S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9950
 
                             I N  S E N A T E
 
                             November 20, 2024
                                ___________
 
 Introduced  by  Sen. JACKSON -- read twice and ordered printed, and when
   printed to be committed to the Committee on Rules
 
 AN ACT to amend the private housing finance law, in relation to enacting
   the housing development fund company self-determination,  preservation
   and affordability act
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Short title. This act shall be known and may  be  cited  as
 the  "housing  development fund company self-determination, preservation
 and affordability act".
   § 2. Legislative findings and declarations. 1. In 1966,  the  Legisla-
 ture  enacted  Article 11 of the private housing finance law. Article 11
 authorized the development of rental and  cooperative  housing  that  is
 subject  to  certain  income restrictions. The type of income-restricted
 housing is referred to as housing development fund companies (HDFCs).
   2. Beginning in the early 1980s, New York city adopted the  HDFC  form
 of  housing cooperative as a means to divest itself of -- and revitalize
 -- its tax-foreclosed multi-family housing stock. At the time  the  city
 was  experiencing large-scale abandonment of its private low and middle-
 income multi-family housing stock. In response to this  housing  crisis,
 the  city  determined  to turn over the ownership and management of many
 city-owned tax-foreclosed multifamily buildings to the existing  tenants
 in the form of HDFC co-ops.
   3.  Previously,  the city sold at auction nearly all of its tax-forec-
 losed multi-family property to private investors - and that  traditional
 approach  to disposing of tax foreclosed property had led to an acceler-
 ating cycle of housing disinvestment and abandonment.  The  city's  HDFC
 initiative was in the city's own interests: it enabled the city to avoid
 the  counterproductive  private auction process and to return the build-
 ings to the tax rolls.
   4. Over the past four decades the city's HDFC initiative proved to  be
 one  of  New York's most enduring housing success stories. Tens of thou-
 sands of resident-shareholders of HDFCs played an important role in  the
 stabilization  and  preservation of New York city's multi-family housing
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD16173-04-4
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 stock in the period following the city's fiscal crisis of the 1970s  and
 1980s. The city's large-scale creation of HDFC co-ops was a major policy
 innovation and was an important part of the city's response to the hous-
 ing  crisis  of that era. Today, there are over 1,100 HDFC co-ops in New
 York city.
   5. All government  and  community  stakeholders  benefitted  from  the
 large-scale creation of HDFCs. The city benefitted by reducing its enor-
 mous  portfolio of tax-foreclosed apartment buildings at a time when the
 buildings were a substantial burden to  the  city  and  when  there  was
 little  in  the  way of a private market for these properties. The resi-
 dents benefitted by the preservation and upgrading of their  own  build-
 ings  and by becoming homeowners for the first time. And the surrounding
 communities benefitted by the stabilization  of  the  neighborhood,  the
 upgrading  of  housing  and  by the transformation of a rental community
 into a homeowning community.
   6. When the city imposed regulatory  controls  on  the  city-sponsored
 HDFCs,  the  regulatory  controls  placed  on  HDFCs  were time-limited.
 Consequently, the HDFCs that were created in the 1980s  and  1990s  have
 regulatory  controls  that already have expired or will soon expire. For
 this class of HDFCs, there is a great deal of uncertainty  as  to  their
 legal status and their financial future.
   7.  This  legislation clarifies the legal status of HDFCs with expired
 regulatory controls in a way that protects and promotes  their  autonomy
 and  self-governance while strengthening the inducements for these HDFCs
 to voluntarily agree to continue to operate as affordable housing.
   8. An important feature of city-sponsored HDFCs is the city's  use  of
 its  authority  to  enter  into  a "regulatory agreement" with the HDFC.
 Under section 576 of the private housing finance law, either  the  state
 or the municipal "supervisory agency" (i.e., HPD) may enter into a regu-
 latory agreement with an HDFC if the agency advances public funds to the
 HDFC.  Under such section of the private housing finance law, every HDFC
 regulatory agreement must provide that:
   (1) Households must meet  income  eligibility  guidelines,  which  are
 defined  by statute as six times the annual rent plus six percent of the
 shareholder's "original investment" in the  HDFC.  See  paragraph  b  of
 subdivision 1 of section 576 of the private housing finance law.
   (2)  Profits  must  be used only for capital improvements or to reduce
 rent/maintenance. Dividends cannot be paid to owners. See  paragraphs  c
 and  d  of  subdivision  1 of section 576 of the private housing finance
 law.
