Loan Guarantee Program (Section 108 Program)
Program Description | Downloads & Related Links | Contact Information
The CDBG Loan Guarantee Program (Section 108 Program) is
an economic and community development financing tool authorized under Section
108 of Title I of the Housing and Community Development Act of 1974, as
amended. The program is a method of assisting non-entitlement local governments
with certain unique and large-scale economic development projects that
cannot proceed without the loan guarantee. In order to be eligible a project
must meet all applicable CDBG requirements and result in significant employment
and/or benefit for low and moderate income persons. Projects that are eligible
for financing under existing federal, state, regional or local programs
will generally not be considered for guarantee assistance unless the programs
would fail to fully meet a project's need.
Unlike the traditional CDBG or EIP Program, the Section
108 Program does not operate through assistance from the Department of
Community Affairs (DCA). Rather, funds are raised through DCA's "Pledge
of Grants" to the U.S. Department of Housing and Urban Development (HUD)
in order to obtain a federal guarantee of notes issued by the local government.
The federally guaranteed notes are sold into private markets through public
offerings conducted by HUD. By approving the project, the State pledges
its future CDBG funds as the ultimate repayment source should a Section
108 loan default. The State's participation in the Section 108 program
does not involve a pledge of Georgia's full faith and credit nor does it
commit any funding to the local government. HUD makes the ultimate approval
or denial of the federal guarantee.
Since CDBG funds are an essential and critical resource
for Georgia's non-entitlement local governments, the Department will use
conservative rating, selection and underwriting criteria in evaluating
requests for the State's concurrence and Pledge of Grants. Only those projects
that DCA determines can generate sufficient revenue from local and project
resources to debt service all obligations will be competitive under the
State's Section 108 rating and selection system.
Maximum Loan Guarantee Amount: $5,000,000 (In the interest
of limiting exposure and promoting a diversified portfolio, the Department
reserves the right to limit the amounts "pledged" to any one unit of local
government or business interest).
Downloads & Related Links
Section 108 Fact Sheet (PDF)
Pre-application Manual (PDF)
Contact Joanie Perry at (404) 679-3173.
Georgia Department of Community Affairs
60 Executive Park South, N.E.
Atlanta, Georgia 30329-2231