(a) The commissioner is hereby authorized to use the moneys held in the fund, or any portion thereof, to make noninterest bearing advances to nonprofit and mutual housing sponsors to defray development costs for housing projects for families of moderate income to be constructed or rehabilitated with eligible mortgages. No such advance shall be made to any nonprofit or mutual housing sponsor by the commissioner unless: (1) the commissioner reasonably anticipates that said nonprofit or mutual housing sponsor will obtain an eligible mortgage for the project; and (2) the said nonprofit or mutual housing sponsor shall have executed an agreement with the commissioner, which agreement shall have such terms and conditions with respect to the rents, profits, dividends, and disposition of the property or franchises of said nonprofit or mutual housing sponsor as may be prescribed in rules and regulations promulgated by the commissioner pursuant to this act.

(b) Any nonprofit or mutual housing sponsor to which any advance has been made pursuant to subsection (a) of this section shall repay said advance in full to the department upon and concurrent with the receipt by said nonprofit or mutual housing sponsor of the proceeds of an eligible mortgage or construction or rehabilitation loan; provided, that the commissioner may extend the period for such repayment of any advance, except that the commissioner shall not extend the period for such repayment of any advance beyond the date of final payment of said eligible mortgage or construction or rehabilitation loan; and provided further, that any such advance may be treated by the commissioner as a grant to the extent that the proceeds of an eligible mortgage cannot by law be used to reimburse any cost or fee included in the development cost for which said advance was made.

(c) If the commissioner shall determine, in the exercise of his discretion, that any nonprofit or mutual housing sponsor to which any advance has been made pursuant to subsection (a) of this section cannot obtain an eligible mortgage, then the commissioner shall declare any such advance immediately due and payable. Any such advance which is declared by the commissioner to be immediately due and payable shall be repaid from any assets of the project for which said advance has been made; provided, that any such advance shall be treated by the commissioner as a grant to the extent that said advance cannot be repaid from the assets of any project for which said advance has been made.

(d) If the commissioner shall determine, in the exercise of his discretion, that any advance made pursuant to subsection (a) of this section is in jeopardy of not being repaid by the nonprofit or mutual housing sponsor to which any such advance has been made, then the commissioner may appoint to the board of directors of said nonprofit or mutual housing sponsor a number of new directors, which number shall be sufficient to constitute a majority of such board, notwithstanding the provisions of the certificate of incorporation or by-laws of said nonprofit or mutual housing sponsor, or any other provision of law. Any new members of such board so appointed by the commissioner shall serve as the members of such board until any such advance is repaid in accordance with subsection (b) of this section, or until any such advance is treated as a grant pursuant to subsection (c) of this section. Any new members of such board so appointed by the commissioner shall receive such compensation for their services as may be provided in the certificate of incorporation or by-laws of said nonprofit or mutual housing sponsor.

L.1967, c. 82, s. 6, eff. May 31, 1967.