2006 Section 108 Public Facility Projects - New York

Foundation for Dance Promotion Project
New York, NY
Section 108 Guaranteed Loan- $3,000,000

The City of New York has designated the New York City Economic Development Corporation (NYCEDC), as the public agency that will issue a Note that will be guaranteed by HUD under Section 108 of the Housing and community Development Act of 1974, as amended, to provide financial assistance to a for profit Developer, The BTJ/AZ Harlem Home, Limited Liability Corporation (LLC). The Developer will use the guaranteed loan proceeds, in conjunction with a $2 million, previously approved Economic Development Initiative (EDI) Grant awarded by HUD to the City, a $10 million bank loan, Empowerment Zone funding, Developer equity, and New Market Tax Credit (NMTC) equity for the acquisition of air rights above a new retail development and the construction of a four-story condominium structure, consisting of 32,000 square feet of performance and rehearsal space for the arts and community entertainment and a separate public research center. This facility will provide performing arts, entertainment, and performance research primarily to residents in and around the 125th Street Corridor in Harlem. The site will offer year-round instruction to low-moderate income residents on dance, visual arts, communications, design, and media. The site is within the federally-designated Upper Manhattan Empowerment Zone.

The US Bancorp Community Development Corporation (USBCDC), the primary lender and NMTC investor in this project, will create an upper tier investment fund that will leverage $7,992,649 in NMTC equity through the investment of all the Section 108 Guaranteed Loan proceeds, the City's EDI grant funds, the bank's loan, the Empowerment Zone funds, and the Developer's equity funds. This Investment Fund will make a capital contribution, as equity, of all theses monies into a Community Development Entity (CDE). The CDE will use this equity investment to make a Qualified Low-Income Community Investment (QLICI) loan to The BTJ/AZ Harlem Home, LLC, the project's Developer. The acquisition and development costs of the project are $34,747,649.

The Community Development Block Grant (CDBG) national objective for the City's use of the guaranteed loan funds is to benefit low-moderate income persons through area benefit. The project is in an area whose target population is 521,635 residents, of which 358,331 are persons of low-moderate income. This project will also create an estimated 250 new full-time jobs.

The NYCEDC will repay the Section 108 Guaranteed Loan from revenues it receives from the project Developer and the project's debt service reserve over an eight-year loan term. It will pay interest only for the first seven years of the eight year loan term, so that the Developer can demonstrate compliance with the NMTC low income community investment requirements. Funding from the debt service reserve will enable NYCEDC to repay the principal balance of the guaranteed loan in the eighth year. To secure repayment of the guaranteed loan, the NYCEDC pledges its interest in its third-party loan to the USBCDC Investment Fund, secured by the Fund's partnership interests in the CDE. Also, the City pledges its CDBG funds as security for repaying the Section 108 Guaranteed Loan.

Rockland Family Shelter
Rockland County, NY
Section 108 Guaranteed Loan- $1,360,000

The County of Rockland will provide financial assistance to Rockland Family Shelter (RFS), Inc. for acquisition of a larger building. The RFS, a non-profit organization whose mission is to eradicate domestic and sexual abuse against women and children through providing shelter to victims of abuse and through public advocacy, needs more space to provide its service to the Rockland County community. In the summer of 2005, Rockland Family Shelter, Inc. used a short term �bridge loan� from a local bank to acquire a two-story, 9,469 square-foot building. It plans on renovating 8,243 square feet of it to increase its service capability. The RFS has raised $500,000 to use in conjunction with the County's loan of its Section 108 Guaranteed Loan proceeds to fund the project for a total cost of $1,860,000. HUD determined that since the County and the RFS had collaborated to meet all the Section 108 Loan Guarantee Program requirements in 2005 when RFS acquired the larger facility, the County is eligible to reimburse pre-award costs to make a loan to the RFS to repay its short term bank loan.

The Community Development Block Grant (CDBG) national objective for the County's use of its Section 108 Guaranteed Loan proceeds is to benefit low-moderate income persons through public services for limited clientele (abused children and battered spouses).

The County will repay the Section 108 Guaranteed Loan over a 20-year period utilizing a third-party loan from the shelter. To secure repayment of the guaranteed loan funds, the County pledges its interest in its third-party loan to RFS, which will be secured by a first lien position on the two-story building. Also, the County pledges its CDBG funds for the repayment of its Section 108 Guaranteed Loan.