Sec. 1904.1. Regulatory agreements

(a) The corporation shall enter into a regulatory agreement with each applicant who has been accepted as a project recipient or local program administrator, provided that the conditions set forth in the award have been satisfied. The regulatory agreement shall provide that regulation of the project shall extend over the greater of the period of the grant or loan or for 15 years in the case of homesteading projects, or 20 years in the case of condominium projects, cooperative projects and rental projects, after completion of the construction, rehabilitation or conversion of the project.

(b) If the project recipient is a private developer, the regulatory agreement shall require the private developer to make an equity investment of the greater of:

(1) 2 ½ percent of project costs; or

(2) 5 percent of project costs less grants which are to be applied to said costs.

The term grants as used in this paragraph shall be deemed to include loans which are not required to be repaid. For the purposes of this subdivision, property which is obtained through a governmental program or from a governmental unit for a public purpose shall be deemed to have no equity value. For the purposes of this subdivision, property owned or acquired and contributed to the project shall be deemed to have an equity value of 25 percent of its preconstruction appraised value. The equity investment is to be made at or prior to the construction loan closing. Equity value may also be recognized for contributions to the acquisition of property which is financed in part by a payment, grant or loan made by the corporation. The equity value in such case shall also be limited to the 25 percent of the actual investment made by the private developer. The corporation may, in its discretion, consent to the establishment of a different equity value if it is necessary to the project. Among the criteria the corporation shall consider in exercising its discretion are:

(i) cost incurred by the owner to acquire the property;

(ii) the preconstruction appraised value; and

(iii) the suitability of the property for development of low income housing.

A private developer is not precluded from making a greater equity investment than that required.

(c) The regulatory agreement shall provide that the restrictions on the use of the eligible property are real covenants that shall run with the land until the termination of the regulatory period or the payment, grant or loan made by the corporation is paid back to the corporation, whichever is later.

(d) The local program administrator shall enter into a contract with each subrecipient, subject to review as to form by the corporation, which shall include the provisions specified in subdivisions (a), (b) and (c) of this section.

(e)

(1) The corporation may provide that where a lender shall have foreclosed or obtained title to the project in accordance with law and provisions of the mortgage, the projects or particular residential units therein shall not be subject to one or more provisions of the act with the exception of section 1102(3)(g) of the act.

(2) The corporation may not make the provisions referred to in paragraph (1) of this subdivision unless the corporation shall first have found that it is necessary in order to enable a project owner to obtain a mortgage loan from a lender other than the corporation.