§ 402. Loans to owners. 1. Notwithstanding the provisions of any
general, special or local law, a municipality, by such officer or agency
as determined by its local legislative body, is hereby authorized:

(a) to make or contract to make loans to the owners of existing
multiple dwellings within its territorial limits, subject to the
limitations in subdivision two of this section, in such amounts as may
be required for the installation of proper heating facilities, the
incorporation of climate resiliency improvements, or elimination of
conditions dangerous to human life or detrimental to health, including
nuisances as defined in section three hundred nine of the multiple
dwelling law, or other rehabilitation, preservation or improvement of
such multiple dwellings, and if such owner acquires the multiple
dwelling for the purposes of such rehabilitation, preservation or
improvement or owns the multiple dwelling subject to an outstanding
indebtedness, such loans may be made exclusively for or may include such
amounts as may be required for the cost of such acquisition or for the
refinancing of such outstanding indebtedness, and may make temporary
loans or advances to such owners in anticipation of the permanent
municipal loans for such purposes; and

(b) to make or contract to make grants to any owner described in
paragraph (a) of this subdivision, on the same terms as permitted under
such paragraph for a loan.

1-a. As used in this article, the term "loan" shall include any grant
made by a municipality pursuant to this article, provided, however, that
any provision of this article concerning the repayment or forgiveness
of, or security for, a loan shall not apply to any grant made pursuant
to this article.

2-a. (a) Each permanent loan shall be secured by a bond and mortgage
or note and mortgage upon the multiple dwelling and the land upon which
it is situated, provided that where the multiple dwelling is held in the
condominium form of ownership, such loan shall be secured by a bond and
mortgage or note and mortgage upon the condominium units rehabilitated
or improved with such loan; where the loan is made to an owner who is a
lessee, such loan shall be secured by a leasehold interest in such
property.

(b) Each such bond and mortgage or note and mortgage shall be repaid
over or within a period of forty years, provided that such period may be
extended as the agency may determine necessary to ensure the continued
affordability or economic viability of the multiple dwelling, in such
manner as may be provided in such bond and mortgage or note and mortgage
and contract. Such bond and mortgage or note and mortgage and the
contract in connection with such permanent and temporary loans may
contain such other terms and provisions not inconsistent with the
provisions of this article as the local legislative body or the agency
may deem necessary or desirable to secure repayment of the loan, the
interest thereon and other charges in connection therewith and to carry
out the purposes and provisions of this article, including, but not
limited to, providing that the lien created by such bond and mortgage or
note and mortgage, and, if applicable, any regulatory agreement executed
by the owner and the agency or restrictive covenant approved by such
agency, may be recorded in an equal or subordinate position, or
subsequently made equal or subordinate, to a lien recorded by any
private lender against such multiple dwelling.

2-b. If a loan pursuant to this article is made to a non-profit
company or a housing development fund company which agrees to provide
housing accommodations exclusively for persons and families of low
income, at least thirty percent of whom are referred to it by the
municipality and have prior to their initial occupancy in such
accommodations resided in emergency shelter facilities operated by or on
behalf of the municipality, the agency may provide that the note and
mortgage shall automatically be reduced to zero in five equal annual
decrements commencing on the tenth year after the initial occupancy
date, provided that such accommodations have been owned and operated in
a manner consistent with an agreement with the municipality contained in
such note and mortgage to provide housing for such persons.

3. The bond or note issued by the owner of such multiple dwelling and
the mortgage relating thereto may authorize such owner, with the consent
of the agency, to prepay the principal of the loan subject to such terms
and conditions as therein provided. Such bond or note and mortgage may
contain such other clauses and provisions as the agency shall require.

4. The agency may require the payment of charges by an owner of such
multiple dwelling in consideration for the financing, regulation,
supervision and audit of such loan. Such fees shall be paid into the
treasury of the municipality requiring the charges and shall be paid and
deposited in the general fund of any such municipality.

5. Whenever reference is made in this article to a municipal loan, a
loan by a municipality, a loan from a municipality, a contract for a
loan between a municipality and an owner, or any similar term, with
respect to the territorial limits of the city of New York such terms
shall be construed to refer to a loan made or to be made either by such
municipality or by the New York city housing development corporation,
whichever is applicable.

6. The bond and mortgage or note and mortgage issued by the owner of
any such multiple dwelling may provide that the loan shall be reduced to
zero commencing on the fifteenth year after the execution of the bond
and mortgage or note and mortgage, provided that, as of the date of any
such reduction, the multiple dwelling has been and continues to be owned
and operated in a manner consistent with a regulatory agreement with the
municipality. Notwithstanding such provision as contained in the bond
and mortgage or note and mortgage, the loan shall be reduced to zero
only if, prior to or simultaneously with delivery of such bond and
mortgage or note and mortgage, the agency made a written determination
that such reduction would be necessary to ensure the continued
affordability or economic viability of the multiple dwelling. Such
written determination shall document the basis upon which the loan was
determined to be eligible for evaporation.