S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7523
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               April 1, 2025
                                ___________
 
 Introduced by M. of A. FITZPATRICK, TAGUE -- Multi-Sponsored by -- M. of
   A. MANKTELOW -- read once and referred to the Committee on Housing
 
 AN  ACT to amend the private housing finance law, in relation to extend-
   ing provisions relating to affordable housing development loans to all
   municipalities of the state of New York

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Section 1150 of the private housing finance law, as added
 by chapter 639 of the laws of 1989, is amended to read as follows:
   § 1150. Statement of legislative findings and purposes. It  is  hereby
 found  and  declared that there exists in [the city of] New York STATE a
 seriously inadequate supply of safe, sanitary  and  affordable  dwelling
 accommodations for persons and families for whom the ordinary operations
 of  private  enterprise cannot provide such accommodations. The legisla-
 ture further finds and declares that [the city of New York] ANY  MUNICI-
 PALITY  should be permitted to assist the private sector in the develop-
 ment of dwelling  accommodations  affordable  to  such  persons  through
 establishment of a program to provide monies to make the construction of
 dwelling accommodations more affordable. It is recognized that currently
 [the  city of New York assists] MUNICIPALITIES ASSIST the development of
 such housing accommodations through the provisions of  articles  fifteen
 and sixteen of the general municipal law which permit such assistance on
 [city-owned]  MUNICIPALLY-OWNED sites which are sold to private develop-
 ers or non-profit groups for construction of housing.   It  is  intended
 that  [the  city  of  New  York]  ANY MUNICIPALITY also be authorized to
 expend monies to assist housing  development  on  sites  which  are  not
 [city-owned]  MUNICIPALLY-OWNED.    Accordingly,  the legislature enacts
 this article to provide such authorization and to encourage the develop-
 ment of additional affordable dwelling accommodations.
   § 2. Subdivisions 1, 6 and 9 of section 1151 of  the  private  housing
 finance law, subdivisions 1 and 9 as added by chapter 639 of the laws of
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD04087-01-5
              

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 1989  and  subdivision  6 as amended by chapter 535 of the laws of 2023,
 are amended to read as follows:
   1.  "Eligible  site"  shall mean any real property [in the city of New
 York] WITHIN A MUNICIPALITY which the SUPERVISING agency  determines  to
 be located in an area which is blighted or deteriorated or has a blight-
 ing influence on the surrounding area or is in danger of becoming a slum
 or  blighted  area  because  of  neighborhood  conditions  indicating an
 inability or unwillingness of the private sector to invest in housing in
 such area.
   6. "Loan" shall mean a mortgage loan  made  by  a  private  lender  in
 participation  with  [the  city of New York] A MUNICIPALITY to a sponsor
 for the purpose of construction of an eligible project including a  loan
 in  which  the  portion  of the loan funded by the SUPERVISING agency is
 represented by a separate note and mortgage.
   9. ["Agency"] "SUPERVISING AGENCY" shall mean [the department of hous-
 ing preservation and development of the city of New York or any  succes-
 sor thereto] ANY OFFICER, BOARD, COMMISSION, DEPARTMENT, OR OTHER AGENCY
 OF  THE  MUNICIPALITY,  OR  THE AUTHORITY OR ANY OTHER PUBLIC AUTHORITY,
 DESIGNATED BY THE LOCAL LEGISLATIVE BODY  TO  CARRY  OUT  THE  FUNCTIONS
 VESTED  IN  THE  AGENCY UNDER THIS ARTICLE OR DELEGATED TO THE AGENCY BY
 THE LOCAL LEGISLATIVE BODY IN  ORDER  TO  CARRY  OUT  THE  PURPOSES  AND
 PROVISIONS OF THIS ARTICLE; EXCEPT THAT IN THE CITY OF NEW YORK SHALL BE
 THE DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT.
   §  3.  Section  1152 of the private housing finance law, as amended by
 chapter 535 of the laws of 2023, is amended to read as follows:
   § 1152. Affordable housing development loans. 1.  (a)  Notwithstanding
 the provisions of any general, special or local law, one or more private
 lenders  and [the city of New York] A MUNICIPALITY, acting through [the]
 ITS SUPERVISING agency, shall have the power to participate  and  invest
 in  making  loans to sponsors for the construction of eligible projects.
 Such loans may be made exclusively for or may include  such  amounts  as
 may  be  required  for  site  acquisition or the refinancing of eligible
 projects. Each such participation loan shall be secured  by  a  bond  or
 note and single participating mortgage or by separate bonds or notes and
 mortgages  upon  the eligible project. Such bond or note and mortgage or
 bonds or notes or mortgages may contain such other terms and  provisions
 not  inconsistent with the provisions of this article as the SUPERVISING
 agency may deem necessary or desirable, including, but not  limited  to,
 terms providing that the lien created by such note and mortgage, and, if
 applicable,  any  regulatory  agreement executed by the sponsor and such
 SUPERVISING agency or restrictive covenant approved by such  SUPERVISING
 agency,  may  be recorded in an equal or subordinate position, or subse-
 quently made equal or subordinate, to the lien created  by  any  private
 lender against such eligible project.
   (b)  Notwithstanding  the  provisions of any general, special or local
 law, and in addition to the power to make or contract  to  make  partic-
 ipation loans granted by paragraph (a) of this subdivision, [the city of
 New  York]  A MUNICIPALITY, acting through [the] ITS SUPERVISING agency,
 shall have the power to make or contract to make loans or grants to  any
 owner described in paragraph (a) of this subdivision without the partic-
 ipation  of  a private lender, on the same terms as permitted under such
 paragraph for a participation loan.
   2. The SUPERVISING agency may enter into an agreement with  a  private
 lender  to  deposit  its  share  of a loan with the private lender to be
 advanced by the private lender. The portion of the loan  funded  by  the
 SUPERVISING agency may be equal to or subordinate in lien to the portion
 A. 7523                             3
 
