§ 508. State loans. 1. The commissioner may, in the name of the state,
make or contract to make loans to a municipality to assist such
municipality to establish and carry out one or more programs of urban
renewal. No such loan shall be made where the municipality has
contracted with the federal government for a capital grant prior to the
thirtieth of April, nineteen hundred fifty-nine; provided, however, that
such a loan may be made with respect to that part of any program which
has been added, or with respect to which the federal capital grant has
been increased, pursuant to a contract or contract amendment entered
into with the federal government after such date. All such loan
contracts shall be subject to approval by the state comptroller, and by
the attorney general as to form. Any such loan shall be in such amount,
not exceeding one-half of the local grants-in-aid which the municipality
has agreed to make under the provisions of the contract for federal aid,
as the commissioner, in his discretion, may deem necessary to assist the
municipality in discharging its obligations in connection with the urban
renewal program for which the loan shall be made. No municipality shall
receive any such loan until (a) the urban renewal plan has been approved
by the governing body, (b) the program set forth in such plan has been
certified as eligible for federal assistance by the housing and home
finance agency of the federal government, and (c) the governing body and
the comptroller of the municipality, or in a municipality having no
comptroller, the chief financial officer of such municipality, have
attached their separate approvals to the loan contract. The commissioner
may make temporary advances to such municipality in anticipation of any
such loan, and no such temporary advance shall be deemed to constitute
part of such loan unless such temporary advance has been made out of the
proceeds of definitive urban renewal bonds sold by the state pursuant to
section sixty of the state finance law.

2. Loans shall be made at the rate of interest paid or to be paid by
the state for the funds loaned to the municipality, plus a proportionate
share of the actual direct cost of the borrowing as certified by the
state comptroller. Each such loan shall be repaid in equal annual
installments over or within a period not to exceed twenty-five years.
Each installment shall equal the amount payable by the state for moneys
borrowed for the loan and shall be paid by the municipality not later
than five days before each such payment by the state is required.

3. Should the municipality fail to make payment of interest or
principal upon any due date, the state comptroller may deduct and retain
from any moneys otherwise payable by the state to such municipality, the
amount of such interest and principal and credit such municipality with
the amount of such deduction.

4. All or any part of the sum which the commissioner has contracted to
lend to the municipality may, with the consent of the commissioner, be
borrowed by the municipality from sources other than the state under
such terms and conditions as the commissioner shall approve, but such
borrowing shall not constitute a waiver or surrender of the rights of
the municipality under its loan contract made with the commissioner.