Rules and Regulations

RCNY tit. 28, ch. 1

in effect

28 RCNY § 1-01 Applicability.

§ 1-01 Applicability. This chapter shall govern loans to owners of multiple dwellings for rehabilitation or improvement pursuant to Article VIII of the Private Housing Finance Law.

§ 1-02 Definitions. As used in this chapter, the following terms shall mean: Agency. The term "Agency" shall mean the Department of Housing Preservation and Development of the City of New York or the office or department charged with the administration of the program. Cost of acquisition. The term "cost of acquisition" shall mean the sum of (1) cash payments made to acquire the property to be rehabilitated or improved and (2) the net cost of satisfying the bona fide mortgages, liens (including real estate taxes due and owing to the City of New York) and other encumbrances on the property. The cost of acquisition shall in no event exceed the appraised value of the property prior to rehabilitation. Development cost. The term "development cost" shall comprehend those items included under such heading in 28 RCNY § 1-05 (Allowable Rehabilitation and Improvement Cost). Maximum mortgage amount. The term "maximum mortgage amount" shall mean the lesser of the following: (1) An amount which, together with all prior liens permitted under 28 RCNY § 1-08(c), shall not exceed 90 percent of the value of the property after completion of rehabilitation; (2) Where the property is owned free and clear and was acquired more than one year before submission of the loan application, development cost; (3) Where the property was acquired more than one year before submission of the loan application and is encumbered, an amount necessary to satisfy such encumbrances (not to exceed the appraised value of the property prior to rehabilitation) plus development cost, provided that the loan shall not exceed two times the development cost; (4) Where the property is to be acquired or was acquired less than one year before submission of the loan application, the cost of acquisition plus development cost. Persons or families of low income. The term "persons or families of low income" shall mean and include, pursuant to § 401 subdivision 3 of Article VIII of the Private Housing Finance Law, owner-occupants, persons and families in occupancy immediately prior to the date the loan is granted, and persons or families whose probable aggregate annual income during the period of occupancy does not exceed six times the rental (including the value or cost to them of heat, light, water and cooking fuel) of the apartment occupied by such persons or families except in the case of persons or families with three or more dependents, where such ratio shall not exceed seven to one, as this definition may be further expanded or limited by 28 RCNY § 1-12 (Management Supervisory Requirements). Value of the property after completion of rehabilitation. The term "value of the property after completion of rehabilitation" shall mean appraised value prior to rehabilitation plus development cost, provided that the estimated revenues, including any subsidies, will be sufficient to support the estimated debt service and operating expenses.

28 RCNY § 1-03 Eligibility and General Conditions.

§ 1-03 Eligibility and General Conditions. (a) Applicants for loans and any prior lienors must covenant in writing, that so long as any part of such loan remains unpaid, or any tax exemption-tax abatement granted as a result of the installations, alterations, improvements or rehabilitation remains in effect, or for a period of at least ten years from the occupancy date, whichever is the later, the following conditions will govern: (1) Apartments in such multiple dwelling shall be available solely for persons or families of low income as herein defined and as set forth below in subdivision (c) and in 28 RCNY § 1-12 (Management Supervisory Requirements). (2) Apartments shall be available strictly in the order of priority set forth in 28 RCNY § 1-12(d). (3) No charge or rental for apartments in such multiple dwelling shall be made or charged in excess of the maximum rentals prescribed by the Department of Housing Preservation and Development in accordance with the New York City Rent and Rehabilitation Law and the regulations promulgated thereunder. (4) At all times during the life of the mortgage, the owner shall keep and maintain the rehabilitated building and all fixtures and articles of personal property now or hereafter used in the building in good condition, order and repair. Failure on the part of the owner to comply with this provision or make repairs when requested by the Agency shall result in the Agency, at its option, employing workmen to make such repairs at the owner's expense or declaring the unpaid principal balance of the mortgage, with interest, immediately due and payable. (5) Any persons owning, operating or managing such multiple dwelling, during or after rehabilitation, shall comply with the laws under which a loan is made and the Rules and Regulations now or hereafter adopted by the Agency, including Equal Opportunity Regulations. (6) Any persons owning, operating or managing such multiple dwelling shall permit the authorized officers, employees, agents or inspectors of the Agency to enter in or upon the mortgaged premises and inspect same at all reasonable hours. (7) The Agency, its officers, employees, agents or inspectors shall have full power to investigate and order the owner of said multiple dwelling or his agents to furnish such reports and information as it may require concerning the planning and construction of the installation, rehabilitation or improvement and the management of said multiple dwelling and shall also have full power to audit the books and records of such owner with respect to such matters. Owners of buildings rehabilitated under this program must submit reports as specified in 28 RCNY § 1-12 (Management Supervisory Requirements). (8) The foregoing covenants shall run with the land. (9) The applicant shall comply with applicable laws and regulations of the Department of Buildings, particularly § 26-235 of the Administrative Code referring to the sealing of vacant buildings, and make the buildings safe. It must be clearly understood that the filing of an application does not relieve the applicant of any liability for violation of such rules. (b) Any individual, partnership, organization or corporation may qualify for a loan if the holder of a fee title to the property, or of an option or contract to purchase with a conveyance of title to be made prior to, simultaneous with, the execution of the loan documents. (c) Loan applicants must be prepared to certify when the loan is granted that at least eighty percent of the tenants occupying the building on such date are persons or families of low income whose probable aggregate annual income will not exceed six times the rental (or seven times, where there are three or more dependents) (including the value or cost to them of heat, light, water and cooking fuel), based on the rents projected to be charged upon completion of the rehabilitation.

