(a) If the organization is seeking to purchase and renovate a new community residential facility or to rehabilitate an existing community residential facility, it shall provide to the department: (1) An independent appraisal by a state certified real estate appraiser; and (2) a structural survey of the home by a state licensed engineer. The department shall not provide community residential facility loan funds for the purchase of a residential facility in principal amounts which are in excess of its appraised value and shall not provide such loan funds for renovation or rehabilitation in principal amounts which are in excess of actual and reasonable cost as defined in department standards.

(b) The borrower shall sign a capital loan agreement in which it agrees to meet all existing department guidelines for use of loan funds and to use such loan funds exclusively for the purchase of property, construction, renovation or rehabilitation of a community residential facility approved by the department.

(c) The borrower shall agree to maintain the facility as a licensed community residential facility for a period equal to the amortization period of the loan. The minimum such obligation shall be five years and the maximum such obligation shall be thirty years.

(d) If the borrower receives a loan equal to one hundred per cent of the total property development cost of a new community residential facility, it shall agree to reserve one hundred per cent of the maximum number of beds in the funded community residential facility for department referrals from state institutions and waiting lists until such time as the department determines this no longer to be necessary. If the borrower receives a loan which provides less than one hundred per cent of the total property development cost of a new community residential facility, it shall agree to reserve not less than two-thirds of the maximum number of beds in the funded community residential facility for department referrals from state institutions and waiting lists until such time as the department determines this no longer to be necessary. The department may establish priorities for the development of new community residential facilities serving persons with specialized needs and may give preference in funding to applications addressing such needs.

(e) The borrower shall provide the department with a promissory note equal to the amount of the loan which shall provide for repayment of the loan principal and interest within a period not to exceed thirty years and a mortgage deed as security for the loan. Such mortgage may be subordinate to a first mortgage interest in the property given by the organization for the purpose of developing such property, provided that the total of both mortgage interests shall not exceed the limit of total property development cost as set forth in section 17a-220. The department shall file a lien against the title of the property for which community residential facility loan funds are expended.

(f) The capital loan agreement shall require the borrower to make periodic payments of principal and interest to the department which payments shall be deposited in the Community Residential Facility Revolving Loan Fund.

(g) In the event of a default or if the capital loan agreement is terminated prior to the borrower's having satisfied its obligations under said agreement, the department shall require the return to the Community Residential Facility Revolving Loan Fund of the outstanding amount of the loan and may foreclose on its mortgage in accordance with the provisions of chapter 49.

(h) In the event that the borrower's license to operate the community residential facility is terminated by the department for cause, the department may bring an action to place the facility into receivership pursuant to sections 17a-231 to 17a-237, inclusive, may contract with a private nonprofit corporation to operate the facility or may operate the facility with department staff until such license is restored. If such license is not restored within one year, this shall constitute a default and the department may pursue the remedies provided in this subsection.

(P.A. 85-472, S. 4, 7.)

History: Sec. 19a-464f transferred to Sec. 17a-223 in 1991.