Item 4: URA resolution authorizing HUD 108 Revenue Bonds

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EURA UGENE RBAN ENEWAL GENCY AIS GENDA TEM UMMARY Action: Resolution 1044 Authorizing Issuance of Urban Renewal Bonds for Projects Receiving Funding from HUD Section 108 Loan Proceeds Meeting Date: July 23, 2007 Agenda Item Number: 4 Department: Central Services Staff Contact: Sue Cutsogeorge www.eugene-or.gov Contact Telephone Number: 682-5589 ISSUE STATEMENT The City Council has put in place the ability for the City to use federal Housing and Urban Development (HUD) Section 108 Loan Guarantee Program (Section 108) funds in combination with the Brownfield Economic Development Initiative (BEDI) grant. The proposed project would use the funds to acquire property in downtown Eugene as part of the West Broadway Redevelopment Project. This resolution, as well as a City resolution on the same agenda, will allow the City to execute the Section 108 documents. See the Agenda Item Summary (AIS) regarding a resolution authorizing execution of a HUD Section 108 loan contract in the amount of $7,895,000 and notes in the amount of $7,895,000 for additional background information about the proposed project. BACKGROUND The full council and Urban Renewal Agency (URA) history on the West Broadway redevelopment effort, as well as the Section 108 and BEDI grant, can be found in Attachment A to the AIS on tonight’s agenda for a resolution authorizing execution of a HUD Section 108 loan contract in the amount of $7,895,000 and notes in the amount of $7,895,000. HUD Section 108 Loan Contract To borrow money under the Section 108 loan program, HUD requires a two-step process. First, the City must enter into a loan contract with HUD. This is like a master loan agreement. Second, the City must draw down funds under a project note. The project notes are governed by the terms in the loan contract. The City is proposing to use the Section 108 funds to acquire property for the West Broadway Redevel- opment Project. A number of repayment sources have been authorized by the council previously in Ordinance 20376. However, the City anticipates that the loan will most likely be repaid from tax increment revenues of the downtown urban renewal district, although it is possible that the proceeds from the sale of the properties to developers may also be used to repay the loan. HUD requires that local governments that borrow Section 108 funds also pledge their current and future Community Development Block Grant (CDBG) allocations as a secondary source of repayment for the borrowing. The City does not anticipate utilizing future CDBG allocations as a source of repayment for this project because the City’s downtown urban renewal district has the financial capacity to make the payments on this borrowing. L:\CMO\2007 Council Agendas\M070723\S0707234.doc