N.Y. Private Housing Finance Law Section 13
Limited-profit housing companies

  • how created

A company may be created by three or more persons, approved by the commissioner, by making, subscribing, acknowledging and filing with the secretary of state a certificate which shall be entitled and endorsed “Certificate of Incorporation of (name of company) pursuant to the Limited-Profit Housing Companies Law”; provided that if the company is to be organized to undertake a municipally-aided project the commissioner shall not approve such persons unless they shall have been first approved by the supervising agency; provided further that no company shall be created to provide aged care accommodations or accommodations for handicapped persons under this article, except under this article and the not-for-profit corporation law. The certificate shall state:

1.

The name of the proposed company.

2.

The purposes for which it is to be formed which shall include among other things a provision that the company is to plan, acquire, construct, own, maintain, and operate projects pursuant to the terms and provisions of this article.

3.

Except in the case of a not-for-profit corporation, the amount of the capital shares, and if any be preferred shares, the preference thereof.

4.

Except in the case of a not-for-profit corporation, the number of shares of which capital shall consist, all of which shall have a par value.

5.

The municipality, as well as the county within this state, in which its principal business office is to be located, and the address to which the secretary of state shall mail a copy of process in any action or proceeding against the corporation which may be served upon him.

6.

Its duration, which shall be:

(a)

not less than the period for which the loans contracted for under this article and the interest thereon remain unpaid in whole or in part; and

(b)

not less than the period for which tax exemption is granted pursuant to § 33 (Tax exemptions)section thirty-three of this article; and

(c)

in any event not less than thirty-five years from the date of occupancy of any project, except as may be provided in sections thirty-five and thirty-six of this article.

7.

The number of directors, which shall not be less than three nor more than twenty-one, and who shall be elected by the stockholders or members of the corporation. Unless required by the certificate of incorporation or the by-laws, directors need not be stockholders. Directors appointed by the commissioner pursuant to subdivision fifteen of this section or by the supervising agency pursuant to paragraph (c) of subdivision sixteen of this section need not be stockholders or meet other qualifications which may be prescribed by the certificate of incorporation or the by-laws. In a corporation undertaking a state-aided project one additional director may be designated by the commissioner, and, in the case of all state-aided mutual companies, such additional director shall be designated by the commissioner at the creation of the company and shall serve from the time of such designation at least until a board of directors has been elected by the tenants entitled to occupancy in the project by reason of ownership of shares in such company. In a corporation undertaking a municipally-aided project one additional director may be designated by the supervising agency, and, in the case of all municipally-aided mutual companies, such additional director shall be designated by the supervising agency at the creation of the company and shall serve from the time of such designation at least until a board of directors has been elected by the tenants entitled to occupancy in the project by reason of ownership of shares in such company. The director appointed by the commissioner or the supervising agency need not be a stockholder or meet other qualifications which may be prescribed by the certificate of incorporation or the by-laws. In the absence of fraud or bad faith the director appointed by the commissioner hereunder or the supervising agency or the directors appointed by the commissioner or by the supervising agency pursuant to subdivision fifteen or paragraph (c) of subdivision sixteen respectively of this section shall not be personally liable for the debts, obligations or liabilities of the corporation. Directors of a mutual housing company are to serve in that capacity without salary but may be reimbursed for expenses incurred directly relating to the duties of the director’s office.

8.

The names and post-office addresses of the directors until the first annual meeting.

9.

The names and post-office addresses of the subscribers to the certificate, and a statement of the number of shares of stock which each agrees to take in the company.

10.

That, except in the case of a company to be aided by a loan from the federal government or any agency or instrumentality thereof, or if the mortgage or mortgage bonds which are to be used in financing the company’s project are to be insured by the federal government or any agency or instrumentality thereof, the entire amount to be paid in cash or property by the shareholders and income debenture holders shall be at least five per centum of the project cost in the case of an urban rental company and a mutual company. The provisions of this subdivision shall not apply to a non-profit company incorporated pursuant to the provisions of the not-for-profit corporation law and this article for the purpose of providing housing for staff members, employees or students of a college, university, hospital or child care institution and their immediate families, or for aged or handicapped persons of low income, nor to a municipally-aided non-profit company nor to a municipally-aided mutual company, nor to a low income non-profit housing company.

