§ 576-e. Municipal housing assistance fund. 1. A municipality may
create and establish a fund to be known as the "municipal housing
assistance fund". Such a fund shall be created and established in the
supervising agency.

2. There may be paid into such municipal housing assistance fund (a)
any moneys appropriated and made available by the municipality for the
purposes of such fund, (b) notwithstanding the provisions of the local
finance law or any other provisions of law, any moneys received in
repayment of loans from such fund, and (c) any other moneys which may be
available for the purpose of such fund from any other source or sources.

3. The purpose of such fund shall be to make loans to housing
development fund companies which have agreed to acquire residential
properties by deed from the commissioner of finance of a municipality
and to operate and manage such properties in accordance with a
regulatory agreement with the municipality until the properties are
transferred to a new owner approved by the municipality.

4. The supervising agency may make loans from the fund to enable such
housing development fund companies to pay development costs and any
other expenses incurred by the housing development fund company and
approved by the supervising agency.

5. Any housing development fund company which receives a loan pursuant
to this section shall execute a note and regulatory agreement. The note
may provide that it shall be reduced to zero over a period of continued
compliance with either the regulatory agreement required pursuant to
this section or such other regulatory agreement as the supervising
agency shall require. The loan shall be reduced to zero only if prior to
or simultaneously with delivery of such note, the supervising agency has
made a written determination that such reduction would be necessary to
ensure the continued affordability or economic viability of the project.
Such written determination shall document the basis upon which the loan
was determined eligible for evaporation.

6. A regulatory agreement pursuant to this section may terminate upon
such terms and conditions as provided by the supervising agency.

7. A housing development fund company which receives a loan pursuant
to this section shall provide in its certificate of incorporation that
the supervising agency shall have the power if in its discretion it
determines that the company has defaulted in its obligations to the
municipality to appoint to the board of such corporation a number of new
directors which number shall be sufficient to constitute a majority of
the board, notwithstanding any other provisions of such certificate or
of any other provision of law.