Item 5: PH: Use of 108 Funds for Construction Financing

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Public Hearing: Use of 108/BEDI Funds for Construction Financing Meeting Date: December 14, 2009 Agenda Item Number: 5 Department: Planning and Development Staff Contact: Nan Laurence www.eugene-or.gov Contact Telephone Number: 682-5340 ISSUE STATEMENT The council is conducting a public hearing on the use of Federal Housing and Urban Development Section 108 Loan Guarantee Program (HUD 108) funds in combination with the Brownfield Economic Development Initiative (BEDI) grant to provide construction financing to Beam Development to rehabilitate the Centre Court building in downtown Eugene (See Attachment A: Property Location Map.) BACKGROUND In January 2006, the City was awarded a $2 million BEDI grant to assist redevelopment projects within the City's two urban renewal districts. BEDI funds must be used in conjunction with projects financed by HUD 108 funds. HUD 108 is the loan guarantee provision of the federal Community Development Block Grant (CDBG) program. Section 108 allows cities to borrow up to five times their annual CDBG allocation. In July 2006, HUD approved the City’s HUD 108 application to create a loan pool, to be used with the BEDI grant, for redevelopment projects within the Downtown and Riverfront urban renewal districts. Eugene’s approved HUD 108 loan guarantee is $7,895,000. On February 26, 2007, the council approved an ordinance (No. 20376) authorizing the use of HUD 108 as a financing tool. The ordinance established the City’s general ability to borrow for HUD 108 projects with the stipulation that individual projects be approved by council resolution only after a public hearing conducted by the council. Individual Project Approval Process To spend the HUD 108/BEDI funds, HUD requires that the specific project funding request be approved by the council following a public comment period and a public hearing. Citizen participation involves a 30-day public comment period, review by the CDBG Advisory Committee, and a public hearing conducted by the council. Final action will include council review and a financing resolution followed by HUD approval. Projects that receive HUD 108/BEDI funds must meet project preference criteria, as follows: a) meet a CDBG national objective of benefiting low- or moderate-income persons or eliminating conditions of slums or blight, b) lead to economic revitalization in connection with brownfields, c) be financially feasible, d) be within reasonable risk, e) be likely to be repaid, and f) provide permanent, full-time employment for low- and moderate-income individuals. The project preference criteria are designed to provide an objective evaluation of the project’s ability to produce an effective and timely outcome. Z:\CMO\2009 Council Agendas\M091214\S0912145.doc