House Bill No. 6564
               House Bill No. 6564

              PUBLIC ACT NO. 97-173


AN  ACT CONCERNING  THE  DEFINITION  OF  "TROUBLED
LOAN" AND CONSUMER LOAN PROGRAMS OF THE DEPARTMENT
OF ECONOMIC AND COMMUNITY DEVELOPMENT.


    Be  it  enacted  by  the  Senate  and House of
Representatives in General Assembly convened:
    Section 1. Subsection  (e) of section 8-37x of
the general statutes is repealed and the following
is substituted in lieu thereof:
    (e)  (1)  [The  Commissioner  of  Economic and
Community Development] AS USED IN THIS SUBSECTION,
"TROUBLED  LOAN" MEANS A LOAN IN WHICH PAYMENTS OF
INTEREST  OR  PRINCIPAL,  OR  BOTH  INTEREST   AND
PRINCIPAL, (A) ARE DELINQUENT UNDER THE TERMS OF A
LOAN AGREEMENT, OR (B) MAY BECOME DELINQUENT UNDER
CONDITIONS WHICH EXIST WHICH WOULD REASONABLY LEAD
THE  COMMISSIONER  OF   ECONOMIC   AND   COMMUNITY
DEVELOPMENT  TO  BELIEVE  THAT A BORROWER WOULD BE
UNABLE TO REPAY THE LOAN.  SAID  COMMISSIONER  may
authorize  the  deferred  payments  of interest or
principal, or both interest and  principal,  or  a
portion  thereof,  in  the case of a troubled loan
made by the commissioner under  any  provision  of
the   general  statutes  or  special  acts  if  he
determines  the  deferral  to  be  in   the   best
interests  of  the state. Such determination shall
be in writing and shall include a statement of the
reasons  why the deferral is in the best interests
of  the  state.  Any  deferral  made   under   the
provisions of this section shall be subject to the
approval of the State Bond Commission. [As used in
this  subsection,  "troubled loan" means a loan in
which payments of interest or principal,  or  both
interest  and  principal, are delinquent under the
terms of a loan agreement.]
    (2)   The   Commissioner   of   Economic   and
Community Development shall, on or before  January
1,  1994, and annually thereafter, submit a report
to the joint standing committees  of  the  General
Assembly  having cognizance of matters relating to
housing   and   finance,   revenue   and   bonding
concerning   any   deferrals   granted  under  the
provisions of this subsection.  The  report  shall
list  each  troubled loan, the amount of the loan,
the decision of the commissioner on  deferral  and
the amount of principal and interest deferred.
    Sec. 2. Section 8-219e of the general statutes
is repealed and  the  following  is substituted in
lieu thereof:
    (a) The state, acting by and in the discretion
of  the Commissioner  of  Economic  and  Community
Development, may enter  into  a  contract  with an
eligible developer, as  defined in section 8-39, a
community  housing  development   corporation,  as
defined in section  8-217,  or  any  other  person
approved by the  commissioner  for state financial
assistance in the  form of a grant-in-aid, loan or
deferred loan for  technical  assistance  and  the
abatement  of  lead-based   paint,   asbestos  and
asbestos-containing  material from  a  residential
dwelling unit. In the case of a deferred loan, the
contract shall require  that  payments on interest
are  due  [immediately]   AND   PAYABLE  but  that
payments on principal  may  be  [made  at  a later
time]   DEFERRED   TO   A   TIME   CERTAIN.   Such
grant-in-aid, loan or deferred loan or combination
thereof shall not  exceed [two-thirds of] the cost
of such abatement,  including expenses incurred in
obtaining technical assistance for such abatement,
and  shall  be   awarded   upon   such  terms  and
conditions as the  commissioner  may  prescribe by
regulations adopted pursuant to subsection (b).
    (b)   The   Commissioner   of   Economic   and
Community Development may  adopt  regulations,  in
accordance  with  the provisions of chapter 54, to
carry out  the  purposes  of  this  section.  Such
regulations shall provide the terms and conditions
of grants-in-aid, loans  or  deferred  loans  made
pursuant to subsection (a) of this section and the
eligibility and application requirements for  such
financial    assistance.   In   determining   such
eligibility requirements, the  commissioner  shall
consider   establishing  priorities  for  low  and
moderate income families and households  having  a
child suffering from lead-paint poisoning.
