Section 452. Loans to owners

1.  Notwithstanding the provisions of any
  general, special or local law, a municipality is  hereby  authorized  to
  make  or  contract  to  make  loans  to  the owners of existing multiple
  dwellings within its territorial limits, subject to the  limitations  in
  subdivision  two of this section, for the elimination of any substandard
  or insanitary condition or  conditions  in  violation  of  the  multiple
  dwelling  law  or  local  housing  code,  or  for  such  replacement and
  rehabilitation of the heating, plumbing, electrical and related  systems
  or  other  improvements  as shall be reasonably necessary to prolong the
  useful life of such dwellings, and may  make  temporary  loans  to  such
  owners  in  anticipation  of  the  permanent  municipal  loans  for such
  purposes.
    2. Each loan shall be evidenced by a note executed by the owner of the
  existing multiple dwelling. The supervising agency in its discretion may
  require one or more of the shareholders of a corporate owner to  co-sign
  such note or to otherwise guarantee or pledge security for the repayment
  of  the  loan.  The  amount of any such loan shall not exceed the sum of
  thirty-five thousand dollars ($35,000) per dwelling unit, or the cost of
  eliminating such substandard or insanitary condition or  conditions,  or
  effecting  such  rehabilitation  or improvement, whichever is less. Each
  such note shall be repaid within a period of the probable  life  of  the
  existing  multiple  dwelling  which  is  hereby  determined to be thirty
  years, or such shorter period as the supervising agency shall determine.
  The repayment shall be made in such manner as may be  provided  in  such
  note  and  contract,  if  any,  in  connection  with  such  loan and may
  authorize such owner, with the consent of  the  supervising  agency,  to
  prepay the principal of the loan subject to such terms and conditions as
  therein  provided.  Such  note and contract may contain such other terms
  and provisions not inconsistent with the provisions of this  article  as
  the  local  legislative body or supervising 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, including  but  not  limited  to  provisions
  ensuring availability of rents for such repayment.
    3. The supervising agency in its discretion may require that the owner
  execute  a  financing  statement  for real property improvement to be in
  such form as the agency shall  specify  and  to  contain  the  following
  information:  the  name and mailing address of the owner, the address of
  the real property, a  statement  that  a  loan  has  been  made  by  the
  municipality under this article, the amount and duration thereof and the
  applicable  interest  rate.  Said  financing  statement  shall  be filed
  without charge in the office for recording mortgages  of  real  property
  and  from  the  date  of  such filing the municipality shall have a lien
  against said real property for the amount advanced or so much thereof as
  remains unpaid and interest thereon. If a financing statement  is  filed
  as  herein provided, the rights and remedies of the municipality and the
  priority of its lien shall be the same as those of a holder  of  a  lien
  for  the  materials  furnished  or labor performed in the improvement of
  real property pursuant to articles two and three of the lien law, except
  that the lien shall be valid for one year after the maturity date of the
  final installment payable under said note and thereafter as provided  in
  section  seventeen of the lien law. Upon payment of all sums advanced by
  the municipality and interest thereon and upon demand of the then record
  owner of the real property, the agency shall deliver to him  a  copy  of
  the  financing  statement  with  an endorsement thereon that the lien is
  satisfied; upon filing of such copy in the office  where  the  financing
  statement  was  filed  and  upon payment of the proper fee therefor, the
  lien of such financing statement shall be discharged.

