Submitted By
Tammie Grossman, Director of Development Customer Services
Reviewed By
LKS
Agenda Item Title
Title
A Resolution Approving the Draft Section 108 Loan Guarantee Program Application and the Section 108 Substantial Amendments to the Program Year 2015 Action Plan and Program Year 2015-2019 Consolidated Plan for Release and Public Comment
End
Overview
Overview
This resolution would approve and release a draft Community Development Block Grant (CDBG) Section 108 Loan Guarantee Program application for a 30-day public comment period along with a required amendedment to the current Consolidated Plan. This would allow the Village to create a business loan fund in the amount of $3 million to assist local businesses and increase jobs available to low- and moderate income persons.
Body
Staff Recommendation
Approve the resolution.
Fiscal Impact
The Village receives an annual entitlement to roughly 1.5 million dollars of CDBG grants to support low- and moderate-income persons, reduce blight, and recover from natural disasters. This application would allow the Village to create a loan pool of up to five times that annual amount. At this time, the staff is proposing to create a fund of three million dollars, which would be secured by the Village’s annual entitlement. The Section 108 application to HUD is expected to have positive economic benefits to the Village by assisting businesses and creating and/or retaining jobs for low- and moderate income persons.
The Village understands that if the borrowers from this Section 108 loan fund fail to make timely payments and the Village therefore fails to make a required payment on its note, HUD could deduct that payment from the Village's CDBG Line of Credit. In accepting this loan guarantee, the Village would pledge all HUD entitlement grants made to the Village, or those for which the Village may become eligible, as security for the loan guarantee.
Background
The Board of Trustees has adopted economic development as a high priority and set a goal to create a Section 108 Loan Guarantee Program in 2016. The Section 108 Program is administered by the U.S. Department of Housing and Urban Development (HUD) and is based on the CDBG Program.
The Village now seeks to establish a small- to medium-focused Section 108 loan fund in the amount of $3 million. These funds, if approved by HUD, will be used by the Village to support business expansion and improvement, create and/or retain jobs, assist low/moderate-income households, and deliver positive economic benefits for the Village and its residents. This draft application for a Section 108 loan fund program follows the Village’s Citizen Participation Plan, which was recently updated to include Section 108.
The Village mentioned the Section 108 priority in both the Consolidated Plan and the Action Plan but now, with a detailed application written, must amend both of these plans to include the specific Section 108 application.
If approved, this resolution would release the draft application for a mandatory 30-day public comment period. It would also release draft amendments to the Village’s PY 2015-2019 Consolidated Plan and PY 2015 Action Plan For Public Comment as required by HUD. After that time period has ended, staff will bring the final versions of the application and amendments back to the Board for final approval and permission to submit them to HUD.
Alternatives
N/A.
Previous Board Action
The final Consolidated Plan and PY 2015 Action Plan were both approved by the Village Board on July 20, 2015, and both stated that the Village would pursue a Section 108 Loan Guarantee Program application in 2016.
Citizen Advisory Commission Action
N/A.
Anticipated Future Actions/Commitments
Immediately after the Board approves the resolution, the Village will advertise the availability of the draft application and amendments. The public will be able to review these and provide comments until September 2, 2016. There will be a public hearing on the draft Section 108 application on September 2, 2016. After this, the final Section 108 application will go to the Village Board for approval and afterward can be submitted to HUD for approval.
If the application is approved by HUD, as each proposed individual Section 108 loan project becomes ready for commitment, after a full review and preliminary approval by the loan committee and the underwriting consultant, the proposed project will be presented to the Village Board for approval. After Board approval and a subsequent 30 day public comment period, the Village will submit each loan proposal to HUD with a full description of the project, an explanation of the eligible activity and national objective to be achieved, and analysis of the project's compliance with the Village’s underwriting guidelines.
Intergovernmental Cooperation Opportunities
As a member of the Cook County HOME program consortium, the Village will amend the Consolidated Plan and Action Plan in partnership with Cook County.
Performance Management (MAP) Alignment
A Governance Priority established for the Neighborhood Services Division of the Development Customer Services Department is “CDBG Administration.”