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.
HUD has scheduled a Section 108 public offering during the last week in May 2015. This public offering will enable state and local government Section 108 borrowers to obtain long-term, fixed rate financing for approved community and economic development projects. Section 108 borrowers with interim loans will be able to convert variable rate financing to permanent fixed rate financing.
In addition, borrowers that participated in public offerings prior to 2005 will be able to refinance their loans and realize significant savings. These older loans have interest rates that are much higher than the rates expected to be available in the new public offering. Section 108 staff will be discussing the details of such refinancing with borrowers and provide estimates of savings.
Borrowers that have not received the full amount of approved loan guarantee commitments are also eligible to participate in this public offering.
Contact the Section 108 Loan Guarantee Program staff at 202-402-4654 for more information on accessing fixed rate financing.
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