(a) Upon application by the agency or a local finance entity, the department may contract with the agency or local finance entity to pay all or a portion of the development costs incurred by a sponsor in connection with the construction of a rental housing development which is financed, or otherwise assisted pursuant to subdivision (b), by the agency, local finance entity, or a federal agency.
(b) In lieu of providing financing of a rental housing development at below-market interest, a local finance entity to be eligible for assistance under this article, may utilize other types of
subsidies including, but not limited to, federal funds, as authorized by law, which reduce by an equivalent amount the rental levels of a rental housing development.
(c) Pursuant to such a contract the agency or local finance entity shall, in accordance with criteria established by the department, (1) ensure the feasibility of the proposed rental housing development to be financed and assisted pursuant to this chapter, (2) supervise the design and construction of the rental housing development to be financed by it and assisted pursuant to this chapter, and (3) supervise the management of such rental housing development while the financing thereof remains outstanding and unpaid or for a period of 30 years, whichever is greater. The department shall adopt criteria to ensure that a local finance entity has the capability of performing such functions prior to entering a contract pursuant to this section.