   (3) The property may not be sold or transferred without  HPD  approval
 for  so long as the regulatory agreement remains in effect and/or unless
 and until any funds or mortgages owed to the city are paid in full.  See
 paragraph  e  of  subdivision  1  of  section 576 of the private housing
 finance law.
   (4) The HDFC may not be dissolved without HPD approval for so long  as
 the  regulatory  agreement remains in effect and/or unless and until any
 funds or mortgages owed to the city are paid in full. See paragraph e of
 subdivision 1 of section 576 of the private housing finance law.
   9. Thus, under section 576 of the private housing finance law  certain
 key  restrictions  remains  in  effect  only for so long as a regulatory
 agreement remains in effect. Put differently, the  city's  authority  to
 impose  section  576 restrictions (including restrictions on dissolution
 of HDFCs and on the sale and disposition of HDFC property) is limited to
 only those HDFCs that are subject to a regulatory agreement and does not
 S. 9950                             3

 extend to HDFCs in which a regulatory agreement or mortgage is no longer
 in effect.
   10.  The  city applied its section 576 authority to HDFCs in two ways:
 i.e. (1) some of the terms of the  section  576  "regulatory  agreement"
 were  incorporated  into various HDFC incorporation documents and in the
 deed conveying title to the property; and (2) a regulatory agreement was
 incorporated into mortgage documents when the city made loans  to  HDFCs
 to  finance  capital  improvements. In each case the city imposed resale
 restrictions that had a fixed term. At the inception of the HDFC program
 in the early 1980s, city-sponsored resale restrictions  imposed  by  the
 sale  documents  expired in ten years. By the late 1980s, city-sponsored
 resale restrictions imposed by the sale  documents  ran  for  25  years.
 Furthermore, resale restrictions that were made a part of city-sponsored
 rehabilitation  loans  to  HDFCs  ran  for the life of the loan -- i.e.,
 usually 15 to 25 years.
   11. Thus, the city used section 576 of the private housing finance law
 as a means to impose additional terms and conditions  (including  resale
 restrictions)  on  the  operation of the HDFC for a fixed term following
 the establishment of the housing cooperative or during  the  life  of  a
 city-sponsored  loan  to the HDFC. For the vast majority of HDFCs, these
 restrictions have expired.
   12. There are presently over 1,100 HDFCs in New York  city  containing
 approximately  25,000  apartments.  Of  these  HDFCs,  approximately  20
 percent are subject to regulatory agreements. A  substantial  number  of
 non-regulated HDFCs date from the 1980s and 1990s. These older HDFCs are
 no  longer subject to city resale restrictions that expired after either
 ten years or 25 years following the incorporation of the HDFCs.
   13. For as long  as  a  particular  city-imposed  resale  restrictions
 remained  in  effect,  an  HDFC is subject to a detailed scheme of regu-
 lations imposed by the city pursuant to section 576 of the private hous-
 ing finance law. In general, HPD resale restrictions govern such  impor-
 tant  issues  of  HDFC  governance as income limitations for purchasers,
 succession rights, sublet rights, flip taxes, HPD consent as a precondi-
 tion to the sale of an HDFC building and HPD consent to the  dissolution
 of  an  HDFC.  Upon the expiration of the city-imposed restrictions, the
 HDFC is no longer subject to these externally imposed regulations.
   14. An HDFC with  expired  regulatory  controls  nevertheless  remains
 subject  to  Article 11 of the private housing finance law as well as to
 various governing documents, such as its certificate  of  incorporation,
 deed  restrictions,  proprietary lease and by-laws. Most importantly, an
 HDFC is required to provide housing for  "persons  of  low  income,"  as
 defined  in  paragraph  a of subdivision 3 of section 573 of the private
 housing finance law. However, once an HDFC regulatory agreement or other
 HPD-imposed income restriction has expired, nothing in the private hous-
 ing finance law expressly precludes these HDFC co-ops from converting to
 a non-HDFC co-op by reincorporating as a conventional co-op (and thereby
 opting out of  the  remaining  statutory  restrictions  imposed  by  the
 private  housing  finance law). That circumstance raised the possibility
 that some HDFCs may opt-out of the HDFC statute and  become  market-rate
 housing  -  which  would  represent  a  loss  to the city's inventory of
 affordable housing stock.
