HomeMy WebLinkAboutResolution - 2007-R0353 - Approve Changes To CD Sec. 108 Loan Program - CDBG - Parks Projects - 07/26/2007Resolution No. 2007-80353
July 26, 2007
Item No. 6.17
RESOLUTION
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK:
THAT the City Council of the City of Lubbock does hereby approve the proposed
changes of the City of Lubbock Community Development Section 108 Loan Program from the
Community Development Block Grant (CDBG) Program to allocate such funds for park projects
within the CDBG-eligible areas of the City of Lubbock. Said proposal is attached hereto and
incorporated in this resolution as if fully set forth herein and shall be included in the minutes of
the City Council.
Passed by the City Council this 26th day of July , 2007.
DAVID A. MIL ER, MAYOR
ATTEST:
Rebe&a Garza, City Secretary
APPROVED AS TO CONTENT:
Bill Howerton, Jr.
Community Development Director
APPROVED AS TO FORM:
gslccdocs/CDBG.res-COL CD 108 Loan Program.Proposa1.08
07111.07
Resolution No. 2007-x0353
4 � n
Proposed Change of Use
HUD Section 108 Loan Program
History of 108 Program
The City was approved for a $2,000,000 Section 108 Loan from the United States
Department of Housing and Urban Development (HUD). City Council then voted
to accept a $lmillion 108 Loan. Trust certificates were then sold by HUD in a
public offering on June 30, 2004. The funding received through the public
offering was in the form of a loan and must be repaid to HUD. The payback is
amortized over an eight-year period. To date, the payments have been made
utilizing the City's annual Community Development Block Grant (CDBG)
allocation, payments from homeowners, and interest earned on the HUD 108
funds. Future payments will come from the annual CDBG allocation.
The funds were to be used for the HUD 108 -Housing Rehab Loan Program.
Guidelines for the city-wide program are as follows.
• Rehabs range from basic home repair to major rehabs of homes.
• Program will follow CDBG regulations.
• Loans will be a 100% payback for participating homeowners.
• The interest rate for the rehab loan is 6.0%.
The program funds have not been spent as originally allocated for the following
reasons:
• Lead-based Paint requirements set forth by HUD have pushed up the total
cost for the renovations. This is not a cost that a homeowner would have
if they obtained financing from a private source.
• Rates in the open market are comparable to the Program's rates, ranging
from 6.75% to 9.0%. When the program was first discussed, interest rates
in the open market were much higher. Under similar loans, clients would
have been expected to pay rates up to 12.0%.
• Staff has initiated the application process with 881 homeowners. This has
resulted in a total of 15 approved cases (1.7% approval rate).
Proposed Use of the Remaining Funds:
There is approximately $863,671 available in the 108 Loan fund to be used for
actual projects. Staff is recommending that the funds be used for Parks projects
within the CDBG-eligible areas of Lubbock.
These projects include:
• Burns Park, 23rd Street and Avenue K, replacement of the existing playground
equipment and ADA, accessibility improvements to the park.
• Hollins Park, I" Street and Vernon, replacement of the existing playground
equipment and ADA accessibility improvements to the park.
• Mae Simmons Park/Dunbar Historic Lake Improvements, MLK Boulevard,
construction of restroom, accessibility improvements, and a walking track.
To change the proposed use of the funds, staff must submit a change in use plan
to the Regional HUD Office in Fort Worth, Texas. Staff will also need to
complete environmental requirements as set forth by HUD.