Transcript COMMUNITY ENHANCEMENT AND ECONOMIC DEVELOPMENT FUND (CEED PROGRAM) A HUD SECTION 108 LOAN PROGRAM Indiana Office of Community and Rural Affairs 2014 Regional Conference.

COMMUNITY ENHANCEMENT AND
ECONOMIC DEVELOPMENT FUND
(CEED PROGRAM)
A HUD SECTION 108
LOAN PROGRAM
Indiana Office of Community and Rural Affairs
2014 Regional Conference
Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
Darin Edwards
[email protected]
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Kathleen Weissenberger
[email protected]
Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
What is Section 108
• Financing tool that allows States and Entitlements to make
loans up to 5 times their annual CDBG allocation
• All activities must meet CDBG requirements and loan terms
must meet Section 108 underwriting criteria
• Notes are repaid with revenue from the project first. If
project fails, loan collateral will be liquidated, finally the
States yearly allocation of CDBG funds will be the last
source of repayment.
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
Indiana’s CEED Program
•In August 2013, the State was notified by the U.S.
Department of Housing and Urban Development (HUD)
that we were approved for up to $30 million of Section
108 Loan Assistance.
•The State has up to 5 years to allocate loan funds from
the $30 million loan pool.
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
CEED Program Eligible Applicants
•Borrower
•State of Indiana non-entitlement jurisdictions
•Counties (except Lake and Hamilton)
•Cities (except those with direct CDBG allocation)
•Incorporated Towns
•End Borrower
•Businesses
•Non-profits
•Housing developers
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
Advantages of CEED Program
•Long-term, Fixed-rate Financing
•AAA rates
•Not considered a general obligation note
•Enables non-entitlement community to do a larger, cost
effective project
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
CEED Eligible Projects
•Housing Development
•Affordable Housing Acquisition/Rehab
•Senior or Family Occupancy
•Economic Development
•Job Creation
•Equipment Purchase
•Facility Acquisition/Rehab
•Community Development
•Public Improvements
•Brownfield Remediation
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
CEED Regulatory Requirements
•Compliance with all CDBG regulations:
•National Objective/Eligible Activity
•Low Moderate Income:
•Job creation/retention
•Area Benefit
•Limited Clientele
•Slum/Blight
•Area
•Spot
•Urgent Need
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
CEED Regulatory Requirements cont.
•Income Targeting LMI / Income Qualification & Verification
for Housing
•Environmental & Historic Review
•Labor Standards (Davis Bacon)
•Uniform Relocation Act
•Fair Housing/Civil Rights/504 Accessibility
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
CEED Regulatory Requirements cont.
•Financial Management/Procurement
•Construction Contract Requirements & Bonding
Requirements
•Section 3
•Lead Based Paint
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
CEED Application Process
•Initial Contact
•Housing – IHCDA
•Non-Residential – OCRA Liaison
•Checklist and Eligibility
•State receives and reviews the proposed project
eligibility
•State works with Local HUD office to determine
eligibility. State may request meeting with applicant.
Ongoing process.
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
CEED Application Process cont.
•Application Underwriting
•State reviews project viability after receipt of all
required application documentation
•Approval
•Application will be submitted to National HUD office for
approval. Can take up to 40 days
•Consent
•State legal opinion to HUD submitted Commitment letter
for financing to borrower. Around 55 days.
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
CEED Application Process cont.
•State/ HUD Closing
•State to execute HUD debt instruments and HUD
advances funds to LUG. Around 60 days
•Project Closing & Funding
•Funding to take place after receipt of all appropriate
supplemental documentation and legal documents are
executed. Around 45-60 days
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
CEED Application Process cont.
•Ongoing Servicing
•Ongoing loan servicing by IHCDA to include servicing
accounts, payment reminders and remittance, submitting
appropriate reports to State, etc.
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
CEED Financing
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Minimum Loan Amount - $500,000.00
Maximum Loan Amount - $7,000,000.00
Term
• Maximum 20 years residential
• Maximum __ years non-residential (variable)
Interest Rates
• Interim – variable interest rate
• Permanent – fixed interest rate
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
Interim Financing
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Interim loan available until public offering
• Interest rate: Variable 90 day London Inter Bank
Offered Rate (LIBOR) +250 basis points, paid
quarterly
• HUD guarantees repayment of borrower’s loan to
investors
Interim Lender currently a Money Market Fund
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
Permanent Financing
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Permanent – fixed interest rate
• Public offering provides long-term, fixed-interest
rate financing
• “Public offering” conducted occasionally by HUD
Section 108 underwriting team
• Interest rates—fixed; benchmarked on U.S. 10-year
Treasury note of equivalent maturity +250 basis
points
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
Permanent Financing cont.
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Permanent – fixed interest rate
• Fees—includes underwriting, legal and printing costs
• Loans serviced by IHCDA
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
Community
and
Economic
Development
Questions
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
Housing
Development
Questions
Matt Rayburn
[email protected]
317 233 9564
Darin Edwards
[email protected]
317 233 4611
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Office of Community and Rural Affairs
Indiana Housing and Community Development Authority
Questions?
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