HUD OKAYS CITY OF FEDERAL WAY REQUEST TO CREATE $3 MILLION LOAN FUND
TO SPARK BUSINESS, HOUSING & JOB DEVELOPMENT
SEATTLE – The U.S. Department of Housing and Urban Development has approved a $3,030,000 loan guarantee sought by the City of Federal Way to establish a loan fund to assist catalytic projects that spark business growth, job creation and affordable housing opportunities, HUD Northwest Regional Administrator Bill Block and Congressman Adam Smith announced today.
The loan guarantee is provided under HUD’s Section 108 Loan Guarantee Assistance program which enables local governments to borrow money from private investors at reduced interest rates. In return, the local government pledges current and future Community Development Block Grant (CDBG) allocations it receives annually from HUD to cover the loan amount as security for the loan.
This is the first time that Federal Way, an entitlement community under HUD’s Community Development Block Grant program, has decided to use the Section 108 program. A number of other communities in Washington State previously have made use of the program – the City of Seattle to launched a capital access fund for small businesses; King County to develop the White Center commercial center, Mt. Vernon to protect its downtown from Skagit River flooding, Tacoma to help finance the LeMay Museum of the American Car, Olympia, Yakima and Lakewood to start economic development loan funds. Nationwide, the Section 108 program has generated $4 of private investment for every $1 in Section 108 guarantee.
“I am pleased to see HUD’s approval of the Section 108 loan guarantee sought by the City of Federal Way. By allowing cities to leverage their CDBG dollars to invest in economic development initiatives that benefit low and moderate-income communities, the Section 108 Loan Guarantee Assistance Program has had inspiring success in many areas throughout the Puget Sound,” said Congressman Smith. “I look forward to seeing Federal Way engage in this important public-private partnership, and I will continue supporting the program in Congress.”
“A Section 108 loan guarantee is a tool that significantly increases the financial capacity of local governments to access private capital that can be put to work revitalizing commercial districts, transforming historic properties, upgrading the housing stock, boosting business and creating jobs,” said Regional Administrator Block. “We look forward to working with Federal Way as it develops and makes use of this fund.”
The Section 108 loan guarantee program permits CDBG entitlement communities to borrow up to five times their latest CDBG allocation for projects that either principally benefit low- and moderate-income persons or aid in the elimination or prevention of slums and blight,. The funds generated by a Section 108 loan guarantee may be used for:
•Economic development activities eligible under CDBG
•Acquisition of real property
•Rehabilitation of publicly owned real property
•Housing rehabilitation eligible under CDBG
•Construction, reconstruction, or installation of public facilities (including street, sidewalk, and other site improvements)
•Related relocation, clearance, and site improvements
•Payment of interest on the guaranteed loan and issuance costs of public offerings
•Debt service reserves
•Public works and site improvements in colonias
•In limited circumstances, housing construction as part of community economic development, Housing Development Grant, or Nehemiah Housing Opportunity Grant programs
# # #
HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business. More information about HUD and its programs is available on the Internet at www.hud.gov and http://espanol.hud.gov. You can also follow HUD on twitter @HUDnews, on facebook at www.facebook.com/HUD, or sign up for news alerts on HUD's News Email List