Sec. 8-76. Sale of projects. Regulations to establish priority order of purchasers. Payment and disposition of purchase price.
Sec. 8-76. Sale of projects. Regulations to establish priority order of purchasers. Payment and disposition of purchase price. Upon the determination by the Commissioner of Economic and Community Development of the termination of the acute
shortage of moderate rental housing in the locality or upon the determination by the
Commissioner of Economic and Community Development and the developer owning
a moderate rental housing project that it is in the best interest of the state and such
developer, such project or any part thereof may be sold by the developer upon terms and
conditions approved by the Commissioner of Economic and Community Development.
(a) Such project or any part of such project sufficiently separable from other property retained by the developer, unless the developer deems it advisable to sell such project
as individual one-family or two-family dwelling units, shall be sold, in accordance with
regulations adopted by said commissioner which shall establish the order of priorities
among the following eligible purchasers: A cooperative or condominium association,
membership in which is open to any tenants of the project or part of the project to be
sold, the Department of Housing and Urban Development or a private sponsor, provided
any such purchaser shall agree to use such project for purposes of housing for persons
or families of moderate income for as long as a need for such housing continues to
exist, as determined by said commissioner, and provided further no tenant occupying
a dwelling unit of the project at the time of sale shall be evicted except for cause.
(b) In the sale of a one-family or two-family dwelling unit in a project, or of shares
in a cooperative or condominium association purchasing a project or part of a project,
preference shall be given to buyers in accordance with the following schedule: (1) First
preference shall go to persons who are tenants of the project at the time of sale and
whose incomes are below the levels for continued occupancy in the project; (2) second
preference shall go to persons who are tenants of the project at the time of sale other
than those tenants specified in subdivision (1) of this subsection; (3) third preference
shall go to applicants who are residents of the community on the waiting list for admission to moderate rental housing projects in the community and whose incomes are below
the maximum limits for admission to such moderate rental housing projects; (4) fourth
preference shall go to veterans who are residents of the community and whose incomes
are below the maximum limits for admission to occupancy of such moderate rental
housing projects in the community; (5) fifth preference shall be given to other residents
of the municipality, including occupants of publicly-assisted housing projects whose
incomes are below the levels for continued occupancy in moderate rental housing projects in the community. No sale or lease of one-family or two-family dwelling units,
or of a share in a cooperative or condominium association owning a housing project,
originally purchased from the authority according to this section, shall be made to any
person who does not meet the qualifications of one or more of the above categories
without the approval of the Commissioner of Economic and Community Development
and any deed conveying such dwelling units or housing project shall state this restriction,
which shall run with the land until released by written instrument in recordable form
executed by said commissioner, and which may be enforced by said commissioner.
(c) The purchase price of a project or any part thereof may be payable by a purchase
money note only when the cost of the project was financed with a loan or deferred loan
by the state. Each purchase money note shall provide for its complete amortization by
periodic payments within a period not exceeding forty-one years from its date, shall
bear interest at a rate to be determined by the State Bond Commission and shall be
secured by a first mortgage on the dwelling unit purchased, provided when the sale is
to a tenant of the project or to a cooperative or condominium association, membership
in which is open to any tenants of the project or part of the project to be sold, the
commissioner may set an interest rate on such purchase money note commensurate with
the amount by which the income of any such individual tenant purchaser or of any tenant
member of a cooperative or condominium association exceeds the maximum limits
permitted for continued occupancy of such project, but in no case shall such interest
rate be set below the minimum determined by the State Bond Commission.
(d) In the event that the original purchaser of a one-family or two-family dwelling
unit sells, assigns, transfers or otherwise conveys any interest in such unit, the entire
unpaid principal balance of the note, with interest thereon, shall become due and payable.
