Section 3. (a) The fund shall finance low and no interest loans, grants, subsidies, credit enhancements and other financial assistance for alternative forms of rental and ownership housing; provided, however, that assistance shall be the minimum amount necessary to make a project feasible. The fund shall be used for: (1) a revolving rehabilitation loan program to support the revitalization of certain abandoned or severely distressed privately-owned residential housing for which a court appointed, nonprofit receiver has been selected pursuant to chapter 111; provided, however, that the program may include activities necessary to make essential repairs and to pay operating expenses necessary to maintain habitability of the housing units in order to prevent abandonment and deterioration of the housing in primarily low and moderate income neighborhoods; provided further, that the loans may be administered by the department through contracts with the Community Economic Development Assistance Corporation established in chapter 40H and through contracts with the Massachusetts Housing Partnership Fund established in section 35 of chapter 405 of the acts of 1985; and provided further, that recipients may enter into subcontracts to administer the contracts with other for-profit or nonprofit organizations; and (2) loans to nonprofit developers for the acquisition of property to provide or preserve affordable housing; provided, however, that loan program may be administered by the department through contracts with the Community Economic Development Assistance Corporation; provided further, that the program may include acquisition, financing and other holding costs, interim management costs and operating costs and may also be used by the Community Economic Development Assistance Corporation to secure, collateralize or reserve against other financing obtained by the Community Economic Development Assistance Corporation to support those costs; provided further, that not less than 50 per cent of the beneficiaries of the housing shall be persons whose income is not more than 80 per cent of the area median income and not less than 25 per cent of the beneficiaries of the housing shall be persons whose income is not more than 30 per cent of that area median income.

(b) Activities eligible for assistance from the fund shall include, but not be limited to: (1) projects to develop and support affordable housing developments and homeownership affordability, through the acquisition, preservation, new construction and rehabilitation of affordable housing; (2) projects to stabilize and promote reinvestment in cities and towns including, but not limited to, acquisition, rehabilitation, new construction and preservation of foreclosed and distressed properties and any other techniques necessary to achieve reinvestment; (3) the preservation of affordable housing developments which are or were subject to prepayment or payment of a state or federally-assisted mortgage or which are receiving project-based rental assistance under section 8 of the United States Housing Act of 1937, 42 U.S.C. section 1437f, and the rental assistance is expiring or which have received other project-based federal or state subsidies which are terminating or have terminated; provided, however, that property eligible for assistance shall include housing where the prepayment or payment of a state or federally-assisted mortgage or the expiration of federal low income housing tax credits or other federal or state subsidies would lead or has led to the termination of a use agreement for low income housing or in which a project-based rental assistance contract is expiring or has expired; provided further, that the department, in consultation with nonprofit organizations, the Community Economic Development Assistance Corporation, the Massachusetts Housing Finance Agency and the Massachusetts Housing Partnership Fund shall identify those projects at greatest risk of prepayment, payment, termination of subsidies and use restrictions, or nonrenewal of rental assistance; provided further, that funding priority shall be based on at-risk criteria to be determined by the department and set forth in regulations promulgated by the department; (4) for grants to cities and towns to assist with the costs of demolishing certain privately-owned vacant and abandoned buildings that have been found to be uninhabitable and not economically feasible to rehabilitate and which the city or town may demolish pursuant to sections 127A and 127B of chapter 111 or sections 6 to 9, inclusive, of chapter 143 and the regulations promulgated thereunder or which have been taken by the city or town for taxes; and provided further, that any such demolition shall be undertaken in accordance with a neighborhood revitalization plan adopted by the city or town after a public hearing and after approval by the department which provides for the rehabilitation and development of housing in the areas in which the demolition is being undertaken; (5) to support the rehabilitation of owner-occupied 1 to 4–family dwellings and the acquisition and rehabilitation of those properties by persons of low or moderate income; provided, however, that the program may include, but shall not be limited to, direct loans, loan guarantees and loan loss reserves; provided further, that the objective of the program shall include the following: (a) projects shall rely, to the greatest extent possible, on bank financing and other taxable financing to support the costs of such acquisition and rehabilitation; (b) coordinating the delivery of such financing and related rehabilitation services with cities and towns that provide such assistance utilizing federal community development block grants, federal HOME funds and other resources; (c) expediting and simplifying the process by which home buyers may obtain financial and technical assistance for acquisitions and rehabilitation; and (d) ensuring that adequate provisions are in place to assure that rehabilitation is completed in a timely and professional manner and to protect homeowners from excessive acquisition and rehabilitation costs; (6) notwithstanding the restrictions in this chapter, for deferred payment second mortgage loans to support the acquisition and rehabilitation or new construction of small multifamily rental properties pursuant to the Permanent PLUS Program to be administered by the department through contracts with the Massachusetts Housing Partnership Fund; provided, however, that the Massachusetts Housing Partnership Fund shall enter into agreements to ensure that: (i) at least 20 per cent of the units shall be affordable to persons whose income is less than 50 per cent of the area median income; (ii) at least 40 per cent of the units are affordable to persons whose income is less than 60 per cent of the area median income; or (iii) at least 50 per cent of the units are affordable to persons whose income is less than 80 per cent of the area median income; and (7) notwithstanding the restrictions in this chapter, to write down interest rates and related costs for a program for low-income and moderate-income first-time homebuyers administered by the board of directors of the Massachusetts Housing Partnership Fund established pursuant to section 35 of chapter 405 of the acts of 1985.

(c) Assistance provided through the program may be made in a manner which qualifies the assistance as a matching contribution under Section 220 of the HOME Investment Partnership Act Title II of the Cranston–Gonzalez National Affordable Housing Act including, in the case of assistance provided in the form of a loan, a commitment to repay the loan to the commonwealth's HOME Investment Trust Fund established pursuant to Section 92.5000(o) of the regulations of the United States Department of Housing and Urban Development.

(d) Loans pursuant to this chapter may be provided to an agency, department, board, commission, authority or instrumentality of the commonwealth or any political subdivision thereof, to housing authorities, nonprofit agencies certified by the United States Department of Housing and Urban Development as community housing development organizations, community development corporations and limited equity cooperative housing corporations established pursuant to chapter 157B of the General Laws. The recipients may enter into subcontracts to carry out the purposes of the contract with other for-profit or nonprofit organizations. Prior to providing assistance, the department shall find that: (1) the housing would not, by private enterprise alone and without government assistance, be available to lower income families and individuals; (2) the amount of assistance appears to be the minimum amount necessary to make the housing development feasible; (3) with respect to rental housing, the operations of the owner and its articles of organization and by-laws and any changes to either shall be subject to regulation by the department; and (4) the housing shall remain affordable for its useful life as determined by the department. The housing shall be considered affordable if, during the first 40 years after assistance is first provided, substantially all of the assisted units shall be rented to or owned by families and individuals whose income at initial occupancy is not more than 80 per cent of the area median income for the federal housing programs and that thereafter the units shall be rented or sold, subject to such restrictions on appreciation as determined by the department to be reasonable and necessary to maintain long-term affordability, to families or individuals at incomes at or below 100 per cent of the area median income.