28 RCNY § 1-04 Preliminary Site Submission.

§ 1-04 Preliminary Site Submission. The applicant, prior to the filing of a formal application, shall submit to the Agency, for preliminary consideration, a description of the proposed installation, alteration, improvement or rehabilitation which shall include the following information: (a) A plot plan of the project site which will include the section, block and lot, metes and bounds description with specific designation of the building or buildings to be improved under the proposed loan or loans. This may be waived by the Agency for loans less than $4,200 per unit; (b) A statement of the general character and physical condition of buildings within the immediate environs of the project site, and of the applicable zoning; (c) A statement outlining plans for the installations, alterations and rehabilitation to each building, the approximate period of time necessary for the completion of such and the estimated cost to each building; (d) A statement setting forth the names and addresses and telephone numbers of the proposed developers, architect and general contractor, attorney and accountants with a resume of the experience of each; (e) A statement as to the source of the equity contribution for such work; (f) A statement setting forth the results of a survey of the housing needs of site occupants and a plan for meeting those needs; (g) A statement setting forth a plan for the management of the building during the alteration, improvement or rehabilitation where tenants remain in occupancy during the work and after such work is completed; (h) Where the property is located within an Urban Renewal, Model Cities, Code Enforcement or any certified area of governmentally sponsored improvements, a letter from the Project Director in charge of such area certifying that rehabilitation of such property is in conformity with plans for the area. Upon receipt of such information, the agency shall advise the applicant whether a formal application may be filed within the time period specified by the agency.

28 RCNY § 1-05 Allowable Rehabilitation and Improvement Costs.

§ 1-05 Allowable Rehabilitation and Improvement Costs. Loans may, at the discretion of the Agency, include the following items of cost incurred in the process of rehabilitation or improvement of multiple dwellings: (a) Development cost. (1) Construction costs. (2) Relocation stipends paid in accordance with applicable laws and regulations to tenants in occupancy of the building to be rehabilitated on the date of execution of the loan, or on such prior date as may be approved by the Agency, but not earlier than the date of filing the loan application. (3) Architectural and legal fees and contractor's overhead and profit as set forth in the schedules herein, and reasonable fees for accounting and appraisals. (4) The cost of a "Payment and Performance Bond" or an amount in lieu thereof, as provided in 28 RCNY § 1-09 (Fee Requirements). (5) Real estate taxes, assessments, frontage and meter charges and sewer rents accruing during the period of construction, commencing on the date of execution of the loan, where income is inadequate during the period of construction to pay such costs. (6) Monthly interest on the amounts advanced under the loan during the period of construction. (7) A supervision fee as provided in 28 RCNY § 1-09. (8) Fees due and payable to an approved title company for the title insurance policy, recording of loan documents and mortgage recording taxes. (9) Net cost, if any, related to the rehabilitation or improvement including, but not limited to, maintaining the property pending rehabilitation or improvement, or where actions are taken in aid of the rehabilitation or improvement prior to the closing, such net costs commencing no earlier than the date of the loan application as may be approved by the Agency. Net cost represents the extent to which, due to the rehabilitation or improvement, operating expenses for repairs, janitorial services, real estate taxes, utilities and management contract and expenses related to the rehabilitation or improvement including cost of initial renting as such are approved by the Agency exceeds the rents collected from the property. (10) Premiums for insurance during construction. (11) An amount approved by the Agency for contingencies, to provide for approved change orders and other approved increases in development cost. (b) Cost of acquisition. (1) The sum of cash payments made to acquire the property to be rehabilitated or improved, and (2) The net cost of satisfying bona fide mortgages, liens (including real estate taxes due and owing to the City of New York) and other encumbrances on the property. The cost of acquisition shall in no event exceed the appraised value of the property prior to rehabilitation. The sum of (1) and (2) shall not exceed the appraised value of the property prior to rehabilitation. (c) Cost of refinancing. Actual cost to applicant or to any one with whom applicant has an identity of interest, of satisfying or refinancing existing mortgages, liens, including real estate taxes due and owing to the City of New York and other encumbrances.

