Section 108 is the loan guarantee component of the Community Development Block Grant (CDBG) Program. Section 108 provides communities with a source of financing for economic development, housing rehabilitation, public facilities, and large-scale physical development projects. This flexibility makes it one of the most potent and important public investment tools that HUD offers to local governments. The Section 108 loan guarantee program allows local governments to transform a small portion of their CDBG funds into federally guaranteed loans large enough to pursue physical and economic revitalization projects capable of renewing entire neighborhoods. Such public investment is often needed to inspire private economic activity, providing the initial resources or simply the confidence that private firms and individuals may need to invest in distressed areas. Local governments borrowing funds guaranteed by HUD through the Section 108 program must pledge their current and future CDBG allocations as security for the loan.
In May 2015 HUD conducted a public offering of Section 108 guaranteed participation certificates in the amount of $391,805,000. (View the Series 2015-A offering circular.) The certificates are backed by a pool of promissory notes that were issued by local governments to provide financing for community and economic development projects and guaranteed by HUD. The offering consists of 136 notes from 85 Section 108 borrowers. The offering circular contains information on rates and other loan terms.
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