S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    595
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 8, 2025
                                ___________
 
 Introduced  by  Sens.  HINCHEY,  JACKSON,  MAY -- read twice and ordered
   printed, and when printed to be committed to the Committee on Housing,
   Construction and Community Development
 
 AN ACT to amend the private housing finance law, in relation  to  estab-
   lishing the small rental housing development initiative
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The private housing finance law is amended by adding a  new
 article 17-C to read as follows:
                              ARTICLE XVII-C
                SMALL RENTAL HOUSING DEVELOPMENT INITIATIVE
 SECTION 1060. LEGISLATIVE FINDINGS AND STATEMENT OF POLICY.
         1061. DEFINITIONS.
         1062. SMALL RENTAL HOUSING DEVELOPMENT INITIATIVE.
   §  1060. LEGISLATIVE FINDINGS AND STATEMENT OF POLICY. THE LEGISLATURE
 HEREBY FINDS AND DECLARES THAT THERE EXISTS IN MANY RURAL AREAS  OF  THE
 STATE A SUBSTANTIAL NEED FOR AFFORDABLE RENTAL HOUSING OF A SIZE THAT IS
 SUITABLE  TO SMALL COMMUNITIES WITH LIMITED INFRASTRUCTURE. THE FINDINGS
 SET FORTH IN ARTICLE SEVENTEEN OF THIS  CHAPTER,  WITH  RESPECT  TO  THE
 SPECIAL  NEEDS  AND PROBLEMS OF SUCH AREAS AND THE SIGNIFICANT POTENTIAL
 ROLE OF LOCALLY BASED NOT-FOR-PROFIT ORGANIZATIONS IN  HELPING  TO  MEET
 SUCH  NEEDS,  ARE  HEREBY  REAFFIRMED. THE LEGISLATURE HEREBY DETERMINES
 THAT, IN ADDITION TO THE PROGRAM OF  STATE  SUPPORT  TO  HELP  MEET  THE
 ADMINISTRATIVE EXPENSES OF SUCH ORGANIZATIONS UNDER ARTICLE SEVENTEEN OF
 THIS  CHAPTER,  A  FURTHER  PUBLIC NEED EXISTS FOR STATE FUNDING FOR THE
 DEVELOPMENT OF AFFORDABLE RENTAL HOUSING OF TWENTY UNITS OR LESS.  IT IS
 THE PURPOSE OF THIS ARTICLE TO ENCOURAGE THE CONSTRUCTION OF  AFFORDABLE
 RENTAL  HOUSING  IN THE RURAL AREAS OF THE STATE BY ESTABLISHING A DEDI-
 CATED PROGRAM OF SUCH FUNDING.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD01745-01-5
              

