Economic Development Initiative
Competitive EDI Summary
EDI provides grants to local governments to enhance both the security of loans guaranteed through the Section 108 Loan Program and the feasibility of the economic development and revitalization projects they finance.
EDI has been the catalyst in the expanded use of loans through the Section 108 Program, one of the most potent public investment tools that HUD offers to local governments. Because Section 108 loans represent a potential risk to local governments' Community Development Block Grant (CDBG) allocations which governments pledge against potential repayment shortfalls, the EDI program offers communities a way to decrease the level of risk to their CDBG funds. HUD's Economic Development Initiative helps local governments manage and reduce this risk in at least two different ways. A local government may use an EDI grant to provide additional security for the Section 108 loan (as a loan-loss reserve or debt-service, for example), thereby reducing the exposure of its CDBG funds in the event of a default in loans made locally with the 108 funds. Or it may use this flexible grant to simply make the project more feasible by paying some of the project costs with grant funds or by reducing the interest rate to be paid from a revolving loan fund. Increasing access to capital for entrepreneurs and small business has emerged as a key component of the job growth strategy powered by the EDI grant program.
How Do I Apply?
Only amendments to previously approved grants are being made. No new grants are being awarded.
Competitive EDI grant funds can can only be used in projects also assisted by the Section 108 Loan Program; such projects may involve activities such as property acquisition; rehabilitation of publicly owned property; housing rehabilitation; economic development activities; acquisition, construction, reconstruction, or installation of public facilities; and for colonias, public works and other site improvements.
Laws and Regulations:
EDI is authorized by Section 108(q) of the Housing and Community Development Act of 1974, as amended.
Program regulations are identical to those governing Community Development Block Grants and the Section 108 Loan program, which are found at 24 CFR Part 570 Subpart M.
The Office of Economic Development in HUD's Office of Community Planning and Development (CPD) administers the program.
An unpublished evaluation of the Section 108 Loan program And EDI by the University of Louisville concluded that "EDI grants have strengthened the economic feasibility of the [108-supported] projects, while making it more likely that they will generate enough cash to repay the guaranteed loan."
|Content Archived: December 12, 2012|