FUNDING AVAILABILITY FOR THE ECONOMIC DEVELOPMENT INITIATIVE (EDI)

Program Overview

    Purpose of the Program. EDI funds are used to enhance the security
of a loan guaranteed by HUD under Section 108 of the Act (as defined in
Section III(A)(1) below) for the same project, or to improve the
viability of the project financed with the Section 108-guaranteed loan.
HUD intends to make available $10,728,155 in EDI funds in FY 2001 to
stimulate economic development by local governments and private sector
parties. HUD desires to see EDI and Section 108 funds used to finance
projects and activities that will provide near-term results and
demonstrable economic benefits, such as job creation and increases in
the local tax base. An EDI grant must be used in conjunction with a new
Section 108 guaranteed loan commitment. In FY 2001, HUD seeks to
increase economic development opportunity for those areas of the
country having the greatest distress.
    Available Funds. Although no new funds were appropriated for the
EDI program in FY 2001, $10,728,155 from the past two fiscal years is
unobligated and therefore HUD proposes to make these funds available
for EDI grants in FY 2001. This amount includes $3,710,000 from the
Community Empowerment Fund (CEF) Pilot. A notice announcing this pilot
program was published in the Federal Register on June 30, 2000. On
reconsideration, HUD has decided not to proceed with this pilot
program. Please note that there is no separate category for regional
economic development applications, unlike last year's SuperNOFA, in
this year's competition. The maximum EDI grant awards will be in the
amount of $1 million.
    Eligible Applicants. Any public entity eligible to apply for and
receive loan guarantee assistance under 24 CFR part 570, subpart M.
Urban counties, as defined in 24 CFR 570.3 and 570.307, may apply for
funding, but units of general local government which participate in the
Urban County may not submit an application independent of the Urban
County. (See Section III(B) below for additional information regarding
eligible applicants.)
    Application Deadline. July 6, 2001.

Additional Information

    If you are interested in applying for funding under this program,
please review carefully the General Section of this SuperNOFA and the
following additional information.

I. Application Due Date, Application Kits, Further Information, and
Technical Assistance

    Application Due Date. Please submit your completed applications
(one original and three copies) on or before 12:00 midnight, Eastern
time, on July 6, 2001, to the addresses shown below.
    See the General Section of this SuperNOFA for specific procedures
governing the form of application submission (e.g., mailed
applications, express mail, overnight delivery, or hand carried).
    Address for Submitting Applications. To HUD Headquarters: The
completed application (an original and two copies) should be submitted
by mail or hand delivery to: Processing and Control Unit, Room 7251,
Office of Community Planning and Development, Department of Housing and
Urban Development, 451 Seventh Street, SW, Washington, DC 20410,
Attention: EDI Grant.
    To the Appropriate CPD Field Office: At the same time the EDI
application and copies are submitted to HUD Headquarters, an additional
copy should be submitted to the Community Planning and Development
Division of the appropriate HUD Field Office for the applicant's
jurisdiction.
    When submitting the application, please refer to EDI, and include
the applicant's name, mailing address (including zip code) and
telephone number (including area code), along with the contact person's
name and phone number.
    For Application Kits. For an application kit and any supplemental
information, please call HUD's SuperNOFA Information line toll free at
1-800-HUD-8929. When requesting the application kit, please refer to
EDI. Please provide the applicant's name, address (including zip code),
and telephone number (including area code), along with the contact
person's name and phone number. The application kit also will be
available on the Internet through the HUD web site at http://
www.hud.gov/grants. Persons with hearing or speech impairments may call
the Center's TTY number at 1-800-HUD-2209 to obtain an application kit.
    For Further Information and Technical Assistance. Contact Bill
Seedyke at (202) 708-1686, extension 4445, of the Office of Economic
Development, Department of Housing and Urban Development, 451 Seventh
Street, SW, Room 7158, Washington, DC 20410; (this is not a toll-free
number). Persons with speech or hearing impairments may access this
number via TTY by calling the toll-free Federal Information Relay
Service at 1-800-877-8339.
    See the General Section of this SuperNOFA for guidance on the
provision of technical assistance for EDI grants. The Section 108 Loan
Guarantee program is not a competitive program and therefore is not
subject to the provisions of the HUD Reform Act pertaining to
competitions. HUD staff will be available to provide advice and
assistance to develop Section 108 loan applications.
    Satellite Broadcast. HUD will hold an information broadcast via
satellite for potential applicants to learn more about the program and
preparation of the EDI application. For more information about the date
and time of the broadcast, please consult the HUD web site at http://
www.hud.gov/grants.

II. Amount Allocated

    No new funds were appropriated for the EDI program under the FY
2001 HUD Appropriations Act. However, $10,728,155 in funds appropriated
for Fiscal Years 1999 and 2000 remain unobligated and available for the
EDI program for FY 2001. This amount includes $3,710,000 that had been
set aside administratively for the Community Empowerment Fund (CEF)
Pilot. A notice announcing this pilot program was published in the
Federal Register on June 30, 2000 (65 FR 40836). On reconsideration,
HUD has decided not to proceed with this pilot program. For the EDI
program, if any additional funds become available during Fiscal Year
2001, HUD may either fund additional applicants in accordance with this
program section of the SuperNOFA or may add these funds to any future
EDI competitions.

III. Program Description; Eligible Applicants; Eligible Activities

    (A) Program Description. EDI funds are used to enhance the security
of a loan guaranteed by HUD under Section 108 of the Act (as defined in
Section III(A)(1) below) for the same project, or to improve the
viability of the project financed with the Section 108-guaranteed loan.
An EDI grant must be used in conjunction with a new Section 108
guaranteed loan commitment. Both Section 108 loan guarantee proceeds
and EDI grant funds are initially made available by HUD to public
entities approved for assistance. Such public entities may re-loan the
Section 108 loan proceeds and provide EDI funds to a business or other
entity to carry out an approved economic development project, or the
public entity may carry out the eligible project itself, as provided in
the approved application.