In the event that the original purchaser of a one-family or two-family dwelling unit
ceases to occupy said unit, the entire unpaid principal balance of any loan, made pursuant
to this section on and after April 9, 1976, with interest thereon, may become due and
payable at the discretion of the commissioner. If such sale, assignment, transfer or conveyance takes place within seven years of the original purchase, the state, acting by and
in the discretion of the commissioner, may recapture a portion of the assistance it provided to finance the purchase of the unit, to be determined as follows: The original
purchaser shall pay to the state an amount equal to the sum of (1) additional interest
representing the difference between the actual interest paid by the original purchaser
on the permanent mortgage loan and the interest that the original purchaser would have
paid had the terms of the mortgage loan required interest at a rate of eight per cent per
annum, from the date of execution of the mortgage loan to the date of prepayment of
the mortgage loan; and (2) fifty per cent of the net appreciation if the unit is resold in
the first, second or third year, thirty per cent of the net appreciation if the unit is resold
in the fourth or fifth year and twenty per cent of the net appreciation if the unit is resold in
the sixth or seventh year following the original purchase. Notwithstanding the provisions
contained in this subsection, the total amount of such recapture shall not exceed the net
gain realized upon the resale of the unit. Permanent mortgage documents provided to
original purchasers on and after July 1, 1987, shall contain provisions necessary to fulfill
the requirements of this subsection.
(e) The proceeds of any sale of any project, or of any part thereof, the cost of which
was financed with a loan or deferred loan by the state to a housing authority, after
payment of all necessary expenses incident to such sale, shall be applied to liquidate
the outstanding balance of such loan or deferred loan. To this end, the authority shall
endorse each purchase money note received by the authority in payment of the purchase
price to the order of the state without recourse and shall deliver such note, together with
a duly executed assignment of the mortgage securing the same, to the Commissioner
of Economic and Community Development, and the State Treasurer shall credit the face
amount of such note as having been paid upon such loan. If the proceeds of the sale of
such project or of any part thereof, including as such proceeds the face amount of any
purchase money note received by an authority and endorsed and delivered by it to the
Commissioner of Economic and Community Development, as aforesaid, are more than
sufficient to liquidate the outstanding balance of such loan, such proceeds shall be applied toward the outstanding balance, if any, on any loan or deferred loan made pursuant
to this part on any other project owned and operated by such authority. If any balance
remains after all such loans or deferred loans have been liquidated, an amount equal to
one-half of any balance remaining shall be retained by or paid over to the state and an
amount equal to the remaining one-half of such balance shall be retained by or paid
over to the authority for payment by it to the municipality in which the project is located.
The proceeds of the sale of any project the cost of which was financed by notes or bonds
issued by the authority and guaranteed by the state, or of any part thereof, after payment
of all necessary expenses incident to such sale, shall be applied so far as practicable to
the redemption of all such outstanding notes or bonds. If such proceeds are more than
sufficient to redeem all such outstanding notes and bonds, one-half of any balance remaining shall be paid over to the state and the remaining one-half of such balance shall
be paid over to the authority for payment by it to the municipality in which the project
is located. If such proceeds are insufficient for complete redemption of such notes and
bonds, any balance remaining after redemption of the largest possible amount thereof
shall be paid over to the state. No such sales shall affect the obligation of the authority
upon such notes or bonds or the obligation of the state on its guarantee thereof. The
proceeds of the sale of any project, or any part thereof, the cost of which was financed,
wholly or partially, by a grant, after payment of all necessary expenses incident to such
sale, shall first be used for the repayment of such grant to the state.
(f) The proceeds of any sale of any project, or of any part thereof, the cost of which
was financed with a loan or deferred loan by the state to a nonprofit corporation, after
payment of all necessary expenses incident to such sale, shall be applied to liquidate
the outstanding balance of such loan or deferred loan. To this end, the nonprofit corporation shall endorse each purchase money note received by the nonprofit corporation in
payment of the purchase price to the order of the state without recourse and shall deliver
such note, together with a duly executed assignment of the mortgage securing the same,
to the Commissioner of Economic and Community Development, and the State Treasurer shall credit the face amount of such note as having been paid upon such loan or
deferred loan. If any balance remains after the loan or deferred loan has been liquidated,
such balance shall be paid over to the state for deposit to the credit of the General Fund.
