From Judy Gilleland - City Manager
As the final details are being completed to move the Cincinnati State project from concept to construction, the developer, Higher Education Partners (“HEP”), will be utilizing a number of financing sources including HUD’s Section 108 program to pay for purchase and renovation of the buildings to be used in the new campus. Current plans call for HEP to repay the loan over a 6 year period.
Section 108 is a loan guarantee provision of the Community Development Block Grant (CDBG) program. Section 108 provides communities with a source of financing for economic development, housing rehabilitation, public facilities, and large-scale physical development projects. This makes it one of the most potent and important public investment tools that HUD offers to local governments. It allows them to transform a small portion of their CDBG funds into federally guaranteed loans large enough to pursue physical and economic revitalization projects. Such public investment is often needed to inspire private economic activity, providing the initial resources or simply the confidence that private firms and individuals may need to invest in distressed areas. Section 108 loans are not risk-free, however; local governments borrowing funds guaranteed by Section 108 must pledge their current and future CDBG allocations to cover the loan amount as security for the loan.
As the agreements come together between Cincinnati State and HEP and between HEP and the City of Middletown, City staff will submit for Council’s consideration an application for Section 108 financing. As with other CDBG documents, this process will require a public hearing and a 30-day public comment period before coming to Council for legislative action. The final dollar amount has not been determined at this time, and the individual agreements, the amount requested by HEP, and all other details of this project will be brought forward as part of the public hearing and public comment process before Council votes on the matter.