    4. The supervising agency may require the owner to execute a  mortgage
  as  security  for a loan in lieu of a financing statement as provided in
  the foregoing subsection three. Such mortgage shall contain  such  terms
  and  provisions  not inconsistent with the provisions of this article as
  the  supervising  agency  shall  deem  necessary  or desirable to secure
  repayment of the loan under this article.
    5. The supervising agency  may  charge  the  owner  of  such  existing
  multiple dwelling reasonable fees for financing, regulation, supervision
  and  audit.  Such  fees  shall be kept by the municipality in a separate
  fund to be known as the article VIII-A housing rehabilitation  fund  and
  shall  be  used  to  help  meet  the  expenses  of  the  municipality in
  administering and carrying out the provisions of this article.
    6. In  the  case  of  a  loan  made  pursuant  to  this  article,  the
  supervising  agency  may pay any liens and charges the priority of which
  is superior to its mortgage and may pay such other expenses  as  may  be
  appropriate  to  protect its loan or to protect the lien of the mortgage
  relating thereto, provided that such expenditures shall not  exceed  the
  total amount of such loan.
    * 7.  Notwithstanding the provisions of, or any regulation promulgated
  pursuant to, the emergency housing rent control law, the local emergency
  housing rent  control  act,  the  emergency  tenant  protection  act  of
  nineteen  seventy-four,  or any local law enacted pursuant thereto, upon
  completion of the rehabilitation of a multiple dwelling which  is  aided
  by  a loan made pursuant to this article, the supervising agency, may as
  an alternative to permissible rental adjustments  under  such  laws  and
  regulations,  adjust  the  rent for each rental dwelling unit within the
  multiple  dwelling.  The  initial  rental  adjustment,  if  set  by  the
  supervising  agency,  shall  be  established  based  solely  on the debt
  service attributable to the loan, provided, that the supervising  agency
  may  establish  rental adjustments less than such debt service, provided
  further  that  the  supervising  agency  may  establish  greater  rental
  adjustments  for vacant dwelling units than for occupied dwelling units.
  The supervising agency shall cause all  tenants  in  occupancy  of  each
  dwelling  unit  affected  by  the  provisions  of this subdivision to be
  notified  of  and  have  an  opportunity  to  comment  on   contemplated
  rehabilitation.  Such  notification  shall  advise  such  tenants of the
  approximate expected rent increase. Such notification and opportunity to
  comment shall be provided before the rehabilitation and again after  the
  construction  is  completed  and  before the establishment of the rental
  adjustment.
    * NB Expires July 1, 2010
    * 8. Notwithstanding the provisions of, or any regulation  promulgated
  pursuant to, the emergency housing rent control law, the local emergency
  housing  rent  control  act,  the  emergency  tenant  protection  act of
  nineteen seventy-four, or any local law enacted pursuant  thereto,  upon
  completion of the rehabilitation of a class B multiple dwelling, class A
  multiple dwelling used for single room occupancy purposes, lodging house
  or   a   substantially   vacant  building  intended  to  be  used  after
  rehabilitation for single room occupancy purposes and which is aided  by
  a  loan  pursuant  to  this article made by the municipality on or after
  September  first,  nineteen  hundred  eighty-five,  the   agency   shall
  establish  the  initial  rent  for  each rental dwelling unit within the
  multiple dwelling. All  dwelling  units  within  the  multiple  dwelling
  subsequent  to  establishment  of  initial  rents by the agency shall be
  subject to the rent stabilization law of  nineteen  hundred  sixty-nine.
  The  occupant  in  possession  of  such  a dwelling unit when it is made
  subject to the rent stabilization law  of  nineteen  hundred  sixty-nine
  shall  be  offered  a  choice  of a one or two year lease at the initial

  rents established by the agency notwithstanding any contrary  provisions
  of,  or  regulations  adopted pursuant to, the rent stabilization law of
  nineteen hundred sixty-nine and the emergency tenant protection  act  of
  nineteen  seventy-four.  The agency shall cause all tenants in occupancy
  of each dwelling unit affected by the provisions of this subdivision  to
  be  notified  of  and have an opportunity to comment on the contemplated
  rehabilitation. Such notification  shall  advise  such  tenants  of  the
  approximate  expected rent increase and the subsequent availability of a
  one or two year lease. Such  notification  and  opportunity  to  comment
  shall  be  provided  before  the  rehabilitation  and  again  after  the
  construction is completed and before the establishment  of  the  initial
  rents.
    * NB Expires July 1, 2010
    9.  The  note  or  note  and  contract issued by the owner of any such
  multiple dwelling to secure such loan may provide that the loan shall be
  reduced to zero commencing on the fifteenth year after the execution  of
  the  note  or  note  and contract, provided that, as of the date of such
  reduction, the 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 note or
  note and contract, the loan shall be reduced to zero only if,  prior  to
  or  simultaneously  with delivery of such note or note and contract, 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.