§ 576-e. Municipal housing assistance fund. 1. A municipality may create and establish a fund to be known as the "municipal housing assistance fund". Such a fund shall be created and established in the supervising agency.

2. There may be paid into such municipal housing assistance fund (a) any moneys appropriated and made available by the municipality for the purposes of such fund, (b) notwithstanding the provisions of the local finance law or any other provisions of law, any moneys received in repayment of loans from such fund, and (c) any other moneys which may be available for the purpose of such fund from any other source or sources.

3. The purpose of such fund shall be to make loans to housing development fund companies which have agreed to acquire residential properties by deed from the commissioner of finance of a municipality and to operate and manage such properties in accordance with a regulatory agreement with the municipality until the properties are transferred to a new owner approved by the municipality.

4. The supervising agency may make loans from the fund to enable such housing development fund companies to pay development costs and any other expenses incurred by the housing development fund company and approved by the supervising agency.

5. Any housing development fund company which receives a loan pursuant to this section shall execute a note and regulatory agreement. The note may provide that it shall be reduced to zero over a period of continued compliance with either the regulatory agreement required pursuant to this section or such other regulatory agreement as the supervising agency shall require. The loan shall be reduced to zero only if prior to or simultaneously with delivery of such note, the supervising agency has made a written determination that such reduction would be necessary to ensure the continued affordability or economic viability of the project. Such written determination shall document the basis upon which the loan was determined eligible for evaporation.

6. A regulatory agreement pursuant to this section may terminate upon such terms and conditions as provided by the supervising agency.

7. A housing development fund company which receives a loan pursuant to this section shall provide in its certificate of incorporation that the supervising agency shall have the power if in its discretion it determines that the company has defaulted in its obligations to the municipality to appoint to the board of such corporation a number of new directors which number shall be sufficient to constitute a majority of the board, notwithstanding any other provisions of such certificate or of any other provision of law.