In addition to the terms and conditions set forth in section 8-253, loans made by the authority hereunder shall also be subject to the following terms and conditions:
(1) A loan hereunder may be prepaid after a period of twenty years or sooner with the permission of the authority; provided, nonprofit mortgagors and mortgagors to whom loans are made on or after October 1, 1978, may prepay their loans prior to maturity only with the consent of the authority. The authority shall grant such consent if it finds (A) that it may reasonably be expected that the prepayment of the loan will not result in a material escalation of rents charged to occupants of the project; and (B) that the need for low and moderate income housing in the area concerned is no longer acute.
(2) The interest rate on the loan shall be established by the authority at the lowest level consistent with the authority's cost of operation and its responsibilities to the holders of its bonds, bond anticipation notes and other obligations, except those loans made pursuant to subsection (32) of section 8-250.
(3) The authority shall require the mortgagor or its contractor to post labor and materials and construction performance surety bonds, or enter into an escrow arrangement acceptable to the authority, in amounts related to the project cost as established by regulation, and to execute such other assurances and guarantees as the authority may deem necessary.
(4) The loan shall be subject to an agreement between the authority and the mortgagor which will subject said mortgagor and its principals or stockholders to limitations established by the authority as to rentals, carrying charges, and other charges, profits and fees, and the disposition of its property and franchises to the extent more restrictive limitations are not provided in the law under which the mortgagor is incorporated or organized.
(5) A loan to a mortgagor, other than a municipal developer or a nonprofit corporation having as one of its purposes the construction or rehabilitation of housing, shall be subject to an agreement between the authority and the mortgagor limiting the mortgagor, and its principals or stockholders, to such return on the mortgagor's equity in any project assisted with a loan from the authority as may be established or permitted by the authority. The mortgagor's equity in a project shall consist of the difference between the amount of the loan and the total project cost, whether or not such costs have been paid in cash or in a form other than cash. With respect to every project, the authority shall, pursuant to rules and regulations adopted by it, establish the mortgagor's equity after the acceptance as proper by the authority of the certification or other assurances of project cost from the mortgagor, provided in no case shall such figure ever be less than the mortgagor's original equity in such project.
(6) No loan shall be executed, except a loan made to a municipal developer or a nonprofit corporation having as one of its purposes the construction or rehabilitation of housing, unless the mortgagor agrees (A) to certify upon completion of project construction or rehabilitation, subject to audit by the authority, either that the actual project cost as defined herein exceeded the amount of the loan proceeds by ten per cent or more, or the amount by which the loan proceeds exceed ninety per cent of total project cost, and (B) to pay forthwith to the authority, for application to reduction of principal of the loan, the amount, if any, of such excess loan proceeds, subject to audit and determination by the agency. No loan shall be made to a municipal developer or a nonprofit corporation unless such mortgagor agrees to certify the actual project cost upon completion of the project, and further agrees to pay forthwith to the authority, for application to reduction of the principal of the loan, the amount, if any, by which the proceeds of the loan exceed the certified project cost, subject to audit and determination by the authority. Notwithstanding the provisions of this subsection, the authority may accept, in lieu of any certification of project cost as provided herein, such other assurances of the said project cost, in any form or manner whatsoever, as will enable the authority to determine with reasonable accuracy the amount of said project cost.
