N.Y. Priv. Hous. Fin. Law § 576-C
In addition to the powers granted to municipalities pursuant to this article, a municipality, acting by its supervising agency, may make loans for the purposes of acquisition, rehabilitation or construction of dwelling accommodations to a non-profit housing development fund company, a wholly-owned subsidiary of such company, a partnership the controlling interest of which is held by such company and which has agreed to limit profits or rate of return of investors in accordance with a formula established or approved by the company, or a private developer which has agreed to limit profits or rate of return of investors in accordance with a formula established or approved by the company, which agrees to provide housing accommodations exclusively for persons and families of low income, at least thirty percent of whom are referred to it by a municipality and have prior to their initial occupancy in such accommodations resided in emergency shelter facilities operated by or on behalf of the municipality or who are otherwise in need of emergency shelter as determined by the municipality, providing, however, that in the case of a building acquired by such a company, subsidiary, partnership, or developer the obligation to provide housing accommodations for such persons shall be applicable only to dwelling accommodations which are or become vacant after the date of acquisition. Such loans may be made for such period of time and pursuant to such terms and conditions as may be required by the municipality, including, but not limited to, terms and conditions providing that the lien created by the note and mortgage, and, as applicable, any regulatory agreement executed by the owner and such municipality, may be recorded in an equal or subordinate position, or subsequently made equal or subordinate, to the lien recorded by any private lender against the dwelling aided by the loan made pursuant to this article, and the supervising agency of such municipality may provide that the amount of the note and mortgage shall automatically be reduced to zero in five equal decrements commencing on the tenth year after the initial occupancy date, provided that, as of the date of such reduction, such accommodations have been and continue to be owned and operated in a manner consistent with an agreement with the municipality contained in such note and mortgage to provide housing for such persons. Notwithstanding such provision as contained in the note and mortgage, the loan shall be reduced to zero only if, prior to or simultaneously with delivery of such note and mortgage, the supervising agency made a written determination that such reduction would be necessary to ensure the continued affordability or economic viability of such housing project. Such written determination shall document the basis upon which the loan was determined to be eligible for evaporation.
N.Y. Priv. Hous. Fin. Law § 576-C