    Sec.   3.   Section   32-317  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    (a) The commissioner,  acting on behalf of the
state, may in his discretion make [low-cost] loans
OR DEFERRED LOANS  to  residents of this state for
the  purchase  and   installation  in  residential
structures  of  insulation,   alternative   energy
devices,   energy   conservation   materials   and
replacement  furnaces  and  boilers,  approved  in
accordance with regulations  to  be adopted by the
Secretary of the  Office of Policy and Management.
In the purchase  and installation of insulation in
new residential structures,  only  that insulation
which  exceeds  the   requirements  of  the  State
Building Code shall  be eligible for such loans OR
DEFERRED LOANS. The  commissioner  may  also  make
[low-cost] loans OR  DEFERRED  LOANS to persons in
the state residing  in  dwellings  constructed not
later than December  31,  1979,  and for which the
primary source of heating since such date has been
electric  resistance, for  (1)  the  purchase  and
installation   of  a   high-efficiency   secondary
heating system using  a  source of heat other than
electric  resistance,  (2)  the  conversion  of  a
primary    electric   heating    system    to    a
high-efficiency  system using  a  source  of  heat
other  than  electric   resistance,   or  (3)  the
purchase  and installation  of  a  high-efficiency
combination heating and cooling system. As used in
this subsection, "high-efficiency"  means having a
seasonal energy efficiency ratio of 11.0 or higher
or a heating  season  performance factor of 7.2 or
higher as designated by the American Refrigeration
Institute in the  Directory  of  Certified Unitary
Air  Conditioners,  Air   Source  Heat  Pumps  and
Outdoor Unitary Equipment,  as  from  time to time
amended, or an  equivalent ratio for a fossil fuel
system.
    (b) Except as provided under subsection (c) of
this section, any such loan OR DEFERRED LOAN shall
be  available only  for  a  residential  structure
containing  not more  than  four  dwelling  units,
shall be not  less  than  four hundred dollars and
not more than  [six]  FIFTEEN thousand dollars per
structure and shall  be  made only to an applicant
who   submits  evidence,   satisfactory   to   the
commissioner, that the  adjusted  gross  income of
the household member  or members who contribute to
the support of  his household was not in excess of
one hundred fifty  per  cent  of  the  median area
income by household  size.  Repayment of all loans
OR DEFERRED LOANS made under this subsection shall
be subject to  a rate of interest to be determined
in accordance with  subsection (t) of section 3-20
and such terms  and conditions as the commissioner
may establish. The  State  Bond  Commission  shall
establish a range  of rates of interest payable on
all loans OR  DEFERRED LOANS under this subsection
and  shall  apply   the  range  to  applicants  in
accordance with a  formula  which  reflects  their
income. Such range shall be not less than zero per
cent for any  applicant in the lowest income class
and not more  than  one per cent above the rate of
interest borne by  the general obligation bonds of
the state last  issued  prior  to  the most recent
date such range  was established for any applicant
for  whom  the   adjusted   gross  income  of  the
household member or  members who contribute to the
support of his  household was at least one hundred
fifteen per cent  of  the  median  area  income by
household size.
    (c) The commissioner shall establish a program
under which he  shall  make funds authorized under
section 32-318 available  for  [low-cost] loans OR
DEFERRED  LOANS  under   subsection  (a)  of  this
section for residential structures containing more
than  four  dwelling   units,   or  for  contracts
guaranteeing payment of  loans provided by private
institutions for such  structures for the purposes
specified under subsection  (a)  of  this section.
Any such loan  OR DEFERRED LOAN shall be an amount
equaling not more  than [one] TWO thousand dollars
multiplied by the number of dwelling units in such
structure,  provided no  such  loan  shall  exceed
[thirty] SIXTY thousand  dollars. If the applicant
seeks a loan  OR  DEFERRED  LOAN  for  a structure
containing more than  thirty  dwelling  units,  he
shall include in  his  application a commitment to
make comparable energy  improvements of benefit to
all dwelling units in the structure in addition to
the thirty units  which  are eligible for the loan
OR DEFERRED LOAN.  Applications  for  contracts of
guarantee   shall   be   limited   to   structures
containing not more than thirty dwelling units and
the amount of the guarantee shall be not more than
[fifteen hundred] THREE  THOUSAND dollars for each
dwelling  unit benefiting  from  the  loan.  There
shall not be  an income eligibility limitation for
applicants  for  such  loans,  DEFERRED  LOANS  or
guarantees,  but  the   commissioner   shall  give
preference  to applications  for  loans,  DEFERRED
LOANS or guarantees  for such structures which are
occupied by persons  of  low  or  moderate income.
