Sec. 8-253a. Additional loan conditions.
Sec. 8-253a. Additional loan conditions. In addition to the terms and conditions
set forth in section 8-253, loans made by the authority hereunder shall also be subject
to the following terms and conditions:
(1) A loan hereunder may be prepaid after a period of twenty years or sooner with
the permission of the authority; provided, nonprofit mortgagors and mortgagors to whom
loans are made on or after October 1, 1978, may prepay their loans prior to maturity
only with the consent of the authority. The authority shall grant such consent if it finds
(A) that it may reasonably be expected that the prepayment of the loan will not result
in a material escalation of rents charged to occupants of the project; and (B) that the
need for low and moderate income housing in the area concerned is no longer acute.
(2) The interest rate on the loan shall be established by the authority at the lowest
level consistent with the authority's cost of operation and its responsibilities to the
holders of its bonds, bond anticipation notes and other obligations, except those loans
made pursuant to subsection (32) of section 8-250.
(3) The authority shall require the mortgagor or its contractor to post labor and
materials and construction performance surety bonds, or enter into an escrow arrangement acceptable to the authority, in amounts related to the project cost as established
by regulation, and to execute such other assurances and guarantees as the authority may
deem necessary.
(4) The loan shall be subject to an agreement between the authority and the mortgagor which will subject said mortgagor and its principals or stockholders to limitations
established by the authority as to rentals, carrying charges, and other charges, profits
and fees, and the disposition of its property and franchises to the extent more restrictive
limitations are not provided in the law under which the mortgagor is incorporated or
organized.
(5) A loan to a mortgagor, other than a municipal developer or a nonprofit corporation having as one of its purposes the construction or rehabilitation of housing, shall be
subject to an agreement between the authority and the mortgagor limiting the mortgagor,
and its principals or stockholders, to such return on the mortgagor's equity in any project
assisted with a loan from the authority as may be established or permitted by the authority. The mortgagor's equity in a project shall consist of the difference between the
amount of the loan and the total project cost, whether or not such costs have been paid
in cash or in a form other than cash. With respect to every project, the authority shall,
pursuant to rules and regulations adopted by it, establish the mortgagor's equity after
the acceptance as proper by the authority of the certification or other assurances of
project cost from the mortgagor, provided in no case shall such figure ever be less than
the mortgagor's original equity in such project.
(6) No loan shall be executed, except a loan made to a municipal developer or a
nonprofit corporation having as one of its purposes the construction or rehabilitation of
housing, unless the mortgagor agrees (A) to certify upon completion of project construction or rehabilitation, subject to audit by the authority, either that the actual project cost
as defined herein exceeded the amount of the loan proceeds by ten per cent or more, or
the amount by which the loan proceeds exceed ninety per cent of total project cost, and
(B) to pay forthwith to the authority, for application to reduction of principal of the loan,
the amount, if any, of such excess loan proceeds, subject to audit and determination by
the agency. No loan shall be made to a municipal developer or a nonprofit corporation
unless such mortgagor agrees to certify the actual project cost upon completion of the
project, and further agrees to pay forthwith to the authority, for application to reduction
of the principal of the loan, the amount, if any, by which the proceeds of the loan exceed
the certified project cost, subject to audit and determination by the authority. Notwithstanding the provisions of this subsection, the authority may accept, in lieu of any certification of project cost as provided herein, such other assurances of the said project cost,
in any form or manner whatsoever, as will enable the authority to determine with reasonable accuracy the amount of said project cost.