28 RCNY § 1-06 Application Submission.

§ 1-06 Application Submission. Applicants who receive approval after review of the preliminary site submission may obtain application forms from the Department of Housing Preservation and Development, Office of Rehabilitation Financing, 100 Gold Street, New York, N.Y. 10033. Application forms may also be obtained from the Department of Housing Preservation and Development, Office of Special Improvements, 2 Lafayette Street, New York, N.Y. 10007, when a loan is sought for less than $4,200 per unit. Submission must include the following: (a) An original and four (4) copies of the application (typewritten or legibly printed) shall be submitted. If the applicant is a corporation, the corporate seal must be affixed to the application. The application shall set forth the name, address and telephone number of the owner of record of the property, the holders of existing liens and of the proposed architect, contractor and attorney. (b) Three (3) copies of preliminary plans shall be submitted. Such plans are to show existing and proposed room or apartment layouts of all the floors; also a plot plan showing the land and building with dimensions and an apartment distribution schedule. Preliminary drawings must be prepared by a registered architect or professional engineer. (Information on rehabilitation design standards promulgated by the Agency may be obtained from the Agency). Where because of the nature of the rehabilitation, plans are not required by the Department of Buildings, this requirement for three copies of preliminary plans may be waived in the discretion of the Deputy Commissioner. (c) For all types of rehabilitation work, the applicant must file an original and three (3) copies of an outline specification and cost estimate for all work to be performed, giving a description of the work and an estimate of the cost and trade cost breakdown of each item. Quality of workmanship and materials shall conform to the rehabilitation design standards promulgated by the Agency. (d) A copy of the document through which the applicant claims title or option. (e) Where applicant is a corporation, a copy of the following additional documents will be required: New York State Certificate of Incorporation or authorization to do business in the state with proof of payment of current franchise taxes and New York City General Corporation Tax. (f) Where applicant is a partnership, copies of its partnership agreement and certificate, a list of all its partners and the information specified in subdivision (g) of this section with regard to each. (g) A list of the assets of the applicant with particular reference to any real estate holdings within the City of New York and where applicant is a corporation, a list of such assets of all officers, directors and of all stockholders having more than ten percent interest; and a statement of the direct or indirect interest of any such parties in other government programs providing loans or other public assistance. (h) Applicant must file on the form provided by the Agency a sworn Certificate of Interest disclosing the identity of all parties involved or to be involved in the purchase, ownership and rehabilitation of the premises in question, and where applicable, the details of the transaction by which one or more of the parties acquired title and full particulars regarding all mortgages and other liens on the premises and all payments made or to be made in connection therewith. If any portion of the loan is to be used to satisfy a mortgage, the applicant will be required to certify as to the origin of each mortgage; if a purchase money mortgage to state the total purchase price of the property, the amount secured by the mortgage and the balance due thereon; if not a purchase money mortgage, to state the actual cash advanced to the mortgagor and the balance due thereon; to state the amount to be paid to the mortgage holder at the date of loan closing to satisfy the mortgage; to certify that payment made to the holder of the mortgage is and will be a bona fide arms length transaction, and disclose whether there is any relationship by family ties or otherwise among any of the parties, their officers or principals; and finally, to certify that the mortgagee of the satisfied mortgage neither has nor will have any financial relationship to the rehabilitation project. Applicant is also required to disclose promptly during the processing of the application, by an amended certificate, any changes which occur during such processing and to verify the continued accuracy of the certificate at the loan closing. (i) Applicant must file a detailed plan for the management of the building during the period of alteration, improvement or rehabilitation when tenants remain in occupancy and after such work is completed. The plan should detail his experience in management of residential property, plans for tenant involvement in the upkeep and maintenance of the building and for community group involvement, if any. (j) A filing fee shall be paid as provided in 28 RCNY § 1-09. (k) Investigatory reports required by the Agency shall be charged to the applicant. (l) Such additional information in such form as the Agency may require. Upon receipt of such application, the Agency will determine whether the loan shall be made based on a recommendation by a Municipal Loan Committee, consisting of the Commissioner of Development, the Deputy Commissioner of the Office of Rehabilitation Financing, the Assistant Administrator for Programs and Policies, the Comptroller, and the General Counsel; and in the case of loans processed by the Office of Special Improvements consisting also of the Office of Rent and Housing Maintenance and the Deputy Commissioner of such Office.

28 RCNY § 1-07 Insurance Requirements.

§ 1-07 Insurance Requirements. The applicant is required to submit to the Agency, for its approval in a form satisfactory to the Agency including but not limited to, an endorsement that fifteen days prior notice by registered mail, return receipt requested, of cancellation shall be given to the City of New York as the Agency shall prescribe, the following evidence of insurance prior to loan closing or commencement of construction or installation, whichever is first: (a) An original policy of fire insurance with extended coverage, for a term of three (3) years, in an amount at least equal to the amount of the loan. During the construction period coverage may be for less than the amount of the loan. Such policy must contain a loss payable clause, naming the City of New York, c/o Department of Housing Preservation and Development as mortgagee and further provide that "buildings in course of renovation with permission granted to complete and occupy" or a similar description to this effect. When the improvements are completed, such proviso is to be deleted from the policy. (b) An original policy of owners protective liability and property damage insurance issued to the contractor, with the owner and "The City of New York Department of Housing Preservation and Development" as additional insured, to protect the owner and the City against claims for property damage and for personal injuries, including accidental death caused by the operations of the contractor or his subcontractors during the performance of work at the building or adjacent thereto, in at least the sum of $100,000 - $300,000 bodily injury and $25,000 - $50,000 property damage, or in such larger amounts as may be determined by the Agency. When improvements are completed, this coverage may be discontinued. (c) Evidence of the contractor's coverage for public liability and property damage insurance, or by the comprehensive general liability insurance to protect him and his subcontractors, the owner and the City against claims for property damage and for personal injuries including accidental death in at least the sum of $100,000 - $300,000 bodily injury and $25,000 - $50,000 property damage. (d) An original policy of boiler insurance (broad form) in the amount of not less than $50,000 providing coverage in the event of explosion, collapse, or rupture of boilers during installation or operation, where applicable. (e) The contractor and each subcontractor shall provide adequate Worker's Compensation Insurance for all employees engaged in the work on a building who may come within the protection of the Workers' Compensation Law, and where practicable, Employer's General Liability Insurance for employees not so protected. (f) A payment and performance bond guaranteeing performance by the contractor and payment for all services and material. Where satisfactory proof has been presented that after a diligent effort such bond cannot be obtained, the Agency may accept in lieu thereof (1) a guarantee of completion executed by the owner and where the owner is a corporation, by the principal stock-holder(s) or officer(s) thereof, (2) a financial statement by each party executing such a guarantee, showing sufficient net assets and net worth to give reasonable certainty of financial ability to fulfill such commitment, and (3) an amount equal to two (2%) percent of the construction cost as a non-refundable fee. The Agency may in its discretion, where satisfactory proof has been presented that after a diligent effort such bond cannot be obtained, accept in lieu thereof bonds furnished by subcontractors covering at least fifty (50%) percent of the construction cost, in which case the balance of the construction cost shall be covered by guarantees of completion and fees as described above. Following completion of the rehabilitation the owner shall maintain public liability insurance against claims for personal injury or death and for damage to property suffered by others, occurring upon, in or about the building in at least the sum of $100,000 – $300,000 bodily injury and $25,000 – $50,000 property damage in a form satisfactory to the Agency. Modification of those insurance requirements as to term, amount, or coverage may be made only with the approval of the Deputy Commissioner of the Agency charged with the administration of this pro- gram.

