(a) The cost, or part thereof, of construction of any such system or the local cash contribution required by the federal government for construction of such system may be paid in the first instance by the state from the proceeds of the issuance of bonds or notes as may be authorized from time to time, or from direct appropriations, and upon completion of such construction the local authority shall (1) reimburse the state to the extent of its share provided for in section 25-71; (2) enter into a contract with the state, acting by and through the Commissioner of Energy and Environmental Protection, for state financial assistance for such local authority’s share in any beach erosion or flood control system in the form of (A) temporary or definitive loans; (B) guarantees by the state of the notes of any local authority; or (C) any combination of such forms of aid.

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(b) Definitive loans made by the state under the authorization of this section (1) shall bear interest at the same rate as the interest cost to the state on the notes or bonds issued pursuant to section 25-73; (2) shall be in an amount not in excess of the cost to such local authority, including any state service charge; and (3) shall be repayable in such installments as are determined by the commission within twenty years from the date of the completion of the system. The provisions of subsection (b) of section 7-374 shall not apply to any bonds or notes issued by any municipality or district under the provisions of sections 25-69 to 25-75, inclusive, or part II of this chapter.