|HUD No. 21-161
HUD Public Affairs
September 28, 2021
HUD Awards Springfield, Massachusetts $5 Million, Marking 2,000th Community Development Block Grant Section 108 Loan
Program Provides Source of Low-Cost, Long-Term Financing for Economic and Community Development Projects
WASHINGTON, D.C. - U.S. Department of Housing and Urban Development (HUD) today awarded Springfield, Massachusetts $5 million, marking the 2,000th approval through the Community Development Block Grant (CDBG) Section 108 Loan Guarantee Program. The program allows local governments to leverage 5 times their current CDBG grant into federally guaranteed loans large enough to pursue physical and economic revitalization projects capable of redeveloping entire neighborhoods. Public investment such as Section 108 loans can spur private economic activity, providing the resources or the confidence that private firms and individuals may need to invest in distressed areas.
Springfield’s Section 108 loan guarantee will support the Main Street Convention District Overlay Zone Fund Project, with funds assisting in the purchase of vacant, abandoned, and foreclosed property located downtown to support redevelopment and revitalization of downtown Springfield.
“The cornerstone of HUD’s Section 108 Loan Guarantee Program since its inception in 1978 has been its incredible flexibility,” said Arthur Jemison, Principal Deputy Assistant Secretary for Community Planning and Development. “Section 108 combines the programmatic flexibility of the CDBG program with flexible loan terms that, together, enable states and local governments to address their community and economic needs that cannot be met from other sources. With this loan guarantee, Springfield will have resources it needs to produce transformative results.”
After the passage of the Housing and Community Development Act in 1974, HUD’s CDBG entitlement communities and states have leveraged their CDBG grant allocations into federally guaranteed loans for projects addressing economic development, affordable housing, infrastructure, and public facilities challenges. Since the beginning of the Program in 1978, Section 108 projects have supported over 600 community and state economic development and affordable housing rehab projects, and contributed to the creation of over 120,000 jobs. The program has also helped fund more than 250 public works and infrastructure projects and 240 housing projects. Section 108 grantees who leveraged other funding sources (federal, state, local, and private) secured, on average, $4.62 of additional funds for every $1 of Section 108 funding (see 2012 HUD report here).
Local governments and states have direct access to the Section 108 Program. Smaller units of local government can access the program through their state, including colonias locations. Funding under Section 108 can be used to provide the necessary gap financing to enable large-scale development, New Market Tax Credit, and Low-Income Housing Tax Credit projects, allowing jurisdictions to take full advantage of federal public-private partnership incentives. Section 108 also provides the necessary inducement to catalyze investment from private lenders.
Activities eligible under Section 108 include:
- Acquisition and site improvements (including clearance, remediation, and demolition) of real property
- Rehabilitation of publicly-owned real property
- Housing rehabilitation, including relocation costs
- Construction, reconstruction, or installation of public facilities (including street, sidewalk, and other site improvements)
- Clearance and demolition of structures on property acquired or rehabilitated with Section 108 funds
- Assistance to for-profit businesses, nonprofit subrecipients, and Community-Based Development Organizations (CBDOs) for economic development projects
- Debt service reserves
As the need for economic recovery and community development continues, HUD’s CDBG Section 108 serves as a critical source of federally guaranteed financing that helps to move projects forward and build strong, sustainable, inclusive communities.
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