[[Page 12018]]

In either case, EDI grant funds and the 108 proceeds must be used
together to support the same eligible project.
    (1) Definitions. Terms used in this program section of the
SuperNOFA have the meanings given in 24 CFR part 570 unless otherwise
specified.
    Act means Title I, Housing and Community Development Act of 1974,
as amended (42 U.S.C. 5301-et seq.).
    Application means a single set of documents submitted by an
eligible applicant for EDI grant funds, in accordance with the
provisions of this program section of the SuperNOFA to finance an
economic development project. An EDI application must be accompanied by
a Section 108 loan guarantee request, which may consist of either a
brief summary of the proposed use of 108 funds, or a full application,
which may either be submitted at the same time as the EDI application
or be provided within 60 days of EDI grant award, as more fully
explained in Section IV(C) of this program section. Note that the
Section 108 application must be submitted to the appropriate HUD field
office concurrently with its submission to Headquarters.
    CDBG funds means those funds collectively so defined at 24 CFR
570.3, including grant funds received pursuant to section 108(q) of the
Act and this program section of the SuperNOFA.
    Economic Development Initiative (EDI) means the competitive award
of economic development grant assistance under section 108(q) of the
Act, as authorized by Section 232 of the Multifamily Housing Property
Disposition Reform Act of 1994 (Pub.L. 103-233, approved April 11,
1994).
    Economic development project means an activity or activities
(including mixed use projects with housing components) that are
eligible under the Act and under 24 CFR 570.703, and that increase
economic opportunity for persons of low- and moderate-income, or that
stimulate or retain businesses or jobs, or that otherwise lead to
economic revitalization.
    Empowerment Zone or Enterprise Community means an urban area so
designated by the Secretary of HUD pursuant to 24 CFR part 597 or part
598, or a rural area so designated by the Secretary of Agriculture
pursuant to 7 CFR part 25, subpart B.
    Firm Commitment means either a written agreement or letter of
understanding by which an applicant and/or its partner:
    (1) agrees to perform an activity specified in the application, and
demonstrates its relationship to the proposed EDI project;
    (2) specifies the amount of the commitment, and demonstrates that
it has the financial and organizational capacity to deliver the
resources necessary to successfully complete the activity; if the
committed activity is to be self-financed, the applicant's partner must
evidence its financial capacity through a corporate or personal
financial statement or other appropriate means; and
    (3) irrevocably commits the resources to the activity either
through cash or in-kind services or contributions; if any portion is to
be financed through a grant or loan from another public or private
organization, that institution's grant or loan commitment must be
firmly committed as well.
    Any such agreement or letter of understanding shall be understood
as being contingent upon receipt of the EDI grant.
    In order for an applicant's commitment of CDBG funds to be counted
by HUD, a resolution from the local governing body (e.g., city/borough
council) authorizing the amount and permitted use(s) of the funds must
be provided. Each agreement or letter of commitment must include the
organization's name and proposed total level of commitment and
responsibilities as they relate to the proposed EDI project. The
commitment must be signed by an official of the organization legally
authorized to make commitments on behalf of the organization and have
an effective date not earlier than the publication date of the NOFA.
    Strategic Plan means a strategy developed and agreed to by the
nominating local government(s) and State(s) and submitted in partial
fulfillment of the application requirements for an Empowerment Zone or
Enterprise Community designated pursuant to 24 CFR part 597 or part
598.
    (2) Background. HUD has multiple programs which are intended to
stimulate and promote economic and community development. Primary among
HUD's resources are the Community Development Block Grant (CDBG)
program and the Section 108 Loan Guarantee program.
    (a) The CDBG program provides grant funds (approximately $4.44
billion in FY 2001) by formula to eligible local governments (either
directly or through States) to carry out community and economic
development activities. The Section 108 Loan Guarantee program provides
local governments with a source of financing for economic development,
public facilities and other eligible large scale physical development
projects. HUD is authorized pursuant to Section 108 to guarantee notes
issued by CDBG entitlement communities, and non-entitlement units of
general local government eligible to receive funds under the State CDBG
program. The Section 108 program is subject to the regulations of 24
CFR part 570 applicable to the CDBG program, as described in 24 CFR
part 570, subpart M. EDI grants must support Section 108 loan
guarantees as generally described in this program section of the
SuperNOFA.
    (b) For FY 2001, the Section 108 program is authorized at $1.26
billion in loan guarantee authority. The full faith and credit of the
United States will be pledged to the payment of all guarantees made
under Section 108. Under this program, communities (and States, if
applicable) pledge their continuing CDBG allocations as security for
loans guaranteed by HUD. The Section 108 program, however, does not
require CDBG funds to be escrowed for loan repayment (unless such an
arrangement is specifically negotiated as loan security and included in
the applicable ``Contract for Loan Guarantee Assistance''). This means
that a community can ordinarily continue to spend its existing
allocation for other CDBG purposes, unless needed for loan repayment.
    (3) EDI Program. The EDI program was enacted in 1994 and is
intended to complement and enhance the Section 108 Loan Guarantee
program. A purpose of EDI grant funds is to reduce grantees' potential
loss of future CDBG allocations:
    (a) By strengthening the economic feasibility of the projects
financed with Section 108 funds (and thereby increasing the probability
that the project will generate enough cash to repay the guaranteed
loan);
    (b) By directly enhancing the security of the guaranteed loan; or
    (c) Through a combination of these or other risk mitigation
techniques.
    (4) Purpose of EDI Funding. HUD intends the approximately $7.0
million in EDI funds to stimulate economic development by local
governments and private sector parties. HUD desires to see EDI and
Section 108 funds used to finance projects and activities that will
provide near-term results and demonstrable economic benefits, such as
job creation and increases in the local tax base.
    (5) Additional Security for Section 108 Loan Guarantee. Public
entities should be mindful of the need to provide additional security
for the Section 108 loan guarantee pursuant to 24 CFR 570.705(b)(3).
Although a public

