HUD awards $ 5 million to Springfield, Massachusetts, marking 2,000th Section 108 loan of the Community Development Grant

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Tuesday
September 28, 2021

HUD awards $ 5 million to Springfield, Massachusetts, marking 2,000th Section 108 loan of the Community Development Grant
The program provides a low-cost, long-term source of funding for economic and community development projects

WASHINGTON, DC – The US Department of Housing and Urban Development (HUD) today granted $ 5 million in Springfield, Massachusetts, marking the 2,000th approval through the Community Development Block‘s Section 108 loan guarantee program. Grant (CDBG). The program enables local governments to mobilize 5 times their current CDBG grant in federally guaranteed loans large enough to pursue physical and economic revitalization projects capable of redeveloping entire neighborhoods. Public investments such as Section 108 loans can boost private economic activity, providing the resources or confidence that private businesses and individuals may need to invest in distressed areas.

Springfield’s Section 108 Loan Guarantee will support the Main Street Convention District Recovery Area Fund Project, with funds helping the purchase of vacant, abandoned and foreclosed properties located downtown to support the redevelopment and revitalization of downtown Springfield.

“The cornerstone of the HUD Section 108 loan guarantee program since its inception in 1978 has been its incredible flexibility,” said Arthur Jemison, deputy senior assistant secretary for community planning and development. “Section 108 combines the programmatic flexibility of the CDBG program with flexible loan terms that together allow states and local governments to meet their community and economic needs that cannot be met from other sources. loan guarantee, Springfield will have the resources it needs to deliver transformative results. ”

After the Housing and Community Development Act was passed in 1974, communities and states eligible for HUD CDBG turned their allocations from CDBG grants into federally guaranteed loans for economic development projects. , affordable housing, infrastructure and public amenities. Since the program began in 1978, Section 108 projects have supported over 600 community and state economic development and affordable housing rehabilitation projects, and have helped create over 120,000 jobs. The program has also made it possible to finance more than 250 public works and infrastructure projects and 240 housing projects. Section 108 recipients who leveraged other sources of funding (federal, state, local, and private) obtained, on average, $ 4.62 in 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. Small units of local government can access the program through their state, including settlement locations. Funding under Section 108 can be used to provide the gap funding needed to enable large-scale development projects, the New Market Tax Credit, and the Housing Tax Credit for New Markets. low-income people, allowing jurisdictions to take full advantage of federal incentives for public-private partnerships. Section 108 also provides the necessary incentive to catalyze investments by private lenders.

Eligible activities under section 108 include:

  • Acquisition and site improvements (including clearing, remediation and demolition) of real estate

  • Rehabilitation of public real estate

  • Home repair, including moving costs

  • Construction, reconstruction or installation of public facilities (including streets, sidewalks and other site improvements)

  • Clearance and demolition of structures on properties acquired or rehabilitated with section 108 funds

  • Assistance to for-profit enterprises, non-profit sub-recipients and community development organizations (CBDO) 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 funding that helps move projects forward and build strong, sustainable and inclusive communities.

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