   15. A city-established HDFC is eligible  to  receive  a  partial  real
 estate  tax exemption granted by the city pursuant to section 577 of the
 private housing finance law. Pursuant to this  authority,  the  city  in
 1989  enacted a partial tax exemption for most city-sponsored HDFCs. The
 S. 9950                             4
 
 tax exemption is generally referred to as the "Division  of  Alternative
 Management Programs" tax exemption, or "DAMP tax exemption".
   16. The tax exemption runs for forty years and will expire in 2029.  A
 condition  of the DAMP tax exemption is that the HDFC remain an HDFC for
 the duration of the tax exemption. Hence, an HDFC that opt-outs  of  the
 HDFC statute and become market-rate housing would be required to forfeit
 the DAMP tax exemption.
   17.  The city in 2017 proposed local legislation that would revoke the
 DAMP tax exemption from any HDFC that declined to sign a new  regulatory
 agreement  with HPD. The proposed new regulatory agreement would contain
 many provisions that would largely deprive HDFCs of autonomy  and  self-
 determination, including the imposition of external fiscal monitors paid
 for  by  HDFC income, new restriction on apartment sales and subletting,
 and limitations on the assets and other  real  property  owned  by  HDFC
 shareholders. By 2019 the city abandoned the proposed legislation in the
 face  of widespread opposition by HDFC community groups and other stake-
 holders.
   18. Also in 2017, the city proposed new state legislation  that  would
 re-regulate HDFCs and that would change the law to ensure that all HDFCs
 remain subject to affordability controls in perpetuity. See S2543 (2017)
 (proposed  amendment  to  the private housing finance law). As stated in
 the city's memorandum in support of S2543:
   "(T)here is a great need for an amendment to clarify that  the  corpo-
 rate  purpose of an HDFC -- to provide affordable housing to persons and
 families of low income -- is perpetual in duration.  Absent  the  checks
 and  balances  provided  by  the  (proposed amendment to private housing
 finance law, which would subject HDFCs for the time to the  requirements
 of  the  not-for-profit  corporation  law), there may be a great loss of
 affordable housing."
   19. Thus, the city expressly acknowledged that,  under  existing  law,
 HDFCs with expired regulatory agreements have the option of remaining as
 an HDFC or, in the alternative, the option of converting to another form
 of   housing  cooperative  without  affordability  controls.  S2453  was
 intended to eliminate the  second  option.  Ultimately,  S2453  was  not
 enacted and the statutory law governing HDFCs remains unchanged.
   20.  Contrary  to  the  city's  2017  statement, the New York Attorney
 General issued an opinion in 2015 to the effect that  HDFC  cooperatives
 could  never  opt-out  of  the  PHFL  and  that they were subject to the
 perpetual regulation of the HPD  Commissioner.  See  New  York  Attorney
 General,  "Guidance  on Housing Development Fund Corporations Seeking to
 Transfer or Sell Property for, or Otherwise Convert Property to  Market-
 Rate Use" (hereafter "Guidance"). HPD joined in the Guidance. The Attor-
 ney  General reached this conclusion based on his determination that the
 statutory term "amendment" - as used in subdivision 5 of section 573  of
 the  private  housing  finance law - encompassed and implied the commis-
 sioner's additional authority to consent to the dissolution of an  HDFC.
 The Attorney General's Guidance is incorrect as a matter of law, in that
 it  misconstrues  the  plain text of the HDFC statute as well as ignores
 the distinct treatment of the concepts of "amendment" and  "dissolution"
 in  other New York corporate law settings, including the business corpo-
 ration law.
   21. Consistent with the city's 2017 statement, HDFCs always  have  had
 the  right under the private housing finance law -- and continue to have
 the right under the private housing finance law -- to dissolve and rein-
 corporate under the business corporation law or  other  applicable  law,
 provided  that  the  housing  development fund company: (1) was formerly
 S. 9950                             5
 
 subject to a regulatory agreement  but  such  regulatory  agreement  has
 expired  and/or  was formerly subject to contractual restrictions imple-
 menting the requirements of section 576 of the private  housing  finance
 law  but  that  such  contractual restrictions have expired; and (2) had
 formerly received a tax exemption under section 577 of the private hous-
 ing finance law but such tax exemption either has expired or  is  other-
 wise no longer being received.
