§ 802. Participation loans to owners. 1. (a) 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 (i) the rehabilitation of such existing multiple dwellings or for the conversion of such non-residential property or for the construction of new multiple dwellings on such vacant land, provided that such rehabilitation, conversion or construction may include climate resiliency improvements, 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 be made exclusively for or may include such amounts as may be required for the cost of such acquisition or for the refinancing of such outstanding indebtedness, (ii) providing site improvements located on the property on which such existing multiple dwellings are located or on such non-residential property or vacant land or in a public right-of-way, incidental or appurtenant to such rehabilitation, conversion or construction, including, but not limited to, water and sewer facilities, sidewalks, landscaping, parks and open space, social, recreational, communal and other non-residential facilities and the outfitting thereof, the curing of problems caused by abnormal site conditions, excavation and construction of footings and foundations and other improvements associated with the provision of infrastructure for housing accommodations, or (iii) providing for other costs of developing housing accommodations, 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.

(b) Notwithstanding the provisions of any general, special or local law, and in addition to the power to make or contract to make participation loans granted by paragraph (a) of this subdivision, the municipality, acting through its agency, and the New York city housing development corporation shall each have the power to make or contract to make loans or grants to any owner described in paragraph (a) of this subdivision without the participation of a private investor, on the same terms as permitted under such paragraph for a participation loan.

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. 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, or, in the case of a multiple dwelling held in the condominium form of ownership, a note and mortgage upon the condominium units rehabilitated with such participation loan, provided that a participation loan to an owner who is a lessee shall be secured by a leasehold interest in such property, and provided, further, 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 (a) 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, (b) 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, (c) 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, (d) 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.

4. Each such bond or note and mortgage or bonds or notes and mortgages shall be repaid over or within a period of forty years, provided that such period may be extended as the agency may determine necessary to ensure the continued affordability or economic viability of the multiple dwelling, in such manner as may be provided in such bond or note and mortgage or bonds or notes and mortgages. 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.