Inspiring development through HUD 108 fundsWritten by Adam Martinez | | firstname.lastname@example.org
When I began brainstorming about the idea of using Housing and Urban Development (HUD) 108 funds differently it was more of a knee-jerk reaction than a bright idea. It really materialized when Toledo City Council voted (10-2) to allow the Berdan Building to use $10 million of a $20 million pool of funds. The development concept of the Berdan Building would be great for Downtown Toledo, but my concerns still linger about the underwriting criteria and how this project was going to qualify for using HUD funds. While Mayor Bell and City Council may have said OK to this project, the ultimate decision is in the hands of the National HUD office.
While there is not much I can do about that project, I began to think about future criteria of what a HUD 108 loan should be. The reality is the city has no concrete public policy on uses for 108 loans, nor underwriting criteria. HUD 108 loans have not been used to their full potential and have not been used very successfully in Toledo. HUD 108 loans are a very powerful tool if used correctly, but the mechanics are complex, the uses are specific, and the penalties and consequences are severe if it is not used appropriately.
In crept the “What ifs … ” We have all had a case of the “What ifs … ” at some point in our lives. The “What ifs … ” taunt us in the back of minds or keep us awake at night; it’s the constant antagonizing of questions with unknown answers. I kept asking myself, “What if there was a better way to do development in Toledo?” “What if there is a better way to use this money?” “What if there was a way to create a public/private partnership to bring jobs to Toledo?” “What if there was a way to use this money — leverage it — but also share the risk?”
So, like any good politician, I held a meeting! I wanted to make sure that meeting was simple and inclusive to ensure all stakeholders were represented. I wanted to ask a few simple questions and most importantly listen to the concerns about 108 loans. I invited members from the various economic development agencies, CDCs and nonprofits, social justice advocates, administrative departments and my colleague Rob Ludeman. I wanted to know if other people had the same concerns about how 108 was being represented.
It was an impressive meeting with the “who’s who” of development in our area. I was very nervous in the beginning, but was confident by the end that I had surrounded myself with professionals who were not afraid to think creatively, understood/respected the constraints of HUD, but were willing to look for creative solutions. There was a lot of talent, experience and passion for Toledo in that room.
The concept is to leverage 108 loan funds with other funding sources. It’s a simple, but innovative approach to trying to figure out how we move Toledo forward, create jobs and help rebuild our economy.
Imagine if we could use the whole $20 million of HUD funds and match that five times over through other financing instruments. Instead of only having $20 million and a lot of risk to the city, we would have $100 million to invest with low risk. Imagine instead of doing one residential building for $10 million and maybe create three to five jobs, we can do a variety of projects, low risk and create thousands of jobs.
This is not a magic silver bullet, but rather a silver buckshot center mass to wound our economic condition. In these tough economic conditions, it is important to be creative, collaborative, inclusive and leave the egos at the door. This loan fund, while still conceptual, is not about me, the organizations or politics; it’s about good public policy, good underwriting, job creation and most importantly, harnessing our economic development power and giving it back to the people of Toledo.
Adam Martinez is a Toledo City Councilman. E-mail him at email@example.com.