   22.  This  legislation  squarely  addresses the legal uncertainty that
 threatens the future of many city-sponsored  HDFCs.  More  particularly,
 this  legislation has three overriding goals: (1) to protect and promote
 the self-determination of HDFC co-ops; (2) to provide strong  incentives
 for  HDFC  co-ops with expired controls to agree to remain as affordable
 housing; and (3) to ensure that the HDFC co-ops that agree to remain  as
 affordable housing are in sound condition and are economically self-suf-
 ficient. These three overriding objectives are complementary.
   23.  The  current  HDFC  tax  exemption  for most city-sponsored HDFCs
 co-ops is scheduled to expire in 2029. Already,  many  financial  insti-
 tutions  have  indicated  a  reluctance to lend to HDFCs in light of the
 financial uncertainty associated with the scheduled  expiration  of  the
 HDFC  tax  exemption in five years. This legislation will eliminate this
 uncertainty by providing a permanent tax incentive for HDFCs.
   24. Currently, HDFC co-ops receive a partial tax exemption - known  as
 "the  DAMP tax benefit". The DAMP tax benefit takes the form of a cap on
 assessed valuation per dwelling unit - currently $12,542. As  previously
 noted, this legislation removes the sunsetting of the DAMP tax exemption
 and  makes  the  tax  exemption  permanent. Furthermore, the legislation
 allows HDFC co-ops to receive the greater of the DAMP tax  exemption  or
 twice the tax abatement that most market-rate co-ops presently currently
 receive under section 467-a of the real property tax law (but which HDFC
 co-ops  presently are ineligible to receive). This increased tax benefit
 to HDFCs is a recognition that income-restricted HDFC co-ops  are  enti-
 tled  to  greater  benefits  than market-rate co-ops. This increased tax
 benefit is a vital means to promote and  protect  housing  affordability
 and  to  provide  financial  stability  to  HDFCs.  The  benefit also is
 intended as an inducement for current HDFC co-ops (with expired  regula-
 tory  controls)  to make a long-term commitment to remain as income-res-
 tricted HDFCs - rather than exercising their right to  reincorporate  as
 another  form  of  housing  cooperative  that  is  not subject to income
 restrictions.
   25. This legislation also establishes a mechanism to ensure that HDFCs
 that receive the tax benefit comply with the new affordability  require-
 ments. As a condition of the continuing receipt of the tax benefit, each
 HDFC  is  required  to  file an annual certification stating that it has
 complied with the  affordability  requirements.  HPD  is  authorized  to
 review  and  audit  the  sales  records  of  the HDFC in order to ensure
 compliance with these requirements. Furthermore, HPD has  the  right  to
 suspend  or revoke the tax exemption and tax abatement if HPD determines
 that HDFC has willfully not complied  with  the  affordability  require-
 ments.
   26.  For  the vast majority of HDFC co-ops, the proposed enhanced real
 estate tax benefit -- together with  the  availability  of  below-market
 interest  financing  available  through  HPD  --  would be sufficient to
 ensure both affordability and fiscal stability. However, for perhaps  10
 to  20 percent of HDFCs -- which are in fair to poor financial condition
 - something more is needed. In  recognition  of  this  special  need  of
 economically  distressed HDFCs, the legislation extends the authority of
 S. 9950                             6
 
 the city of New York to offer special tax relief to HDFC co-ops that are
 in severe fiscal distress and that are in danger of tax  foreclosure  by
 reason  of  unpaid  real estate taxes. Such tax relief is conditioned on
 the  HDFC co-op agreeing to enter into a special regulatory agreement in
 which the city exercises appropriate oversight  and  monitoring  of  the
 HDFC.  Current  legislation  was  enacted  in  2002  and  authorized tax
 forgiveness only for HDFCs that "(as of) January 1, 2002 had outstanding
 municipal real estate taxes relating to any period prior to  January  1,
 2001."  This  baseline year for tax forgiveness (i.e., tax arrears as of
 2001) has never been updated to a more current tax year. The legislation
 updates the baseline year so that the city has the flexibility to  offer
 tax forgiveness (in appropriate cases and subject to strict controls set
 forth  in  current law) for HDFC co-ops that are at risk of tax foreclo-
 sure. In this way an economically distressed HDFC co-op  is  saved  from
 tax  foreclosure,  and  may  thereby  provide sustainable and affordable
 housing for years to come. This is critically important - not  just  for
 the HDFC shareholders themselves - but also for neighborhood stability.
