(3) Other grounds.
The owner will eliminate inadequate, unsafe or unsanitary conditions and demolish or rehabilitate the dwelling unit pursuant to the provisions of article VIII, VIII-A, XIV, XV or XVIII of the PHFL, the Housing New York Program Act, or sections 8 and 17 of the U.S. Housing Act of 1937 (National Housing Act), on the condition that the owner:
(i) proves that it has a commitment for the required financing;
(ii) proves that any rehabilitation requires the temporary removal of the tenant; and
(iii) agrees to offer and will offer the tenants the right of first occupancy following any rehabilitation at an initial rent as determined pursuant to the applicable law and subject to any terms and conditions established pursuant to applicable law and regulations.
(b) Election not to renew.
Once an application is filed under this section, with notification to all affected tenants, the owner may refuse to renew all tenants' leases until a determination of the owner's application is made by the DHCR. For the purposes of paragraph (a)(2) of this section, service of the application at any time shall be considered sufficient compliance with section 2524.2(c)(3) of this Part. If such application is denied, or withdrawn, prospective renewal leases must be offered to all affected tenants within such time and at such guidelines rates as directed in the DHCR order of denial or withdrawal.
(c) Terms and conditions upon which orders authorizing refusal to offer renewal leases may be based.