HUD AWARDS LOAN COMMITMENT FOR THE PROPOSED CONSTRUCTION OF A MODULAR HOUSING MANUFACTURING FACILITY TO SUPPORT AFFORDABLE HOUSING IN BOULDER, COLORADO

WASHINGTON - The U.S. Department of Housing and Urban Development (HUD) has awarded a $4 million loan commitment to the City of Boulder, Colorado to support affordable housing. One of the ways the city is exploring to create more affordable housing is the construction of a Modular Housing Manufacturing Facility funded through the Section 108 Loan Guarantee Program. The facility was proposed to HUD by the City of Boulder as an innovative way to produce much needed affordable housing for area residents and workers while providing workforce training for students in the Boulder Valley School District. The proposed factory design has the capacity to build up to 100 homes each year to help achieve the city and region's housing goals.

The Section 108 Loan Guarantee Program allows local governments to leverage 5 times their current Community Development Block Grant (CDBG) into federally guaranteed loans large enough to pursue physical and economic revitalization projects capable of redeveloping entire neighborhoods. Public investment, such as Section 108 loans, can spur private economic activity, providing the resources or the confidence that private firms and individuals may need to invest in distressed areas. Read more about HUD's Section 108 Loan Guarantee Program (www.hudexchange.info/programs/section-108/).

"The partnership of the City of Boulder, Boulder Valley School District, and Flatirons Habitat for Humanity shows how local partnerships with HUD support, such as HUD's Section 108 Loan Guarantee Program, can yield innovative solutions to complex local community development challenges," said Arthur Jemison, Principal Deputy Assistant Secretary, Office of Community Planning & Development at U.S. Department of Housing and Urban Development. Section 108 is the versatile tool that can be used to provide financing to unique and innovative projects like this one."

The City of Boulder has a goal to achieve 15% of all homes in Boulder as permanently affordable using a deed restriction to maintain affordability in perpetuity. The Boulder County Regional Housing Partnership also established a 12% goal that was adopted by all jurisdictions in Boulder County. The modular factory is an important element of achieving these goals by increasing the city's and region's production capacity of affordable homes. It is a result of a partnership of the Boulder Valley School District, the City of Boulder, and Flatirons Habitat for Humanity and has the capacity to build up to 100 homes each year to help achieve the city and region's housing goals.

"Affordable housing is a vital component of a thriving community. Research shows that stable, affordable housing is crucial to a community's health, environment and well-being," said Director of the city's Housing and Human Services Department Kurt Firnhaber, "The City of Boulder is firmly committed to expanding its affordable housing approaches with an increased focus on ownership opportunities. We are thankful to HUD for this loan and to our partners for working with us to explore innovative solutions to complex affordable housing challenges."

After the passage of the Housing and Community Development Act in 1974, HUD's CDBG entitlement communities and states have leveraged their CDBG grant allocations into federally guaranteed loans for projects addressing economic development, affordable housing, infrastructure, and public facilities challenges. Since the beginning of the Program in 1978, HUD has issued 2,000 Section 108 loan guarantee commitments to support community and state economic development and affordable housing rehab projects that have contributed to the creation of over 120,000 jobs. The program has also helped fund public works and infrastructure and housing projects. Section 108 grantees who leveraged other funding sources (federal, state, local, and private) secured, on average, $4.62 of additional funds for every $1 of Section 108 funding (see 2012 HUD report here (www.huduser.gov/portal/publications/pdf/HUD_Section108_LoanGuaranteeProgram.pdf)).

Local governments and states have direct access to the Section 108 Program. Smaller units of local government can access the program through their state. Funding under Section 108 can be used to provide the necessary gap financing to enable large-scale development, New Markets Tax Credit, and Low-Income Housing Tax Credit projects, allowing jurisdictions to take full advantage of federal public-private partnership incentives. Section 108 also provides the necessary inducement to catalyze investment from private lenders.

Activities eligible under Section 108 include:

• Acquisition and site improvements (including clearance, remediation, and demolition) of real property
• Rehabilitation of publicly owned real property
• Housing rehabilitation, including relocation costs
• Construction, reconstruction, or installation of public facilities (including street, sidewalk, and other site improvements)
• Clearance and demolition of structures on property acquired or rehabilitated with Section 108 funds
• Assistance to for-profit businesses, nonprofit subrecipients, and Community-Based Development Organizations (CBDOs) for economic development projects

As the need for economic recovery and community development continues, HUD's CDBG Section 108 serves as a critical source of federal financing that helps to move projects forward and build strong, sustainable, inclusive communities.

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