§ 452. Loans to owners. 1. Notwithstanding the provisions of any general, special or local law, a municipality is hereby authorized to make or contract to make loans to the owners of existing multiple dwellings within its territorial limits, subject to the limitations in subdivision two of this section, for the elimination of any substandard or insanitary condition or conditions in violation of the multiple dwelling law or local housing code, or for such replacement and rehabilitation of the heating, plumbing, electrical and related systems or other improvements as shall be reasonably necessary to prolong the useful life of such dwellings, and may make temporary loans to such owners in anticipation of the permanent municipal loans for such purposes.

2. Each loan shall be evidenced by a note executed by the owner of the existing multiple dwelling. The supervising agency in its discretion may require one or more of the shareholders of a corporate owner to co-sign such note or to otherwise guarantee or pledge security for the repayment of the loan. The amount of any such loan shall not exceed the sum of thirty-five thousand dollars ($35,000) per dwelling unit, or the cost of eliminating such substandard or insanitary condition or conditions, or effecting such rehabilitation or improvement, whichever is less. Each such note shall be repaid within a period of the probable life of the existing multiple dwelling which is hereby determined to be thirty years, or such shorter period as the supervising agency shall determine. The repayment shall be made in such manner as may be provided in such note and contract, if any, in connection with such loan and may authorize such owner, with the consent of the supervising agency, to prepay the principal of the loan subject to such terms and conditions as therein provided. Such note and contract may contain such other terms and provisions not inconsistent with the provisions of this article as the local legislative body or supervising 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, including but not limited to provisions ensuring availability of rents for such repayment.

3. The supervising agency in its discretion may require that the owner execute a financing statement for real property improvement to be in such form as the agency shall specify and to contain the following information: the name and mailing address of the owner, the address of the real property, a statement that a loan has been made by the municipality under this article, the amount and duration thereof and the applicable interest rate. Said financing statement shall be filed without charge in the office for recording mortgages of real property and from the date of such filing the municipality shall have a lien against said real property for the amount advanced or so much thereof as remains unpaid and interest thereon. If a financing statement is filed as herein provided, the rights and remedies of the municipality and the priority of its lien shall be the same as those of a holder of a lien for the materials furnished or labor performed in the improvement of real property pursuant to articles two and three of the lien law, except that the lien shall be valid for one year after the maturity date of the final installment payable under said note and thereafter as provided in section seventeen of the lien law. Upon payment of all sums advanced by the municipality and interest thereon and upon demand of the then record owner of the real property, the agency shall deliver to him a copy of the financing statement with an endorsement thereon that the lien is satisfied; upon filing of such copy in the office where the financing statement was filed and upon payment of the proper fee therefor, the lien of such financing statement shall be discharged.

4. The supervising agency may require the owner to execute a mortgage as security for a loan in lieu of a financing statement as provided in the foregoing subsection three. Such mortgage shall contain such terms and provisions not inconsistent with the provisions of this article as the supervising agency shall deem necessary or desirable to secure repayment of the loan under this article.

5. The supervising agency may charge the owner of such existing multiple dwelling reasonable fees for financing, regulation, supervision and audit. Such fees shall be kept by the municipality in a separate fund to be known as the article VIII-A housing rehabilitation fund and shall be used to help meet the expenses of the municipality in administering and carrying out the provisions of this article.

6. In the case of a loan made pursuant to this article, the supervising agency may pay any liens and charges the priority of which is superior to its mortgage and may pay such other expenses as may be appropriate to protect its loan or to protect the lien of the mortgage relating thereto, provided that such expenditures shall not exceed the total amount of such loan.

* 7. Notwithstanding the provisions of, or any regulation promulgated pursuant to, the emergency housing rent control law, the local emergency housing rent control act, the emergency tenant protection act of nineteen seventy-four, or any local law enacted pursuant thereto, upon completion of the rehabilitation of a multiple dwelling which is aided by a loan made pursuant to this article, the supervising agency, may as an alternative to permissible rental adjustments under such laws and regulations, adjust the rent for each rental dwelling unit within the multiple dwelling. The initial rental adjustment, if set by the supervising agency, shall be established based solely on the debt service attributable to the loan, provided, that the supervising agency may establish rental adjustments less than such debt service, provided further that the supervising agency may establish greater rental adjustments for vacant dwelling units than for occupied dwelling units. The supervising agency shall cause all tenants in occupancy of each dwelling unit affected by the provisions of this subdivision to be notified of and have an opportunity to comment on contemplated rehabilitation. Such notification shall advise such tenants of the approximate expected rent increase. Such notification and opportunity to comment shall be provided before the rehabilitation and again after the construction is completed and before the establishment of the rental adjustment.

* NB Expires July 1, 2024

* 8. Notwithstanding the provisions of, or any regulation promulgated pursuant to, the emergency housing rent control law, the local emergency housing rent control act, the emergency tenant protection act of nineteen seventy-four, or any local law enacted pursuant thereto, upon completion of the rehabilitation of a class B multiple dwelling, class A multiple dwelling used for single room occupancy purposes, lodging house or a substantially vacant building intended to be used after rehabilitation for single room occupancy purposes and which is aided by a loan pursuant to this article made by the municipality on or after September first, nineteen hundred eighty-five, the agency shall establish the initial rent for each rental dwelling unit within the multiple dwelling. All dwelling units within the multiple dwelling subsequent to establishment of initial rents by the agency shall be subject to the rent stabilization law of nineteen hundred sixty-nine. The occupant in possession of such a dwelling unit when it is made subject to the rent stabilization law of nineteen hundred sixty-nine shall be offered a choice of a one or two year lease at the initial rents established by the agency notwithstanding any contrary provisions of, or regulations adopted pursuant to, the rent stabilization law of nineteen hundred sixty-nine and the emergency tenant protection act of nineteen seventy-four. The agency shall cause all tenants in occupancy of each dwelling unit affected by the provisions of this subdivision to be notified of and have an opportunity to comment on the contemplated rehabilitation. Such notification shall advise such tenants of the approximate expected rent increase and the subsequent availability of a one or two year lease. Such notification and opportunity to comment shall be provided before the rehabilitation and again after the construction is completed and before the establishment of the initial rents.

* NB Expires July 1, 2024

9. The note or note and contract issued by the owner of any such multiple dwelling to secure such loan may provide that the loan shall be reduced to zero commencing on the fifteenth year after the execution of the note or note and contract, provided that, as of the date of such reduction, the 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 note or note and contract, the loan shall be reduced to zero only if, prior to or simultaneously with delivery of such note or note and contract, 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.