§ 802. Participation loans to owners. 1. (a) Notwithstanding the
provisions of any general, special or local law, one or more private
investors and a municipality, acting through its agency, shall have the
power to participate and invest in making loans to the owners of
existing multiple dwellings or to the owners of non-residential property
or to the owners of vacant land subject to the limitations of
subdivisions two through seven of this section, in such amounts as shall
be required for (i) the rehabilitation of such existing multiple
dwellings or for the conversion of such non-residential property or for
the construction of new multiple dwellings on such vacant land, provided
that such rehabilitation, conversion or construction may include climate
resiliency improvements, and if any such owner acquires the existing
multiple dwelling or the non-residential property or the vacant land for
the purpose of such rehabilitation, conversion or construction or owns
the existing multiple dwelling or the non-residential property or the
vacant land 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, (ii) providing site improvements located on the property
on which such existing multiple dwellings are located or on such
non-residential property or vacant land or in a public right-of-way,
incidental or appurtenant to such rehabilitation, conversion or
construction, including, but not limited to, water and sewer facilities,
sidewalks, landscaping, parks and open space, social, recreational,
communal and other non-residential facilities and the outfitting
thereof, the curing of problems caused by abnormal site conditions,
excavation and construction of footings and foundations and other
improvements associated with the provision of infrastructure for housing
accommodations, or (iii) providing for other costs of developing housing
accommodations, and such private investors and a municipality may
jointly participate or invest in the making of temporary loans or
advances to such owners in anticipation of the permanent participation
loans for such purposes.

(b) Notwithstanding the provisions of any general, special or local
law, and in addition to the power to make or contract to make
participation loans granted by paragraph (a) of this subdivision, the
municipality, acting through its agency, and the New York city housing
development corporation shall each have the power to make or contract to
make loans or grants to any owner described in paragraph (a) of this
subdivision without the participation of a private investor, on the same
terms as permitted under such paragraph for a participation loan.

2. A municipality may utilize federal grant funds or state grant funds
or any municipal funds to finance its participation or investment in a
loan pursuant to this article. This subdivision shall not apply to any
participation in a loan by the New York city housing development
corporation pursuant to section eight hundred five of this article.

3. Each participation loan shall be secured by a bond or note and
single participating mortgage or by separate bonds or notes and
mortgages upon the existing multiple dwelling or the non-residential
property and the land upon which it is situated or, in the case of the
construction of a new multiple dwelling, upon the vacant land and the
multiple dwelling to be constructed, or, in the case of a multiple
dwelling held in the condominium form of ownership, a note and mortgage
upon the condominium units rehabilitated with such participation loan,
provided that a participation loan to an owner who is a lessee shall be
secured by a leasehold interest in such property, and provided, further,
that each such loan shall be made upon such terms and conditions as may
be approved by the agency, including but not limited to, provisions that
(a) priority may be given to the payment of the principal of and
interest on that portion of the mortgage indebtedness attributable to
participation in the loan by one or more private investors, (b) the
interest of the municipality created as a result of making such a
mortgage loan may be subordinated to the interest that one or more of
such private investors may have upon such participation, (c) the
interest of each upon such participation need not be of equal priority
as to lien nor be equal as to interest rate, time or rate of
amortization of principal or time of payment of interest, or otherwise,
(d) the bond or note and mortgage may provide that the municipality's
portion of a participation loan made to an owner shall be reduced to
zero commencing in the fifteenth year after the execution of the bond or
note and mortgage, provided that, as of the date of any such reduction,
such 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 or
note and mortgage, the municipality's portion of the loan shall be
reduced to zero only if, prior to or simultaneously with delivery of
such bond 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.

4. Each such bond or note and mortgage or bonds or notes and mortgages
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 or note and
mortgage or bonds or notes and mortgages. Such bond or note and mortgage
or bonds or notes and mortgages and any 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.

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

6. Where a municipality joins with one or more private investors in
making a participation loan secured by a single participating mortgage
or by separate mortgages, the agency may make provision, either in the
mortgage or mortgages or by separate agreement, for the performances 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 and for the imposition of reasonable fees for
financing, regulation, supervision and audit of such multiple dwelling.
The agency is hereby authorized to act as trustee or to consent to the
appointment of a banking institution or any subsidiary thereof to act in
such capacity and to provide such services as are generally performed by
any such bank itself or its subsidiary owning and holding such a
mortgage.

7. Banking organizations and insurance companies may exercise such
power only to the extent and on such conditions as may be authorized by
the state superintendent of financial services.

8. Notwithstanding the provisions of any other law, a savings bank may
invest to an amount not exceeding ninety per centum of the value of any
real property when jointly participating or investing in a loan pursuant
to the provisions of this article or not exceeding ninety-five per
centum of the value of any real property when jointly participating or
investing in a loan pursuant to the provisions of article fourteen of
this chapter.