PROGRAM:  Short-term use of undisbursed, but otherwise committed CDBG funds.  See CFR 570.301 (b).

 

TYPE OF ASSISTANCE:  Loan

 

MAXIMUM AMOUNT:  The maximum available aggregate float loan amount is an amount not to exceed the previous year's ending balance in the CDBG letter of credit, adjusted for projected changes in the City's annual entitlement as determined by the Finance Department.

 

ELIGIBILITY:  Must be a high priority community development project that results in significant public benefits, and for which there is a demonstrated immediate need and no other available resources.  If proposed outside the annual Consolidated Plan budget process, the proposal must follow full citizen participation requirements.  These requirements include referral to the CDAB for review, notifying the public through legal advertisement of the City's intent to amend its consolidated Plan to include the float loan, inviting public comments during a thirty day comment period, and convening at least one public hearing.  If included in the annual CDBG budget process, the activities must be fully described in the annual action plan section of the Consolidated Plan.

 

ELIGIBLE/ INELIGIBLE USES:  Must meet all eligibility requirements of the CDBG program.

 

RATES/TERMS: All CDBG float loans must bear an interest rate to be charged to the borrower.  All revenue earned from interest will be returned to the CDBG program income account unless the interest is structured as an integral part of the project financing.  Loan must be repaid in full.  Term of loan is 2.5 years of issuance date.

 

SECURITY: Must be secured by documentation of end-financing commitment such as an irrevocable Letter of Credit including language acceptable to the City that funds in any amount can be drawn at any time during the life of the loan upon a 30-day notice period to the developer.  HUD requires the City to identify a course of action to be taken if repayment of the loan is not made.  Of the courses of action acceptable to HUD, the City will obtain an irrevocable letter of credit from a commercial lender for the full amount of the loan to cover any default or shortfall in repayment.  The lender and terms of such line of credit must be described in the action plan section of the Consolidated Plan along with the float loan project description.

 

APPROVAL:   City Council approval needed for each Float Loan

 

 

 

Contact: Bill Fischer, Business Development Manager

Phone: (513) 352-3785

Fax: (513) 352-6257