N.Y. Comp. Codes R. & Regs. tit. 9 § 1643-1.3

Current through Register Vol. 46, No. 25, June 18, 2024

Section 1643-1.3 - Borrowing from private investors

(a) Temporary loan notes. Local agencies may be authorized or directed by the division to issue their own short term notes directly to private investors, such as banks, to finance the cost of project development, prior to the issue of housing bonds by the State. These notes are termed temporary loan notes and are issued in anticipation of the loan to be made by the State. Temporary loan notes may have a maturity not in excess of one year from the date of issue, but subject to prepayment in advance of maturity, and may be refunded, upon maturity, through the sale of a similar issue of short-term notes by the local agency, subject to the limitations of the Public Housing Law. Where a project has been declared substantially completed, the local agency may only issue temporary loan notes that mature within a period not to exceed one year beyond the date of maturity of notes outstanding on the date of substantial completion. Temporary loan notes may also be refunded out of advances made by the State representing either the proceeds of a bond issue or an issue of short-term notes by the State. No refunding of temporary loan notes, may, however, take place after the bonds have been issued for same. The Public Housing Law further provides that the proceeds of an issue of short-term notes by the local agency in anticipation of a loan from the State shall be used only for the purposes for which the proceeds of the loan itself may be used.

(b) Requisition agreements and advance loan notes. Where the temporary financing of project cost is by borrowing from private investors, such as banks, the security for the temporary loan notes issued is a requisition agreement between the State and the local agency and an advance loan note, executed simultaneously with the temporary loan notes and deposited in escrow. The advance loan note is made payable by the local agency to the State of New York, is dated as of the date of maturity of the temporary loan notes for which the advance loan note is the security, matures one year from such date and is made out in a principal amount, rounded off to the nearest $1,000, sufficient to pay the principal of and the interest on the temporary loan notes. The requisition agreement, in turn, specifies that the State will purchase the local agency's advance loan note on the date of maturity of the temporary loan notes and that the proceeds of such purchase will be applied to the payment of the principal of and the interest on the temporary loan notes, the balance, if any, being paid to the local agency for deposit in the project's development fund. In the event that the temporary loan notes are refunded, upon maturity, by a similar issue of temporary loan notes, the old requisition agreement and advance loan note are cancelled and replaced by a new requisition agreement and advance loan note securing the new issue of temporary loan notes. In the event the State purchases the advance loan note, upon maturity of the temporary loan notes, out of the proceeds of a bond issue or an issue of short-term notes, the division will hold the advance loan note against the receipt of the local agency's certificate of indebtedness. The advance loan note will thereupon be cancelled and returned to the local agency.

N.Y. Comp. Codes R. & Regs. Tit. 9 § 1643-1.3