   27.  In summary, this legislation provides a much needed permanent tax
 incentive for HDFCs -- as well as targeted tax relief  for  economically
 distressed  HDFCs.  The permanent tax benefit will eliminate the current
 uncertainty surrounding the expiration of the DAMP tax exemption in 2029
 - and will thereby ease  the  availability  of  mortgage  financing  for
 HDFCs.  Furthermore,  the  permanent  tax benefit will serve as a strong
 incentive for HDFCs with expired regulatory  controls  to  affirmatively
 choose   to   remain  as  affordable  HDFC  housing  subject  to  income
 restrictions -- consistent with  democratic  principles  of  self-gover-
 nance.  This  approach  is  a  matter  of basic fairness and justice; is
 consistent with the promises given to HDFCs over the past thirty  years;
 and  is  in  full accord with how all other government-sponsored private
 housing under the private housing finance law is treated (such as  Mitc-
 hell-Lama  housing  and  Article V redevelopment companies). Most impor-
 tantly, this approach will ensure the long-term  economic  viability  of
 affordable HDFC co-ops.
   §  3. Subdivision 5 of section 573 of the private housing finance law,
 as amended by chapter 410 of the laws of 1984, is  amended  to  read  as
 follows:
   5.  The  secretary of state shall not file the certificate of incorpo-
 ration of any such corporation  or  any  amendment  thereto  unless  the
 consent  or  approval  of the commissioner or the supervising agency, as
 the case may be, is affixed thereon or attached thereto. Consent to  the
 filing of such certificate of incorporation shall be based upon findings
 by the commissioner or supervising agency as to the character and compe-
 tence  of  the  sponsor.    FOR  PURPOSES  OF THIS SUBDIVISION, THE TERM
 "AMENDMENT" AS APPLIED TO SUCH CORPORATION SHALL MEAN  AND  INCLUDE  ANY
 CHANGES IN A CERTIFICATE OF INCORPORATION AS AUTHORIZED IN SECTION EIGHT
 HUNDRED  ONE  OF THE BUSINESS CORPORATION LAW BUT SHALL NOT BE DEEMED TO
 INCLUDE A DISSOLUTION OF SUCH  CORPORATION  PURSUANT  TO  SECTION  EIGHT
 HUNDRED  FIVE  OF  THE BUSINESS CORPORATION LAW. THE DISSOLUTION OF SUCH
 CORPORATION DOES NOT REQUIRE THE CONSENT OR APPROVAL OF THE COMMISSIONER
 OR THE SUPERVISING AGENCY. A HOUSING DEVELOPMENT FUND  COMPANY  HAS  THE
 RIGHT  UNDER  THIS  SECTION AND SECTION FIVE HUNDRED SEVENTY-SIX OF THIS
 ARTICLE TO DISSOLVE AND RE-INCORPORATE UNDER  THE  BUSINESS  CORPORATION
 LAW  OR OTHER APPLICABLE LAW, PROVIDED THAT THE HOUSING DEVELOPMENT FUND
 COMPANY:
   A. WAS FORMERLY SUBJECT TO A REGULATORY AGREEMENT BUT SUCH  REGULATORY
 AGREEMENT  HAS  EXPIRED  AND/OR  WAS  FORMERLY  SUBJECT  TO  CONTRACTUAL
 S. 9950                             7
 
 RESTRICTIONS IMPLEMENTING  THE  REQUIREMENTS  OF  SECTION  FIVE  HUNDRED
 SEVENTY-SIX  OF  THIS  ARTICLE  BUT  SUCH  CONTRACTUAL RESTRICTIONS HAVE
 EXPIRED; AND
   B. HAD FORMERLY RECEIVED A TAX EXEMPTION AND/OR TAX ABATEMENT PURSUANT
 TO  SECTION  FIVE  HUNDRED  SEVENTY-SEVEN  OF  THIS ARTICLE AND SUCH TAX
 EXEMPTION AND/OR TAX ABATEMENT HAS EITHER EXPIRED  OR  IS  OTHERWISE  NO
 LONGER BEING RECEIVED.