[[Page 12019]]

entity is required by the Act to pledge its current and future CDBG
funds as security for the Section 108 loan guarantee, the public entity
will usually be required to furnish additional collateral. In most
cases, the additional collateral consists (in whole or in part) of the
asset financed with the Section 108 loan funds (e.g., a loan made to a
business as part of an economic development project). Applications
proposing uses for EDI funding that directly enhance the value of the
assets securing the Section 108 loan will help ensure that the project-
based asset(s) will satisfy the additional collateral requirements.
    (6) Typical Project Structures. Provided that proposals are
consistent with other CDBG requirements, including national objectives,
HUD envisions that the following project structures could be typical:
    (a) Funding Reserves. The cash flow generated by an economic
development project may be expected to be relatively `` '' in the early
stages of the project, i.e., potentially insufficient to meet operating
expenses and debt service obligations. The EDI grant can make it
possible for reserves to be established in a way that enhances the
economic feasibility of the project.
    (b) Over-Collateralizing the Section 108 Loan.
    (i) The use of EDI grant funds may be structured in appropriate
cases to improve the likelihood that project-generated cash flow will
be sufficient to cover debt service on the Section 108 loan directly
and therefore enhance the security of the guaranteed loan. One
technique for accomplishing this approach is over-collateralization of
the Section 108 loan.
    (ii) An example is the creation of a loan pool funded with both
Section 108 and EDI grant funds. The community would make loans to
various businesses from the combined pool at an interest rate equal to
or greater than the rate on the Section 108 loan. The total loan
portfolio would be pledged to the repayment of the Section 108 loan.
    (c) Direct Enhancement of the Security of the Section 108 Loan. The
EDI grant can be used to cover the cost of providing credit
enhancements. An example of how the EDI grant can be used for this
purpose is by using the grant funds to cover the cost of a standby
letter of credit, issued in favor of HUD. This letter of credit will be
available to fund amounts due on the Section 108 loan if other sources
fail to materialize and thus will serve to protect the public entity's
future CDBG funds.
    (d) Provision of Financing to For-Profit Businesses at a Below
Market Interest Rate.
    (i) While the rates on loans guaranteed under Section 108 are only
slightly above the rates on comparable U.S. Treasury obligations, they
may nonetheless be higher than can be afforded by businesses in
severely economically distressed neighborhoods. The EDI grant can be
used to make Section 108 financing affordable.
    (ii) EDI grant funds could serve to ``buy down'' the interest rate
up front, or make full or partial interest payments, allowing the
businesses to be financially viable in the early start-up period, which
might not otherwise be possible with Section 108 alone. This strategy
would be particularly useful where a community was undertaking a large
commercial/retail project in a distressed neighborhood in order to act
as a catalyst for other development in the area.
    (e) Combination of Techniques. A combination of the above or other
techniques could be employed in implementing an economic development
project.
    (7) Additional Project Structure. HUD will consider funding an EDI
proposal in which the related Section 108-guaranteed obligation would
be used solely as security only under the following conditions:
    (a) If EDI funds are not the first source of funds injected into
the project, and
    (b) If project funds are disbursed according to a ratio that equals
the amount of EDI funds to the amount of private or public debt that is
firmly committed to the project, as required under Rating Factor 4
``Leveraging Resources'' below, and
    (c) If the grantee maintains in its records a listing of the amount
of private funds being distributed by the private party (i.e., the
financing institution) to the project.
    Grantees are reminded that the EDI grantee/Section 108 borrower's
loan guaranteed obligation cannot remain undisbursed for more than five
years following the year in which the Section 108 commitment is made.
Consequently, the borrower's 108-guaranteed obligation cannot have a
term that exceeds five years plus the remaining portion of the fiscal
year in which the commitment is made.
    (B) Eligible Applicants. (1) Any public entity eligible to apply
for Section 108 loan guarantee assistance pursuant to 24 CFR 570.702
may apply for EDI grant assistance under Section 108(q). Eligible
applicants are CDBG entitlement units of general local government and
non-entitlement units of general local government eligible to receive
loan guarantees under 24 CFR part 570, subpart M. Urban Counties, as
defined at 24 CFR 570.3 and 570.307, are eligible applicants for EDI
funds; units of general local government which participate in an Urban
County program are not independently eligible applicants. For non-
entitlement applicants other than those subject to 24 CFR 570, subpart
F, applicants will be required to provide evidence in the application
from an authorized official of the State agency responsible for
administering the State CDBG program stating its intention to support
the related Section 108 loan with a pledge of its CDBG funds pursuant
to the requirements of 24 CFR 570.705(b)(2). Such evidence shall take
the form of the HUD Certification titled ``SECTION 108 LOAN GUARANTEES:
State Certifications Related to Nonentitlement Public Entities'' which
may be obtained either by downloading from the Internet or in the EDI
Application Kit to be published shortly after publication of this
SuperNOFA. Note that effective January 25, 1995, non-entitlement public
entities in the State of Hawaii were authorized to apply to HUD for
Section 108 loans (see 59 FR 47510, December 27, 1994). Thus, non-
entitlement public entities in all 50 states and Puerto Rico are now
eligible to participate in the Section 108 and EDI programs.
    (2) Applicants for economic development projects under this section
must comply with the threshold requirements of Section II of the
General Section of the SuperNOFA.
    (C) Eligible Activities and National Objectives. (1) EDI grant
funds and section 108 loan guarantee funds may be used for activities
listed at 24 CFR 570.703, provided such activities are carried out as
part of an economic development project as described in this EDI
section of the SuperNOFA. If the application fails to meet the
requirements for an EDI project as set forth in this program section of
the SuperNOFA, HUD will not give it a rating.
    (2) Each activity assisted with Section 108 loan guarantee or EDI
funds must meet a national objective of the CDBG program as described
in 24 CFR 570.208. The applicant must clearly identify in its narrative
statement (as described in Section V(B) below) the CDBG national
objective the proposed project will achieve and provide the appropriate
CDBG national objective's regulatory citation found at 24 CFR 570.208.
Also, the applicant must address, when applicable, how the proposed
activities will comply with the

[[Page 12020]]

public benefit standards of the CDBG program as reflected in the
regulation at 24 CFR 570.209 for the CDBG Entitlement and Small Cities
programs, or 24 CFR 570.482 for the State CDBG program.
    (3) In the aggregate, a grantee's use of CDBG funds, including any
Section 108 loan guarantee proceeds and Section 108(q) (EDI) funds
provided pursuant to this program section of the SuperNOFA, must comply
with the CDBG primary objective requirement as described in Section
101(c) of the Act and 24 CFR 570.200(a)(3), or 24 CFR 570.484 in the
case of State grantees.

