HUD OKAYS $1.1 MILLION RE-CAPITALIZATION OF YAKIMA'S ECONOMIC & COMMUNITY DEVELOPMENT LOAN FUND
City Will Use Loan Fund to Spark Investments in Former Boise Cascade Sawmill Area & Improve Public Facilities in Lower-Income Neighborhoods

YAKIMA - The U.S. Department of Housing and Urban Development today announced that HUD has okayed a $1,095,000 loan guarantee to the City of Yakima that will allow it to re-capitalize its existing Community and Economic Development Loan Fund and provide loans to small business and capital for needed infrastructure improvements in the City.

HUD is providing the loan guarantee under its Section 108 Loan Guarantee Assistance program which enables local governments to borrow money from private investors at reduced interest rates. In return, local governments pledge current and future Community Development Block Grant (CDBG) allocations to cover the loan amount as security for the loan. Over the years, Section 108 guarantees generally have generated $4 of private investment for every $1 in Section 108 guarantee.

"Yakima has one of the most stable and diversified economies in Washington State," said Secretary Donovan, "due in large part to an effective partnership between the local business community and the City. This loan guarantee will permit the City to continue enhancing economic activity and providing opportunity to residents up and down the Yakima Valley."

"The City of Yakima's economic development strategy, including its use of HUD's Section 108 loan guarantee program, offers a textbook example of how local governments and local business communities can work together to build a better, stronger economic future," said Mary McBride, HUD's Northwest Regional Administrator. "We are pleased to be able to continue supporting Yakima's successful community and economic development partnership."

This is the third Section 108 loan guarantee that HUD has approved for the City of Yakima. The first guarantee of $4 million was awarded in 2003 and helped the City generate some $6 million in activity, including both The Hilton Garden Inn and Sports Center Restaurant in downtown. The City received a second guarantee of $2,945,000 in 2004 to provide additional financing for its community and economic development loan fund.

The City plans to use this latest Section 108 loan guarantee to promote economic activity in the former Boise Cascade Sawmill area and to make improvements in public facilities which serve residents of the City's lower-income neighborhoods.

As it has in the past, the City of Yakima will work with the National Development Council to solicit, review and underwrite loans made to businesses and for infrastructure improvements and submit each proposed project to the City Council and HUD for approval.

HUD's Section 108 Loan Guarantee Assistance Program enables local governments to borrow money from private investors at reduced interest rates to promote economic development, stimulate job growth and improve housing or public facilities. Such public investment is often needed to inspire private contributions, to provide seed money, or to simply boost confidence that many private firms and individuals need to invest in distressed areas.

Section 108 loans are not risk-free, however; local governments borrowing funds secured by this loan guarantee program must pledge a portion their current and future Community Development Block Grant (CDBG) allocations to cover the loan amount as security for the loan. The loan must be re-paid within 20 years.

###

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 at @HUDnews or on Facebook at www.facebook.com/HUD, or sign up for news alerts on HUD's News Listserv.