§ 802. Participation loans to owners. 1. 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 the rehabilitation of such existing multiple dwellings or for the conversion of such non-residential property or for the construction of a new multiple dwelling on such vacant land, 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 include such amounts as may be required for the cost of such acquisition or for the refinancing of such outstanding indebtedness, 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. 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. (a) 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, provided 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 (i) 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, (ii) 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, (iii) 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, (iv) 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.

(b) The aggregate amount of each such participation loan shall not exceed the cost of the rehabilitation, conversion or construction, plus the costs of any or all undertakings necessary for the planning, financing, acquisition, satisfaction of tax liens and other municipal liens and encumbrances, construction, equipment and development in connection therewith, provided that, if any portion of such loan is used for the cost of acquisition or for refinancing, the amount of a municipality's portion of such loan shall not exceed one and one-half times the cost of rehabilitation, conversion or construction.

(c) The amount of any such loan, together with the amount of all prior liens and encumbrances, shall not exceed, except in the case of a loan made to a non-profit company, a mutual company, or a housing development fund company, ninety per centum of value unless the agency makes a written determination that the owner has insufficient resources to pay for the remaining ten per centum of value, in which case such loan shall not exceed ninety-five per centum of value. The amount of any such loan, together with the amount of all prior liens and encumbrances, made to a non-profit company, a mutual company, or a housing development fund company shall not exceed value, provided that when after completion of such rehabilitation, conversion or construction, such multiple dwelling is, or is to be operated, exclusively for the benefit of persons and families who are entitled to occupancy by reason of ownership of stock in the corporate owners, such loan shall not exceed ninety-eight per centum of value unless the agency makes a written determination that the owner has insufficient resources to pay for the remaining two per centum of value, in which case such loan shall not exceed value. 4. Each such bond or note and mortgage or bonds or notes and mortgages shall be repaid over or within a period of thirty years in such manner as may be provided in such bond or note and mortgage or bonds or notes and mortgages but in no case shall the term of such loan exceed the probable life of the multiple dwelling which is hereby determined to be thirty years. 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.