BY COUNCILOR GILBERT:
RESOLVED, that the proper city officials are hereby authorized to enter into a Section 108 loan agreement, substantially in the form of that on file in the office of the city clerk as Public Document No. __________ with Hillside Business Association (HBA) related to the construction of the Fifth Street redevelopment housing project in the amount of $7,282,000 payable from Fund 264, said authorization is subject to HUD’s approval of said redevelopment housing project.
FURTHER RESOLVED, that the city of Duluth hereby pledges $1,820,500 in future CDBG funding to cover 25 percent of the Section 108 loan value as is required by HUD.
STATEMENT OF PURPOSE: This purpose of this resolution is to authorize the issuance of a loan in the amount of $7,282,000 from the city’s approved HUD Section 108 guaranteed loan allocation. The funds will be used to construction the Village Place housing development located on the lower side of East Fifth Street between Sixth and Seventh avenues East. HBA is a community based development organization (CBDO) and a limited partner in Central Hillside Development Limited Partnership, LLLP (developer). HBA will provide the loan funds to the developer for construction of the project. Developer will repay the Section 108 loan from tax credit equity participation, surplus cash, any tax savings which may occur and any unanticipated TIF generated. HBA will be responsible for a servicing fee and for all costs incurred by the city in connection with the city’s loan from HUD.
HUD requires 125 percent coverage on the Section 108 loan value. This resolution pledges $1,825,500 in future CDBG funding to cover the additional 25 percent.