 of the loan funded by the private lender and may contain such terms with
 respect  to interest rate, if any, rate of amortization of principal, if
 any, and time of payment of interest and principal as determined by  the
 SUPERVISING  agency. The SUPERVISING agency may make provision either in
 the mortgage or mortgages or by separate agreement for  the  performance
 by  the  private lender of such services as are generally performed by a
 banking institution which itself holds a  mortgage,  including,  without
 limitation, construction loan advances, construction supervision, initi-
 ation  of  foreclosure  proceedings,  procurement  of insurance, and all
 other matters in connection with the financing, supervision,  regulation
 and audit of any such loan to any such eligible project.
   3.  If the eligible project is to consist of one to four unit dwelling
 accommodations or cooperative  or  condominium  units,  the  SUPERVISING
 agency's  share  of  the  loan  may  be  converted  after  completion of
 construction into mortgages on such dwelling accommodations or condomin-
 ium units or financing statements filed with respect to such cooperative
 shares, provided such units or such cooperative shares are purchased  by
 persons  of low income. Such mortgages and any blanket mortgage that the
 SUPERVISING agency retains on any portion of, or on all of, the eligible
 project may provide that such mortgages and such blanket  mortgage  will
 automatically  be reduced to zero over a period of continuous compliance
 by the mortgagor with a regulatory  agreement  or  restrictive  covenant
 with  or approved by the SUPERVISING agency and upon the satisfaction of
 any  additional  conditions  specified  therein.  Notwithstanding   such
 provision  as  contained  in such mortgage, the loan shall be reduced to
 zero only if, prior to or simultaneously with delivery of such mortgage,
 the SUPERVISING agency made a written determination that such  reduction
 would  be  necessary  to  ensure the continued affordability or economic
 viability of the eligible  project.  Such  written  determination  shall
 document the basis upon which the loan was determined to be eligible for
 evaporation.  Such  period of continuous compliance with such regulatory
 agreement or restrictive covenant shall not be less than fifteen years.
   4. If the eligible project is to consist of one to four unit  dwelling
 accommodations  or  cooperative  or  condominium  units, the SUPERVISING
 agency shall require that the dwelling units be  offered  only  to  bona
 fide  purchasers who intend to occupy a unit as their principal place of
 residence; provided, however, that in the  case  of  two  to  four  unit
 dwelling accommodations the bona fide purchaser may occupy only a single
 unit as a principal place of residence. If the purchaser ceases to occu-
 py  the  unit  as a principal place of residence, the SUPERVISING agency
 may provide for recapture of all or a portion of the  SUPERVISING  agen-
 cy's share of the loan.
   5.  If the eligible project is a rental project, the SUPERVISING agen-
 cy's share of the loan may be converted after completion of construction
 into a permanent loan with a term of forty  years,  provided  that  such
 period may be extended as the SUPERVISING agency may determine is neces-
 sary  to ensure the continued affordability or economic viability of the
 eligible project, payable in such manner as may be provided in the  note
 and  any  mortgage  in connection with such loan. Such note and mortgage
 may contain such terms and conditions as the SUPERVISING agency may deem
 necessary or desirable to effectuate the purposes and provisions of this
 article. The sponsor or any subsequent owner or owners of such a project
 shall agree to rent such units only to persons of low  income  for  such
 period  as  the SUPERVISING agency may determine. All such units LOCATED
 IN THE CITY OF NEW  YORK  shall  be  subject  to  the  emergency  tenant
