cdbg economic development

CDBG Economic Development

Annual Competition and Set-Aside Programs (EIP and RDF)

Three Routes to ED with CDBG

1. Annual Competition ED application

2. Employment Incentive Program

3. Redevelopment Fund Program

Features of ED Programs

Maximum Grant $500,000

Primary Purpose Expand employment opportunities for L/M income people

Low/Moderate Income Benefit

51% of jobs created and/or retained

Eligible Uses Public facilities, infrastructure, business loans, elimination of Slum and Blight (RDF)

Available Funding

Community Development Block Grant (CDBG) Funds from U.S. Housing and

Urban Development (HUD)

CDBG-ED $37 million CDBG allocation

EIP $7 million set-aside

RDF $1.5 million set-aside

The CDFD Finance Team

Field Staff – project identification, assessment, development and monitoring

Credit Unit

Credit analysis, underwriting

Financing options

Program Manager

Review overall project

Ensure program objectives can be met

Craft award documents

Project oversight

Who Can Apply?

Eligible:

Non-Entitlement Cities & Counties

Ineligible:

Entitlement (Metro/Urban) Cities & Counties

Getting Started – EIP & RDF

1. Have an Idea? Call DCA early!2. Initial Project Assessment – ED

representative will visit.3. PACA – pre-agreement cost

approval does not guarantee funding.

4. Application – Reviewed by panel.

Application Process

Application Forms (DCA 1- DCA 13)

Supplemental Information & Documentation

Public Infrastructure or Loan attachments Refer to: EIP or RDF Application Manual

and CDBG Applicants & Recipients Manuals

Canton-UAC

Canton-UAC

Source Amount Use Amount EIP Grant $ 500,000 Rail spur const. $ 500,000EDA $ 928,870 Rail spur const. $ 821,750 (City/DACC/UAC) Water and sewer ext. $ 31,000

Contingencies $ 76,120DACC $ 226,803 Rail spur construction $ 120,213

Contingencies $ 57,090ROW acquisition $ 49,500

DACC/City $ 71,600 Pre-eng. assessment $ 10,275Engineering fees $ 59,500NEPA environ. $ 1,825

City $ 31,000 Water and sewer ext. $ 31,000UAC $ 99,467+ Rail spur construction $ 80,437

Contingencies $ 19,030Bldg exp, M&E $ NA

Total $ 1,857,740 + Total $ 1,857,740 +

Canton-UAC

Loan Structures

DCA Grant to a Local Government:

Direct loan to a private business. Loan to a development authority who then makes a

direct loan to a private business.

Quality Industries, LLC

Quality Industries, LLC

Quality Industries, LLC

Direct loan from Hart County to Quality $283,176 loan for M&E Saved 23 jobs Created 7 new jobs $2 million in private investment

Source and Use

Source Amount Use Amount EIP $ 295,176 Machinery & Equipment $ 283,176

Administration $ 12,000 

Pinnacle/SBA $1,540,000 Land and Building $1,440,000Working Capital $ 100,000

Quality equity $ 345,000 Land and Building $ 160,000Machinery & Equipment $ 138,504Working Capital $ 46,496

Total $2,180,176 $2,180,176

Loan Activities

YES Land Buildings Rehabilitation Machinery & Equipment

NO Working Capital Refinancing Speculative Projects General Conduct of Government Project Not Meeting Federal Guidelines

Credit Worthiness

The State takes “informed risk” Funding the Grey Area

Look for positives Make the project work Work with Program Manager

Five C’s of Credit

CapacityCapital

CharacterCollateralConditions

Revolving Loan Funds

It’s (mostly) Your Money Loan payments capitalize local RLF RLFs can be used for local economic

development needs Must be CDBG eligible

Sample RLF Projects

Retail Daycare Manufacturing Telecommunications Workforce Development Centers Public Infrastructure

Redevelopment Fund

City of Washington – Fitzpatrick Hotel

RDF – Fitzpatrick Hotel

Vacant and Dilapidated (the tree!)

Rear wall, roof and second floor required emergency stabilization

Extensive repairs required Declared a ‘blight’

RDF – Fitzpatrick Hotel

Rehabilitate the hotel to historic preservation standards

Place back in commercial use Full service hotel with 16

rooms and suites 3 commercial storefronts

on first floor Restaurant Conference facilities

RDF – Fitzpatrick Hotel

RDF Provided: ‘Gap’ financing Subordinate to primary lender Favorable terms

.875% rate 20-year term Repayment deferred until

construction complete and certificate of occupancy issued

Source and Use

Source Amount Use Amount RFP Grant $250,000 Building Rehabilitation $250,000 

SunTrust $976,000 Building Rehabilitation $751,817Furniture & Fixtures $119,585Interest $ 90,000Architect & Engineering $ 14,598

Fitzpatrick $205,666 Building Acquisition $130,000Operating Capital $ 39,620Opening Supplies $ 28,246Insurance & Taxes $ 7,800

Total $1,431,666 $1,431,666

Things to Remember

Describe your project and jobs created/retained

Document need, costs and support of banks & businesses

Debt – credit underwriting and terms

Contact:

Andy Yarn EIP Infrastructure & Public Facilities

(404) 679-1589 Jonathan Corso EIP Loans

(404) 327-7909 Stefanie Dye RDF Program

(404) 679-1738