(7) As a condition of the loan, the authority shall have the power at all times during the construction and rehabilitation of a housing project and the operation thereof: (A) To enter upon and inspect without prior notice any project, including all parts thereof, for the purpose of investigating the physical and financial condition thereof, and its construction, rehabilitation, operation, management and maintenance, and to examine all books and records with respect to capitalization, income and other matters relating thereto and to make such charges as may be required to cover the cost of such inspections and examinations; (B) to order such alterations, changes or repairs as may be necessary to protect the security of its investment in a housing project or for the health, safety and welfare of the occupants thereof; (C) to order any managing agent, project manager or owner of a housing project to do such acts as may be necessary to comply with the provisions of all applicable laws and ordinances or any rule or regulation of the authority or the terms of any agreement concerning the said project or to refrain from doing any act in violation thereof and in this regard the authority shall be a proper party to file a complaint and to prosecute thereon for any violation of laws or ordinances as set forth herein; (D) to require the adoption and continuous use of uniform systems of accounts and records for a project and to require all owners or managers of same to file annual reports containing such information and verified in such manner as the authority shall require and to file at such times and on such forms as the authority may prescribe reports and answers to specific inquiries of the authority to determine the extent of compliance with any agreement, the terms of the loan, the provisions of this chapter and any other applicable law; and (E) to enforce, by court action if necessary, the terms and provisions of any agreement between the authority and the mortgagor as to schedules of rentals or carrying charges, aggregate family income limits as applied to applicants for housing or the occupants thereof, or any other limitation imposed upon the mortgagor as to financial structure, construction, operation, or disposition of the housing.
(8) If, pursuant to subsection (29) of section 8-250, the authority appoints a majority of new directors to the board of directors of a mortgagor corporation, or appoints a new managing agent for an unincorporated association, the persons so appointed need not be stockholders or partners or meet other qualifications which may be prescribed by the articles of incorporation or other basic documents of organization or the bylaws of such mortgagor. In the absence of fraud or bad faith, the persons so appointed shall not be personally liable for the debts, obligations or liabilities of such mortgagor; and shall serve only for a period coexistent with the duration of the reasons for their appointment or until the authority is assured, in a manner satisfactory to it, that the need for such service no longer exists; and they shall serve as directors or managing agents for such compensation as the authority may determine and shall be entitled to be reimbursed for all necessary expenses incurred in the discharge of their duties as directors or managing agents of such mortgagor.
(1972, P.A. 208, S. 8; P.A. 74-104, S. 11, 12; P.A. 75-465, S. 5, 7; P.A. 77-316, S. 6; P.A. 78-150; P.A. 81-472, S. 5, 159; P.A. 84-110, S. 1, 2; P.A. 87-436, S. 19, 23.)
History: P.A. 74-104 replaced “and” in the phrase “having as one of its purposes the construction and rehabilitation of housing” with the word “or” in Subdiv. (5); P.A. 75-465 excepted loans made pursuant to Sec. 8-250(ff) from provisions of Subdiv. (2); P.A. 77-316 amended Subdiv. (5) to replace 6% limit on investment return with “such a return ... as may be established or permitted by the authority” and replaced provision for establishment of equity at the time of final construction loan advance with provision that equity be established “after the acceptance as proper by the authority of the certification or other assurances of project cost from the mortgagor” and deleted Subdiv. (7) re reduction of rents when earned surplus exceeds 10%, renumbering subsequent Subdivs. accordingly; P.A. 78-150 allowed mortgagors receiving loans on and after October 1, 1978, to pay loans prior to maturity only with authority's consent; P.A. 81-472 made technical changes; P.A. 84-110 amended Subdiv. (5) to provide for variation in the mortgagor's equity; P.A. 87-436 added references to municipal developers in Subdivs. (5) and (6); (Revisor's note: In 1989 a reference in Subdiv. (2) to Subdiv. “(ff)” of Sec. 8-250 was changed editorially by the Revisors to Subdiv. “(32)” to conform with changes made to said section by the Revisors for consistency with customary statutory usage).
Subdiv. (1):
Authorized authority, in the absence of facts requiring authority's consent under section, to approve or deny consent for prepayment of loans made under chapter and is consistent with its broad provisions. 281 C. 227. Legislature gave authority sole discretion to determine whether mortgagor met requirements necessary to receive consent to prepay mortgage, and authority properly determined that “the area concerned”, for purposes of apartment building in Middletown, was the Hartford metropolitan statistical area. 294 C. 639.