EDI provides grants to local governments to enhance both the security
of loans guaranteed through the Section 108 Loan Program and the
feasibility of the economic development and revitalization projects
EDI has been the catalyst in the expanded use of loans through
the Section 108 Program, one of the most potent public investment
tools that HUD offers to local governments. Because Section 108
loans represent a potential risk to local governments' Community
Development Block Grant (CDBG) allocations which governments pledge
against potential repayment shortfalls, the EDI program offers communities
a way to decrease the level of risk to their CDBG funds. HUD's Economic
Development Initiative helps local governments manage and reduce
this risk in at least two different ways. A local government may
use an EDI grant to provide additional security for the Section
108 loan (as a loan-loss reserve or debt-service, for example),
thereby reducing the exposure of its CDBG funds in the event of
a default in loans made locally with the 108 funds. Or it may use
this flexible grant to simply make the project more feasible by
paying some of the project costs with grant funds or by reducing
the interest rate to be paid from a revolving loan fund. Increasing
access to capital for entrepreneurs and small business has emerged
as a key component of the job growth strategy powered by the EDI
How Do I Apply?
HUD awards EDI funds as competitive project grants, to be used
in conjunction with Section 108 loan commitments.
Competitive EDI grant funds can can only be used in projects also
assisted by the Section 108 Loan Program; such projects may involve
activities such as property acquisition; rehabilitation of publicly
owned property; housing rehabilitation; economic development activities;
acquisition, construction, reconstruction, or installation of public
facilities; and for colonias, public works and other site improvements.
Laws and Regulations:
EDI is authorized by Section
108(q) of the Housing and Community Development Act of 1974,
Program regulations are identical to those governing Community Development
Block Grants and the Section 108 Loan program, which are found at
CFR Part 570 Subpart M.
The Office of Economic Development in HUD's Office of Community
Planning and Development (CPD) administers the program.
An unpublished evaluation of the Section 108 Loan program And EDI
by the University of Louisville concluded that "EDI grants
have strengthened the economic feasibility of the [108-supported]
projects, while making it more likely that they will generate enough
cash to repay the guaranteed loan."