11.

That, so long as this article shall remain applicable to any project of the company, its real property shall not be sold, transferred, encumbered or assigned except as permitted by the terms and provisions of this article.

12.

That all of the subscribers to the certificate are of full age, that at least two-thirds of them are citizens of the United States, and that at least one of the persons named as director is a citizen of the United States and a resident of the state of New York.

13.

That the company has been organized to serve a public purpose and that it shall be and remain subject to the supervision and control of the commissioner, or, if the company is organized to undertake a municipally aided project, of the supervising agency, except as otherwise provided in this article, so long as this article remains applicable to any project of the company; that all real and personal property acquired by it, and all structures erected or rehabilitated by it, shall be deemed to be acquired, rehabilitated or created for the proper effectuation of the purposes of this article, and that the directors and subscribers of such company shall be deemed to have agreed that they shall at no time receive or accept from such company in repayment of their investment in its stock any sums in excess of the par value of the stock, together with such dividends or other compensation as are prescribed by or permitted under this article, and that, upon dissolution of the company, any surplus remaining after the payment of all its obligations shall be distributed and disposed of and title to the property may be conveyed in fee, only as prescribed by this article.

14.

The certificate may provide that in the event that income debentures are issued by the company the owners thereof may be given the same right to vote as they would have if possessed of certificates of stock of the amount and par value of the income debentures held by them. If provision is made for the issuance of income debentures interest shall be paid by the company on income debentures only out of net earnings of the company that would be applicable to payment of dividends if there were no income debentures.

15.

That in the event of a violation by a state-aided company of any provision of the certificate of incorporation or of law or of the loan or mortgage contract or any order of the commissioner or of any rules and regulations duly promulgated pursuant to the provisions of this article the commissioner may remove any or all of the existing directors of the company and appoint such person or persons whom the commissioner deems advisable, including officers and employees of the division of housing and community renewal, as new directors to serve in the places of those removed; that directors so appointed by the commissioner who are officers or employees of the division of housing and community renewal shall serve in such capacity without compensation; and that any directors so appointed by the commissioner shall serve only for a period coexistent with the duration of such violation or until the commissioner is assured in a manner satisfactory to him against violations of a similar nature.

16.

If the company is organized to undertake a municipally-aided project, such certificate shall contain:

(a)

A declaration that the original directors, officers, subscribers and income debenture holders possessing the right to vote, shall be deemed at the time of accepting such offices, or subscribing to the stock or income debentures to have agreed not to resign from the company and not to sell their stock or income debentures prior to the completion of the project and the certification of the total actual project cost by the supervising agency, except with the consent of the supervising agency.

(b)

A declaration that the shares of stock and the income debentures of the company shall be issued only in such amounts and form as may be approved by the supervising agency and that no stock shall be redeemed, purchased or retired and no income debentures shall be redeemed prior to their dates of maturity or purchased or retired by the company during the period in which the loan by the municipality is in force or for which tax exemption is granted pursuant to § 33 (Tax exemptions)section thirty-three of this article, except with the consent of the supervising agency.

(c)

A provision that in the event of a violation by the company of any provision of the certificate of incorporation or of law or of the loan or mortgage contract or of any rules and regulations duly promulgated pursuant to the provisions of this article, the supervising agency may remove any or all of the existing directors of the company and appoint such person or persons which the supervising agency in its sole discretion deems advisable, including officers or employees of the supervising agency, as new directors to serve in the places of those removed; that directors so appointed by the supervising agency who are officers or employees of the supervising agency shall serve in such capacity without compensation; and that any directors so appointed by the supervising agency shall serve only for a period coexistent with the duration of such violation or until the supervising agency is assured in a manner satisfactory to it against violations of a similar nature.

