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September 6, 2018
HUD OKAYS $11.1 MILLION SECTION 108 LOAN GUARANTEE FOR CLACKAMAS COUNTY
County will use loan funds to expand affordable housing stock, improve community facilities & create jobs
OREGON CITY - The U.S. Department of Housing and Urban Development today announced that it has approved a $11,100,000 HUD Section 108 loan guarantee to Clackamas County, Oregon that will enable the County to increase the number of affordable housing units, provide community services through new public facilities, and assist with job-creating opportunities for low- and moderate-income persons.
HUD provides Section 108 Loan Guarantees (https://www.hudexchange.info/programs/section-108/) to enable local governments to borrow money from private investors at reduced interest rates. As required under the Section 108 program, the County has pledged to re-pay the loan principal over 20 years using a portion of the HUD Community Development Block it annually is entitled to receive under the Housing and Community Development Act of 1978. Over the years, Section 108 guarantees generally have generated $4 of private investment for every $1 in Section 108 guarantee.
"HUD's Loan Guarantee Program is a powerful and proven tool for public entities to leverage significant private dollars to meet urgent community needs," said HUD Northwest Regional Administrator Jeff McMorris. "Clackamas County is proposing an ambitious, but balanced plan to use its loan proceeds to expand the affordable housing stock, to improve public facilities and to create jobs. By any standard, that would be a win-win-win for the County and its residents."
With 375,000 residents, Clackamas County is Oregon's third most-populous county. It is home to the three highest and two of the lowest per capita income cities in the state and, the County estimates, 20,000 low-income persons are at risk of being priced out of the rental housing market.
The County intends to use $6,000,000 of its Section 108 loan guarantee funds to provide loans to third-party borrowers to acquire and, if necessary, demolish and clear demolition and clear sites for construction of new affordable housing and, also, to rehabilitate existing affordable housing and possibly mixed-use buildings that will include commercial space and housing. Loan funds will not be used to construct new housing.
The County also expects to use $4,100,000 of Section 108 funds to enable third-party borrowers to construct or upgrade infrastructure to address community needs, such as health centers, service centers, and food banks. It also plans to use $1,000,000 in Section 108 funds to allow third-party borrowers to third party borrowers to create job opportunities for low- and moderate-income persons.
The Section 108 loan guarantee program permits CDBG entitlement communities to borrow up to five times their latest CDBG allocation for projects that either principally benefit low- and moderate-income persons or aid in the elimination or prevention of slums and blight. The funds generated by a Section 108 loan guarantee may be used for:
- Economic development activities eligible under CDBG
- Acquisition of real property
- Rehabilitation of publicly owned real property
- Housing rehabilitation eligible under CDBG
- Construction, reconstruction, or installation of public facilities (including street, sidewalk, and other site improvements)
- Related relocation, clearance, and site improvements
- Payment of interest on the guaranteed loan and issuance costs of public offerings
- Debt service reserves
- Public works and site improvements in colonias
- In limited circumstances, housing construction as part of community economic development, Housing Development Grant, or Nehemiah Housing Opportunity Grant programs.
HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. More information about HUD and its programs is available on the Internet at www.hud.gov and https://espanol.hud.gov.
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