IV. Program Requirements

    (A) CDBG Program Regulations. In addition to 24 CFR 570.701
(Definitions), 570.702 (Eligible Applicants), and 570.703 (Eligible
Activities), as explained in Section III(C) above of this SuperNOFA,
the CDBG regulatory requirements in 24 CFR 570.707, including subparts
J (Grant Administration), K (Other Program Requirements), and O
(Performance Reviews) govern the use of EDI funds, as applicable.
    (B) Compliance with Applicable Laws. An award of EDI funding does
not in any way relieve grant recipients or third party users of EDI
funds from compliance with all applicable Federal, State and local
laws.
    (C) Related Section 108 Loan Guarantee Request.
    (1) Each EDI application must be accompanied by a request for new
Section 108 loan guarantee assistance. Notwithstanding the form of the
request for new Section 108 loan guarantee assistance under paragraphs
(a), (b), (c), or (d) of this section below, the applicant must include
citations to the specific regulatory subsections supporting activity
eligibility and national objectives compliance for the project
described in its application. Both the EDI and Section 108 funds must
be used in conjunction with the same economic development project. This
request may take any of several forms as defined below.
    (a) A full application for new Section 108 loan guarantee(s),
including the documents listed at 24 CFR 570.704(b).
    (b) A brief description (not to exceed three pages) of the project
to be applied for in a new Section 108 loan guarantee application. Such
108 application must be submitted within 60 days of written notice of
EDI selection, with HUD reserving the right to extend such period on a
case-by-case basis where HUD determines there is evidence of good
cause. EDI awards will be conditioned on approval of actual Section 108
loan commitments. This Section 108 application description must be
sufficient to support the basic eligibility of the proposed project and
activities for Section 108 assistance. (See Section III(C) of this
program section of this SuperNOFA.).
    (c) A copy of a pending, unapproved Section 108 loan guarantee
application, and any proposed amendments to the Section 108 application
which are related to the EDI application. The applicant's submission of
such an EDI/Section 108 application shall be deemed by HUD to
constitute a request to suspend separate processing of the Section 108
application. The Section 108 application will not be approved until on
or after the date of the related EDI award.
    (d) A request for a Section 108 loan guarantee assistance
(analogous to Section IV(C)(1)(a) or (b) above) that proposes to
increase the amount of a previously approved application. However, any
amount of Section 108 loan guarantee authority approved before HUD's
announcement of an EDI grant for the same project is not eligible to be
used in conjunction with an EDI grant under this program section.
    (2) Further, a Section 108 loan guarantee amount that is required
to be used in conjunction with a prior EDI or Brownfields Economic
Development Initiative (BEDI) grant award, whether or not the Section
108 loan guarantee has been approved as of the date of this SuperNOFA,
is not eligible for an EDI award under this SuperNOFA. For example, if
a public entity has a previously approved Section 108 loan guarantee
commitment of $12 million, even if none of the funds have been
utilized, or if the public entity had previously been awarded an EDI
grant of $1 million and had certified that it will submit a Section 108
loan application for $10 million in support of that EDI grant, the
public entity's EDI application under this SuperNOFA must propose to
increase the amount of its total Section 108 loan guarantee commitments
beyond those amounts (the $12 million or $10 million in this example)
to which it has previously agreed.
    (D) Prohibitions on Use of EDI and Section 108 Funds. Certain
restrictions shall apply to the use of EDI and Section 108 funds:
    (1) EDI grants must not be used as a resource to immediately repay
the principal of a loan guaranteed under Section 108. Repayment of
principal is only permissible with EDI grant funds as a matter of
security if other sources projected for repayment of principal prove to
be unavailable.
    (2) Section 108 loan obligations may not be subordinated, directly
or indirectly, to federally tax exempt obligations. Pursuant to Office
of Management and Budget (OMB) Circular A-129 (REV.), Appendix A,
Sections II c.2 and d. (Policies for Federal Credit Programs and Non-
Tax Receivables), Section 108 guaranteed loan funds may not directly or
indirectly support federally tax-exempt obligations.
    (E) Time-frames. EDI grant awards will contain conditions requiring
grantees to adhere to their stated time-frames for implementing
proposed projects and drawing Section 108 and EDI funds. If the related
Section 108 application has not been submitted and approved and the
Note guaranteed within fifteen (15) months of written HUD notification
of grant award, HUD may deobligate the EDI funds. If EDI grant funds
and Section 108 loan proceeds have not been disbursed to the applicant
within the timeframes specified in the EDI Grant Agreement and the 108
Contract, HUD reserves the right to recapture the EDI funds, unless an
extension of time has been authorized in writing by HUD, and either
award them to the applicant that scored the next highest in that year's
competition, provided that such applicant's application remains
feasible and appropriate under this program section of the NOFA, or
make them available as part of the next EDI NOFA.
    (F) Limitations on Grant Amounts. (1) HUD expects to approve EDI
grant amounts for approvable applications with a range of ratios of EDI
grant funds awarded to new Section 108 loan guarantee commitments, but
the minimum ratio will be $1 of Section 108 loan guarantee commitments
for every $1 of EDI grant funds. However, if an applicant proposes a
leverage ratio of 1:1, it will not receive any points under Rating
Factor 4, paragraph (1): ``Leverage of Section 108 Funds.'' For
example, an applicant requesting an EDI grant of $1 million will be
required to leverage a minimum of at least $1 million in new Section
108 loan guarantee commitments. Even with a ratio of 1:1, applications
with higher ratios will receive more points under Rating Factor 4,
``Leveraging Resources''. Because the proposed ratio of EDI funds to
Section 108 funds represents an applicant's financial commitment, HUD
will condition the EDI grant award on the grantee's achievement of that
specific ratio. Its failure to meet that condition by obtaining timely
HUD approval of a commitment for, and issuance of, the required Section
108 guaranteed

[[Page 12021]]

