S 595: Establishes the small rental housing development initiative to provide funding to eligible applicants to construct small rental housing developments in eligible areas.

  
  STATE OF NEW YORK ________________________________________________________________________ 595 2025-2026 Regular Sessions  IN SENATE (Prefiled) January 8, 2025 ___________ Introduced by Sens. HINCHEY, JACKSON, MAY -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Community Development AN ACT to amend the private housing finance law, in relation to estab- lishing the small rental housing development initiative The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The private housing finance law is amended by adding a new 2 article 17-C to read as follows: 3 ARTICLE XVII-C 4 SMALL RENTAL HOUSING DEVELOPMENT INITIATIVE 5 Section 1060. Legislative findings and statement of policy. 6 1061. Definitions. 7 1062. Small rental housing development initiative. 8 § 1060. Legislative findings and statement of policy. The legislature 9 hereby finds and declares that there exists in many rural areas of the 10 state a substantial need for affordable rental housing of a size that is 11 suitable to small communities with limited infrastructure. The findings 12 set forth in article seventeen of this chapter, with respect to the 13 special needs and problems of such areas and the significant potential 14 role of locally based not-for-profit organizations in helping to meet 15 such needs, are hereby reaffirmed. The legislature hereby determines 16 that, in addition to the program of state support to help meet the 17 administrative expenses of such organizations under article seventeen of 18 this chapter, a further public need exists for state funding for the 19 development of affordable rental housing of twenty units or less. It is 20 the purpose of this article to encourage the construction of affordable 21 rental housing in the rural areas of the state by establishing a dedi- 22 cated program of such funding. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD01745-01-5 
 S. 595 2 1 § 1061. Definitions. For the purposes of this article, the following 2 terms shall have the following meanings: 3 1. "Small rental housing developments" shall mean affordable rental 4 apartment buildings of twenty units or less for low to moderate income 5 households. 6 2. "Eligible area" shall mean a town or city with a population of 7 thirty thousand or less. 8 3. "Eligible applicant" shall mean a non-profit housing agency such as 9 a rural preservation or neighborhood company or other similar non-profit 10 entity chartered by the state. 11 4. "Low to moderate-income household" shall mean a household with up 12 to one hundred twenty percent of area median income. 13 5. "Period of affordability" shall mean the required length of time a 14 project must meet affordability requirements pursuant to 24 CFR 15 92.252(e) and to be specified in the project note and mortgage. 16 § 1062. Small rental housing development initiative. 1. Applicants 17 constructing small rental housing developments in eligible areas shall 18 be eligible for state funding in the form of deferred loans at zero 19 percent interest loans, due on sale. Such zero interest loans may be 20 subject to forgiveness in accordance with the provisions of subdivision 21 two of this section. 22 (a) The eligible applicant shall choose a payback period for such loan 23 of between ten and twenty years. 24 (b) The maximum per-unit subsidy shall be determined by the commis- 25 sioner. 26 (c) Funds shall be used for the construction of residential units and 27 may be used for the construction of community rooms or common areas used 28 for the benefit of residents. 29 2. (a) Zero interest loans issued in accordance with subdivision one 30 of this section shall be deferred for the period of affordability. If 31 the eligible applicant, who is the recipient of a zero interest loan, 32 remains in compliance with all program requirements for the entirety of 33 the period of affordability, the zero interest loan may be forgiven and 34 the mortgage lien placed against the property may be satisfied. 35 (b) If the property of an eligible applicant is sold during the period 36 of affordability, the sum of any outstanding mortgage must be re-paid. 37 The mortgage lien may be assumed by a new purchaser only if approved by 38 the housing trust fund corporation, subject to any conditions or 39 requirements set by the housing trust fund corporation. 40 (c) The rental management requirements of the small rental housing 41 initiative shall run with the property throughout the entirety of the 42 period of affordability, regardless of any change in ownership. 43 (d) Awards made under this program shall be pursuant to a regulatory 44 agreement, including rent setting and any and all rent increases during 45 the affordability period. 46 3. The division of housing and community renewal shall notify, in 47 writing, all applicants who were not selected for funding of the reasons 48 why the proposal was not funded, including the design, underwriting, 49 legal or program deficiencies, deficiencies of any documents and/or the 50 basis upon which the application was determined to be ineligible for 51 funding. 52 4. The division of housing and community renewal shall provide for the 53 review, at periodic intervals not less than annually, of the performance 54 of applicants receiving grants or loans pursuant to this article. Such 55 review shall, among other things, be for the purposes of ascertaining 56 the conformity to agreement provisions, and adherence to regulations. 
 S. 595 3 1 Agreements entered into pursuant to this article may be terminated and 2 funds may be withheld or recaptured by the division of housing and 3 community renewal upon a finding of substantial nonperformance or breach 4 by such applicant under its agreement. 5 5. The division of housing and community renewal shall develop addi- 6 tional procedures and requirements related to the application and award 7 of funding for projects pursuant to this article as deemed necessary or 8 appropriate to implement the purposes and provisions of this article. 9 § 2. This act shall take effect immediately.