COUNTYWIDE SECTION 108 LOAN PROGRAM
The Countywide Section 108 Loan Program is a $30 million pre-approved pool of loan guarantee authority available to participating cities and related redevelopment agencies in the Los Angeles Urban County Community Development Block Grant (CDBG) Program. The Countywide Section 108 Loan Program was established under a generic application to the U.S. Department of Housing and Urban Development (HUD). Since the program is pre-authorized, it allows the CDC to make loans more quickly because the Section 108 loan application to HUD has already been completed.
Cities and redevelopment agencies can use Section 108 financing for any eligible community and economic development activity. Such activities include 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 it to the CDC with the following required material:
(1) Published public notice;
(2) A public hearing; and
(3) Approval by the governing body (e.g., city council) to submit the application.
Borrowers must also identify the primary source of repayment and collateral for the loan, in accordance with underwriting guidelines, as well as sign a binding loan agreement following formal adoption by the borrower’s governing body, the Los Angeles County Board of Supervisors, and HUD. HUD regulations require full collateralization of the loan and this must be approved by CDC’s Credit Committee. As part of the approval process, the CDC must also publish a 30-day public notice discussing the proposed project, and hold a public hearing 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 sign 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.
So far, the CDC has funded the following types of projects: rehabilitation of community centers, aquatics center construction, street and landscape improvements, senior facility construction, site acquisition for commercial development, and the expansion of industrial business parks.
The Countywide Section 108 Loan Program currently has approximately $14,000,000 available and repayment terms up to twenty years. Borrowers can also partner with the CDC to apply directly to HUD larger loan amounts.
For more information contact:
Diann Viox, Manager
Phone: (323) 890-7164
E-mail:diann.viox@lacdc.org