(a) For purposes of this section:

(1) “Applicant” means a local or state police officer who applies for a loan under the home purchasing assistance program, established pursuant to subsection (b) of this section, for the purpose of financing the purchase of real estate.

(2) “Authority” means the Connecticut Housing Finance Authority.

(3) “Municipality” means a town, city or borough with a population of not less than forty-five thousand which, by resolution of its legislative body, elects to participate in the program established in accordance with subsection (b) of this section.

(4) “Real estate” means a one, two or three-family residence located in a participating municipality.

(5) “Targeted neighborhood” means an area designated by the legislative body of the municipality as an area where there has been a high incidence of crime or where the legislative body of the municipality determines that increased police presence is needed, where police officers participating in the home purchasing assistance program established pursuant to subsection (b) of this section shall reside.

(b) The Connecticut Housing Finance Authority shall develop and, in cooperation with participating municipalities, administer a pilot program of home purchasing assistance. The purpose of the program shall be to encourage local and state police officers to purchase and live in residential property in targeted neighborhoods located in the municipality by which they are employed to reduce crime by promoting community policing. The authority shall implement the pilot program in an amount not to exceed ten million dollars and in a manner designed to facilitate the purchase of real estate targeted neighborhoods in participating municipalities by providing low-interest loans to local and state police officers in accordance with the provisions of this section. The pilot program shall commence on January 1, 1997, and terminate on December 31, 1999.

(c) To be eligible for assistance under subsection (e) or (f) of this section, an applicant shall: (1) Be a local police officer employed by a municipal police department on a full-time or part-time basis or a state police officer; (2) certify intent to use the funds in connection with the purchase of real estate located in the municipality by which such applicant is employed as provided by this section; (3) certify intent to own and reside in such real estate on a permanent and full-time basis for at least seven years; (4) take title in such applicant’s name and be the grantee or borrower, as the case may be under this section, and (5) in the case of a loan, agree to make monthly loan payments for a period not to exceed thirty years, in the manner prescribed by the authority pursuant to procedures adopted by the authority in accordance with subsection (i) of this section.

(d) A municipality may participate in the pilot program by (1) enrolling in the program established under this section in accordance with written procedures of the authority, (2) advising each applicant of the availability of down payment assistance under § 8-286 and low-interest loans through the authority and (3) designating one or more targeted neighborhoods in the municipality.

(e) (1) A municipality may make grants to applicants to pay for reasonable and bona fide closing costs, as described in subsection (i) of § 36a-563. The authority may provide a preference for loans under this section to applicants for loans for real estate located in a municipality in which grants are offered under this subsection.

(2) If a grantee ceases to be a local or state police officer prior to the end of the seventh year after the date on which such grant is made, or ceases to live in the residential property purchased with assistance provided under this section, the grantee shall reimburse the municipality for the amount of the grant within thirty days of receipt of written notice from the municipality that such reimbursement is due.

(f) Any applicant for a loan under this section shall be eligible for a loan for down payment assistance under § 8-286, except that the provisions of regulations adopted under § 8-289 concerning household income and equity contributions shall not apply to an applicant as defined in subsection (a) of this section.

(g) The authority shall issue mortgage revenue bonds pursuant to 26 USC Section 143 to provide sufficient funds for loans under this section. The interest rate on such loans shall be the lowest practicable which would create an incentive for applicants. Such loans shall satisfy the requirements of 26 USC Section 143, including, but not limited to, requirements for residence, sales, income and three-year requirements, as applicable, and the requirements of the Connecticut Housing Finance Home Mortgage Loan Program.

(h) The authority shall submit a report on the program to the General Assembly on or before October 1, 1997, and annually thereafter. Such report shall include programmatic data and may include recommendations for modifications to the program.

(i) The authority shall adopt written procedures in accordance with § 1-121 establishing procedures for the application and distribution of loans pursuant to subsection (f) of this section and the conditions for such loans.