Low and Moderate Income Housing Predevelopment Cost Revolving Loan Fund. Interest-free loans for predevelopment costs.

(b) The state, acting by and in the discretion of the Commissioner of Housing, may enter into a contract to provide financial assistance in the form of interest-free loans or deferred loans to nonprofit corporations, housing authorities or municipal developers, or to partnerships which include a nonprofit corporation, housing authority or municipal developer, for predevelopment costs incurred in connection with the construction, rehabilitation or renovation of housing for low and moderate income persons and families. Such predevelopment costs may include: (1) Feasibility studies, (2) expenses incurred in project planning and design, including architectural expenses, (3) legal and financial expenses, (4) expenses incurred in obtaining required permits and approvals, (5) options to purchase land, (6) expenses incurred in obtaining required insurance, and (7) other preliminary expenses authorized by the commissioner. Repayment of such loans or deferred loans shall be made upon receipt of permanent financing by the borrower, except the commissioner may forgive any such loan or deferred loan in any case where the borrower has made a good faith effort to obtain permanent financing and has been refused such financing and where the forgiveness of such loan is in the best interest of the state. Payments of principal on such loans or deferred loans shall be paid to the Treasurer for deposit in the Housing Repayment and Revolving Loan Fund. 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.