(b) In connection with any state or municipal project, an authority may pay so much of the necessary cost of removal of families of low income, and of business or commercial tenants, from the area or buildings to be cleared for the development of the project to suitable locations in such cases and in such amounts as may be approved by the commissioner in the case of a state project or municipality in case of a municipal project, but, except as otherwise provided by law, in no event more than four hundred dollars for any family, nor more than three thousand dollars for any business or commercial tenant. Removal costs so paid by an authority shall be included in the project cost.

(c) In connection with the development of any federal project, an authority may contract with the federal government and with a municipality to accept and distribute relocation payments as may be agreed upon. 2. Any person or family residing in an area or building to be cleared or demolished by an authority or municipality in connection with the development of a project under this chapter may be admitted to a dwelling in any project of the authority or municipality if the probable aggregate annual income of such person or family does not exceed the income limit for continued occupancy established by the authority or municipality for the dwelling to which such person or family is admitted. 3. Until July first nineteen hundred seventy whenever an agency as defined in subdivision five of section five hundred two of the general municipal law undertakes the clearance, rehabilitation, conservation or renewal of an area, or an authority or municipality undertakes the clearance, replanning, re-construction or rehabilitation of a substandard or insanitary area in connection with a project as defined in this chapter, and if the commissioner determines in the case of an urban renewal project financially assisted by the state as provided in sections five hundred eight, five hundred nine and five hundred ten of the general municipal law or in the case of a state project as defined in this chapter that the area of such a project is one to which this subdivision shall apply, and an authority or municipality finds that there are not available suitable dwellings for the relocation of persons or families of low income who will be deprived of dwellings within the area of such a project, such authority or municipality may, with the approval of the commissioner in the case of state projects, relocate such persons or families by admission to a dwelling in any project of the authority or municipality. The income of a family relocated pursuant to this subdivision shall not be subject to the limitation prescribed in subdivision one (a) of section one hundred fifty-six of this chapter. Notwithstanding any general, special or local law, each person or family admitted to a project pursuant to this subdivision shall be required to move from such project within one year from the date of admission unless the income of the family is within the limits prescribed for continued occupancy in the project and, in the opinion of the authority or municipality, the removal of the family from the project would occasion undue hardship.