(a) Any housing authority may prepare and submit to the Commissioner of Housing for approval a program of social and supplementary services and project rehabilitation and improvement for any or all housing projects within the jurisdiction of such housing authority. Such program shall include the estimated costs of the services, rehabilitation and improvement and the method and staff required to carry out such program. After approval of such program by the commissioner, the state, acting by and in the discretion of the commissioner, may enter into a contract with the housing authority conditioned upon the housing authority performing the program approved. Such contract shall provide for state financial assistance in the form of a grant-in-aid, loan, deferred loan or combination thereof equal to the cost of such program, including administrative or other cost or expense to be incurred by the state in connection with such program as approved by the commissioner, provided such contract shall provide financial assistance in the form of a loan, or deferred loan rather than a grant only in a case where, and to the extent that, repayment ability exists because of an adequate rental structure or funds are made available by an agency of the United States government in such amounts and for such periods of time as are required to repay such loan, together with interest. The contract shall further provide that in the event such funds provided by an agency of the United States government shall terminate prior to complete repayment of a loan or deferred loan made pursuant to this subsection, the remaining balance of such loan shall be deemed to be a grant-in-aid. 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.

(b) Said commissioner shall establish a program of rehabilitation and major repair, including any repair, replacement or installation as may be necessary for energy conservation, of (1) existing rental housing projects developed with state financial assistance, pursuant to this chapter or chapter 129, to restore such projects to a sound, habitable and energy-efficient condition, (2) housing developed with state financial assistance pursuant to chapter 138b, (3) projects developed with state financial assistance pursuant to § 8-214f, and (4) projects developed with state financial assistance pursuant to § 8-218. Each housing authority, nonprofit corporation, community housing development corporation, municipal developer or other eligible developer, shall prepare and submit to said commissioner a request for any necessary construction, rehabilitation and major repair with respect to each such housing project within the jurisdiction of such authority, nonprofit corporation, community housing development corporation, municipal developer or other eligible developer, including the construction or rehabilitation of facilities adjacent to such project which are functionally related to and serve the needs of such project. Each such request shall include a detailed description and the estimated cost of such construction, rehabilitation or major repair. After approval by said commissioner of such construction, rehabilitation or major repair as requested, or any part thereof, the state, acting by and in the discretion of said commissioner, may enter into a contract with such authority, nonprofit corporation, community housing development corporation, municipal developer or other eligible developer, providing for state financial assistance in the form of a grant-in-aid, loan, deferred loan or combination thereof equal to the cost of such approved construction, rehabilitation or major repair, including, in the case of grants-in-aid or loans or deferred 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 or other cost or expense to be incurred by the state in connection with such program as approved by the commissioner, provided such contract shall provide financial assistance in the form of a loan or deferred loan rather than a grant only in a case where, and to the extent that, repayment ability exists because of an adequate rental structure or funds are made available by an agency of the United States government in such amounts and for such periods of time as are required to repay such loan or deferred loan, together with interest. The contract shall further provide that in the event such funds provided by an agency of the United States government shall terminate prior to complete repayment of a loan or deferred loan made pursuant to this subsection, the remaining balance of such loan or deferred loan shall be deemed to be a grant-in-aid. Such grants-in-aid, loans or deferred loans shall be provided from the proceeds of state bonds authorized and issued in accordance with the provisions of subsection (c) of this section.

(c) For the purposes of subsection (b) of this section the State Bond Commission shall have power, from time to time to authorize issuance of bonds of the state in one or more series and in principal amounts not exceeding in the aggregate forty-two million dollars. All provisions of § 3-20, or the exercise of any right or power granted thereby which are not inconsistent with the provisions of this section are hereby adopted and shall apply to all bonds authorized by the State Bond Commission pursuant to this section, and temporary notes in anticipation of the money to be derived from the sale of any such bonds so authorized may be issued in accordance with said § 3-20 and from time to time renewed. Such bonds shall mature at such time or times not exceeding twenty years from their respective dates as may be provided in or pursuant to the resolution or resolutions of the State Bond Commission authorizing such bonds. None of said bonds shall be authorized except upon a finding by the State Bond Commission that there has been filed with it a request for such authorization, which is signed by or on behalf of the Commissioner of Housing and states such terms and conditions as said commission, in its discretion, may require. Said bonds issued pursuant to this section shall be general obligations of the state and the full faith and credit of the state of Connecticut are pledged for the payment of the principal of and interest on said bonds as the same become due, and accordingly and as part of the contract of the state with the holders of said bonds, appropriation of all amounts necessary for punctual payment of such principal and interest is hereby made, and the Treasurer shall pay such principal and interest as the same become due.

(d) The proceeds from the sale of the bonds and notes authorized by subsection (c) of this section, except refunding bonds and notes, shall be deposited in a fund designated the “Rental Rehabilitation Fund”, which fund shall be used to make the grants, loans and deferred loans authorized by subsection (b) of this section. Payments from the fund to authorities shall be made by the State Treasurer on certification of the Commissioner of Housing in accordance with the contract for financial assistance between the state and such authority. All payments by an authority of state service charges, as authorized by subsection (f) of this section, financed from the proceeds of the state’s general obligation bonds authorized pursuant to any authorization, allocation or approval of the State Bond Commission made prior to July 1, 1990, shall be paid to the State Treasurer for deposit in said fund. All payments of service charges not financed from the proceeds of the state’s general obligation bonds shall be paid to the State Treasurer for deposit in the Housing Repayment and Revolving Loan Fund.

(e) The State Treasurer is authorized to invest such moneys in the Rental Rehabilitation Fund as he deems to be available for such purpose in obligations of or guaranteed by the state or the United States of America or agencies or instrumentalities thereof and, without limitation on the foregoing, in such other obligations, including time deposits or certificates of deposit, as may be permitted investments by the Treasurer for the General Fund of the state and secured in such manner as the Treasurer may require.

(f) Grants, loans and deferred loans or combinations thereof made under the authority of this section and financed from the proceeds of the state’s general obligation bonds authorized pursuant to any authorization, allocation or approval of the State Bond Commission made prior to July 1, 1990, shall include, as part of the project cost, a state service charge, as approved by the Commissioner of Housing.

(g) The Commissioner of Housing shall approve an operation or management plan of each housing project, which shall provide an income adequate for debt service, administration, including a state service charge, other operating costs and establishment of reasonable reserves for repairs, maintenance and replacements, vacancy and collection losses.

(h) Subject to the approval of the Governor, any administrative or other cost or expense incurred by the state in connection with the carrying out of the provisions of this section, including the hiring of necessary employees and the entering upon necessary contracts, may be paid from the Rental Rehabilitation Fund.

(i) Any principal and interest payments received pursuant to this section from eligible developers shall be paid to the State Treasurer for deposit in the General Fund.