|HUD No. 10-12-11
October 12, 2011
HUD APPROVES $3.3 MILLION LOAN GUARANTEE TO AUBURN, ALABAMA
BIRMINGHAM - The Department of Housing and Urban Development today announced that it is approving a $3.3
million loan guarantee to the City of Auburn. The Borrower will utilize the Section 108 funds for four separate activities.
HUD's Section 108 Loan Guarantee Assistance Program enables local governments to borrow money at reduced interest rates to promote economic development, stimulate job growth and improve public facilities. Such public investment is often needed to inspire private contributions, to provide seed money or to simply boost confidence private firms and individuals may need to invest in distressed areas.
"HUD's Loan Guarantee Program can be a powerful public investment tool to drive economic development in underserved areas," said HUD Southeast Regional Administrator Ed Jennings, Jr. "The program will be a boost to the City's revitalization efforts and provide jobs for Auburn residents who need them most. The Loan Guarantee funds will be administered by the City of Auburn, with development assistance from the Auburn Housing Authority and various for-profit businesses."
Project Description. The Borrower's Housing & Economic Development Activities Project will consist of three primary components. One, the Borrower will work with the Housing Authority to rehabilitate 38 units of housing in the Housing Authority's Moton Apartments building. Two, the Borrower will establish an economic development loan fund (the
"Loan Fund") that will provide fixed-asset loans to for-profit businesses in the City of Auburn. Three, the Borrower
will set up a Micro-Loan Program (the "MLP") for small business borrowers that would not otherwise meet the underwriting standards of traditional business lenders-these particular Business Borrowers must work with the local SBA-designated Small Business Development Center in order to come up with business plans, financial projections, et al. The maximum loan amounts under the MLP will be for $35,000, with a maximum term of six years and a maximum interest rate of 18%.
HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov. You can also follow HUD on twitter @HUDnews, on facebook at www.facebook.com/HUD.