28 RCNY § 1-08 Mortgage Conditions.

§ 1-08 Mortgage Conditions. (a) No loan may exceed the maximum mortgage amount. (b) Each loan made under this program shall be secured by a bond or note and mortgage upon the multiple dwelling to be improved and the land upon which it is situated to be repaid over or within a period of thirty years in such manner as may be provided therein. (c) The Agency may take a junior lien on the property as security for the loan or may, in accordance with the provisions of the Private Housing Finance Law, participate in a rehabilitation loan with a private lender, provided that the total indebtedness will not exceed the maximum mortgage amount after completion of rehabilitation. In determining whether to take a junior lien the Agency shall give favorable consideration to the following, if present: that the interest rate on the prior lien is more favorable than the Agency can offer the mortgagor; that the holder of the prior lien is an institutional lender of recognized standing; and that the principal amounts due under the prior lien or liens are being amortized on a basis which would not jeopardize the City's lien. A subordination agreement may be required from the holder of any prior lien where the Agency deems it desirable. (d) The mortgagor shall be required at the closing to execute a construction contract for the performance of the work with a general contractor or tradesman. Both the contract and the general contractor or tradesman must be approved by the Agency and the Agency reserves unto itself the right to approve or reject a contractor. The mortgagor shall be required to submit a resume of the experiences of the proposed contractor and all proposed subcontractors, financial statements of the contractor and for all firms in which the contractor has a controlling interest for the last three years, references from at least three major clients of each contractor, and a statement of the ethnic breakdown of the employees of each such contractor and subcontractor in advance of such closing. (e) At the closing of the loan, the owner shall advise the Agency by a sworn statement of changes, if any, that have occurred since the date of application for the loan with respect to condition of the building, mortgage balances, acquisition cost, taxes, liens, discounts and assignments, and any change in relationship of parties in interest, and if there have been no changes, shall so state. If any portion of the loan is used to satisfy a mortgage, the mortgagor will be required at the closing to provide a certificate from the holder of the mortgage as to the amount paid by such mortgagee for the mortgage, where applicable, and the balance due thereon. (f) Interest and amortization payments shall be due and payable commencing on the first day of the third month after a certificate of occupancy, temporary or permanent, has been obtained, where applicable. This period may be extended upon due notice by the Agency to the City Comptroller where occupancy is dependent on conditions beyond the owner's control such as the availability of Federal rent supplements. (g) A mortgagor may not, at any time, further encumber, mortgage or permit any encumbrance or lien of any kind upon the mortgaged premises without the prior written consent of the Agency, nor may the premises or any part thereof be conveyed, assigned or transferred without the prior written consent of the Agency. Failure to comply with this subdivision (g) at the option of the Agency, shall result in the Agency's declaring the entire unpaid principal balance and interest immediately due and payable. (h) The mortgage may provide that with the consent of the Agency a mortgagor may prepay the principal amount of the loan together with interest then due. However, the apartments in the premises shall remain subject to the conditions set forth in 28 RCNY § 1-03 (Eligibility and General Conditions). (i) The Agency shall establish first rentals or adjust maximum rents, whichever is applicable, for all buildings rehabilitated with a municipal loan and certify same to the Division of Housing and Community Renewal. In arriving at such rent levels, the Agency shall consider the total of the projected operating costs, including water and sewer taxes, fuel, insurance, utilities, painting and repairs, and vacancy allowance, a reasonable return on the owner's equity and interest and amortization payments on the mortgage.

