COMMUNITY ENHANCEMENT AND ECONOMIC DEVELOPMENT FUND(CEED PROGRAM)

A HUD SECTION 108 LOAN PROGRAM

Indiana Office of Community and Rural Affairs

2014 Regional Conference

Darin Edwards Kathleen Weissenberger daedwards@ihcda.in.gov kweissenberger@ocra.in.gov

@OCRAIndiana #INOCRAconf

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

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.C

EED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

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.

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

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

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

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

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

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

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

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

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

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

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

CEED Regulatory Requirements cont.• Financial Management/Procurement• Construction Contract Requirements & Bonding

Requirements• Section 3• Lead Based Paint

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

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.

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

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.

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

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

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

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.

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

CEED Financing• 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 rateC

EED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

Interim Financing• 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

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

Permanent Financing• 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

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

Permanent Financing cont.• Permanent – fixed interest rate

• Fees—includes underwriting, legal and printing costs

• Loans serviced by IHCDA

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

@OCRAIndiana #INOCRAconf

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

Community and Economic Development Questions

@OCRAIndiana #INOCRAconf

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority

Housing Development Questions

Matt Rayburn

mrayburn@ihcda.in.gov317 233 9564

Darin Edwardsdaedwards@ihcda.in.gov317 233 4611

@OCRAIndiana #INOCRAconf

Questions?

CEED

Loan P

rogra

mOffice of Community and Rural Affairs

Indiana Housing and Community Development Authority