Repayment of such loans OR DEFERRED LOANS shall be
subject  to such  rates  of  interest,  terms  and
conditions as the  commissioner  shall  establish.
The state shall  have  a lien on each property for
which a loan,  DEFERRED LOAN or guarantee has been
made under this  section to ensure compliance with
such terms and conditions.
    (d) With respect  to  all  loans  OR  DEFERRED
LOANS  under  this   section,  any  repayments  of
principal shall be paid to the State Treasurer for
deposit in the  energy conservation revolving loan
account. The interest applicable to any such loans
made shall be  paid  to  the  State  Treasurer for
deposit in the  General  Fund.  IN  THE  CASE OF A
DEFERRED LOAN, PAYMENTS  ON  INTEREST  ARE DUE AND
PAYABLE BUT PAYMENTS  ON PRINCIPAL MAY BE DEFERRED
TO A TIME CERTAIN.
    (e) The commissioner  shall  adopt regulations
in  accordance with  chapter  54,  (1)  concerning
qualifications for such  loans  OR DEFERRED LOANS,
requirements and limitations  as to adjustments of
terms  and  conditions   of   repayment   and  any
additional requirements deemed  necessary to carry
out the provisions  of  this section and to assure
that those tax-exempt bonds and notes used to fund
such  loans qualify  for  exemption  from  federal
income taxation, (2)  providing  for  the  maximum
feasible availability of  such  loans  OR DEFERRED
LOANS for dwelling  units  owned  or  occupied  by
persons   of  low   and   moderate   income,   (3)
establishing procedures to  inform such persons of
the availability of  such  loans OR DEFERRED LOANS
and to encourage and assist them to apply for such
loans and (4)  providing  that  (A)  the  interest
payments received from  the recipients of loans OR
DEFERRED LOANS, less  the expenses incurred by the
commissioner in the  implementation of the program
of loans, DEFERRED LOANS and loan guarantees under
this section, and  (B)  the payments received from
electric and gas companies under subsection (f) of
this section shall  be  applied  to  reimburse the
General Fund for interest on the outstanding bonds
and notes used  to  fund  such  loans  OR DEFERRED
LOANS.
    (f) Not later than August first, annually, the
commissioner   shall  calculate   the   difference
between (1) the weighted average of the percentage
rates of interest  payable on all subsidized loans
OR   DEFERRED   LOANS   made   from   the   energy
conservation   loan   program   authorized   under
sections 32-315 to  32-318, inclusive, and (2) the
average of the percentage rates of interest on any
bonds and notes  issued  pursuant to section 3-20,
which   have  been   dedicated   to   the   energy
conservation loan program under sections 32-315 to
32-318, inclusive, and  used to fund such loans OR
DEFERRED LOANS, and  multiply  such  difference by
the  outstanding  amount  of  all  such  loans  OR
DEFERRED LOANS, or  such  lesser  amount as may be
required under Section  103 (b)(2) of the Internal
Revenue   Code  of   1986,   or   any   subsequent
corresponding internal revenue  code of the United
States, as from  time to time amended. The product
of  such difference  and  such  applicable  amount
shall not exceed  six  per  cent of the sum of the
outstanding principal amount  at  the  end of each
fiscal year of  all  loans  OR DEFERRED LOANS made
under  the  energy   conservation   loan   program
authorized  under  sections   32-315   to  32-318,
inclusive, and the balance remaining in the energy
conservation  revolving loan  account.  Not  later
than September first,  annually, the Department of
Public Utility Control shall allocate such product
among each electric  and  gas  company  having  at
least   seventy-five   thousand    customers,   in
accordance with a  formula  taking  into  account,
without   limitation,  the   average   number   of
residential customers of  each  company. Not later
than October first,  annually,  each  such company
shall pay its assessed amount to the commissioner.
The commissioner shall  pay to the State Treasurer
for deposit in  the General Fund all such payments
from electric and  gas  companies, and shall adopt
procedures to assure  that  such  payments are not
used for purposes  other  than  those specifically
provided in this  section.  The  department  shall
include each company's  payment  as  an  operating
expense  of  the   company  for  the  purposes  of
rate-making under section 16-19.

Approved June 24, 1997