28 RCNY § 1-09 Fee Requirements.

§ 1-09 Fee Requirements. (a) Simultaneously with the filing of the application the applicant shall deliver to the Department of Housing Preservation and Development, Office of Rehabilitation Financing, a certified or cashier's check payable to the "Municipal Loan Program Application Account" in the sum of one hundred fifty dollars ($150), or such larger amount as may be required by the Agency to defray the costs of appraisal, credit reports and other expenses of processing the application. Applications filed with the Office of Special Improvements must be accompanied by such a check payable to "Small Loan Program Application Account" in the amount of one hundred dollars ($100) for such purposes. (b) All mortgage loans are subject to a supervision fee in the amount of two (2%) percent of the total loan, payable to the City of New York. Such fee may be waived by the Agency in whole or in part in the case of loans under $4,200 per unit. (c) A fee in lieu of payment and performance bond, where applicable, shall be requested equal to two (2%) percent of the estimated construction cost, which sum shall be deposited by the Agency in its Rehabilitation Loan Reserve Fund. (d) A management fee in the amount of 1/4 percent of the original principal amount of the loan shall be charged and payable per annum to meet costs of supervision during the life of the loan. The Agency may in its discretion deposit such sum in its Rehabilitation Loan Fund or use such sum in whole or in part to pay a bank or the New York City Housing Development Corporation for the performance of such services as are generally performed by a banking institution which itself owns and holds a mortgage. (e) Where a monthly installment of principal and interest on a mortgage has become overdue for a period in excess of fifteen (15) days a "late charge" of one (1) cent per month for every dollar of such installment so overdue may be charged the mortgagor by the Agency and deposited in its Rehabilitation Loan Reserve Fund. (f) The Agency may determine in its sole discretion to submit the loan application to the New York City Housing Corporation. In the event that such corporation is or shall become the mortgagee, all fees required by this section shall be paid to the corporation rather than to the City of New York, except as the Agency may otherwise prescribe. (g) None of the fees provided for by this section are refundable.

28 RCNY § 1-10 Construction Requirements: Payments.

§ 1-10 Construction Requirements: Payments. (a) The plans, specifications, work write-ups or any description of work to be performed on a building subject to a loan under this program must be approved by the applicable office of the Agency prior to the commencement of any rehabilitation work or the closing of a mortgage loan for same. Such plans, specifications, work write-ups or other description of work must conform to the rehabilitation design standards of the Agency and must have been approved by the Department of Buildings, where applicable, or any other necessary governmental bureau or department. (b) During the rehabilitation process the Agency's architects, engineers, rehabilitation specialists or officers and others designated by the Agency may conduct periodic inspections of the work. Copies of all plans, specifications, work write-ups or other description of work, with the Agency's approval stamped thereon, must be kept on the job site for the use of such Agency personnel. (c) Requests for change-orders shall be in writing. Change-orders must be fully documented, showing original and revised cost estimates and reasons for such change-orders. Upon approval thereof, which shall also be in writing, the change shall be reflected in a revised trade payment breakdown. (d) The Agency may require the deposit of loan advances in a separate escrow account, in a bank designated by the Agency, subject to withdrawal only upon the joint signatures of the borrower and a representative of the Agency. The Agency may further require that the owner deposit all or a designated portion of the rents collected from the multiple dwellings during the period of construction in such escrow account, or in a separate trust account under such terms and provisions as the Agency shall prescribe. (e) Progress payments on work completed shall be made on the basis of sworn statements as herein provided, subject to review and approval by the Agency. At the time of each progress payment, the contractor, mortgagor or owner shall execute for the Agency a sworn statement that all bills due for labor, services rendered, and materials furnished in connection with the work to the date of payment are paid and that no liens have been filed, or if not paid, submit list itemizing the amounts due to creditors so as to insure a proper allocation of the payment to satisfy in full such unpaid items. Such statement shall reconcile requisitions with the trade payment breakdown previously submitted. The Agency reserves unto itself the right, at its discretion, to take proceeds of the loan and pay all verified delinquent claims for labor, materials or other services rendered. The Agency shall further withhold an amount equal to no less than ten percent of the total amount of each progress payment as a retention fund under the mortgage to assure satisfactory progress of the work. Such retention, or a portion thereof, may be released prior to the completion of the work upon written request by the owner or mortgagor with the approval of the Deputy Commissioner of the Agency; the retention on completed work may thus be reduced to five percent upon completion of fifty percent of the work. All of the retention remaining shall be released upon the completion of the work to the entire satisfaction of the Agency and other necessary state or municipal bureaus or departments, the presentation to the Agency of a permanent certificate of occupancy, where applicable, proof of payment for all labor and materials, a cost certification prepared and certified by an independent public accountant licensed by New York State, and also a sworn certificate disclosing any changes from the applicant's filing in accordance with 28 RCNY § 1-06(g) (Application Submission). (f) The portion of the loan representing interest on advances during construction shall be adjusted upon completion of the rehabilitation as follows: If such portion shall be more than the amount required for interest on advances, the excess shall be credited to the mortgagor in reduction of the principal of the loan; if less than the amount required for such interest, the difference shall be deducted from the final payment of loan proceeds and paid over to the City of New York. (g) Any income derived during any period of occupancy prior to commencement of debt service may be credited against the construction loan. (h) Books and records of the contractor and of subcontractors relative to the rehabilitation shall be subject to audit by the Agency. All subcontracts shall be submitted to the Agency when executed and any interest between the mortgagor and the subcontractor shall be disclosed at that time. (i) The aforementioned cost certification shall be provided on a form approved by the Agency and must include the following: (1) A certified list of the actual costs paid by the general contractor for materials and subcontract work under the general contract. (2) A certified list of the actual costs for non-construction items as were approved by the Agency. (3) Proof that all labor and materials included in the rehabilitation have been paid for. (4) An opinion certifying as to the accuracy of the owner's costs statements by an independent certified public accountant.

