Any municipality which is a distressed municipality as defined in subsection (b) of section 32-9p, on October 1, 1987, may apply to the Commissioner of Housing to designate an area of such municipality as a housing development zone. Any such area shall consist of one or two contiguous United States census tracts or a portion of an individual census tract as determined in accordance with the most recent United States census. At least twenty-five per cent of the designated area shall be zoned or allow for multifamily residential dwellings.