(a) Upon preliminary approval by the State Bond Commission pursuant to the provisions of § 3-21, the state, acting by and through the Commissioner of Housing, may enter into a contract or contracts (1) with an authority, municipal developer or nonprofit corporation for state financial assistance for a rental housing project or projects or continuum of housing or mobile manufactured home parks subject to the provisions of § 8-114b, for elderly persons in the form of capital grants, interim loans, permanent loans, deferred loans or any combination thereof for application to the development cost of such project or projects, or (2) with a housing partnership for state financial assistance for a rental housing project or projects or continuum of housing, for elderly persons, in the form of interim loans, permanent loans, deferred loans or any combination thereof, for application to the development cost of such project or projects. A contract with an authority may provide that in the case of any loan made in conjunction with any housing assistance funds provided by an agency of the United States government, if such housing assistance funds terminate prior to complete repayment of a loan made pursuant to this section, the remaining balance of such loan may be converted to a capital grant or decreased loan. Any such state assistance contract with an authority for a capital grant or loan entered into prior to the time housing assistance funds became available from an agency of the United States government, may, upon the mutual consent of the commissioner and the authority, be renegotiated to provide for a loan or increased loan in the place of a capital grant or loan or a part thereof, consistent with the above conditions. In the case of a deferred loan, the contract shall require that payments on all or a portion of the interest are due currently but that payments on principal may be made at a later time.

(b) Permanent loans made by the state under this section: (1) Shall bear interest payable quarterly on the first days of January, April, July and October for the preceding calendar quarter; (2) shall be in an amount not in excess of the development cost of the project or projects, including, in the case of loans financed from the proceeds of the state’s general obligation bonds issued pursuant to any authorization, allocation or approval of the State Bond Commission made prior to July 1, 1990, administrative cost or other expense to be incurred by the state in connection therewith, as approved by the Commissioner of Housing; and (3) shall be repayable in such installments as are determined by the Commissioner of Housing within fifty years from the date of completion of the project or projects, as determined by the Commissioner of Housing. In anticipation of final payment of such capital grants or loans, the state, acting by and through said commissioner and in accordance with such contract, may make temporary advances to the authority, municipal developer, nonprofit corporation or housing partnership for preliminary planning expense or other development cost of such project or projects. Any loan provided pursuant to this section shall bear interest at a rate to be determined in accordance with subsection (t) of § 3-20. As a condition of making any loan under this section, the commissioner may require such authority, developer, corporation or partnership to develop a management plan designed to ensure adequate maintenance of such project or projects, continuum of housing or mobile home parks.