28 RCNY § 1-11 Labor Compliance Conditions.

§ 1-11 Labor Compliance Conditions. Each mortgagor or contractor performing rehabilitation work with proceeds of a mortgage loan under this program must agree that the following standards and requirements will be strictly complied with: (a) The contractor will not discriminate against any employee or applicant for employment because of race, creed, color, national origin or sexual orientation. The contractor will take affirmative action to insure that applicants are employed, and that employees are treated during employment without regard to their race, creed, color, national origin or sexual orientation. Such action will include, but not be limited to the following: employment, up-grading, demotion, transfer, recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Agency setting forth the provisions of this non-discrimination clause. (b) The contractor will participate in an on-the-job training program in accordance with the Mayor's Executive Order No. 50 of 1980 as amended and the agreement dated December 10, 1970 with the New York Building and Construction Industry, Board of Urban Affairs Fund, and will enter into a contract with the Agency to implement such training program. (c) To the extent that such preference is not inconsistent with the Executive Orders and the agreements referred to in subdivision (b) above, the contractor, including subcontractors within model cities, urban renewal and code enforcement areas will give a priority in hiring to persons living within the geographic neighborhood in which the work is being performed. (d) The contractor will not subcontract any part of the work without prior written approval of the Agency. The Agency will not approve any subcontractor for work who is at the time ineligible because of violations of this 28 RCNY § 1-11 (Labor Compliance Conditions), inefficiency, abandonment of duties, or disregard for creditors on prior jobs performed under this program. Failure to comply with the provisions of this 28 RCNY § 1-11 will result in the Agency's withholding from the contractor any progress payments, in addition to exercising such other rights as may be reserved to the Agency in the loan documents, and forfeiture by the contractor of consideration for future work under this program. (e) With every requisition for a progress payment or at such times as the Agency shall prescribe, the contractor shall submit to the Agency copies of his payroll report and of each of the subcontractors (it being understood that the contractor will be responsible for the submission of records of subcontractors). Such payroll report shall contain such items as prescribed by the Agency including, but not limited to, the name and address of each employee, his classification or trade, ethnic/racial origin, hourly rate of pay, deductions made, number of hours worked and actual wages paid for the work week. (f) In order to assure strict compliance with this section and these rules and regulations, the books and records of the general contractor or tradesman and all subcontractors shall at all times be available to the agents or representatives of this Agency and the Agency reserves the right to interview or confer with any employee on a construction job or in the office of general contractor or tradesman or subcontractor, at any time, in order to determine such strict compliance. Failure to comply with this chapter shall be considered a breach of construction contract and may result, at the discretion of the Agency, in the removal of the general contractor, tradesman or subcontractor from the construction job and other penalties as the Agency might deem necessary to impose.