obligations ratio may result in the cancellation and recapture of all
or a proportionate share of the EDI grant award.
    HUD will cap EDI awards at a maximum of $1 million. An application
in excess of $1 million will be reduced below the amount requested by
the applicant to the extent HUD determines that such a reduction is
appropriate.
    After selection, but prior to grant award, if HUD determines that
an application can be funded at a lesser EDI grant amount than
requested and still be feasible and consistent with the proposed plan
and the purposes of the Act, it reserves the right to reduce the amount
of the EDI award and/or increase the required Section 108 loan
guarantee commitment, if appropriate.
    (4) If additional EDI grant funds become available to HUD (e.g.,
from recaptures or other appropriations), HUD reserves the right to
award grants under this SuperNOFA during FY 2001 whose aggregate total
may exceed the approximately $7 million announced in this program
section of the SuperNOFA, up to the maximum amount authorized by law.
    (5) If an applicant is awarded an EDI grant that has been reduced
below the original request (e.g., the application contained some
activities that were ineligible, the grant request exceeded the funding
cap, there were insufficient funds to reach all applications (as
defined in Section V(A) below) at the full amount requested, or there
were technical deficiencies that could not be resolved), it will be
asked to modify its project plan and application to conform to the
terms of HUD's approval before HUD will execute a grant agreement. HUD
also will proportionately reduce or deobligate the EDI award if an
applicant does not submit an approvable Section 108 loan guarantee
application and issue Section 108-guaranteed obligations on a timely
basis in the amount required by the EDI/108 leveraging ratio which will
be approved by HUD as a special condition of the EDI grant award (see
Section IV(F)(1) above of this program section of the SuperNOFA). Any
modifications or amendments to an application approved pursuant to this
SuperNOFA, whether requested by the grantee or by HUD, must be within
the scope of the approved original EDI application in all respects
material to rating the application, unless HUD determines that the
revised application scores above the level of the lowest funded
application and is otherwise approvable under this SuperNOFA
competition.
    (6) In the case of a requested increase in guarantee assistance for
a project with a previously approved Section 108 loan guarantee
commitment (as further discussed in Section IV(C)(1)(d), above), the
EDI assistance approved will be based on the increased amount of
Section 108 loan guarantee assistance.
    (7) Pursuant to another portion of this SuperNOFA, HUD is
simultaneously announcing the availability of $25 million of
Brownfields Economic Development Initiative (BEDI) funds.The BEDI
program's principal purpose is to assist in the remediation of
contaminated commercial and industrial sites, but economic development
proposals that contain some limited amount of environmental site
remediation as part of the overall cost may be submitted under the EDI
portion of this SuperNOFA as well. While HUD will permit applicants to
pursue BEDI and EDI funds for the same project, HUD requires that the
BEDI and EDI applications (and their components) be independent of one
another. Thus, each application should have an identifiable amount of
Section 108 funding associated with its respective request for EDI and
BEDI funds for purposes of determining the leverage of Section 108
funding to the corresponding amount of EDI or BEDI funds requested.
Also, the proposed amount of Section 108 borrowing associated with the
BEDI or EDI grant shall not be used to determine leverage of other
financial resources under Rating Factor 4, paragraph (2). Further, if
an applicant seeks both BEDI and EDI funds for the same project, it
must include in its response to Rating Factor 3 a discussion of how the
project can be financed and implemented if it fails to obtain either
BEDI or EDI funds under this SuperNOFA.
    (G) Timing of Grant Awards. (1) If an applicant submits a full
Section 108 application with its EDI grant application, HUD will
evaluate the Section 108 application concurrently with the request for
EDI grant funds. Note that the 108 application must be submitted to the
appropriate HUD field office concurrently with submission to
Headquarters. In addition, EDI grant assistance cannot be used to
leverage a Section 108 loan guarantee approved prior to the date of
HUD's announcement of an EDI grant pursuant to this SuperNOFA. However,
the EDI grant may be awarded before HUD approval of the Section 108
commitment if HUD determines that such award will further the purposes
of the Act.
    (2) HUD notice to a grant recipient of the amount and conditions of
EDI funds awarded, based upon review of the EDI application,
constitutes an obligation of grant funds, subject to compliance with
the conditions of award and execution of a grant agreement. EDI funds
must not be disbursed to the grantee before the issuance of the related
Section 108-guaranteed obligations.
    (H) Economic Opportunities for Low and Very Low-Income Persons
(Section 3). Section 3 of the Housing and Urban Development Act of 1968
(12 U.S.C. 1701u) is applicable to EDI grant recipients. Please see
Section II(E) of the General Section of the SuperNOFA.
    (I) Nondiscrimination. Section 109 of the Housing and Community
Development Act of 1974, as amended (42 U.S.C. 5309), is applicable to
EDI grant recipients. Applicants must therefore adhere to HUD
regulations at 24 CFR parts 6 and 570, including, but not limited to,
reporting and record-keeping requirements under 24 CFR 570.506 and
570.507.

V. The Application Selection Process

    (A) Rating and Ranking. (1) Each rating factor and the maximum
number of points is provided below. The maximum number of points to be
awarded is 104. To be eligible for funding, an EDI application must
obtain a total score of at least 20 points in Rating Factors 1
(Capacity) and 3 (Soundness of Approach) combined.
    (2) All applications meeting program and threshold requirements
will be scored under the selection criteria below. Applications will be
selected for funding as follows:
    All EDI grant applications will be separately ranked in order of
points assigned with the applications receiving more points ranking
above those receiving fewer points.
    In the event two or more applications are given the same score, but
there are insufficient funds for all, the application(s) with the
highest score(s) on Rating Factor 2 (Distress/Extent of the Problem)
shall be selected. If there is still a tie, the following Factors will
be considered sequentially as follows, with the application having the
high score on that Factor taking precedence until the tie is broken:
Rating Factor 3 (Soundness of Approach), Rating Factor 1 (Capacity and
Experience), Rating Factor 4 (Leveraging Resources), and Rating Factor
5 (Comprehensiveness and Coordination).
    Fundable economic development applications must meet the threshold
requirements stipulated in the General Section of this SuperNOFA and be
complete as required by the Submission requirements of this program
section of the SuperNOFA. Economic development projects will be funded
in rank order until the total aggregate

[[Page 12022]]

amount of the applications funded is equal to the maximum amount
available in the competition (subject to the Department's discretion as
described in Section IV(F) below).

Bonus Points

    An additional two points may be awarded for projects that are
located either in federally-designated Empowerment Zones and Enterprise
Communities; two points may also be awarded for qualifying projects in
Dallas, Texas as mandated by a decision by the U.S. District Court for
the Northern District of Texas, for a maximum of four points possible.
For specific details, please see Section III(C)(1) in the General
Section of the SuperNOFA, and Rating Factor 3, paragraph (6) below.
    (B) Narrative Statements.
    Applications must:
    (1) Provide a narrative statement describing the activities that
will be carried out with the EDI grant funds. The EDI narrative
statement must not exceed three (3) 8.5" by 11" pages, doubled-spaced.
    (2) Describe how the proposed uses of EDI funds will meet the
national objectives under 24 CFR 570.208 for the CDBG program and
qualify as eligible activities under 24 CFR 570.703. Applications must
include citations to the specific regulatory subsections supporting
eligibility of activities and compliance with national objectives. (See
Section III(C) of this program section of this SuperNOFA).
    (3) The applicant must also provide narrative statements in
response to each of the rating factors below.
    (4) Print all narrative statements in 12 point type/font, and use
sequentially numbered pages.
    (C) Factors for Award Used to Evaluate and Rate Applications. HUD
will evaluate all applications for funding assistance based on the
following factors, the responses to which demonstrate the quality of
the proposed project or activities, and the applicant's capacity and
commitment to use the EDI funds in accordance with the purposes of the
Act. Responses to Rating Factors 1-5 below shall not exceed fifteen
(15) pages combined.