(d)

A provision that the supervising agency or its duly authorized representative shall be notified in writing of and shall have the right to attend all meetings of the board of directors or of the stockholders and income debenture holders of the company.

(e)

A provision that the sale of stock by a stockholder or the company or the sale of income debentures, the holders of which possess the right to vote, by any such holder or the company, shall be subject to the consent of the supervising agency.

(f)

Such other provisions, not inconsistent with law, as the supervising agency may deem necessary to protect the investment of the municipality and to carry out the purposes of this article.

17.

The certificate of incorporation of a non-profit company incorporated pursuant to the provisions of the not for-profit corporation law and this article shall, in addition to all other matters required by law to be stated therein, state:

a.

That its purpose is to provide housing and auxiliary facilities for staff members, employees or students of any college, university, hospital, child care institution and their immediate families, for aged or handicapped persons of low income, or for any one of the above purposes, or to provide housing accommodations pursuant to the terms and provisions of this article in the case of a municipally-aided non-profit company, or to provide housing accommodations pursuant to the provisions of this article in the case of a low income non-profit housing company;

b.

That the directors or trustees are and at all times shall be officers, directors or trustees of such college, university, hospital or child care institution, or, in the case of a non-profit company providing housing for aged or handicapped persons of low income or of a municipally-aided non-profit company providing housing accommodations pursuant to the terms and provisions of this article, or of a low income non-profit housing company providing housing accommodations pursuant to the provisions of this article, of a corporation organized pursuant to the provisions of the not-for-profit corporation law;

c.

That the property of such company shall upon dissolution vest in such college, university, hospital, child care institution, or not-for-profit corporation, and

d.

That no part of the net earnings of such college, university, hospital, child care institution or not-for-profit corporation shall inure to the benefit of any private individual.

18.

That the secretary of state is designated as the agent of the company upon whom process in any action or proceeding against it may be served.

Source: Section 13 — Limited-profit housing companies; how created, https://www.­nysenate.­gov/legislation/laws/PVH/13 (updated Sep. 22, 2014; accessed Jun. 22, 2024).

10
Short title
11
Policy and purposes of article
11‑A
Additional policy and purposes of article
12
Definitions
13
Limited-profit housing companies
13‑A
The applicability of not-for-profit corporation law
13‑B
Verification of papers filed with supervising agency
13‑C
Voting, election and referendum procedures
14
Consent of commissioner to incorporation
15
Participation by certain corporations and individuals
16
Limited-profit housing companies
17
Powers
18
Designation of and service of process on secretary of state and registered agent
19
Consideration for issuance of stock, bonds or income debentures
20
Mortgages, mortgage bonds and notes
21
Capital structure
22
State loans
22‑A
Redevelopment loans
22‑B
Loans for state-aided limited-profit housing companies
23
Municipal loans and municipally aided projects
23‑A
Mortgage modifications, evidence of pre-existing indebtedness
23‑B
Participation in loan or investment
23‑C
Mortgage modifications
24
Income debentures
25
Working capital
26
Conditions and security for loans
26‑A
Findings for municipally-aided projects
26‑B
Special provisions with respect to state urban development corporation projects
26‑C
Special provisions with respect to Battery Park city projects
27
Limitations
28
Payments from earnings
29
Acquisition of property
30
Transfer of real property
31
Rentals and selection of tenants
31‑A
Resale price of shares
31‑B
Assignment or pledge of tenant cooperator’s shares
31‑C
Tenant-cooperators
32
Supervision and regulation
32‑A
Additional supervision and regulation
32‑B
Annual reports
33
Tax exemptions
34
Foreclosure and judgments
35
Voluntary dissolution
35‑A
Requirements regarding dissolution
36
Sale of project prior to termination of tax exemption
36‑A
Additional powers of municipalities
37
Separability clause

Accessed:
Jun. 22, 2024

Last modified:
Sep. 22, 2014

§ 13’s source at nysenate​.gov

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