28 RCNY § 1-12 Management Supervisory Requirements.

§ 1-12 Management Supervisory Requirements. (a) Neither an owner, nor anyone acting in his behalf, shall make a charge or demand a fee of any kind for processing a tenant's application. (b) The owner shall receive no more than one month's rent as security and one month's rent in advance at the time the tenant takes occupancy of premises rented after the loan is granted. Upon direction by the Agency, such security deposits when received by the owner shall be immediately submitted to the Agency to be held in escrow by the Agency for the benefit of the tenant. The Agency will deposit all such funds in a separate interest bearing account with a banking institution of the Agency's choice. The records of such account shall be available at all times to an owner or tenant for the purposes of audit, inspection or examination, and interest accruing from such account shall enure to the benefit of the tenant-depositor. The principal amount of such deposit together with interest thereon shall be returned to the tenant by the Agency upon the written request of the owner certifying that the tenant's occupancy has been terminated and that all the terms and conditions of such occupancy have been complied with. (c) The apartments in a rehabilitation building are available to persons or families of low income as defined in 28 RCNY § 1-02 (Definitions). (1) Probable aggregate annual income includes the annual income of the chief wage earner of the family, plus all other income of other members of the family in excess of $1,500 per annum for each such member. The income of a working minor who is a full-time student shall not be included in the computation of such annual income. Social Security or other pension plan payments received by females aged sixty-two years and over, or males sixty-five or over shall be excluded from computation of annual income up to a total maximum amount of $75 a month per individual. (2) If at the time a loan is granted, the tenant's probable annual income exceeds, or later increases so as to exceed, the prescribed income limits by more than fifty percent, he can be removed, with the Agency's consent, from the building either the expiration of a two-(2) year period from the time the loan was granted. (3) A tenant who moves into the building after the loan has been granted is subject to removal, with the Agency's consent, when his yearly income exceeds the income limits by more than fifty percent. (4) If, after the expiration of a two-year period from the time the loan was granted, more than twenty percent of the tenants in the building are over-income, the Agency may require the owner to remove over-income tenants. (5) When the owner of the building occupies one of the units, he will be liable for rent surcharges the same as any tenant. (6) Any person or family in occupancy whose income exceeds the maximum prescribed shall pay a rent surcharge in accordance with the following schedule: (Percentage of Maximum Permitted Income) Up to 100 percent Basic rent only In excess of 100 to 105 percent Basic rent only In excess of 105 to 110 percent Basic rent plus 5 percent In excess of 110 to 115 percent Basic rent plus 10 percent In excess of 115 to 120 percent Basic rent plus 15 percent In excess of 120 to 125 percent Basic rent plus 20 percent In excess of 125 to 130 percent Basic rent plus 25 percent In excess of 130 to 135 percent Basic rent plus 30 percent In excess of 135 to 140 percent Basic rent plus 35 percent In excess of 140 to 145 percent Basic rent plus 40 percent In excess of 145 to 150 percent Basic rent plus 45 percent In excess of 150 percent Basic rent plus 50 percent The owner of the dwelling must, subject to the approval of the Agency, take the action necessary to assure compliance with these provisions. Rental surcharges collected by the owner are paid to the Agency by check made out to the order of the City of New York and are used to reimburse the City for any tax exemption or abatement granted to the owner. If such benefits have not been granted, or if a sum equal to the amount of tax exemption and abatement granted has already been paid to the City, the surcharge shall be paid to the City in reduction of the loan in accordance with § 403 Subdivision 4 of Article VIII of the Private Housing Finance Law. (d) Tenants for initial occupancy of such rehabilitated buildings, and for the filing of vacancies as they occur, shall be selected by the Owner in the following order of priority: (1) Site occupants, that is, tenants occupying the building on the date of preliminary site submission or such later date approved by the Agency. "Building" in this paragraph shall include parcels subject to a consolidated loan. Where the Housing Authority has entered into a leasing program regarding the rehabilitated building, all tenants eligible for public housing must apply to the Housing Authority to recognize their priority. (2) Tenants in occupancy shall have the first priority for internal transfer. (3) If the site is within an urban renewal area or other redevelopment area, residents of sites acquired to effectuate the plans for such area; families in emergency need of housing, including families who are homeless, under warrant of eviction, living in buildings condemned as unfit for human habitation, or facing displacement from sites, buildings or dwelling units being cleared or vacated by governmental action. Within this class preference shall be given to residents of the same community planning district. (4) Persons listed on the outside waiting list in strict chronological order. (5) Others, subject to Agency approval. Notwithstanding the foregoing, where a federal subsidy is involved, federal standards of priority are controlling as to the affected apartments. (e) The Agency may direct that a certain number of apartments be held vacant until the building is at least 70 percent occupied by relocatees having priorities (1) through (3) of subdivision (d) above, but not beyond the date when debt service commences. Implementation of the priority system described above shall be accomplished as follows: (1) The owner shall submit to the Agency, prior to renting, a Tenant Selection Review Form prescribed by the Agency. (2) The owner shall fully complete such form and state whether he wishes to reject or accept the tenant applicant. (3) The Agency shall render a decision on acceptability of the tenant within three working days of receipt of the Tenant Selection Review Form. (4) The Agency reserves the right to approve or reject any tenant applicant and the owner agrees to be bound by its decision. It shall be the owner's responsibility to contact the Agency to obtain such decision. If the applicant is rejected, the owner will follow the same procedure for any other applicant he considers. (5) The owner shall accept referrals from whatever governmental source the Agency may designate. Where the Agency determines that an owner has rejected a tenant applicant, it reserves the right to order him to submit another applicant for that housing unit. The fact that an applicant is on welfare shall not be grounds for rejection. Failure to submit a Tenant Selection Review Form to the Agency, failure to obtain Agency approval prior to renting, or renting an apartment to a tenant applicant who has not been approved by the Agency, shall, at the option of the Agency, make the owner liable for the expense of finding a comparable housing unit for another applicant who is eligible under renting priorities set forth above and for any unusual cost in relocating such applicant in such comparable unit. (f) At the discretion of the Agency, the owner may be required to enter into a regulatory agreement with regard to the management and operation of the building and the rents, profits, dividends or distribution of its property and as otherwise prescribed by the Agency. (g) The owner shall maintain separate and accurate books and records of all managerial and financial data, including assets, liabilities, equity, income and expense, relative to the rehabilitated property or properties for which a separate loan has been made. Such books and records must be made available to the representatives of the Agency for audit, examination or review upon demand. Unless this requirement is modified or waived in the case of a loan under $4,200 per unit, financial reports as prescribed by the Agency relative to a rehabilitated property or properties for which such a separate loan has been made are required to be filed in duplicate, with the Agency for the six-month period ended December 31, and the twelve-month (annual) period ended each June 30. The reports are due within 90 days after the close of each respective period. The indicated filing requirements are to be met with respect to the initial operating periods although these may not be full six- or twelve- month periods. Such reports are to be based on audit examination, in accordance with generally accepted auditing standards, by an independent public accountant licensed in New York State. The annual report, for the fiscal year ended each June 30, is to be certified by such accountant relative to the financial statements and other data required to be contained therein. The foregoing reports are to include the following: (1) Accountant's certification. (2) Financial statements (accrual basis). (i) Balance Sheet, with such supporting schedules as required to be fully informative. (ii) Statement of Operations, with detailed income and expense subclassifications. The annual statement shall also show separately the operating figures for the last six months of the fiscal year, January l-June 30. (iii) Statement of Sources and Application of Funds (Change in net working capital). There shall also be filed such other financial reports or data as the Agency may require. (h) The Agency reserves the right to make periodic inspection on each apartment in the rehabilitated building. Such inspections shall be for the purpose of inspecting the condition and maintenance of the building, the condition of utilities, fixture and equipment. Periodic visits may also be made to the building by representatives of the Agency for the purpose of conferring with tenants, advising on consumer practices, frauds and products, education regarding maintenance of dwellings and where necessary serving as a liaison or intermediary on landlord-tenant problems. Copies of reports of such inspections shall be made available to the owner with recommendations for corrective measures where necessary. (i) Re-renting or eviction proceedings may only take place with the approval of the Agency. No new tenants may be moved into a building without the owner's following the same procedures as hereinabove set forth.