 S. 595                              2
 
   § 1061. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE,  THE  FOLLOWING
 TERMS SHALL HAVE THE FOLLOWING MEANINGS:
   1.  "SMALL  RENTAL  HOUSING DEVELOPMENTS" SHALL MEAN AFFORDABLE RENTAL
 APARTMENT BUILDINGS OF TWENTY UNITS OR LESS FOR LOW TO  MODERATE  INCOME
 HOUSEHOLDS.
   2.  "ELIGIBLE  AREA"  SHALL  MEAN  A TOWN OR CITY WITH A POPULATION OF
 THIRTY THOUSAND OR LESS.
   3. "ELIGIBLE APPLICANT" SHALL MEAN A NON-PROFIT HOUSING AGENCY SUCH AS
 A RURAL PRESERVATION OR NEIGHBORHOOD COMPANY OR OTHER SIMILAR NON-PROFIT
 ENTITY CHARTERED BY THE STATE.
   4. "LOW TO MODERATE-INCOME HOUSEHOLD" SHALL MEAN A HOUSEHOLD  WITH  UP
 TO ONE HUNDRED TWENTY PERCENT OF AREA MEDIAN INCOME.
   5.  "PERIOD OF AFFORDABILITY" SHALL MEAN THE REQUIRED LENGTH OF TIME A
 PROJECT  MUST  MEET  AFFORDABILITY  REQUIREMENTS  PURSUANT  TO  24   CFR
 92.252(E) AND TO BE SPECIFIED IN THE PROJECT NOTE AND MORTGAGE.
   §  1062.  SMALL  RENTAL  HOUSING DEVELOPMENT INITIATIVE. 1. APPLICANTS
 CONSTRUCTING SMALL RENTAL HOUSING DEVELOPMENTS IN ELIGIBLE  AREAS  SHALL
 BE  ELIGIBLE  FOR  STATE  FUNDING  IN THE FORM OF DEFERRED LOANS AT ZERO
 PERCENT INTEREST LOANS, DUE ON SALE. SUCH ZERO  INTEREST  LOANS  MAY  BE
 SUBJECT  TO FORGIVENESS IN ACCORDANCE WITH THE PROVISIONS OF SUBDIVISION
 TWO OF THIS SECTION.
   (A) THE ELIGIBLE APPLICANT SHALL CHOOSE A PAYBACK PERIOD FOR SUCH LOAN
 OF BETWEEN TEN AND TWENTY YEARS.
   (B) THE MAXIMUM PER-UNIT SUBSIDY SHALL BE DETERMINED  BY  THE  COMMIS-
 SIONER.
   (C)  FUNDS SHALL BE USED FOR THE CONSTRUCTION OF RESIDENTIAL UNITS AND
 MAY BE USED FOR THE CONSTRUCTION OF COMMUNITY ROOMS OR COMMON AREAS USED
 FOR THE BENEFIT OF RESIDENTS.
   2.  (A) ZERO INTEREST LOANS ISSUED IN ACCORDANCE WITH SUBDIVISION  ONE
 OF  THIS  SECTION  SHALL BE DEFERRED FOR THE PERIOD OF AFFORDABILITY. IF
 THE ELIGIBLE APPLICANT, WHO IS THE RECIPIENT OF A  ZERO  INTEREST  LOAN,
 REMAINS  IN COMPLIANCE WITH ALL PROGRAM REQUIREMENTS FOR THE ENTIRETY OF
 THE PERIOD OF AFFORDABILITY, THE ZERO INTEREST LOAN MAY BE FORGIVEN  AND
 THE MORTGAGE LIEN PLACED AGAINST THE PROPERTY MAY BE SATISFIED.
   (B) IF THE PROPERTY OF AN ELIGIBLE APPLICANT IS SOLD DURING THE PERIOD
 OF  AFFORDABILITY,  THE SUM OF ANY OUTSTANDING MORTGAGE MUST BE RE-PAID.
 THE MORTGAGE LIEN MAY BE ASSUMED BY A NEW PURCHASER ONLY IF APPROVED  BY
 THE  HOUSING  TRUST  FUND  CORPORATION,  SUBJECT  TO  ANY  CONDITIONS OR
 REQUIREMENTS SET BY THE HOUSING TRUST FUND CORPORATION.
   (C) THE RENTAL MANAGEMENT REQUIREMENTS OF  THE  SMALL  RENTAL  HOUSING
 INITIATIVE  SHALL  RUN  WITH THE PROPERTY THROUGHOUT THE ENTIRETY OF THE
 PERIOD OF AFFORDABILITY, REGARDLESS OF ANY CHANGE IN OWNERSHIP.
   (D) AWARDS MADE UNDER THIS PROGRAM SHALL BE PURSUANT TO  A  REGULATORY
 AGREEMENT,  INCLUDING RENT SETTING AND ANY AND ALL RENT INCREASES DURING
 THE AFFORDABILITY PERIOD.
   3. THE DIVISION OF HOUSING AND  COMMUNITY  RENEWAL  SHALL  NOTIFY,  IN
 WRITING, ALL APPLICANTS WHO WERE NOT SELECTED FOR FUNDING OF THE REASONS
 WHY  THE  PROPOSAL  WAS  NOT FUNDED, INCLUDING THE DESIGN, UNDERWRITING,
 LEGAL OR PROGRAM DEFICIENCIES, DEFICIENCIES OF ANY DOCUMENTS AND/OR  THE
 BASIS  UPON  WHICH  THE  APPLICATION WAS DETERMINED TO BE INELIGIBLE FOR
 FUNDING.
   4. THE DIVISION OF HOUSING AND COMMUNITY RENEWAL SHALL PROVIDE FOR THE
 REVIEW, AT PERIODIC INTERVALS NOT LESS THAN ANNUALLY, OF THE PERFORMANCE
 OF APPLICANTS RECEIVING GRANTS OR LOANS PURSUANT TO THIS  ARTICLE.  SUCH
 REVIEW  SHALL,  AMONG  OTHER THINGS, BE FOR THE PURPOSES OF ASCERTAINING
 THE CONFORMITY TO AGREEMENT PROVISIONS, AND  ADHERENCE  TO  REGULATIONS.
 S. 595                              3
 
 AGREEMENTS  ENTERED  INTO PURSUANT TO THIS ARTICLE MAY BE TERMINATED AND
 FUNDS MAY BE WITHHELD OR RECAPTURED  BY  THE  DIVISION  OF  HOUSING  AND
 COMMUNITY RENEWAL UPON A FINDING OF SUBSTANTIAL NONPERFORMANCE OR BREACH
 BY SUCH APPLICANT UNDER ITS AGREEMENT.
   5.  THE  DIVISION OF HOUSING AND COMMUNITY RENEWAL SHALL DEVELOP ADDI-
 TIONAL PROCEDURES AND REQUIREMENTS RELATED TO THE APPLICATION AND  AWARD
 OF  FUNDING FOR PROJECTS PURSUANT TO THIS ARTICLE AS DEEMED NECESSARY OR
 APPROPRIATE TO IMPLEMENT THE PURPOSES AND PROVISIONS OF THIS ARTICLE.
   § 2. This act shall take effect immediately.