The proceeds of the sale of any project, or any part thereof, the cost of which was
financed, wholly or partially, by a grant, after payment of all necessary expenses incident
to such sale, shall first be used for the repayment of such grant to the state. If any balance
remains after the grant has been repaid, such balance shall be paid over to the state for
deposit to the credit of the General Fund.
(1949 Rev., S. 954; 1953, 1955, S. 451d; 1959, P.A. 508; February, 1965, P.A. 297, S. 1; 1967, P.A. 522, S. 8; 1969,
P.A. 502; P.A. 73-191, S. 1; P.A. 76-20, S. 1, 2; P.A. 77-614, S. 284, 610; P.A. 78-303, S. 81, 136; 78-304, S. 12, 13, 22;
P.A. 79-598, S. 3, 4, 10; P.A. 83-373, S. 1, 2; P.A. 84-493, S. 8, 9; P.A. 86-307, S. 3, 12; P.A. 87-485, S. 1-3; P.A. 92-166, S. 3, 31; P.A. 95-250, S. 1; P.A. 96-211, S. 1, 5, 6.)
History: 1959 act added schedule of preference; 1965 act provided authority may sell rather than "dispose of" projects,
limited application of Subdiv. (a) to the sale of a one or two-family dwelling unit, added Subdivs. (b) and (c), specified
proceeds are to include face amount of any purchase money note and state or authority may retain balance of loans, and
added provisions re disposition of purchase money notes to liquidate state loans, to redeem authority bond and notes and
to distribute surplus, if any; 1967 act substituted commissioner of community affairs for public works commissioner;
1969 act included provisions concerning cooperatives and condominium associations amending preference schedule and
purchase money note provisions accordingly; P.A. 73-191 allowed sale of projects or a part of a project to department of
housing and urban development or private sponsor under conditions specified in section, made former schedule of preference specifically applicable to sales of one and two-family units, deleted restriction of purchase money notes to sales to
tenants' cooperatives, condominium association and one or two-family units and added provision concerning interest rates
pegged to amount tenants' incomes exceed maximum allowed for continued occupancy; P.A. 76-20 deleted references to
authority in provisions for approval of sales, and execution and enforcement of written instruments and provided that upon
sale of property by original purchaser or his ceasing to occupy property, loan becomes due; P.A. 77-614 substituted
department of economic development for commissioner of community affairs, effective January 1, 1979; P.A. 78-303
substituted commissioner for department; P.A. 78-304 included developers under provisions of section; P.A. 79-598 substituted commissioner of housing for commissioner of economic development; P.A. 83-373 changed maximum amortization
time from 30 to 41 years and provided for proceeds of sale to be applied toward any outstanding balance of any loans to
the authority; P.A. 84-493 provided for repayment of state grants to moderate rental housing projects in the case of the
sale of such project; P.A. 86-307 deleted references to "authority" in first paragraph of section and Subsec. (a), amended
Subsec. (e) to delete "developer", add the words "in which the project is located" after "municipality" and make technical
changes, and added Subsec. (f) re sale of any project financed with loan to nonprofit corporation; P.A. 87-485 amended
Subsec. (b) to give first preference to tenants having incomes below level for continued occupancy and second preference
to other tenants, renumbered the order of subsequent preferences and renumbered Subdivs. (2) through (4) as (3) through
(5), and amended Subsec. (d) by adding provisions concerning recapture of assistance; P.A. 92-166 made technical changes
in Subsecs. (c), (e) and (f) to add provision re deferred loans, consistent with 1992 public acts; P.A. 95-250 and P.A. 96-211 replaced Commissioner and Department of Housing with Commissioner and Department of Economic and Community
Development.