(7) As a condition of the loan, the authority shall have the power at all times during
the construction and rehabilitation of a housing project and the operation thereof: (A)
To enter upon and inspect without prior notice any project, including all parts thereof,
for the purpose of investigating the physical and financial condition thereof, and its
construction, rehabilitation, operation, management and maintenance, and to examine
all books and records with respect to capitalization, income and other matters relating
thereto and to make such charges as may be required to cover the cost of such inspections
and examinations; (B) to order such alterations, changes or repairs as may be necessary
to protect the security of its investment in a housing project or for the health, safety and
welfare of the occupants thereof; (C) to order any managing agent, project manager or
owner of a housing project to do such acts as may be necessary to comply with the
provisions of all applicable laws and ordinances or any rule or regulation of the authority
or the terms of any agreement concerning the said project or to refrain from doing any
act in violation thereof and in this regard the authority shall be a proper party to file a
complaint and to prosecute thereon for any violation of laws or ordinances as set forth
herein; (D) to require the adoption and continuous use of uniform systems of accounts
and records for a project and to require all owners or managers of same to file annual
reports containing such information and verified in such manner as the authority shall
require and to file at such times and on such forms as the authority may prescribe reports
and answers to specific inquiries of the authority to determine the extent of compliance
with any agreement, the terms of the loan, the provisions of this chapter and any other
applicable law; and (E) to enforce, by court action if necessary, the terms and provisions
of any agreement between the authority and the mortgagor as to schedules of rentals or
carrying charges, aggregate family income limits as applied to applicants for housing
or the occupants thereof, or any other limitation imposed upon the mortgagor as to
financial structure, construction, operation, or disposition of the housing.
(8) If, pursuant to subsection (29) of section 8-250, the authority appoints a majority
of new directors to the board of directors of a mortgagor corporation, or appoints a new
managing agent for an unincorporated association, the persons so appointed need not
be stockholders or partners or meet other qualifications which may be prescribed by the
articles of incorporation or other basic documents of organization or the bylaws of such
mortgagor. In the absence of fraud or bad faith, the persons so appointed shall not be
personally liable for the debts, obligations or liabilities of such mortgagor; and shall
serve only for a period coexistent with the duration of the reasons for their appointment
or until the authority is assured, in a manner satisfactory to it, that the need for such
service no longer exists; and they shall serve as directors or managing agents for such
compensation as the authority may determine and shall be entitled to be reimbursed for
all necessary expenses incurred in the discharge of their duties as directors or managing
agents of such mortgagor.
(1972, P.A. 208, S. 8; P.A. 74-104, S. 11, 12; P.A. 75-465, S. 5, 7; P.A. 77-316, S. 6; P.A. 78-150; P.A. 81-472, S. 5,
159; P.A. 84-110, S. 1, 2; P.A. 87-436, S. 19, 23.)
History: P.A. 74-104 replaced "and" in the phrase "having as one of its purposes the construction and rehabilitation of
housing" with the word "or" in Subdiv. (5); P.A. 75-465 excepted loans made pursuant to Sec. 8-250(ff) from provisions
of Subdiv. (2); P.A. 77-316 amended Subdiv. (5) to replace 6% limit on investment return with "such a return ... as
may be established or permitted by the authority" and replaced provision for establishment of equity at the time of final
construction loan advance with provision that equity be established "after the acceptance as proper by the authority of the
certification or other assurances of project cost from the mortgagor" and deleted Subdiv. (7) re reduction of rents when
earned surplus exceeds 10%, renumbering subsequent Subdivs. accordingly; P.A. 78-150 allowed mortgagors receiving
loans on and after October 1, 1978, to pay loans prior to maturity only with authority's consent; P.A. 81-472 made technical
changes; P.A. 84-110 amended Subdiv. (5) to provide for variation in the mortgagor's equity; P.A. 87-436 added references
to municipal developers in Subdivs. (5) and (6); (Revisor's note: In 1989 a reference in Subdiv. (2) to Subdiv. "(ff)" of
Sec. 8-250 was changed editorially by the Revisors to Subdiv. "(32)" to conform with changes made to said section by
the Revisors for consistency with customary statutory usage).
Subdiv. (1):
Authorized authority, in the absence of facts requiring authority's consent under section, to approve or deny consent
for prepayment of loans made under Ch. 134 and is consistent with its broad provisions. 281 C. 227.