§ 126. Reduced rentals for the elderly. (a) For the purpose of enabling lower income elderly persons to continue in occupancy without paying rentals in excess of a fair proportion of their income, any municipality having a population of less than one million is authorized to make and to contract to make periodic payments to a redevelopment company in an amount not exceeding the difference between the rent or carrying charges for the dwellings occupied by such lower income persons and one-third of their net probable aggregate annual income, where such rent or carrying charges exceed such one-third of income; provided that the aggregate amount of periodic payments to be made in accordance with contracts entered into by the municipality during any fiscal year thereof pursuant to this section, subdivision nine of section thirty-one, subdivision seven of section eighty-five-a, and section five hundred seventy-seven-a of this chapter shall not exceed the aggregate amount of all real property taxes paid or payable during such fiscal year by all companies organized pursuant to this article, article II, article IV, and article XI of this chapter and the aggregate estimated receipts of all such companies in such fiscal year from rental surcharges collected or to be collected pursuant to this chapter.

(b) Such payments shall be made only where the contract between the municipality and the company pursuant to section one hundred fourteen imposes income limitations on admission and on continued occupancy and requires the payment of surcharges to the municipality by over-income occupants.

(c) Such payments shall be made only on account of a person or family in occupancy where the head of the household is sixty-two years of age or older and is not a recipient of public assistance pursuant to the social services law, and where the net probable aggregate annual income of the person or family in occupancy does not exceed six thousand five hundred dollars a year. Notwithstanding the provisions of subdivision twenty-nine of section two of this chapter, net probable aggregate annual income shall mean the annual income of family members from all sources after deductions of federal, state and city income taxes; provided that any municipality may provide that increases in benefits under the social security act which take effect after such person or family has assumed occupancy shall not be taken into account.

(d) A company having a contract with the municipality pursuant to this subdivision may not collect from persons or families in occupancy on whose account such payments are made any rentals in excess of the amounts specified in such contract.