§ 576. Regulatory agreements. 1. Every housing development fund
company as a condition precedent to receiving an advance pursuant to
this article, shall enter into an agreement with the commissioner or
with the supervising agency, as the case may be, to be regulated as
follows:

a. Maximum rentals shall be fixed by the commissioner or the
supervising agency, as the case may be, based upon the final gross
project cost, at an amount sufficient to pay the necessary costs of the
project.

b. Dwellings in any such project shall be available for persons or
families whose probable aggregate annual income does not exceed six
times the rental (including the value or cost to them of heat, light,
water and cooking fuel) of the dwellings to be furnished such persons or
families, except that in the case of persons or families with three or
more dependents, such ratio shall not exceed seven to one. For purposes
of this paragraph, tenants in a housing project of a housing development
fund company organized under the provisions of the business corporations
law and this article shall have added to their total annual carrying
charges an amount equal to six per centum of the original investment of
such person or family in the equity obligations of such housing company.

c. Profits shall be used for capital improvements or to reduce
rentals.

d. Ordinary dividends may not be declared. Capital dividends may be
declared only with the consent of the commissioner or the supervising
agency, as the case may be.

e. The property or franchises of the corporation may not be disposed
of without the consent of the commissioner or the supervising agency, as
the case may be, nor may the corporation be dissolved unless payment in
full is made of remaining balances of principal and interest due and
unpaid on any mortgage or mortgages, of any advances made from the fund
pursuant to this article and of any and all expenses incurred in
effecting such dissolution.

f. The commissioner or the supervising agency, as the case may be,
shall have power, in his or its discretion, if he or it determines that
any advance pursuant to this article is in jeopardy of not being repaid,
or that the proposed housing project for which such advance was made is
in jeopardy of not being constructed, to appoint to the board of
directors of the corporation a number of new directors, which number
shall be sufficient to constitute a majority of such board. Directors so
appointed need not be stockholders or members or meet other
qualifications which may be prescribed by the certificate of
incorporation or by-laws. In the absence of fraud or bad faith
directors so appointed shall not be personally liable for the debts,
obligations or liabilities of the corporation.

2. A regulatory agreement pursuant to this section shall be terminated
upon repayment in full of any and all advances made pursuant to this
article provided that such termination shall not take place until (a)
assumption of the regulation of the project by the commissioner, in the
case of a state-aided mortgage, or by the supervising agency, in the
case of a municipally-aided mortgage or by the appropriate federal
authorities in the case of a federally-aided mortgage or (b) if the
project is not to be financed with a state-aided, municipally-aided or
federally-aided mortgage, the expiration of any exemption of the real
property of the project from local and municipal taxes.

3. The commissioner or supervising agency may require a housing
development fund company receiving advances under this article to
execute a financing statement for real property improvement. The
financing statement shall be in such form as the commissioner or
supervising agency shall prescribe and shall include the name and
address of the housing development fund company and of the agency making
the advances, the location of the project, with a description sufficient
to identify the property, including street address, if any, and a
statement that funds have or will be advanced to the company pursuant to
this article and the maximum amount of such advances, together with such
other information as the form shall specify. The financing statement
shall be filed in the office in which a mechanic's lien affecting the
property would be filed, which office shall accept it for filing without
fee and docket it in the manner of such lien. From the date of such
filing the state or municipality, as the case may be, shall have a lien
for the total of advances under this article made and not repaid. The
provisions of articles two and three of the lien law shall govern such
lien, except that it shall be valid for a period of three years from the
date of filing, unless extended as provided in section seventeen of the
lien law. Upon repayment of the advances, the commissioner or
supervising agency shall deliver to the housing development fund company
a copy of the financing statement with an endorsement thereon that the
lien is satisfied. Upon filing of such copy, without payment of fee, in
the office in which the financing statement was filed, the lien shall be
discharged.