   §  4.  Section  576  of  the private housing finance law is amended by
 adding a new subdivision 4 to read as follows:
   4. A HOUSING DEVELOPMENT FUND COMPANY THAT IS NO LONGER SUBJECT EITHER
 TO A REGULATORY AGREEMENT OR TO DEED RESTRICTIONS ENTERED INTO WITH  THE
 COMMISSIONER  OR  SUPERVISORY AGENCY SHALL CONTINUE TO BE SUBJECT TO THE
 OVERSIGHT OF THE COMMISSIONER OR  SUPERVISORY  AGENCY,  SUBJECT  TO  THE
 LIMITATION SET FORTH IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION FIVE
 HUNDRED  SEVENTY-SEVEN OF THIS ARTICLE, PROVIDED THAT THE HOUSING DEVEL-
 OPMENT FUND COMPANY CONTINUES TO ELECT TO RECEIVE A TAX EXEMPTION AND/OR
 TAX ABATEMENT PURSUANT TO SECTION FIVE  HUNDRED  SEVENTY-SEVEN  OF  THIS
 ARTICLE.  IF SUCH HOUSING DEVELOPMENT FUND COMPANY ELECTS NOT TO RECEIVE
 A  TAX  EXEMPTION AND/OR TAX ABATEMENT PURSUANT TO SUCH SECTION, THEN IT
 SHALL CEASE TO BE SUBJECT TO THE REGULATION AND OVERSIGHT OF THE COMMIS-
 SIONER OR SUPERVISORY AGENCY.
   § 5. Subdivision 1 of section 577 of the private housing finance  law,
 as  amended by chapter 658 of the laws of 1967, paragraph (a) as amended
 by chapter 428 of the laws of 1980, paragraph (c) as  added  by  chapter
 494 of the laws of 1995, and paragraph (d) as added by chapter 73 of the
 laws of 2009, is amended to read as follows:
   1.  (a)  The  local  legislative  body  of any municipality in which a
 project of a housing development fund company is or is to be located may
 exempt AND ABATE the real property in such project from local and munic-
 ipal taxes including school taxes,  other  than  assessments  for  local
 improvements,  to the extent of all or part of the value of the property
 included in the completed project. The tax exemption AND  TAX  ABATEMENT
 shall  operate  and continue for [such period as may be provided by such
 local legislative body, but in no event for a period of more than  forty
 years, commencing] SO LONG AS A HOUSING DEVELOPMENT FUND COMPANY REMAINS
 IN  COMPLIANCE WITH THE REQUIREMENTS OF THIS SECTION, AND SHALL COMMENCE
 in each instance from the date on which the benefits of  such  exemption
 first  became available and effective.  THE TAX EXEMPTION AND TAX ABATE-
 MENT SHALL BE APPLIED TO:
   (I) NEWLY CREATED HOUSING DEVELOPMENT FUND COMPANIES THAT ARE  SUBJECT
 TO  REGULATORY AGREEMENT AND/OR CONTRACTUAL OR DEED RESTRICTIONS IMPOSED
 BY THE COMMISSIONER OR SUPERVISORY AGENCY;
   (II) HOUSING DEVELOPMENT FUND COMPANIES THAT ARE PRESENTLY SUBJECT  TO
 A  REGULATORY  AGREEMENT AND/OR CONTRACTUAL OR DEED RESTRICTIONS IMPOSED
 BY THE COMMISSIONER OR SUPERVISORY AGENCY; AND
   (III) HOUSING  DEVELOPMENT  FUND  COMPANIES  THAT  ARE  NOT  PRESENTLY
 SUBJECT  TO  A  REGULATORY  AGREEMENT  AND  ARE NOT PRESENTLY SUBJECT TO
 CONTRACTUAL OR DEED RESTRICTIONS IMPOSED BY THE COMMISSIONER OR SUPERVI-
 SORY AGENCY BUT THAT AGREE TO THE CONDITIONS OF THE  TAX  EXEMPTION  AND
 TAX ABATEMENT AS HEREINAFTER DESCRIBED IN PARAGRAPH (B) OF THIS SUBDIVI-
 SION.
