(a) As used in this section and sections 8-214g and 8-214h, “limited equity cooperative” has the same meaning as provided in § 47-242.

(b) As used in this section and sections 8-214g and 8-214h, “mutual housing association” means a nonprofit corporation, incorporated pursuant to chapter 602 or any predecessor statutes thereto, and having articles of incorporation approved by the Commissioner of Housing in accordance with regulations adopted pursuant to § 8-79a or 8-84, having as one of its purposes the prevention and elimination of neighborhood deterioration and the preservation of neighborhood stability by affording community and resident involvement in the provision of high quality, long-term housing for low and moderate income families in which residents (1) participate in the ongoing operation and management of such housing, (2) have the right to continue residing in such housing for as long as they comply with the terms of their occupancy agreement, and (3) have an ownership interest in such occupancy agreement conditional upon compliance with its terms but do not possess an equity interest in such housing.

(c) The state, acting by and through the Commissioner of Housing, may enter into a contract with a nonprofit corporation, as defined in § 8-39, to provide financial assistance for the development of limited equity cooperatives for low and moderate income families. State financial assistance provided under this subsection may be in the form of grants, loans, deferred loans or any combination thereof and may be used for the acquisition or development of housing sites and for the costs incurred in the development of limited equity cooperatives. In the case of a deferred loan, the contract shall require that payments on interest are due immediately but that payments on principal may be made at a later time. Any nonprofit corporation which receives such assistance shall require that members who participate in the cooperative project for which assistance was requested under this section contribute their labor during the development or operation of the cooperative, or make a cash contribution to become a member of the cooperative, or both.

(d) The state, acting by and through the Commissioner of Housing, may enter into a contract with a mutual housing association to provide financial assistance for the development of housing for low and moderate income families. State financial assistance provided under this subsection may be in the form of grants, loans, deferred loans or any combination thereof and may be used for the acquisition or development of housing sites and for the costs incurred in the development of such housing. Contracts for state financial assistance provided under this subsection shall provide that the mutual housing association: (1) Require resident members to pay a membership fee as a condition of eligibility for occupancy of a dwelling unit, provided such membership fee shall be refundable to the resident member, with nominal interest, when the resident member vacates such unit; (2) may allow, in fixing the rentals for dwelling units, for a reasonable return on equity capital contributed to the development of such housing through mutual housing association membership fees or grants obtained from sources other than the state, provided such return on equity capital shall be utilized by the association to develop additional dwelling units; and (3) shall permit continued occupancy by resident members whose incomes rise above low and moderate income limits, provided the rent to be paid for such continued occupancy shall be fixed at a level not less than twenty-five per cent of the resident members’ adjusted household income, and provided any increased rent collected for continued occupancy shall be used by the association to develop additional dwelling units for low and moderate income families or shall be credited against the rent owed by another low or moderate income resident member of the association.

(e) If the Commissioner of Housing determines, based on a full examination of the circumstances, that a nonprofit corporation is unable to manage the land, interests in land or buildings acquired or constructed with state financial assistance under this section, the commissioner may release such land, interests in land or buildings from the obligations of the limited equity cooperative program and shall impose any new restrictions in the deed or deeds for the land, interests in land or buildings as the commissioner deems appropriate to ensure the continued use of such land, interests and buildings for the benefit of low or moderate income families. In such case, the equity of each resident in such property shall either (1) be used first for payment of any debt incurred by the resident from membership in the cooperative and then for payment to the resident of any remaining equity, or (2) transferred with the property so that the resident does not lose such equity.