Rating Factor 1: Capacity of the Applicant and Relevant
Organizational Experience (15 Points)

    This factor addresses the extent to which the applicant has the
organizational resources necessary to successfully implement its
proposed activities in a timely manner. The rating of the ``applicant''
or the ``applicant's organization and staff'' will include any
subcontractors, consultants, and subrecipients that are firmly
committed (see definition in Section III(A)(1) above) to participate in
the activities described in the application. In rating this factor, HUD
will consider the following:
    (1) With regard to the EDI/Section 108 project, the applicant
should demonstrate that it has the organization and the staff and
financial resources in place to implement the specific steps required
to successfully carry out its proposed EDI/Section 108 project. This
includes factors such as:
    (a) Performance in the administration of its CDBG, HOME or other
programs;
    (b) Performance, if any, in carrying out economic development
projects similar to that proposed, including the ability to conduct
prudent underwriting, if applicable;
    (c) Ability to carry out projects and programs in a timely manner;
an applicant must address its performance in spending previously
awarded funds, if any, in a timely manner, including, for CDBG
entitlement recipients, the extent to which it has met the HUD standard
of having no more than 1.5 times its entitlement amount undisbursed
(see 24 CFR 570.902(a)(1)(i); and,
    (d) If applicable, capacity to manage projects under this program
section of the SuperNOFA along with any federal funds awarded as a
result of a federal urban Empowerment Zone/Enterprise Community
designation (including Enhanced Enterprise Community (EEC)
designation).
    (2) An applicant that has previously received an EDI or BEDI grant
award must describe the status of the implementation of those
project(s) assisted with EDI or BEDI funds, any delays that have been
encountered and the actions it is taking to overcome any such delays to
carry out the project in a timely manner. For such previously funded
EDI or BEDI grant projects, HUD will award more rating points for
applications providing evidence of achievement of specific measurable
outcomes in carrying out activities funded with previous EDI or BEDI
grant funds and the associated Section 108 guaranteed loan funds.
    (3) Experience and performance of subrecipients, nonprofit
organizations and other entities that have a role in implementing the
proposed program should be included in this review. Experience will be
judged in terms of recent and successful performance of activities
relevant to those proposed in the EDI application. The more recent and
extensive the experience, the greater the number of points that will be
awarded for this Factor.
    (4) In addition to the application, HUD also may rely on
information from performance reports, financial status information,
monitoring reports, audit reports and other available information in
making its determination under this factor.

Rating Factor 2: Distress/Extent of the Problem (40 Points)

    This Factor addresses the extent to which there is need for funding
the proposed activities based on levels of distress, and an indication
of the urgency of meeting the need/distress in the applicant's target
area. In responding to this Factor, applications will be evaluated on
the extent to which the level of distress is documented and compared,
vis-a-vis, the target area, the jurisdiction, and national data.
    (1) In applying this Factor, HUD will consider current levels of
distress for the following areas affected by the project: first, in the
area (i.e., Census Tract(s) or Block Groups) immediately surrounding
the project site or the target area to be served by the proposed
project; second, in the jurisdiction in which the project is to be
located; third, relative to the similar measures of distress in the
nation. Applicants may also provide data for the overall jurisdiction
alongside comparable jurisdictions in the county and state, as
appropriate to the activity, in order to demonstrate the various levels
of distress in context. This means that an application that provides
data that show levels of distress in the project area and the
jurisdiction expressed as a percent greater than the national average
will be rated higher under this Factor.
    Notwithstanding the above, an applicant proposing a project to be
located outside the target area could still receive points under the
Distress Factor if a clear rationale is provided linking the proposed
project location and the benefits to be derived by persons living in
more distressed area(s) of the applicant's jurisdiction.
    (2) Applicants should provide data that address all indicators of
distress, if applicable, as follows:
    (a) Poverty rate (20 points)--data should be provided in both
absolute and percentage form (i.e., whole numbers and percents) for
both the target area(s) and the jurisdiction as a whole; an application
that compares the local poverty rate in the following manner to the
national average at the time of submission will receive points under
this Section as follows:
    (i) Equal to but less than twice the national average--5 points;

[[Page 12023]]

    (ii) Twice but less than three times the national average--10
points;
    (iii) Three or more times the national average--20 points.
    (b) Unemployment (15 points)--; for both the project area and
jurisdiction; an application that compares the local unemployment rate
in the following manner to the national average at the time of
submission will receive points under this Section as follows:
    (i) Equal to but less than twice the national average--2 points;
    (ii) Twice but less than three times the national average--4
points;
    (iii) Three but less than four times the national average--6
points;
    (iv) Four but less than five times the national average--8 points;
    (v) Five or more times the national average--10 points.
    (c) Other Indicators of social and/or economic decline that best
capture the applicant's local situation (5 points)--examples that could
be provided under this Section are information demonstrating the
jurisdiction's stagnant or falling tax base, including recent
commercial or industrial closings, housing conditions, such as the
number and percentage of substandard and/or overcrowded units, rent
burden (defined as average housing cost divided by average income) for
both the target area and jurisdiction, local crime statistics, etc.
    (3) To the extent that the applicant's Consolidated Plan, its
Analysis of Impediments to Fair Housing choice (AI), and/or its Anti-
Poverty Strategy identify the level of distress in the jurisdiction and
the neighborhood in which the project is to be carried out, references
to such documents should be included in preparing the response to this
Factor.
    (4) In rating applications under this Factor, HUD reserves the
right to consider sources of available objective data other than, or in
addition to, those provided by applicants, and to compare such data to
those provided by applicants.
    (5) HUD requires use of sound and reliable data (e.g., U.S. Census
data, State statistical reports, university studies/reports that are
verifiable) to support distress levels cited in each application. A
source for all information along with the publication or origination
date must also be provided. Updated Census data are available as
follows for the listed indicators:
    (a) Unemployment rate--estimated monthly for counties, with a two-
month lag;
    (b) Population--estimated for incorporated places and counties,
through 1999;
    (c) Poverty rate--estimated every two years, with a three-year lag,
with 1997 being the most recent available.

