§ 23. Municipal loans and municipally aided projects. 1. A municipality may make or contract to make loans to a company or to a public benefit corporation providing housing for staff members, employees or students of a college, university, hospital or child care institutions and their immediate families in an amount not to exceed, except in the case of a non-profit company incorporated pursuant to the provisions of the not-for-profit corporation law and this article for the purpose of providing housing for aged or handicapped persons of low income, and except in the case of a company or public benefit corporations providing housing for staff members, employees or students of a college, university, hospital or child care institution and their immediate families, and except in the case of a municipally-aided non-profit company or of a municipally-aided mutual company, and except in the case of a low income non-profit housing company, ninety-five per centum of the project cost to be secured, except as provided in section fifteen of this article, by a first mortgage lien and may make temporary loans or advances to a company in anticipation of a permanent municipal loan. In the case of a non-profit company incorporated pursuant to the provisions of the not-for-profit corporation law and this article for the purpose of providing housing for aged or handicapped persons of low income and in the case of a company or public benefit corporations providing housing for staff members, employees or students of a college, university, hospital or child care institution and their immediate families, and in the case of a municipally-aided non-profit company or of a municipally-aided mutual company, and in the case of a low income non-profit housing company, such loans may not exceed the total project cost. Notwithstanding the foregoing, such loans to a municipally-aided mutual company to assist in financing the acquisition of a building by residents thereof may not exceed ninety-five per centum of the project cost. Such mortgage, or bonds or notes secured thereby and such contract may contain such terms and conditions not inconsistent with the provisions of this article as the local legislative body may deem necessary or desirable to secure repayment of its loan, the interest thereon and other charges in connection therewith. In the case of a loan in an amount greater than ninety-five per centum of the total project cost the supervising agency may in its discretion require satisfactory independent guarantees that the loan will be repaid according to the terms of the company's bond or note and mortgage. 1-a. Notwithstanding any other provision of this article or any other law, any such loan may be made to a company at such rate of interest, if any, as the local legislative body may deem necessary or desirable to carry out the policy and purposes of this article. 2. The supervising agency shall have exclusive power to promulgate such supplementary rules and regulations with respect to a municipally-aided project and a company formed to undertake or operate any such project, as may be necessary to carry out the provisions of this article. No assignment for collateral or pledge by a municipality of its mortgage interest in a municipally-aided project to the state or to any political subdivision thereof shall either affect the power of the supervising agency granted herein or authorize the commissioner to exercise any powers not otherwise granted in this article. 3. Prior to the date of approval by the local legislative body of the contract between a municipality and a company for a municipally aided project, the total estimated project cost of such project, the estimated capital requirements of the company formed to undertake or operate such project, the initial capital structure of such company and a modification of any of the foregoing items, shall be subject to the approval of the supervising agency and the commissioner. Any modification of any of the foregoing items made after such date of approval of the contract shall be subject solely to the approval of the supervising agency. If after such date of approval of the contract, any change is made in such contract which requires the approval of the local legislative body, such change shall also be subject to the prior approval of the commissioner. 4. The commissioner shall have the power, prior to the date of approval by the local legislative body of a contract between a company and the municipality for a municipally aided project, to approve the proposed maximum average of the rentals to be charged for the dwellings in the project, or any modifications thereof. After such date of approval of the contract, the supervising agency shall have sole power to increase or reduce the rental rate for the dwellings in the project in the manner prescribed by section thirty-one of this article for the variance of the rental rates. However, if a variance in such rental rate is made necessary because of a change in the project which requires the approval of the local legislative body, the prior approval by the commissioner of such variance of the rental rate shall also be obtained. 5. The commissioner and the supervising agency shall each have full power to investigate into and order a company undertaking or operating a municipally aided project to furnish such reports and information as each may require concerning the planning, construction, acquisition, rehabilitation, management or operation of the project. 6. The commissioner shall have the power to audit the books of a company undertaking or operating a municipally aided project solely as to the legality of the expenditures and to disallow any expenditure which the commissioner shall find has been made in violation of law or any rule or regulation duly issued pursuant to this article. The supervising agency shall have the full power to audit the books of any such company as to the legality, reasonableness or necessity of its expenditures. Any expenditure disallowed by the commissioner or the supervising agency on such audits shall not be included in any construction, management or operating costs in connection with any application to increase or reduce the rents or carrying charges in a project. 7. (a) At the direction of the supervising agency, with the consent and approval of the mayor the municipality shall establish and keep a separate fund known as the limited-profit mortgage reserve fund for the purposes of insuring the municipality against any loss resulting from the making of a mortgage loan, temporary loan or advance to a municipality-aided project and to protect the municipality in the event of delinquency in the repayment of such mortgage loan, temporary loan or advance.

(b) There shall be paid into such fund the portions of fees allocated to and directed to be deposited in such fund by the supervising agency with the consent and approval of the mayor as provided for in subdivision seven of this section. In addition, there shall be credited to and deposited in such fund any portion of the unexpended balance remaining in the housing fund as the supervising agency with the consent and approval of the mayor may determine to be in excess of the amounts needed to meet expenditures required to be paid from the housing fund.