 protection  act  of nineteen seventy-four and the rent stabilization law
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 of nineteen hundred sixty-nine, as amended, unless converted to a  coop-
 erative  or  condominium  pursuant to subdivision seven of this section.
 Initial rentals for all rental units shall be  set  by  the  SUPERVISING
 agency.
   6.  [If]  IN THE CITY OF NEW YORK, IF the eligible project is a rental
 project annual profits shall be limited to an amount set by  the  SUPER-
 VISING  agency  for  as  long as the loan is outstanding. Excess profits
 shall be used to establish project reserves,  provide  capital  improve-
 ments  or  reduce the principal amount of the SUPERVISING agency's loan,
 as determined by the SUPERVISING agency.
   7. If the eligible project is a rental project,  no  conversion  to  a
 cooperative  or  condominium  shall  be permitted for a period of twenty
 years after initial occupancy, and unless (i) the  SUPERVISING  agency's
 share  of  the loan is prepaid upon such conversion, (ii) the conversion
 shall be done pursuant to section three hundred  fifty-two-eeee  of  the
 general  business law as a non-eviction plan, and (iii) apartments occu-
 pied by non-purchasing tenants  continue  to  be  subject  to  the  rent
 stabilization  law  of nineteen hundred sixty-nine as amended, until the
 occurrence of a vacancy.
   8. A loan made pursuant to this article shall be exempt from the mort-
 gage recording taxes imposed by article eleven of the tax law.
   9. Notwithstanding the provisions of any general, special or local law
 or charter, the SUPERVISING agency shall have power, without  soliciting
 competing  bids,  to contract with any sponsor or to make provision in a
 loan for the construction or reconstruction  of  any  site  improvements
 located  in  the  public  right-of-way or on the eligible site which are
 necessary for the development of an eligible project. Such site improve-
 ments may include, but shall not  be  limited  to,  streets,  sidewalks,
 landscaping,  parks  and  open space, social, recreational, communal and
 other non-residential facilities and the  outfitting  thereof,  lighting
 fixtures,  and  water  and sewer lines, incidental or appurtenant to the
 construction of such eligible projects.
   10. No loan shall be made pursuant to the provisions of  this  article
 unless  the  SUPERVISING  agency finds that: (a) the construction of the
 eligible project does not directly displace  current  low  and  moderate
 income  residents  of the eligible site; (b) the eligible project lever-
 ages private and other public investment, if any, so as  to  reduce  the
 amount  of  assistance  provided pursuant to this article to the minimal
 amount which is necessary for construction of the eligible project;  (c)
 the  eligible  project  will be built by a private developer/builder who
 has agreed to limit its profit in accordance with a formula satisfactory
 to the SUPERVISING agency; (d) the eligible project will provide assist-
 ance to an area which is blighted or deteriorated  or  has  a  blighting
 influence on the surrounding area, or is in danger of becoming a slum or
 a blighted area because of neighborhood conditions indicating an inabil-
 ity  or  unwillingness  of  the  private  sector  to  cause  the type of
 construction for which a loan is to be provided; and  (e)  the  eligible
 project will make home ownership or rental housing affordable to persons
 who  cannot  presently afford the housing available based upon the ordi-
 nary unaided operation of private enterprise.
   11. a. The SUPERVISING agency may make non-interest  bearing  advances
 to  sponsors to defray the pre-development costs of eligible projects in
 accordance with the provisions of this chapter.
   b. No such advances shall be made unless the SUPERVISING agency  finds
 that:  (i) the sponsor proposes to finance the eligible project in whole
 or in part by a loan granted  pursuant  to  this  article  or  that  the
 A. 7523                             5
 
