06-16-2015 HUD Section 108Performing Arts & Events Center
Application to HUD Section 108
Loan Guarantee Program
Policy Question:
Should the City of Federal Way submit and
accept a loan in the amount of $3,030,000
from the U.S. Department of Housing and
Urban Development Section 108 Loan
Program for the Performing Arts & Events
Center?
if (.ea.
6/16/2015
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Section 108 Loan Program
Basis
• Section 108 of the Housing and Community
Development Act of 1974
• 24 CFR §570.700- 570.71 1
• Cities can borrow five (5) times their annual CDBG
authority from HUD for eligible projects
Section 108 Loan Program
Application requirements:
• Projects must meet three conditions:
(1) be an Eligible Activity; and
(2) meet Public Benefit Standards; and
(3) Meet at least 1 of 3 National Objectives:
o Benefit low- and moderate - income persons
o Prevent or eliminate slums or blight
o Address urgent community need
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Federal Way Section 108
Loan Fund
• Program approved by HUD in May 2014
• Loan Fund Capacity: $3,030,000
• Program focus on Economic Development
• Release of funds requires project- specific
application
• Potential Projects Identified:
o Twin Lakes Commercial District
o Performing Arts & Events Center
Performing Arts & Events
Center Application
How does PAEC meet HUD program
requirements?
(1) National Objective
• Job Creation from the PAEC facility and Town
Center projects meet the objective to benefit
low- and moderate - income persons
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Performing Arts & Events
Center Application
(2) Eligible Activities
• 24 CFR 570.703(1) - construction of public
facilities
• 24 CFR 570.703(i)(1) - economic development
activities
Performing Arts & Events
Center Application
(3) Public Benefit
• Economic Development activities must
demonstrate public benefit, typically in the form
of job creation or retention
o
51% of jobs must be filled by low- and
moderate - income persons.
o Must create /retain 1 FTE per $10,000 of
CDBG funding ($3.030 million /$10,000 = 303
Jobs Required
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Performing Arts & Events
Center Application
(3) Public Benefit (cont'd)
O Jobs must be considered permanent.
o Construction jobs do not count.
• 24 CFR 570.209(b)
• 24 CFR 570.208(a)
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Performing Arts & Events
Center Application
Application Contents
• Development Objectives
• Project Description
• Project Financing and Schedule
• Regulatory Compliance and Public Benefit
• Public Participation
• Attachments and Appendices
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Loan Structure
• Borrower:
• Loan Amount:
• Loan Term:
• Interest Rate:
City of Federal Way
$ 3,030,000
20 Years
On Closing - Adjustable
90 -Day LIBOR + 20 BPS
Currently 0.48%
Fixed Rate
Currently 2.95%
Loan Structure (cont'd)
• Debt Service:
• Use of Funds:
$191,582
Average Annual Payment
Design costs and other
"soft costs" including
legal and accounting, as
well as loan fees and
closing costs
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Loan Repayment
Source of Repayment
• City of Federal Way annual CDBG entitlement
grant
• Current CDBG grant amount: $61 7,465*
- Future grants subject to change based on congressional action and /or
number of entitlement communities
• Expected Annual Debt Service: $191,582
• Percent of annual grant: 31%**
** -- Actual percentage depends on total grant, but dollar obligation remains for
term of loan
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Federal Way Use of CDBG Funds
Estimated $$ available annually:
• CDBG $617,465
• Planning & Admin (20% max.) $123,493
o CDBG Public Services (15% max.) $92,619
o Community Economic Revitalization Fund
(CERF) (65 %)
• Projects $209,771
• Section 108 Loan Payment $191,582
$401 ,353
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Federal Way Use of CDBG Funds
201 5 -2019 Consolidated Plan includes an
expectation that the City will use its Section
108 Loan Fund for the PAEC.
201 5 Annual Action Plan includes the Section
108 Loan, and $55,000 for debt service.
The City Council UNANIMOUSLY approved the
Consolidated Plan and Annual Action Plan at
the June 5, 2014 business meeting.
Job Creation
Public Benefit Standards
• 24 CFR 208
• 24 CFR 209
• A public facility must create at least:
O 1 FTE per $35,000 of CDBG Assistance; or
O 1 FTE per $10,000 of CDBG Assistance in a
Redevelopment Area
• PAEC will not create enough jobs itself so public
benefit must be met through adjacent /related
developments
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Section 108 Public
Facilities Projects
Diverse range of eligible uses
• Infrastructure (Streets, sidewalks utilities, etc.)
• Parks, Community Recreation & Senior
Centers
• Parking Structures
• Performing Arts and Cultural Centers
• Fire Stations
Generally Prohibited
• General Government Use (e.g., City Hall,
Police cars, etc.)
Using CDBG to Repay
Section 108
The following list of projects was gathered
from HUD's annual report of Section 108 loan
projects, and all projects were financed
between 2008 and 2011.
In each case, the city or county will repay the
Section 108 Guaranteed Loan using its future
CDBG funds. Additionally, where state law
allows, they have pledged the full faith and
credit of the city or county.
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Comparable Projects
Allen - jemison Building - Dinah Washington
Cultural Arts Center
Tuscaloosa, AL
Section 108 Loan: $1,500,000
Joe Balderrama Recreation
Center
Oceanside, CA
Section 108 Loan: $6,400,000
Comparable Projects (cont'd)
DeKaib Community and
Senior Centers
DeKaib County, Georgia
Section 108 Loan:
$14,000,000
Ideal Theater Rehabilitation Project
Yauco, Puerto Rico
Section 108 Loan: $2,500,000
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Comparable Projects (cont'd)
The Ponce Convention Center
Ponce, Puerto Rico
Section 108 Loan:
The Oceanographic Center of
the Caribbean (Public Aquarium)
Ponce, Puerto Rico
Section 108 Loan:
Si 7,600,000
$3,290,000
Public Participation
The City has fulfilled its requirements in order
to submit the Application
• Distinctly identified in the Consolidated Plan and
Annual Action Plan for Program Year 201 5
• On May 1 5, 201 5, the City published a Notice of
Review and 30 -Day Public Comment Period and
Public Hearing in the Federal Way Mirror
• The 30 -day public inspection /comment period
ended on dune 15, 2015
• Public Hearing tonight.
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Public Participation (cont'd)
Copies of the proposed Application were made
available for public review and comment at
the:
• City of Federal Way Office of the Mayor
• Federal Way Community Development Department
• Federal Way Branches of the King County Library
• Multi- Service Center
• City's website at www.cityoffederalway.com
• Public Hearing
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Next Steps
• Finalize Application Requirements;
• Confirm Job Creation Expectations; and
• Submit Application to:
o HUD Seattle Regional Office; and
o HUD Washington, D.C. Headquarters
• Respond to HUD Questions as Required
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Next Steps
• Once Approved By HUD:
o Confirm HUD Loan Requirements;
o Hold Required 2nd Public Hearing on
Loan; and
o City Action to Execute Documents
• Close Loan and Fund
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Performing Arts & Events Center
Application to HUD Section 108
Loan Guarantee Program
6/16/2015
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