Section 3. (a) The fund shall finance low and no interest loans, grants, subsidies, credit enhancements and other financial assistance for alternative forms of rental and ownership housing; provided, however, that assistance shall be the minimum amount necessary to make a project feasible. Activities eligible for assistance from the fund shall include, but not be limited to: (1) capital grants and deferred payment loans for new construction, rehabilitation or acquisition of alternative forms of rental and ownership housing units; (2) capital grants and deferred payment loans for new construction, rehabilitation or acquisition of alternative forms of rental and ownership housing for homeless families and individuals; (3) mortgage insurance guarantees and other credit enhancements for alternative forms of rental and ownership housing; (4) projects making alternative forms of rental and ownership housing more accessible to senior citizens and persons with disabilities; (5) matching funds for municipalities that sponsor alternative forms of rental and ownership housing initiatives; and (6) matching funds for employer-based programs to assist employees in meeting their rental and homeownership housing costs.
(b) A loan program established pursuant to subsection (a) shall be administered by the department through contracts with authorities. The authorities may, pursuant to the terms and conditions of contracts with the department, directly issue loans for the purposes of the program or may enter into subcontracts with nonprofit organizations established pursuant to chapter 180 for those purposes. Loans issued directly or indirectly by those organizations shall be: (1) subject to the review and approval of the department; (2) limited to not more than 50 per cent of the financing of the total development costs; provided, however, that this limitation shall not apply to loans provided for the establishment of battered women’s shelters which loans may be provided in amounts up to 80 per cent of the financing of total development costs; and provided further, that those loans shall not exceed $2,500,000 per project; (3) issued only if a contract or agreement for the use of the property for housing purposes provides for the recording of a restriction in the registry of deeds or the registry district of the land court in the county in which the affected real property is located, for the benefit of the department, running with the land, that the land be used for providing alternative forms of rental and ownership housing; provided further, that the property shall not be released from the restriction until the balance of the principal and interest for the loan shall be repaid in full or until a mortgage foreclosure deed shall be recorded; (4) issued for a term of up to 30 years during which time repayment may be deferred by the loan issuing authority unless, at the end of a fiscal year, cash collections from all sources in connection with the housing, except for contributions, donations or grant moneys, exceed 105 per cent of cash expenditures on behalf of the housing, including debt service, operating expenses, operating reserves and capital reserves; provided further, that any excess cash shall be paid to the commonwealth within 45 days after the end of the fiscal year, payable first to interest due under this section and then to principal advanced pursuant to the loan; provided further, that if on the date the loans become due and payable to the commonwealth an outstanding balance exists, the loans may be extended for periods of not more than 10 years, as the department determines, provided that the project continues to remain affordable housing as set forth in the contract or agreement entered into for the duration of the project by the department; and provided further, that in the event that the terms of repayment detailed in this section would cause a project authorized by this chapter to become ineligible to receive federal funds which would otherwise assist in the development of that project, the department may waive the terms of repayment which would cause the project to become ineligible; (5) subject interest rates as fixed by the department, in consultation with the state treasurer; (6) issued once the department considers a balanced geographic plan for any alternative forms of housing; and (7) for projects developed pursuant to this chapter not refinanced during the term of a loan issued pursuant to this chapter unless the balance of the principal and interest for the prior loan is repaid in full at the time of the refinancing; provided, however, that housing projects may be refinanced if the refinancing would result in a reduction of costs paid by the commonwealth; provided further, that a refinanced loan shall be due and payable not later than the date on which the prior loan was due and payable, except in accordance with clause (4) or when necessary to effect extraordinary repairs or maintenance to be approved by the department.