 project,  if  otherwise  financed,  will  provide housing for persons or
 families of low income, and that such project  is  otherwise  consistent
 with  the  purposes  of this article; (ii) the project site is suitable,
 there  is  a need for the housing type proposed in the area to be served
 and the project is feasible; and (iii) it is  reasonable  to  anticipate
 that financing will be obtained and the SUPERVISING agency makes a find-
 ing to that effect.
   c.  No  such  advances  may  be  made to a sponsor unless such sponsor
 enters into an agreement with the SUPERVISING agency which provides that
 such sponsor shall be regulated with respect to  rents,  profits,  divi-
 dends  and  disposition of its property or franchise, in accordance with
 the provisions of this article.
   d. An advance granted pursuant to this section shall be used  only  to
 defray  the  pre-development costs of eligible projects. For purposes of
 this subdivision, the term  pre-development  costs  shall  include,  but
 shall  not  be  limited to: the reasonable and necessary costs for plan-
 ning, site preparation, developing architectural drawings and conducting
 engineering and environmental studies, but shall not include acquisition
 of  land  or  buildings,  drainage  and  landscaping  of  vacant   land,
 construction of new buildings or the reconstruction or rehabilitation of
 existing buildings.
   e. Each such advance shall be repaid in full to the SUPERVISING agency
 by the sponsor. Such repayment shall be made upon receipt by the sponsor
 or  its  successor  in  interest  of  the  proceeds  of  its mortgage or
 construction loan for the eligible project, unless the SUPERVISING agen-
 cy extends the period for the repayment of such advances.  In  no  event
 shall the time of repayment be extended to a date later than the date of
 final  advance  of funds pursuant to such mortgage or construction loan.
 Notwithstanding this paragraph, the SUPERVISING agency may  reduce  such
 advance to zero over a period of continued compliance with the SUPERVIS-
 ING  agency's agreement with the sponsor pursuant to paragraph c of this
 subdivision if the SUPERVISING agency has made a  written  determination
 that  such reduction would be necessary to ensure the continued afforda-
 bility or economic viability  of  the  eligible  project.  Such  written
 determination  shall document the basis upon which the SUPERVISING agen-
 cy's non-interest bearing advance was  determined  eligible  for  evapo-
 ration.
   f.  If  the  SUPERVISING  agency, in its discretion, determines at any
 time that mortgage or construction financing for  the  eligible  project
 may  not  be obtained, then all advances made to the sponsor pursuant to
 this subdivision shall become  immediately  due  and  payable  upon  the
 demand of the SUPERVISING agency.
   12.  If the eligible project is a rental project, the bond or note and
 mortgage or bonds or notes or mortgages issued by  the  sponsor  of  any
 eligible  project  to  secure  a participation loan may provide that the
 city's portion of such loan shall be reduced to zero commencing  on  the
 fifteenth  year after the execution of such bond or note and mortgage or
 bonds or notes or mortgages, provided that, as of the date of  any  such
 reduction,  the  eligible project has been and continues to be owned and
 operated in a manner consistent with a  regulatory  agreement  with  the
 city.  Notwithstanding  such  provision as contained in the bond or note
 and mortgage or bonds or notes or mortgages, the loan shall  be  reduced
 to  zero  only if, prior to or simultaneously with delivery of such bond
 or note and mortgage or bonds or notes  or  mortgages,  the  SUPERVISING
 agency  made a written determination that such reduction would be neces-
 sary to ensure the continued affordability or economic viability of  the
 A. 7523                             6
 
 eligible  project.  Such  written determination shall document the basis
 upon which the loan was determined to be eligible for evaporation.
   §  4.  Section  1153  of  the private housing finance law, as added by
 chapter 639 of the laws of 1989, is amended to read as follows:
   § 1153. General provisions. 1. The SUPERVISING agency shall issue  and
 promulgate rules and regulations for the administration of this article.
   2.  If  any clause, sentence, paragraph, section or part of this [act]
 ARTICLE shall be adjudged by any court of competent jurisdiction  to  be
 invalid,  such  [judgement] JUDGMENT shall not affect, impair or invali-
 date the remainder thereof, but shall be confined in  its  operation  to
 the  clause,  sentence,  paragraph,  section  or  part  thereof directly
 involved in the controversy in  which  such  judgment  shall  have  been
 rendered.
   §  5.  This  act shall take effect on the ninetieth day after it shall
 have become a law.