Section 85. Control of rentals

1. The commissioner shall fix the maximum
  rental per room to be charged the tenants of the dwellings furnished  by
  a  housing company, the average of such rentals for the dwellings in any
  project not to exceed the maximum  average  rental  prescribed  by  law,
  except  as provided in section eighty-seven. Such maximum average rental
  rate shall be determined upon the basis of the actual final cost of  the
  project  containing  such rooms so as to secure, together with all other
  income of the housing company, a sufficient income to meet all necessary
  payments to be made by said housing company, as hereinafter  prescribed,
  and  such  room  rental  rates  shall  be  subject  to  revision  by the
  commissioner from time to time. The payments to be  made  by  a  housing
  company shall be
    (a)  All  fixed charges, and all operating and maintenance charges and
  expenses which shall include a charge to be fixed by the commissioner to
  reimburse him in whole or  in  part  for  the  expenses  of  inspection,
  supervision  and  auditing,  taxes, assessments, insurance, amortization
  charges in amounts approved by the commissioner to amortize the mortgage
  indebtedness in whole or in part,  improvements  and  additions  to  the
  projects  to  the extent and in the amount approved by the commissioner;
  depreciation charges if, when and to the extent deemed necessary by  the
  commissioner;   reserves,   sinking  funds  and  expenses  essential  to
  operation and management of the  project  in  amounts  approved  by  the
  commissioner.
    (b)  A  distribution  not  exceeding the maximum fixed by this article
  upon the capital of the housing company allotted to the project  by  the
  commissioner, and interest on income debentures.
    (c)  Where  feasible  in  the discretion of the commissioner a sinking
  fund in an amount to be  fixed  by  the  commissioner  for  the  gradual
  retirement  of the capital, and income debentures of the housing company
  to the extent permitted by this article.  When  tenants  own  shares  or
  income  debentures  in  a  housing  company, a sinking fund may with the
  approval and subject to the regulations of the commissioner  be  set  up
  and  maintained  out  of  the net profits applicable to surplus and used
  subject to the regulations of the commissioner for the purchase  at  not
  to  exceed  par and accrued interest of the shares and income debentures
  held by tenants ceasing to be occupants  of  the  buildings;  shares  so
  purchased  may be resold by the housing companies. The moneys payable by
  the  project  to  reimburse  the  commissioner  for  the   expenses   of
  inspection, supervision and auditing as herein provided shall be paid to
  the executive department. Letting, subletting or assignment of leases of
  apartments  in  such  buildings  or  structures  at greater rentals than
  prescribed by the order of the commissioner are prohibited and all  such
  leases shall be void for all purposes.
    2.  For the purpose of calculating rentals in such dwellings, alcoves,
  dining bays, and similar accommodations where their existence is legally
  permissible, and bathrooms in the case of apartments of three  rooms  or
  less,  may,  in  the  discretion of the commissioner, be counted as half
  rooms; bathrooms in apartments of  four  rooms  or  more  shall  not  be
  counted as rooms or half rooms.
    3.  In projects where the land is leased from a municipality the value
  of the land shall be taken at a sum fixed by the board, body or  officer
  designated   by   the   local  legislative  body  and  approved  by  the
  commissioner. For all  the  purposes  of  this  article  (including  the
  provisions  of  section  eighty-one)  the determination of the actual or
  estimated cost of projects involving leased lands shall be made  on  the
  basis  provided  in  section  eighty-three  and  other  sections of this
  article in the case of projects involving land purchased  in  fee  by  a
  housing company, except that in projects involving leased land the value

  of  the land leased, ascertained in the manner described above, shall be
  used instead of the cost of the land in determining the  total  cost  of
  the  land and improvements comprising the project. In projects involving
  leased  land,  the rental, if any, during the period of construction may
  be included as part of the cost of the project.  The  sections  of  this
  article  requiring  the  investment of at least one-fifth of the cost of
  the projects capital and income debentures shall not apply  to  projects
  involving  leased  land  but  in  such  projects  the value of the land,
  ascertained in the manner described above, plus the amount  obtained  by
  the  investment  in  the  capital  and  income debentures of the housing
  company shall be at least one-fifth of the cost of the project, and  the
  amounts,  if any, to be raised by mortgage indebtedness shall not exceed
  four-fifths of such cost.