(a) The commissioner is authorized to make development grants to municipalities for development projects, provided (1) no such grant shall be made for any such project until said commissioner has given approval to the plan therefor and (2) no such grant shall be made for any such project in an amount exceeding fifty per cent or, in the case of grants to any distressed municipality, as defined in section 32-9p, sixty-five per cent of the net cost, excluding, except as provided in this subsection, planning costs and special planning costs of such project as determined by said commissioner, and except that when two or more towns jointly initiate such a project in accordance with the provisions of section 8-196, such grant may be in an amount not exceeding seventy-five per cent of the net cost, excluding, except as provided in this subsection, planning costs and special planning costs of such project as determined by said commissioner. In distressed municipalities, as defined in section 32-9p, the commissioner may authorize such grants to be used for loans to businesses and industries locating, constructing, expanding, renovating or operating within development projects. Said commissioner may include planning costs or special planning costs of such project if such costs have already been paid or reimbursed by the municipality. Any distressed municipality’s share of the cost of development projects may, to the extent permitted by federal law, be paid entirely or partially from amounts received by the municipality under any federal capital grant program. Special development grants, as provided in subsections (b) and (c), may be made to any municipality, regardless of whether or not it is a distressed municipality, in amounts up to one hundred per cent of such costs.

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(b) The commissioner is authorized to make special development grants to municipalities to plan, install, construct or reconstruct utilities, sewerage and water lines and systems, and water towers and to acquire rights-of-way, therefore, to the boundaries of development projects. Such development grants may be made in amounts to their total costs, but not to exceed, ten per cent of the estimated physical development costs within the development project as last approved by the commissioner.

(c) The commissioner is authorized to make special development grants to municipalities for site improvement, utility, water, roads and sewerage facilities, renovation of building space, related engineering services, and for relocation expenses for the purpose of assisting industrial and business firms to locate or expand within development projects and which, upon such location or expansion, would result in a significant increase in employment or municipal real estate tax revenue to the municipality within which such development projects are located. All relocation assistance shall be in conformance with the provisions of chapter 135. Such grants may be made in amounts to their estimated total cost.

(d) In allocating funds available for the making of development grants, said commissioner is authorized to establish priorities among municipalities, taking into account their relative needs for development projects, the effects of proposed projects on existing housing and the extent to which particular projects are likely to advance the purposes of this chapter.