In June 2015, IEDA received approval from HUD to establish a Section 108 loan guarantee program. Section 108 is the loan guarantee component of the CDBG program and allows the state to borrow funds through HUD that are secured with future state CDBG allocations. Section 108 provides communities with a source of financing for a variety of community and economic development projects.
Unlike traditional CDBG assistance, awards made under the 108 program are in the form of a below market rate interest loan.
All incorporated cities and counties in the state of Iowa, except those designated as HUD entitlement areas, are eligible to apply for and receive funds under this program. Funds may be passed through to not-for profit organizations and private businesses for eligible projects.
IEDA will consider applications from communities for the following types of projects:
- Economic development projects with job creation
- Adaptive conversion or reuse of commercial buildings for residential development
- Rehabilitation or renovation of upper story residential units
- Gut rehabilitation or demolition of vacant, dilapidated single family residential units
As the Section 108 program is designed for larger scale development projects, the minimum loan amount under this program is $1,000,000 and the maximum loan amount is $10,000,000. Loan terms may not exceed 15 years and will vary, depending on the project activities.
IEDA will conduct loan underwriting, which is reviewed and approved by HUD. All loans will require adequate security to ensure loan repayment.
All federal CDBG requirements apply to Section 108 loans.
Availability of Funds
Communities interested in the Section 108 program should contact IEDA staff to check on the availability of funds. The amount of available funds is dependent on previous awards and loan repayments.
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