Rating Factor 3: Soundness of Approach (25 Points)

    This factor addresses the quality and cost-effectiveness of the
proposed plan. The relationship between the proposed activities,
community needs and purposes of the program funding must be clearly
described, as follows, in order to receive points for this factor. In
rating this factor, HUD will consider the following:
    (1) (5 Points) The quality of the plan/proposal for the use of EDI
funds and Section 108 loan funds, including the extent to which the
proposed plan for use of EDI grant/Section 108-guaranteed loan funds
will address the needs described in Rating Factor 2 above regarding the
distress and extent of the problem in the immediate target area and/or
jurisdiction. As part of the response to this factor, an applicant
should identify the specific eligible activities it will carry out and
should fully describe how the project will achieve one of the national
objectives under the Community Development Block Grant program.
Applications should also demonstrate how the proposed project would
mitigate or otherwise address the distress identified in Rating Factor
2 above.
    (2) (5 Points) The extent to which the plan is logical, feasible
and likely to achieve its stated purpose. HUD's desire is to fund
projects and activities which will quickly produce demonstrable results
and advance the purposes of the EDI program. The applicant should:
    (a) Demonstrate that it has a clear understanding of the steps
required to implement its project, including the actions that all
parties responsible for implementing the project must complete. For
example, applications providing evidence that authority necessary to
proceed with the project has been sought and/or received, in the form
of any necessary zoning classification, waivers, general permits,
special use permits, assessment district designation, public easements
and rights-of-way, etc., will receive more points for this Factor.
    (b) Provide a specific time schedule for carrying out the project
and identify measurable objectives to be accomplished. The timeline
form contained in the Appendix A to this program section of the
SuperNOFA should be included in the application.
    (3) The extent to which the proposed project addresses the Analysis
of Impediments and the needs identified in Rating Factor 2; the extent
to which such project activities will result in the physical and
economic improvement for the residents in the neighborhood in which the
project will be carried out; the extent to which the applicant will
offer residents an opportunity to relocate to environmentally healthy
housing or neighborhoods; or the extent to which residents will benefit
from the funded project to enable them to continue to live in a
redeveloped or revitalized neighborhood and thus share in the
anticipated economic benefits the project is expected to generate.
    (4) Financial feasibility. (10 Points) HUD will consider the extent
to which the applicant demonstrates that its project is financially
feasible. In responding to this subfactor, the applicant must clearly
address the question of why the EDI funds are critical to the success
of this project. The response should include these items, as
applicable:
    (a) Project costs and financial requirements. A funding sources and
uses statement must be provided, as well as justifications for project
costs;
    (b) The amount of any debt service or operating reserve accounts
that will be established in connection with the economic development
project;
    (c) The reasonableness of the costs of any credit enhancement paid
with EDI grant funds;
    (d) The amount of program income (if any) to be received each year
during the repayment period for the guaranteed loan;
    (e) Interest rates on loans to third parties (other than
subrecipients), if any, either as an absolute rate or as a plus/minus
spread to the Section 108 rate;
    (f) The applicant's underwriting criteria that will be used in
determining project feasibility.
    (5) The extent to which the project incorporates one or more
elements that facilitate a successful transition of welfare recipients
from welfare to work, including the number of living wage jobs (i.e.,
those that are part of career path or apprenticeship programs) to be
created by the project and the impact of the project on job creation
that will benefit individuals on welfare or low to very low income.
Such an element could include, for example, linking the proposed
project or loan fund to social and/or other services needed to enable
welfare recipients to successfully secure and carry out full-time jobs
in the private sector; provision of job training to welfare recipients
who might be hired by businesses financed through the proposal; and/or
incentives for businesses financed with EDI/section 108 funds to hire
and train welfare recipients.

[[Page 12024]]

    (6) Due to an order of the U.S. District Court for the Northern
District of Texas, Dallas Division, with respect to any application
submitted by the City of Dallas, Texas, HUD's consideration of the
response to this factor, ``Soundness of Approach,'' will include the
extent to which Dallas' plan for the use of EDI funds and Section 108
loan funds will be used to eradicate the vestiges of racial segregation
in the Dallas Housing Authority's programs consistent with the Court's
order. Up to two (2) additional points will be awarded to any
application submitted by the City of Dallas, Texas, to the extent this
subfactor is addressed.

Rating Factor 4: Leveraging Resources (15 Points)

    In evaluating this factor, HUD will consider the extent to which
the response demonstrates the likelihood that the project will leverage
both Section 108 loan and other public or private funds as part of the
total project resources. This factor has two subfactors, each with its
own maximum point total:
    (1) Leverage of Section 108 funds (10 points).
    The minimum ratio of Section 108 funds to EDI funds in any project
may not be less than 1:1. The extent to which the proposed project
leverages an amount of Section 108 funds greater than a 1:1 ratio will
result in that application's receiving a higher number of points. If
the application has a ratio of 1:1, it will not receive any points
under this subfactor. If an application proposes that the EDI funds
will leverage additional new Section 108 commitments, it will receive
more points under this subfactor.
    (2) Leverage of other financial resources (5 points). HUD will
evaluate the extent to which other funds (public or private) are
leveraged with EDI grant funds and Section 108 guaranteed loan funds,
and the extent to which such other funds are firmly committed to the
project. This could include the use of CDBG funds, other Federal or
state grants or loans, local general funds, project equity or
commercial financing provided by private sources or funds from non-
profits or other sources. Funds will be considered committed to the
project if they meet the requirements of ``Firm Commitment'' as defined
in Section III(A)(1) above, and shall be subject to completion of any
environmental review required under 24 CFR part 58 for the project.

