantial number of persons of low  income  whose  income  does  not
  exceed   fifty  percent  of  the  median  income  for  the  metropolitan
  statistical area in which the project is located, or if the  project  is
  located  outside  such  an area, to projects which contain a substantial
  number of persons of low  income  whose  incomes  do  not  exceed  fifty
  percent  of  the  median  income  for the county in which the project is
  located.