§ 23-b. Participation in loan or investment. Notwithstanding any other
provisions of this article or of any general, special or local law,
where a municipality has made or contracted to make a mortgage loan to a
company to finance a project: one or more banking organizations as
defined in subdivision eleven of section two of the banking law,
educational institutions, hospitals, medical research institutes,
insurance companies, trustees or fiduciaries, including fiduciaries
holding funds for investment, the New York city housing development
corporation, other public corporations, or other entities which
purchase, invest, or deal in first mortgage loans in the normal course
of their business, or any combination of the foregoing, shall have the
power to participate in such loan or make or participate in a new loan
secured by a bond or note and a single participating mortgage, or by
separate bonds or notes and separate mortgages, or to invest, singly or
jointly, with the municipality in a bond or note and single
participating mortgage or in separate bonds or notes and mortgages or in
a new mortgage or mortgages with respect to all or a portion of the loan
by a municipality to a company; and the supervising agency shall have
the power, upon the mortgagor's consent, to modify the terms and
conditions of the original bond or bonds or note or notes and mortgage
or mortgages and any other documents executed in connection with such
original loan, as the supervising agency may deem necessary or desirable
to provide for such participation, new loan or investment as provided in
this section, including but not limited to (i) modification of the rate
and time of payment of interest on the original loan or rate and time of
amortization of principal thereof, (ii) providing for priority for
payment of the principal of and interest on that portion of the mortgage
indebtedness attributable to such participation, new loan or investment
by one or more of such entities or organizations, (iii) subordination of
the interest of the municipality to the interest of one or more of such
organizations or entities in such participation, new loan or investment,
and (iv) otherwise providing that the interest of each upon such
participation, new loan or investment need not be of equal priority as
to lien, or be equal as to interest rate, time or rate of amortization
of principal or time of payment of interest or otherwise; provided,
however, that the aggregate amount of the loan or loans to a company
does not exceed the amount authorized pursuant to section twenty-three
of this article. When consent of a company is required for any
participation, new loan or investment pursuant to this section and such
participation, new loan or investment will be substantially equivalent
to a refinancing of indebtedness pursuant to section twenty-three-a or
subdivision twenty-two-a of section six hundred fifty-four of this
chapter, then; (i) the provisions of this article, including without
limitation the provisions of section twenty-three-a, limiting total
indebtedness of a company after a refinancing shall apply to total
indebtedness of the company after such participation, new loan or
investment; (ii) the provisions of this article applicable to a mortgage
of a company insured by the federal government in connection with such
refinancing shall apply to a mortgage securing the interest of entities
or organizations other than the municipality in such participation, new
loan or investment; (iii) the provisions of this article concerning
residual indebtedness, such residual indebtedness having been calculated
as if the mortgage referred to in clause (ii) of this sentence were a
federally insured mortgage, shall apply to an interest of the
municipality after such participation, new loan or investment which is
secured by a mortgage; (iv) the provisions of this article concerning
residual receipts obligations shall apply to an interest of the
municipality after such participation, new loan or investment which is
unsecured, and (v) the provisions of subdivision four-b of section
twenty-three-a of this article concerning the credit referred to therein
shall apply in a manner consistent with such subdivision. For purposes
of the foregoing sentence of this section, the term surplus cash
(referred to in subdivision seven of section twenty-three-a of this
article) shall be applied by the supervising agency in a manner
consistent with the definition of such term in regulatory agreements
with the federal government for the refinancing of indebtedness of
municipally-aided projects. The provisions of subdivisions one and five
of section twenty-six of this article shall not apply to such
participation in a loan or investment pursuant to this section if
undertaken in connection with a project theretofore approved pursuant to
section twenty-six of this article. Where the municipality shall join
with one or more organizations of the kind hereinabove mentioned, in
making a loan secured by a single participating mortgage or by separate
mortgages, the municipality is authorized, through its supervising
agency, to make provision, either in the mortgage or mortgages or by
separate agreement, for the performance of such services as are
generally performed by a banking institution or insurance company which
itself owns and holds a mortgage or by a trustee under a trust mortgage.
The supervising agency is hereby authorized to act as trustee or to
consent to the appointment of a banking institution to act in such
capacity. In connection with any participation in a loan or investment
pursuant to this section, the municipality through its supervising
agency shall have the power to assign or pledge, in whole or in part, to
one or more of the organizations or entities participating in such loan
or investment its right, title and interest in and to any mortgage held
by it pursuant to this article and any contract or arrangement for the
payment of subsidy relating to such mortgage, including the right to
receive and apply to repayment of such loan and the interest thereon any
receipts to be derived by it from such mortgage or from such contract or
arrangement.