   (b)  IN  ORDER  FOR  A  HOUSING  DEVELOPMENT FUND COMPANY DESCRIBED IN
 SUBPARAGRAPH (III) OF PARAGRAPH (A) OF THIS SUBDIVISION TO  BE  ELIGIBLE
 FOR  A  TAX  EXEMPTION  AND TAX ABATEMENT PURSUANT TO THIS SECTION, SUCH
 COMPANY SHALL BE REQUIRED, FOR SO LONG AS IT RECEIVES SUCH TAX EXEMPTION
 AND TAX ABATEMENT, TO NOT APPROVE A SALE  OF  AN  APARTMENT  UNLESS  THE
 S. 9950                             8
 
 PURCHASER  OF  THE  APARTMENT  PROVIDES SATISFACTORY PROOF OF INCOME AND
 UNLESS THE INCOME OF THE PURCHASER IS NO GREATER THAN THE INCOME LIMITA-
 TION SPECIFIED HEREIN. SUCH INCOME LIMITATION SHALL BE, AT THE  ELECTION
 OF THE HOUSING DEVELOPMENT FUND COMPANY, EITHER (I) THE APARTMENT RESALE
 REQUIREMENT  OF  PARAGRAPH  B OF SUBDIVISION ONE OF SECTION FIVE HUNDRED
 SEVENTY-SIX OF THIS ARTICLE; OR (II) A REQUIREMENT THAT THE INCOME OF  A
 PURCHASER  OF  AN APARTMENT NOT EXCEED ONE HUNDRED SIXTY-FIVE PERCENT OF
 THE AREA MEDIAN INCOME, AS DETERMINED FROM TIME TO TIME  BY  THE  UNITED
 STATES  DEPARTMENT  OF  HOUSING AND URBAN DEVELOPMENT. AS A CONDITION OF
 THE CONTINUING RECEIPT OF SUCH TAX  EXEMPTION  AND  TAX  ABATEMENT,  THE
 HOUSING DEVELOPMENT FUND COMPANY SHALL FILE AN ANNUAL CERTIFICATION WITH
 THE  COMMISSIONER  OR  SUPERVISORY  AGENCY THAT THE COMPANY HAS COMPLIED
 WITH THE REQUIREMENTS OF  THIS  SECTION.  SUCH  CERTIFICATION  SHALL  BE
 LIMITED  TO  A  LISTING  OF  APARTMENTS SOLD OR TRANSFERRED IN THE PRIOR
 TWELVE MONTHS AND A STATEMENT THAT THE INCOME OF THE PURCHASER OR TRANS-
 FEREE OF THE APARTMENT COMPLIES WITH  THE  INCOME  REQUIREMENT  OF  THIS
 PARAGRAPH,  EXCEPT THAT A TRANSFEREE WHO IS A MEMBER OF THE TRANSFEROR'S
 FAMILY OR HOUSEHOLD NEED NOT COMPLY WITH SUCH REQUIREMENT.
   (C) (I) THE COMMISSIONER OR SUPERVISORY AGENCY MAY  REVIEW  AND  AUDIT
 THE  SALES  RECORDS  OF  A  HOUSING DEVELOPMENT FUND COMPANY IN ORDER TO
 ENSURE COMPLIANCE WITH THE REQUIREMENTS OF THIS SECTION. THE COMMISSION-
 ER OR SUPERVISORY AGENCY SHALL HAVE THE AUTHORITY TO SUSPEND  OR  REVOKE
 THE  TAX  EXEMPTION AND TAX ABATEMENT APPLICABLE TO ANY HOUSING DEVELOP-
 MENT FUND COMPANY, IN PROPORTION TO THE PERCENTAGE OF DWELLING UNITS  AT
 A  HOUSING  DEVELOPMENT  FUND  CORPORATION  NOT  IN COMPLIANCE WITH THIS
 SECTION, IF THE COMMISSIONER DETERMINES THAT THE COMPANY  HAS  WILLFULLY
 VIOLATED THE PROVISIONS OF THIS SECTION, SO LONG AS THE HOUSING DEVELOP-
 MENT FUND COMPANY IS PROVIDED WITH PRIOR WRITTEN NOTIFICATION AS TO EACH
 SPECIFIC  INSTANCE OF NONCOMPLIANCE AND TO WHICH DWELLING UNIT SUCH NON-
 COMPLIANCE IS ALLEGED.
   (II) A HOUSING DEVELOPMENT FUND COMPANY SHALL HAVE THE RIGHT TO  REBUT
 ALLEGATIONS  OF  A WILLFUL VIOLATION OF THIS SECTION, AND ALSO TO CHARGE
 AND COLLECT ADDITIONAL MONIES FROM ANY SHAREHOLDER, INCLUDING SUCCESSORS
 AND ASSIGNS, FOUND BY THE COMMISSIONER OR  SUPERVISORY  AGENCY  TO  HAVE
 WILLFULLY  NOT  COMPLIED  WITH THE REQUIREMENTS OF THIS SECTION SO AS TO
 RECOVER EXPENSES FOR ALL LOSSES OF TAX EXEMPTIONS AND TAX ABATEMENTS AND
 SO AS TO RECOVER ALL EXPENSES ASSOCIATED WITH RESPONDING TO SUCH ALLEGA-
 TIONS BY THE COMMISSIONER OR SUPERVISORY AGENCY.
