COUNTYWIDE SECTION 108 LOAN PROGRAM
The Countywide Section 108 Loan Program is a $30 million pre-approved pool of loan guarantee authority available to cities participating and related redevelopment agencies in the Los Angeles Urban County Community Development Block Grant (CDBG) Program. The Section 108 Loan Program was established as a loan pool under a generic application to the U.S. Department of Housing and Urban Development (HUD). Since the program has been pre-authorized for drawdown HUD, it allows the Community Development Commission (CDC) to make loans in a shorter period of time because the conventional Section 108 loan application process outlined in the federal regulations has already been completed.
Cities and redevelopment agencies can use Section 108 financing for any eligible community and economic development activity such as the development of infrastructure and public facilities, job creation activities, as well as relocation and environmental remediation assistance. Borrowers must complete a loan application and submit to the CDC all required materials following:
(1) the publishing of a public notice;
(2) convening a public hearing; and
(3) obtaining approval by the governing body (e.g., city council) to submit the application.
Borrowers will also need to identify the primary source of repayment and collateral for the loan, in accordance with underwriting guidelines, as well as enter into a binding loan agreement following formal adoption by the borrower’s governing body, the Los Angeles County Board of Supervisors, and HUD. Full collateralization of the loan is required pursuant to HUD regulations and must be approved by CDC’s Credit Committee. As part of the approval process, a 30-day public notice must be published by the CDC discussing the proposed project, and a public hearing must be held prior to loan approval by the Board of Supervisors. Section 108 loans are subject to all applicable federal regulatory requirements.
Borrowers using CDBG funds as the primary source of repayment must enter into an amended Reimbursable Contract to set-aside and allow the CDC to drawdown the city’s CDBG funds for the CDC’s repayment requirements to the Fiscal Agent.
To date, the following types of projects have been funded: rehabilitation of community centers, aquatics facility construction, street and landscape improvements, senior facility construction, site acquisition for commercial development, and office/industrial business park.
The Countywide Section 108 Loan Program has a current available balance of approximately $14,500,000 and a repayment term up to twenty years. Application for Section 108 loans issued directly from HUD for larger loan amounts may also be proposed through the CDC.
For more information contact:
Diann Viox, Manager
Phone: (323) 890-7164
E-mail: diann.viox@lacdc.org