Section 108: What is Section 108 and its Relationship to CBDG

hello I'm SEMA Thomas deputy director of the section 108 loan guarantee program I'm joined today by Paul Webster the director of the section 108 loan guarantee program we're excited that you can join us today as we discuss 50 years of guaranteed loans from Vision to implementation here at HUD Paul do you mind sharing first with us a little bit about the history of section 108 so since the program was implemented uh We've funded more than 2,000 projects we have uh issued over10 billion in commitments we've created did uh at least 120,000 jobs uh over that period of time so the uh the program has had a tremendous impact on uh communities uh under the cdb2 program over uh that that period of time uh program is also uh given uh us the opportunity to work closely with communities to help uh solve issues to help them structure projects that comply with all of the eligibility rules under the cdbg program in section 108 uh and also in many cases structure the project so that it has a greater impact so that section 108 funds can uh can provide the needed boost to uh project design so that uh instead of creating uh 200 jobs it can create 250 uh instead of uh providing uh needed streets and curbs and gutters and a uh low and moderate income area uh we can expand the areas in the city that can be uh that can be uh assisted with funding to meet a basic uh uh Community Development needs so it's been a rewarding experience from that standpoint to to be able to help communities address their needs to be able to uh provide some added value to the uh to the uh the use of the section 108 program so Paul can you share a bit more about what it's like and you've started talking about what it's like to work with communities from Vision to implementation can you share more about that brainstorming to capturing results and outcomes with communities and what it's like well one example is a uh it's a city that we assisted uh in implementing the first loan pool project under Section 108 where a community gets a commitment uh of X dollar and then uses uh those funds for various and for multiple projects over the years um in order to get to the point where it's feasible for both the community and for uh for HUD we went through uh multiple uh brainstorming sessions with local officials with uh with lenders uh before we got to the point where uh the program was implemented successfully this one particular Community has has uh has carried out many uh additional projects under uh section 108 and it's become a paradigm for other communities to uh to follow in uh finding ways to provide funding in a economical way for particularly for economic development projects that's great and Paul you've been with Section 108 longer than anyone what are some lessons learned well over the years the I would say the most important lesson that that uh I've learned and that we've tried to apply to uh to situations where sex 108 funds uh are being considered as a funding source uh is to engage a community uh uh upfront as soon as possible so that we can uh help them uh structure projects or restructure projects in a way that will both address the uh their goals and try to meet their goals but also ensure that they comply with all of the legal requirements that uh have to be complied with in connection with the use of federal funding so uh I would say that's the biggest lesson uh that we've learned and over the years we've come up with more innovative ways to use uh uh the financing uh the different uh kinds of projects and uh again trying to uh structure loan terms to meet the uh the needs of a project so that uh not every project uh get in one particular category we can fund uh projects uh such as a shopping center where um needed services are provided to low and moderate income persons in an area that's undeserved we can uh structure the terms of the loan so that the uh the cash flow from the project can match The Debt Service under Section 108 uh program and so that there's not a need to have uh additional funding UPF front to uh cover uh capitalized interest for example during a startup period so Paul on that note many communities they're familiar with grants but I noticed your team can do quite a bit of support guidance assistance can you share more about that so we offer uh a uh very basic technical assistance to communities uh they don't have to go hire a cons consultant necessarily to for example to structure projects they can come to HUD with an idea and we can help them take that idea and turn that idea into uh reality and uh often times again uh by our getting involved upfront providing that technical assistance we can anticipate and avoid eligibility issues that might otherwise be uh created if someone else less familiar with the the requirements for using section 108 funds were to be involved that's great it's it's a great example of how HUD can be a partner in these Community Development projects so on that note Paul what are your thoughts on the future in Community Development and how 108 might be able to help our thoughts uh my main thought is to um uh continue to be adaptable to changing uh conditions uh to changing demographics uh so that communities can uh meet the needs that ex that will exist five years 10 years from now without having to uh fit a project into a model that was created uh well before uh that need came to be so um the the main uh thing that I think we want to do is to try to keep the program Nimble flexible and uh to be able to adapt to needs as they arise that we had never anticipated thank you Paul for sharing so much about this incredible Community Development tool section 108 I'd like to express my gratitude for everyone involved in the production of the series as well as our communities that have used section 108 please feel free to contact me or anyone on our team to learn more about section 108 we hope you enjoyed the series and we hope to hear from you soon