HUD OKAYS $2.9 MILLION LOAN GUARANTEE TO SPARK ECONOMIC & COMMUNITY DEVELOPMENT IN LAKEWOOD
New City Loan Fund Will Generate Capital to Create & Retain Jobs

SEATTLE - The U.S. Department of Housing and Urban Development today announced it approved a $2.9 million loan guarantee to the City of Lakewood to establish a new Community Economic Development Fund that will generate third-party investment capital to support economic and community development projects that will create and retain jobs for low- and moderate-income persons.

HUD is providing the loan guarantee assistance 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.

The City's fund will give priority to private-sector projects that support economic development projects, but may also use the loan fund for other types of projects, such as housing rehabilitation and public facilities or public improvements. In particular, the City expects to focus its efforts on census tract 72000, the most economically depressed census tract in Lakewood. However, projects throughout the City may be considered for funding.

"HUD's Loan Guarantee Program can be a powerful public investment tool to drive economic development in underserved areas," said HUD Secretary Shaun Donovan. "The program will be a boost to the City's revitalization efforts and provide jobs for residents who need them most."

"Access to capital remains a problem in many communities across the country including Lakewood, and that severely strains their capacity to preserve and expand economic activity and the jobs that come with it," said HUD Northwest Regional Administrator Mary McBride. "HUD's Section 108 loan guarantee is an established and proven tool to access capital and generate the private investment capital that is essential to maintaining and building vibrant local economies. We look forward to working with the City of Lakewood in putting these resources to work."

All prospective Community Economic Development Fund projects will be underwritten by the City of Lakewood Community Development Department (CDD) with the assistance of its consultant, the National Development Council (NDC). NDC will advise CDD on matters of project feasibility and eligibility. CDD will be solely responsible for making funding decisions.

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.

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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.