Section 34. The commonwealth acting by and through the department may enter into a contract or contracts with a housing authority for state financial assistance in the form of a grant by the commonwealth of the development cost of a housing project or projects. The total amount of grants financed by bonds authorized prior to September first, nineteen hundred and eighty-three shall not exceed the sum of one hundred and thirty-eight million dollars. Each such contract shall contain such limitations as to the development cost of the project and administrative and maintenance costs, and such other provisions as the department may require and shall require that said grant shall be applied only to development cost of the project or to pay the principal and interest on notes of the housing authority issued to temporarily finance the development cost; and provided further, that grants under this section shall not be used for the modernization or renovation of existing projects as provided for in paragraph (j) of section twenty-six. Each such contract shall provide for a period during which state financial aid shall be deemed to be continuing notwithstanding that it is paid as a single grant or as several grants, which period shall continue until at least twenty-five years but not more than forty years from the completion date of the project unless and until the full amount of the state grant is reimbursed to the commonwealth as provided in this section. Each project shall be based upon a separate application made to the department and shall be planned to conform, as nearly as possible, to the existing published requirements of the federal government for low-rent or other housing projects, except such requirements as are based upon the cost limitations set forth in federal legislation. A housing authority may, with the approval of the department, acquire under the provisions of clause (d) of section eleven for the purposes of a project under this section or section thirty-five any land acquired by a city or town under the provisions of chapter three hundred and seventy-two of the acts of nineteen hundred and forty-six, as amended; provided, that such city or town has not completed construction of a housing project on such land. Each project developed under this section and section thirty-five shall be administered for occupancy in accordance with section thirty-two, except clause (c), and except that each such project shall be occupied, except as hereinafter provided by veterans and their families, and priority shall be given first to veterans of World War II of low income and to veterans of low income who have served in the active armed forces of the United States at any time between June the twenty-fifth, nineteen hundred and fifty and January the thirty-first, nineteen hundred and fifty-five, both dates inclusive; then to veterans of low income, such low income to be determined from time to time by the department; then to a person without regard to family status who is a veteran and who is fifty years of age or over; then to elderly persons qualifying for housing under the provisions of section forty; then, without regard to family status, to a person of low income who is permanently and totally disabled and eligible for assistance under chapter one hundred and eighteen A, or blind, then to other persons of low income living in substandard housing, and a housing authority may remodel or reconstruct parts of projects erected under this section to make the same available for occupancy by elderly persons qualifying for housing under the provisions of section forty and such remodeled or reconstructed apartments shall be available for occupancy by eligible elderly persons of low income only to the extent that no eligible veterans apply for such units; provided, that if no eligible veterans or elderly persons of low income apply for such remodeled or reconstructed units, the units shall be made available to other persons of low income living in substandard housing. Notwithstanding the requirement that each project shall be based upon a separate application made to the department, the department may consolidate two or more projects of the same housing authority, for which projects applications have been seasonably made under this section and which projects shall have been approved by the department, into a single project, and may make on behalf of the commonwealth a contract with the housing authority for state financial assistance in respect of such consolidated project superseding any such contract made in respect of any of the constituent projects, and may determine the date of completion of the consolidated project superseding any such date determined in respect of any of the constituent projects and such consolidated project shall be constructed, financed and managed as a single project; provided, that nothing contained in this sentence shall affect the rights of the holders of any notes outstanding in respect of any of the constituent projects at the time of such consolidation.

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If federal assistance for low-rent housing becomes available in any form not applicable to projects under this chapter, the department shall immediately report the circumstances to the general court together with such recommendations for legislation as may be necessary to enable such projects to qualify for such assistance. Upon the availability of federal financial assistance for low-rent housing projects, each housing authority having a contract for state financial assistance shall, upon receipt of written notice from the department, immediately enter into negotiations with the federal government to arrange for federal assistance with respect to any project developed hereunder and for the termination or reimbursement, in whole or in part, of state financial assistance. For any such project the department may order any housing authority (1) to apply for federal financial assistance and (2) upon obtaining the approval of the federal government, to enter into a contract or contracts for federal assistance and to make such arrangements as are possible to terminate, reduce or subordinate the obligation of the commonwealth to render financial assistance in such amount as is provided by federal assistance. No order of the department shall in any way affect any outstanding obligations of a housing authority or the rights of any holders of the notes thereof. The amount of federal payments shall be used to the fullest allowable extent, first, to meet the payment of principal and interest on all notes guaranteed by the commonwealth and, second, to reimburse the commonwealth for grants made on account of the project for which the federal payment was received.

If the department shall determine that an acute shortage of housing for veterans constituting a public exigency, emergency or distress no longer exists and that a shortage of low-rent housing no longer exists in a particular city or town, any project, or a part of any project with the land appurtenant thereto, constructed under this section may, with the approval of the department, be sold for the fair market value thereof as determined by the department, but for not less than the total of the outstanding obligations of the housing authority with respect to such project if the whole is sold, or not less than that percentage of the total outstanding obligations of the authority with respect to such project which the cost of the part sold bears to the total cost of the entire project if a part is sold.

There is hereby established the Housing Authority Bonds Sinking Fund and the state treasurer is hereby designated custodian thereof. He shall administer such fund in accordance with the provisions of chapter twenty-nine. So long as any bonds issued by a housing authority to finance the cost of a project under this section or section thirty-five and guaranteed by the commonwealth are outstanding, the proceeds of any sale of such project shall be paid by the housing authority into such fund and shall be expended from time to time by the state treasurer to pay interest and principal of any bonds issued by such housing authority to finance such project.