28 RCNY § 1-13 Community Participation.

§ 1-13 Community Participation. The Agency acknowledges the desirability of involving recognized and responsible community organizations in the planning and execution of rehabilitation efforts in their areas.

28 RCNY § 1-14 Fee Schedules.

§ 1-14 Fee Schedules. Allowable architectural and legal fees and contractor's overhead and profit shall not exceed the fee schedules below: (a) Architectural fees. Five and a half percent of construction cost up to $400,000; above that, four and a half percent but not less than $22,000. The fee, which includes mechanical engineers fees will be paid directly to the architect in three parts. Upon closing the municipal loan with plans and specifications approved by the Department of Buildings and this Agency, the architect will receive sixty percent of his fee, an additional twenty percent at closing of the walls and the final twenty percent at completion thereof and upon receipt of a statement of compliance accompanied by a Certificate of Occupancy. (1) Any work beyond the scope of the contract requirements requested by the Department of Housing Preservation and Development in writing, shall be paid to the architect at the rate of two and a half times the reasonable salaries of technicians engaged in such changes. (2) When the basic plans are repeated for identical buildings (within twenty percent of design is reused) then such fee shall be reduced by thirty-three and a third percent of original design fee. (3) Architect shall supply all required services, plans, specifications and filing with the Department of Buildings. (4) If buildings are contiguous, and only one set of mechanical drawings is used for all buildings, then the fee for each duplicate building shall be 50 percent of the original building construction cost. (b) Contractor's overhead and profit. Construction Cost Fee as Percent of Construction Cost Less than $100,000 10.0 100,000 9.7 200,000 9.4 300,000 9.1 400,000 8.8 500,000 8.5 600,000 8.2 700,000 7.9 800,000 7.6 900,000 7.3 1,000,000 7.0 1,500,000 5.5 2,000,000 4.0 The amount allowed shall not be less than that for the preceding construction cost. (c) Legal fees. One percent of construction cost up to $50,000, plus three tenths of one percent on amounts in excess of $50,000. The legal fee shall be paid in two parts as follows: Seventy-five percent on closing and twenty-five percent at final payment.

28 RCNY § 1-15 Rent Adjustments.

§ 1-15 Rent Adjustments. (a) Upon completion of the rehabilitation or improvement, maximum rents shall be adjusted pursuant to § 33.9 of the Rent and Eviction Regulations and the rules and regulations adopted pursuant to those provisions. (b) Such rentals may thereafter be increased upon application made by the owner to the office or department charged with administration of the Program in the manner set forth herein and as set forth in § 33.9 of the Rent and Eviction Regulations and the rules and regulations adopted pursuant thereto. If such office or department determines that a rent increase is required based upon operating and maintenance expenses, real estate taxes, debt service requirements, vacancy and other rent collection losses, and a return on equity computed at 8 percent, the director of that office or department shall so certify to the Office of Rent Control and inform the Office of Rent Control of the amount of the increases which are requested. The Office of Rent Control shall issue written notice to the tenants of the rent increases requested by the owner. Upon expiration of the time allowed for the tenants to answer as set forth in such notice, the Office of Rent Control shall forward any responses to the administering office or department. Such office or department shall review the responses and the record and may then request that the Office of Rent Control issue orders adjusting the rents as finally determined by that office or department. The Office of Rent Control will issue such orders within fifteen days after receipt of such request.

28 RCNY § 1-16 Failure to Comply with Regulations.

§ 1-16 Failure to Comply with Regulations. Upon failure of an applicant, owner or mortgagor to comply with this chapter, said applicant, owner or mortgagor may be disqualified by the Agency from applying for a loan under this program for up to three years following the date of any failure.

28 RCNY § 1-17 Waiver.

§ 1-17 Waiver. The Agency may waive any of this chapter where the nature of the installation, alteration, improvement or rehabilitation or other circumstances warrant such exception. Any waiver to be effective requires the approval of the Commissioner or the Municipal Loan Committee.

Source: City of New York, Charter, Administrative Code and Rules (American Legal Publishing XML export, codelibrary.amlegal.com)URL: https://codelibrary.amlegal.com/codes/newyorkcity/latest/NYCrules/0-0-0-53382Fetched: 10/24/2026