(a) There is established a fund to be known as the “Housing Infrastructure Fund”. The fund shall contain any moneys required by law to be deposited therein and shall be held separate and apart from all other moneys, funds and accounts. Any balance remaining in the fund at the end of any fiscal year shall be carried forward in the fund for the fiscal year next succeeding. The fund may be used to make grants-in-aid, loans or deferred loans authorized by subsection (b) of this section.

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(b) The state, acting by and in the discretion of the Commissioner of Housing, in consultation with the Secretary of the Office of Policy and Management, may enter into a contract to provide state financial assistance in the form of a grant-in-aid, loan, deferred loan or combination thereof to municipalities located within the planning regions in which the pilot program is established, upon the approval of the regional fair housing compact as provided in section 8-386. In the case of a deferred loan, the contract shall require that payments on interest are due immediately but that payments on principal may be made at a later time. Notwithstanding the provisions of subsection (d) of section 4-86, funds appropriated to any state agency for payment to local governments for purposes related to or necessary for the development of housing in the regions, including but not limited to the purposes contained in this subsection, other than those for which distribution is governed by statutory formula, may be made available for the pilot program authorized under section 8-386 upon the recommendation of the Governor and approval of the Finance Advisory Committee. The grants-in-aid, loans, deferred loans or combinations thereof authorized under this subsection and any additional funds made available for the pilot program as provided in this subsection shall be used by the municipalities in said regions for the purpose of planning, construction or renovation of housing and for any of the following when necessary to support the development of housing within such municipalities in accordance with the regional fair housing compact: (1) Sanitary sewer lines, including interceptors, laterals and pumping stations; (2) natural gas, electric, telephone and telecommunications pipes, wires, conduits and other facilities and waterlines and water supply facilities, except for any such pipes, wires, conduits, waterlines or facilities which a public service company, as defined in section 16-1, a water company, as defined in section 25-32a, or a municipal utility is required to install pursuant to any provision of the general statutes, or any special act, a regulation or order of the Public Utilities Regulatory Authority or a certificate of public convenience and necessity; (3) storm drainage facilities, including facilities to control flooding; (4) public roadways and related appurtenances; (5) community septic systems approved by the Department of Energy and Environmental Protection, provided administrative costs directly related to such construction or renovation shall not exceed five per cent of the total grant or loan from the department. Such grants-in-aid, loans, deferred loans or combinations thereof shall be awarded in such amounts and upon such conditions as the commissioner, in consultation with the secretary, may prescribe by regulation except that no grant-in-aid, loan, or deferred loan or combination thereof shall be made to any municipality that has not approved a housing compact prepared under section 8-386.