The proceeds of any sale or other disposition of such project in excess of the total of all obligations of the housing authority with respect to such project shall, after the payment of all bonds issued by the housing authority to finance the cost of such project and payment of the costs of the sale or disposition, be retained by the housing authority for the preservation, modernization and maintenance of its public housing assisted under this chapter as approved by the department, or if the housing authority has no public housing assisted pursuant to this chapter, such proceeds shall be paid to the department to fund capital improvements for the preservation, modernization and maintenance of state-aided public housing.

The provisions of sections one to forty-four, inclusive, except section thirty-three shall, as far as apt, be applicable to projects developed under this section and under section thirty-five and to housing authorities while engaged in developing and administering such projects; provided, that whenever the phrases ”federal government” or ”federal legislation” are used in said sections one to forty-four, inclusive, they shall also mean the commonwealth or laws of the commonwealth, as the case may be; and that whenever the words ”low-rent housing project” or ”projects” are used in said sections they shall also mean a state-aided project under this section and section thirty-five.

The department may enforce any of its orders, rules or regulations or the provisions of any contract between the commonwealth and a housing authority by a civil action filed under the provisions of section five of chapter two hundred and forty-nine. In the event of a breach by a housing authority of any provisions of contract between it and the commonwealth relating to a project, the commonwealth, acting by the department, may take immediate possession of the project and retain possession and operate the project in the place and stead of the housing authority, with all the rights and powers of the housing authority, and subject to all of its obligations respecting the possession and operation of the project and the revenues therefrom, until such time as such breach shall have been corrected to the satisfaction of the department.

A housing authority which has received state financial assistance to finance a project under authority of this section, or which has received funds from a city or town under authority of chapter three hundred and seventy-two of the acts of nineteen hundred and forty-six as amended, shall cause an audit to be made of its accounts annually at the close of a fiscal year by the department of the state auditor and a copy of the report of said audit shall be filed promptly with the department.

Any type of housing including one, two and three family dwellings may be constructed under this section notwithstanding the provision that each project shall conform as nearly as possible to the existing published requirements of the federal government for low-rent or other housing projects. In offering for sale residences constructed under this section, preference to potential buyers shall be given whenever reasonably possible as follows: (1) veteran tenants of such residences; (2) all other World War II veterans, as defined in section seven of chapter four; (3) surviving spouses and parents of said veterans of World War II; (4) all other United States war veterans; (5) all other resident citizens of the city or town in which said residences are located; (6) all other citizens of the commonwealth; (7) an urban redevelopment corporation; and (8) all others. The provisions of this paragraph shall not apply to projects completed after July first, nineteen hundred and sixty-six.

Whenever a housing authority shall determine that land acquired by it pursuant to clause (d) of section 11 for the purpose of this section is in excess of or no longer required for such purpose it may, upon approval by the department, sell or otherwise dispose of the land by deed or instrument approved as to form by the attorney general. If the housing authority is disposing of such land for purposes of housing development, it may do so in accordance with section 26. So long as any bonds issued by a housing authority to finance the cost of a project under this section or section 35 and guaranteed by the commonwealth are outstanding, funds received from a disposition of land as provided in this chapter shall be applied in accordance with the fourth paragraph of this section. After the payment of all bonds issued by the housing authority to finance the cost of such project, funds received shall be applied in accordance with the fifth paragraph of this section.

Whenever a housing authority shall determine that any gas, electric or heating distribution system which has been built or acquired for the purposes of this section is no longer required for such purposes, it may upon approval by the department, sell or otherwise dispose of such gas, electric or heating distribution system, or any part thereof, by deed or instrument approved as to form by the attorney general. Funds received from a sale of a gas, electric or heating distribution system or any part thereof, as herein provided, shall be paid into the Housing Authority Bonds Sinking Fund or to the commonwealth and the city or town in which the system is located, as provided in this section.

The department shall promulgate rules and regulations relative to uniform standards for tenant selection which shall establish the order of priority governing the selection of tenants, and a housing authority thereafter shall be bound by such standards in its selection of tenants.

Notwithstanding any of the provisions of sections thirty-five through thirty-seven, inclusive, any housing authority having a contract for state financial assistance, may, with respect to any project developed hereunder, and in accordance with the provisions of sections fourteen and thirty, contract with the federal government for financial assistance in accordance with the provisions of federal legislation. Commencing with the first of January, nineteen hundred and eighty-seven, housing authorities which have received federal financial assistance shall satisfy the requirements of the Single Audit Act of 1984, 31 USC 7501 et seq. by causing audits of their records to be made annually or biennially by an independent auditor to be selected by such housing authorities to conduct such audits. Said audits shall be made in accordance with generally accepted government auditing standards as well as standards prescribed by the office of the state auditor. Housing authorities acting under the requirements of this section shall submit said audited financial statements to the office of the state auditor for his notice and approval; provided, that all independent audits conducted in accordance with the aforementioned requirements and standards shall be deemed to meet the approval of the state auditor.

Notwithstanding any general or special law to the contrary, construction and development activity related to redevelopment of state-aided or federally-aided public housing projects where the land, buildings or structures associated with the housing project have been conveyed or transferred to an affiliated non-profit or private entity for purposes of completing the redevelopment shall not be subject to any general or special law related to the procurement and award of contracts for the planning, design, construction management, construction, reconstruction, installation, demolition, maintenance or repair of buildings by a public agency; provided, however, that the department shall review and approve the procurement processes used to undertake this redevelopment in accordance with subsection (q) of section 26; and provided further, that all construction, reconstruction, alteration, installation, demolition, maintenance or repair shall be subject to sections 26 to 27F, inclusive, and section 29 of chapter 149. The department shall request rates and updates from the division of labor standards for these projects.