§ 125. Tax exemptions. 1. (a) The local legislative body of any municipality in which a project of such company is or is to be located may by contract agree with any redevelopment company to exempt from local and municipal taxes, other than assessments for local improvements, all or part of the value of the property included in such project which represents an increase over the assessed valuation of the real property, both land and improvements, acquired for the project at the time of its acquisition by the redevelopment company which originally undertook the project and for such definite period of years as such contract may provide, except that where the real property in a project was acquired for purposes of rehabilitation, the local legislative body either may utilize the foregoing formula or may agree to exempt from such taxes all or part of the value of the property included in such project on condition that the amount of such taxes to be paid shall not be less than ten per centum of the annual shelter rent or carrying charges of such rehabilitation project. The tax exemption shall not operate for a period of more than twenty-five years, commencing in each instance from the date on which the benefits of such exemption first become available and effective; provided, however, that with respect to a project either acquired by a mutual redevelopment company pursuant to section one hundred twenty-six or owned and continuing to be owned by a mutual redevelopment company which would require substantial increases in carrying charges after the period of tax exemption is ended unless relief is provided, the local legislative body may contract with such mutual redevelopment company to extend such tax exemption for not more than twenty-five additional years at a rate of tax exemption not to exceed an average of fifty per centum during such additional period, provided that the tax exemption during the first two years of such additional period shall continue at the rate of the tax exemption of such project immediately preceding the termination of the initial twenty-five year period and that the tax exemption thereafter shall be decreased in equal biennial decrements, the first of which shall occur immediately following such two year period, and provided that such contract shall contain provisions as to income limitations relating to admission and continued occupancy of the project and provisions as to rental surcharges to the same effect as are contained in subdivisions two, three, four and five of section thirty-one, except that in the case of projects owned and continuing to be owned by mutual redevelopment companies, persons or families whose probable aggregate annual income does not exceed the median income for families of the same size in the same metropolitan area shall also be eligible for admission to the project on the understanding that any person or family becoming eligible by reason hereof whose probable aggregate annual income at the time of admission or during the period of occupancy exceeds, the greater of (i) the median income for such persons or families for the metropolitan statistical area in which the project is located, or if a project is located outside a metropolitan statistical area, the median income for such persons or families for the county in which the project is located, as most recently determined by the United States department of housing and urban development, in which case any person or family becoming eligible for admission pursuant to this subparagraph shall pay, from the time of admission, a rental surcharge as provided for in subdivision three of section thirty-one of this chapter, computed on the basis of the income limitations applicable to such persons or families in the absence of this subparagraph, or (ii) six times the rental shall be liable for payment of rental surcharges hereunder computed on the basis of such ratio, except that in the case of families with three or more dependents such ratio shall be seven to one; and provided further that with respect to a project which is or is to be permanently financed by a federally-aided mortgage, the tax exemption shall operate for so long as such mortgage is outstanding, but in no event for a period of more than forty years, commencing in each instance from the date on which the benefits of such exemption first become available and effective; and provided further that with respect to a project which is or is to be permanently financed by a loan from the New York city housing development corporation, the tax exemption shall operate for so long as such loan is outstanding.

(a-1) Where the redevelopment contract between a mutual redevelopment company and the local legislative body under which the initial tax exemption was granted contains provisions different from those in subdivisions two, three, four and five of section thirty-one of this chapter, then a contract to extend the tax exemption for an additional period under paragraph (a) of this subdivision may provide that those provisions of the redevelopment contract shall continue to apply (with such modifications as the supervising agency of such mutual redevelopment company shall approve) during the additional period as if such additional period were the initial period of tax exemption for such mutual redevelopment company, notwithstanding the provisions of paragraph (a) of this subdivision to the contrary.

