Judicial District of Middlesex


      Housing; CHFA Mortgage; Whether Court Properly Ruled that CHFA was Correct in Refusing to Allow Plaintiff to Prepay its Mortgage; Whether Court Correctly Interpreted the Phrase "Area Concerned" in General Statutes § 8-253a.  In 1998, the plaintiff purchased an apartment building in Middletown from the Connecticut Housing Finance Authority (CHFA).  The plaintiff financed the purchase by executing a promissory note in favor of the CHFA, which was secured by a thirty year mortgage.  The note provided that until September 9, 2016, the plaintiff could not pay off the note without the CHFA's consent.  In 2002, the plaintiff sought to prepay the note and the CHFA refused its payment.  The plaintiff then commenced the present action, alleging that the CHFA breached the parties' contract and the covenant of good faith and fair dealing.  The court ruled in favor of CHFA, noting that according to General Statutes § 8-253a, prepayment of a CHFA mortgage is permissible only if the CHFA makes two critical findings, to wit:  "(A) that it may reasonably be expected that the prepayment of the loan will not result in a material escalation of rents charged to occupants of the project; and (B) that the need for low and moderate income housing in the area concerned is no longer acute."  As to this second finding, the parties disagreed as to the meaning of the phrase "in the area concerned" in this case.  The CHFA argued that it referred to the Hartford metropolitan statistical area (statistical area), which it claimed includes Middletown.  The plaintiff claimed that "area" as used in § 8-253a should be construed as meaning Middlesex County, where Middletown is located, and that Middletown's housing needs should be evaluated in light of the needs of the whole county.  The plaintiff did not dispute that there is an acute need for affordable housing in the statistical area but asserted that there is no acute need for affordable housing in Middlesex County.  The trial court rejected the plaintiff's arguments, including its assertion that the portion of United States Code that addresses the prepayment of housing and urban development loans supported its position.  The court indicated that although § 8-253a and the federal statute have some similarities, they address different issues.  After analyzing data from the United States Census Bureau and the United States Office of Management and Budget, the court determined that "in the area concerned" in § 8-253a refers to the statistical area, which clearly encompassed Middletown.  Accordingly, it found that the CHFA had no obligation to accept the prepayment, and it rejected the breach of contract claim.  It also found that the plaintiff failed to prove that the CHFA breached the covenant of good faith and fair dealing.  In this appeal, the Supreme Court will determine whether the trial court properly rendered judgment in favor of the CHFA.