(c) The monies in the limited-profit mortgage reserve fund shall be deposited in one or more of the banks or trust companies designated, in the manner provided by law, as depositories of the funds of such municipal corporation. The comptroller or the chief fiscal officer may invest the monies in such fund in obligations specified in paragraph d of this subdivision. Any interest earned or capital gain realized on the money so deposited or invested shall accrue to and become part of such fund. The separate identity of such fund shall be maintained whether its assets consist of cash or investments or both.

(d) Monies in such fund may be invested (1) in special time deposit accounts in, or certificates of deposit issued by, a bank or trust company located and authorized to do business in this state, provided, however, that such time deposit account or certificate of deposit shall be payable within such time as the proceeds may be needed to meet expenditures for which such monies were obtained and provided further that such time deposit account or certificate of deposit be secured by a pledge of obligations of the United States of America or obligations of the state of New York or obligations of any municipal corporation, school district or district corporation of the state of New York; or (2) in obligations of the United States of America, obligations of the state of New York or obligations of the municipal corporation which has established such mortgage insurance fund provided: (i) such obligations are not tax exempt; (ii) such obligations shall be payable or redeemable at the option of the owner within such times as the proceeds may be needed to meet expenditures for purposes for which the monies so invested were obtained, and (iii) such obligations, unless registered or inscribed in the name of the municipal corporation for which such investment is made, shall be purchased through, delivered to and held in custody of a bank or trust company in this state and shall be sold or presented for redemption or payment only by such bank or trust company upon written instructions from the comptroller or chief fiscal officer.

(e) An expenditure shall be made from such fund only by an authorization of the supervising agency with the consent and approval of the mayor and only for one or more of the following purposes:

(i) Payment of expenses of establishing and administering the fund;

(ii) Payment of a delinquent installment or installments of interest and principal due to the municipality under a mortgage loan, temporary loan or advance to a municipally-aided project;

(iii) Payment of any loss sustained by the municipality as a result of the making of a loan, temporary loan or advance to a municipally-aided project, whether such loss consists of a deficiency upon a mortgage, foreclosure sale as authorized by sections thirty-four and ninety-four of this chapter or otherwise; except that in the event the municipality acquires title to the project, payment for any loss or deficiency shall be deferred until such time when the municipality shall dispose of title to the project; any such loss or deficiency shall be diminished by the municipality to the extent of the amount derived by the municipality from such disposition plus any net operating income derived by the municipality during its period of ownership or less any net operating loss sustained by the municipality during such period and less any amount of interest paid by the municipality to retire any bonded indebtedness incurred in connection with the loan made to such project.

(iv) Payment of all costs entailed in procuring mortgage insurance in such amounts, and from such insurers as the supervising agency deems desirable to insure the municipality against any loss resulting from the making of a mortgage loan to a municipality-aided project. The payment from such fund of any delinquent installment or installments due the municipality under a mortgage as provided in subsection (ii) of this paragraph e shall not be deemed either a remission or waiver of the right to such installment or installments and such installment or installments shall continue to be due and payable to the municipality and shall be deposited, together with interest accrued, in the mortgage insurance fund when paid.

(f) The comptroller or chief fiscal officer shall keep a separate account for the mortgage insurance fund. Such account shall show:

(i) The date and amount of each sum paid into the fund;

(ii) The interest earned by the fund;

(iii) The capital gains or losses resulting from the sale of investments of the fund;

(iv) The interest or capital gains which have accrued to the fund;

(v) The amount and date of each withdrawal from the fund;

(vi) The assets of the fund indicating the cash balance therein and a schedule of the amounts invested. The comptroller or chief fiscal officer shall render a detailed report of the operation and condition of such fund to the supervising agency annually each fiscal year and at such other times as the supervising agency or the mayor may require. 8. Whenever reference is made in this article to a municipal loan, a loan by a municipality, a loan from a municipality, a contract for a loan between a municipality and a company, or any similar term, with respect to the territorial limits of the city of New York such term shall be construed to refer to a loan made or to be made either by such municipality or by the New York city housing development corporation, whichever is applicable. 9. The city of New York shall have the power to invest jointly or participate in a loan with the New York city housing development corporation or with one or more organizations or entities mentioned in section fifteen in a bond or note and single participating mortgage, or in separate bonds or notes and separate mortgages of a company organized pursuant to the provisions of this article upon such terms and conditions as are provided in said section fifteen of this article. 10. A municipality with a population of less than one million may, by action of its local legislative body concurred in by the commissioner, provide for the supervision and regulation of any municipally-aided project and the company carrying out such project by the commissioner in lieu of the supervising agency. With respect to any such project and company, the commissioner shall have, from and after the effective date of such action, all of the powers and duties of a supervising agency pursuant to this article. The company shall pay to the commissioner fees, as prescribed by the commissioner, to cover the expenses of examination, audit, and supervision of the company and the project. Notwithstanding any other provision of law, funds collected pursuant to such fees shall be deposited to the credit of the general fund. The provisions of subdivisions one and eight of this section shall apply only to projects financed in whole or in part by a mortgage loan, temporary loan or advance by a municipality. The provisions of subdivisions two, three, four, five, six and seven hereof shall apply to all municipally-aided projects including projects financed in whole or in part by a mortgage loan from the federal government or any agency or instrumentality thereof or by a mortgage or mortgage bonds insured by the federal government or any agency or instrumentality thereof.