(a-2) Any inconsistent provision of law notwithstanding, in a city having a population of one million or more, where a local legislative body has acted to extend the tax exemption of a mutual redevelopment company for an additional twenty-five years after the initial tax exemption period has expired, the local legislative body may authorize tax exemption during the final eleven years of such additional twenty-five year exemption period under this subdivision, provided that the amount of taxes to be paid by the mutual redevelopment company during the final eleven years of such additional twenty-five year exemption period shall not be less than an amount equal to the greater of (i) ten per centum of the annual rent or carrying charges of the project minus utilities for the residential portion of the project, or (ii) the taxes payable by such company for the residential portion of the project in the fourteenth year of such additional twenty-five year exemption period, and may further extend the period of such additional twenty-five year exemption for up to a total period of thirty-five years from the date of expiration of the initial tax exemption, provided that the amount of taxes to be paid by the mutual redevelopment company during any such extension beyond such additional twenty-five year exemption period shall not be less than an amount equal to the greater of (i) ten per centum of the annual rent or carrying charges of the project minus utilities for the residential portion of the project, or (ii) the taxes payable by such company for the residential portion of the project in the fourteenth year of such additional twenty-five year exemption period.

(a-3) Any inconsistent provision of law notwithstanding, the local legislative body of any municipality may grant an additional tax exemption period for any project, other than a project by a mutual redevelopment company, that received a tax exemption under paragraph (a) of this subdivision, upon the expiration of the tax exemption period. The additional tax exemption period may be for a term of forty years, or until such time as the project is no longer operated under the restrictions and for the purposes set forth in this article, whichever is sooner. Unless otherwise approved by the local legislative body, the amount of taxes paid by the redevelopment company during such additional tax exemption period shall not be less than (i) the taxes payable by such company in accordance with the resolution for such redevelopment company that was approved by the local legislative body and that was in effect immediately prior to the expiration of the initial tax exemption period, or (ii) if there is no such resolution, the taxes payable by such company in accordance with the exemption authorized pursuant to this article immediately prior to the expiration of the initial tax exemption period.

(a-4) Any inconsistent provision of law notwithstanding, in a city having a population of one million or more, where a local legislative body has acted to extend the tax exemption of a mutual redevelopment company for the maximum period provided for in paragraph (a-2) of this subdivision, the local legislative body may grant an additional tax exemption for a period of up to fifty years, provided that the amount of taxes to be paid during any such period of tax exemption shall be not less than an amount equal to the greater of (i) ten per centum of the annual rent or carrying charges of the project minus utilities for the residential portion of the project, or (ii) the taxes payable by such company for the residential portion of the project during the tax year commencing July first, two thousand and ending on June thirtieth, two thousand one. Such grant of an additional tax exemption period shall take effect upon the expiration of the maximum period provided for in paragraph (a-2) of this subdivision.

(b) A redevelopment company which has been granted and has received tax exemption pursuant to this section may at any time elect to pay to the municipality or other appropriate taxing jurisdiction the total of all accrued taxes for which exemption was granted and received, together with interest at the rate of five per centum per annum. Upon such payment the tax exemption of the project shall thereupon cease and terminate.

(c) Where a municipality acts on behalf of another taxing jurisdiction in assessing real property for the purpose of taxation, or in levying taxes therefor, the said agreement by the local legislative body of such municipality shall have the effect of exempting the real property in a project from local and municipal taxes, other than assessments for local improvements, levied by or in behalf of both such taxing jurisdictions.

(d) As used in this subdivision the term "taxing jurisdiction" means any municipal corporation or district corporation, including any school district or any special district, having the power to levy or collect taxes and benefit assessments upon real property, or in whose behalf such taxes or benefit assessments may be levied or collected. 2. Any inconsistent provision of law notwithstanding, mortgages of any such company issued to the federal government or any instrumentality thereof, or to any municipal housing authority or other public housing agency or instrumentality thereof whose obligations are determined to be exempt from federal taxation by the federal government, or issued to a financial institution and insured or guaranteed by the federal housing administrator or any other instrumentality of the federal government shall be exempt from the mortgage recording taxes imposed by article eleven of the tax law.