Rating Factor 5: Comprehensiveness and Coordination (5 Points)

    This factor addresses the extent to which the applicant has
coordinated its activities with other known organizations; that it
participates or promotes participation in its or the State's
Consolidated Planning process; and that it is working towards
addressing a need in a comprehensive manner through linkages with other
activities in the community.
    In evaluating this factor, HUD will consider the extent to which
the applicant demonstrates it has:
    (1) Coordinated its proposed activities with those of other groups
or organizations before submission, in order to best complement,
support and coordinate all known activities; and developed specific
steps to share information on solutions and outcomes with others. Any
written agreements or memoranda of understanding in place, or that will
be in place after award, should be described in the application.
    (2) Developed linkages, or specific steps to develop linkages with
other activities, programs or projects (through meetings, information
networks, planning processes or other mechanisms to coordinate
activities), so that solutions are holistic and comprehensive. Describe
any linkages with other HUD-funded projects/activities outside the
scope of those covered by the Consolidated Plan, as well as established
linkages and outreach with residents of the project area.

VI. Application Submission Requirements

    (A) EDI Funding. An application for funding under the EDI funding
allocation under this program section of the SuperNOFA must have the
following items to be complete. The standard forms, certifications and
assurances that are required for the EDI application (and listed in
paragraph (I) below) can be found in Appendix B to the General Section.
The remaining application items that are forms (i.e., excluding such
items as narratives or letters, etc.), referred to as the ``non-
standard forms'' can be found in Appendix B to this program section of
the SuperNOFA.
    (B) Transmittal Letter signed by the authorized representative of
the eligible applicant indicating that it is submitting the application
for funding under the Economic Development Initiative Program and is
requesting funding consideration for an EDI project.
    (C) Checklist and Submission Table of Contents indicating the page
numbers where the submission items can be found in the application
(form HUD-40076-EDI/BEDI).
    (D) EDI Narrative Statement describing EDI funded eligible
activities within the proposed project.
    (E) EDI/BEDI/Section 108 Funding Eligibility Statement. A completed
EDI/BEDI Section 108 Funding Eligibility Statement (form HUD-40076-EDI/
BEDI).
    (F) Request for Loan Guarantee Assistance. A request for loan
guarantee assistance under Section 108, as further described in Section
IV(C) of this program section of the SuperNOFA. Full application
guidelines for the Section 108 program are found at 24 CFR 570.704.
    (G) Narrative Responses to Factors for Award:
    (1) Rating Factor 1: Capacity and Relevant Organizational
Experience. Provide a narrative indicating the capacity of your
organization and staff to perform the work for which it is requesting
funding.
    (2) Rating Factor 2: Need Statement Identifying the level of
Distress/Extent of the Problem. Provide a narrative statement including
any documentation supporting the statement of need. Optional form HUD-
40076-EDI/BEDI as a format to respond to this factor for award may also
be used.
    (3) Rating Factor 3: Soundness of Approach. Include the activities,
budget and time frame for conducting activities in the response (see
form HUD 40076-EDI/BEDI).
    (4) Rating Factor 4: Leveraging Resources. The response should
include a completed copy of form HUD-40076-EDI/BEDI, ``Rating Factor 4:
Leveraging Resources Sources and Uses Statement.''
    (5) Rating Factor 5: Comprehensiveness and Coordination. Provide a
narrative response to this factor.
    (H) Request for Funds. A single application must contain a request
for funds for a single EDI/108 project. You may submit more than one
application for each additional unrelated EDI/108 project. Each
application will be rated and ranked individually. In no event will HUD
rate and rank more than one EDI project per application.
    (I) Additional Application Forms and Certifications. In addition to
any forms that have been submitted in response to the Factors for Award
(which may be found at Appendix A, the following forms and
certifications must also be submitted:
    (1) Application for Federal Assistance (Standard Form (SF) 424);
    (2) Federal Assistance Funding Matrix (HUD 424M);

[[Page 12025]]

    (3) Standard Form for Assurances--Non-Construction Programs (SF
424B) and/or Standard Form for Assurances--Construction Programs (SF
424D)--not applicable for this program section.
    (4) Drug-Free Workplace Certification, HUD-50070.
    (5) Certification of Payments to Influence Federal Transactions,
HUD 50071, (and if applicant and/or participating parties are engaged
in lobbying, the Disclosure Form Regarding Lobbying, SF-LLL);
    (6) Applicant/Recipient Disclosure/Update Report, HUD-2880;
    (7) Certification Regarding Debarment and Suspension, HUD-2992;
    (8) Certification of Consistency With EZ/EC Strategic Plan, HUD-
2990;
    These forms are found in the Appendix B to the General Section of
this SuperNOFA. Budget Information on Standard Forms 424B or 424C are
not required under this EDI section of the SuperNOFA

    In addition to the fair housing and other civil rights assurance
described under Section II(B) of the SuperNOFA General Section,
applicants for EDI funds must provide assurance that they will comply
with Section 109 of the Housing and Community Development Act of 1974,
as amended, and must have resolved to HUD's satisfaction any letter of
noncompliance findings under Section 109 before the deadline for EDI
application submission.
    If an applicant wishes to receive an acknowledgment of HUD's
receipt of its application, it should submit a completed Acknowledgment
of Receipt of Application form.

VII. Corrections to Deficient Applications

    The General Section of the SuperNOFA provides the procedures for
corrections to deficient applications.

VIII. Environmental Requirements

    (A) Environmental Review. After the completion of this competition
and after HUD's award of EDI grant funds, pursuant to 24 CFR 570.604,
each project or activity assisted under this program is subject to the
provisions of 24 CFR part 58, including limitations on the EDI grantee
and Section 108 public entity's commitment of HUD and non-HUD funds
prior to the completion of environmental review, notification and
release of funds. No such assistance will be released by HUD until a
request for release of funds is submitted and the requirements of 24
CFR part 58 have been met. All public entities, including
nonentitlement public entities, shall submit the request for release of
funds and related certification, required pursuant to 24 CFR part 58,
to the appropriate HUD field office for each project to be assisted.
    (B) Environmental Justice. Executive Order 12898 (Federal Actions
to Address Environmental Justice in Minority Populations and Low-Income
Populations) directs Federal agencies to develop strategies to address
environmental justice. Environmental justice seeks to rectify the
disproportionately high burden of environmental pollution that is often
borne by low-income, minority, and other disadvantaged communities, and
to ensure community involvement in policies and programs addressing
this issue.

IX. Authority

    Section 108(q), Title I, Housing and Community Development Act of
1974, as amended, (42 U.S.C. 5301-5320); 24 CFR part 570.

Appendix A

    The non-standard forms for the EDI application follow.
BILLING CODE 4210-32-P