   (III) ANY ANNUAL CERTIFICATION SUBMITTED PURSUANT TO THIS SECTION THAT
 HAS BEEN ACCEPTED FOR FILING AND THAT HAS NOT BEEN SUBJECT TO A  SUSPEN-
 SION  OR REVOCATION ACTION BY THE COMMISSIONER OR SUPERVISORY AGENCY FOR
 A PERIOD OF FIVE YEARS SHALL BE DEEMED CORRECT AND SHALL NOT BE  SUBJECT
 TO FURTHER AUDIT OR REVIEW BY THE COMMISSIONER OR SUPERVISORY AGENCY.
   (D)  THE  CONDITIONS  SET  FORTH  IN PARAGRAPH (B) OF THIS SUBDIVISION
 SHALL BE THE SOLE AND EXCLUSIVE CONDITIONS GOVERNING THE ELIGIBILITY  OF
 A  HOUSING  DEVELOPMENT  FUND COMPANY DESCRIBED IN SUBPARAGRAPH (III) OF
 PARAGRAPH (A) OF THIS SUBDIVISION FOR RECEIPT OF THE TAX  EXEMPTION  AND
 TAX ABATEMENT AUTHORIZED IN PARAGRAPH (E) OF THIS SUBDIVISION.
   (E)  FOR  EACH  ELIGIBLE  HOUSING DEVELOPMENT FUND COMPANY, THE ANNUAL
 AMOUNT OF THE TAX EXEMPTION AND TAX  ABATEMENT  AUTHORIZED  PURSUANT  TO
 THIS SECTION SHALL BE THE GREATER OF:
   (I)  TWELVE THOUSAND FIVE HUNDRED FORTY-TWO DOLLARS, EQUIVALENT TO THE
 CAP ON ASSESSED VALUE PER APARTMENT OF FIFTY THOUSAND DOLLARS IN THE TWO
 THOUSAND TWENTY-FOUR TAX YEAR, AND WHICH SHALL INCREASE  BY  TWO  AND  A
 HALF PERCENT PER YEAR IN EACH SUBSEQUENT TAX YEAR; OR
 S. 9950                             9
 
   (II) THE NET REDUCTION IN REAL ESTATE TAXES RESULTING FROM TWO HUNDRED
 PERCENT  OF  THE  TAX  ABATEMENT  FOR HOUSING COOPERATIVES AUTHORIZED BY
 SECTION FOUR HUNDRED SIXTY-SEVEN-A OF THE REAL PROPERTY TAX LAW.
   (F) Where a municipality acts on behalf of another taxing jurisdiction
 in  assessing  real  property for the purpose of taxation, or in levying
 taxes therefor, the action of the local legislative body of such munici-
 pality in granting such tax exemption shall have the effect of exempting
 the real property in such project from local and municipal taxes includ-
 ing school taxes, other than assessments for local improvements,  levied
 by or in behalf of both such taxing jurisdictions.
   [(c)]  (G) The local legislative body of any municipality may grant an
 exemption under paragraph (a) of this subdivision to the  real  property
 of  a  project  of  any  entity to which it is authorized to make a loan
 pursuant to section five hundred seventy-six-c of this article.
   [(d)] (H) In a city having a population of one million or more, within
 one hundred twenty days following receipt of a written  submission  from
 the  supervising agency requesting a tax exemption pursuant to paragraph
 (a) of this subdivision for the real property containing the project  of
 a  housing  development  fund  company, the local legislative body shall
 approve or disapprove by resolution the requested tax exemption. If  the
 local  legislative  body  fails  to  take such action within one hundred
 twenty days following receipt  of  such  written  submission  from  such
 supervising  agency, then the tax exemption requested by the supervising
 agency shall be deemed approved pursuant to paragraph (a) of this subdi-
 vision.
   § 6. Paragraph (b) of subdivision 1 of section 577-b  of  the  private
 housing  finance  law, as amended by chapter 225 of the laws of 2004, is
 amended to read as follows:
   (b) on January first, two thousand [two] TWENTY-FOUR, had  outstanding
 municipal  real  estate  taxes  relating  to any period prior to January
 first, two thousand [one] TWENTY-THREE.
   § 7. This act shall take effect on the first of January next  succeed-
 ing the date on which it shall have become a law.