HUD's Office of Community Planning and

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Summary: Underwriting • CDBG has: – Voluntary underwriting guidelines – Required public benefit standards • Two types of ED underwriting: business loans and real estate loans – Each requires a different underwriting approach – But both focus on reasonable and necessary public investment in the venture 254
ACTIVITY: UNDERWRITING 255
Page 2 and 3:
Welcome • HUD’s Office of Commu
Page 4 and 5:
Learning Objectives • Be familiar
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Agenda (cont) • Day 3 • Infrast
Page 8 and 9:
ECONOMIC DEVELOPMENT STRATEGIES (TO
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Overview of Economic Development
Page 12 and 13:
The Process Economic Analysis Evalu
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Economic Analysis • Assess qualit
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Strategy Options CDBG 108 Other Fed
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Implementation • Describe goals
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Summary: ED Strategies • Economic
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Topics • CDBG history background
Page 24 and 25:
Primary Purpose • Develop viable
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“Companion” Programs to CDBG
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CDBG ED Project Decision Process 1.
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Typical CDBG-Funded ED Activities
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Eligible Activities • Wide variet
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Eligible Activities - ED Projects T
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Special Econ. Development • Comme
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Commercial Rehab • Limited types
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Special Activities by CBDOs • Typ
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Planning and Capacity Building •
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ACTIVITY: DETERMINING PROJECT ELIGI
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National Objectives 570.208 All CDB
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LMI: Area Benefit • Activity that
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Documenting Area Benefit • Bounda
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Job Training, Placement, or Support
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LMI: Housing Activities • Permane
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LMI: Job Creation & Retention • A
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Job Retention with LMI Benefit •
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Counting Jobs • Each business tra
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Counting Jobs • Count all jobs cr
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Documenting Job Creation • When
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Determining Income Status - Written
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Slum & Blight: Area Basis • Activ
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Slum & Blight: Spot Basis • Activ
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Urgent Need • Activities that all
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ACTIVITY: MEETING NATIONAL OBJECTIV
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Limitations on Job Relocation • J
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Faith-Based Organizations • Final
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570.209 Public Benefit Standards
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Test at Two levels • Individual S
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Aggregate Standards • Create/reta
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Projects Automatically Fail Individ
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Summary: CDBG Foundation • Three
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REVITALIZATION STRATEGY AREAS (TOOL
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Revitalization Strategies • Writt
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• Area must be: - Contiguous - Pr
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Assessment • Describe economic co
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Benchmarks • Must describe measur
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Review & Approval • Submitted wit
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SMALL BUSINESS DEVELOPMENT (TOOLKIT
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SMALL BUSINESS DEVELOPMENT 104
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What Is a Small Business? • Not u
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Technical Assistance • Business c
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Typical Training & TA Providers •
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Financial Assistance • Types of A
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MICROENTERPRISE ASSISTANCE 114
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Microenterprise Assistance • Fina
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National Objective • Limited Clie
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Key Steps In Setting Up Program •
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Key Steps • Design TA and trainin
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BUSINESS INCUBATORS 124
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Benefits of Incubators • Help red
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Financial Burden • Incubator is a
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Funding Incubator Construction •
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Evaluating Incubator Applications
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Summary: Incubators • TA is impor
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JOB TRAINING & OTHER PUBLIC SERVICE
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What Is Job Training? • Help unem
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Other ED Public Services • To sup
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Who Can Undertake Training? • Gra
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National Objective • Training as
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Key Steps • Conduct a needs asses
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Summary: Job Training • Job train
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LARGE-SCALE COMMERCIAL DEVELOPMENTS
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What Are Large-Scale Commercial Dev
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CDBG Roles • Financing to busines
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Special ED Activities • Acquisiti
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National Objective • Job creation
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Key Steps in Design • Determine i
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INFRASTRUCTURE (TOOLKIT CH 7) 162
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What Is Infrastructure? • Non-hou
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Privately Owned Utilities • Cover
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Ineligible Infrastructure Activitie
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Special Assessments (cont) • If a
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Special Assessments Are Not • Not
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National Objective (cont) • Low/M
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Key Steps • Decide if want to tar
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Summary: Infrastructure • Public
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Topics • Financing options • Re
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Methods of Financing • Grants •
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Equity • Contribution of cash or
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Debt Options • Direct loans - Sub
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Contingent Payment Loans • “Def
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REVOLVING LOAN FUNDS 190
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Typical Borrowers • Existing busi
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Steps: Market & Client Scan • Con
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Step: Select Administrative Entity
Page 198 and 199:
CDFIs 198
Page 200 and 201:
Definition of a CDFI • Specialize
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CDFIs & CDBG • Job creation/reten
Page 204 and 205: UNDERWRITING (TOOLKIT CH 9) 204
Page 206 and 207: Underwriting Defined • Underwriti
Page 208 and 209: HUD Appropriateness Criteria • Tw
Page 210 and 211: Risks: Inflated costs Understated c
Page 212 and 213: Necessity of Public Funding • Sho
Page 214 and 215: Reasonable Return & Terms • Loan
Page 216 and 217: Public Benefit Test • Applies to
Page 218 and 219: Public Benefits: Aggregate Portfoli
Page 220 and 221: Two Primary Types of ED Lending •
Page 222 and 223: Underwriting Business Loans • Abi
Page 224 and 225: Debt Coverage Ratio Guidelines •
Page 226 and 227: What Is Value? Fair market value Li
Page 228 and 229: General Guidelines: LTV • Commerc
Page 230 and 231: Commitment • Commitment by owners
Page 232 and 233: Management • Must be experienced
Page 234 and 235: Small Startups • Likely to have a
Page 236 and 237: Underwriting Real Estate Loans •
Page 238 and 239: Collateral • Use Loan-to-Value Ra
Page 240 and 241: Experience • Be certain developme
Page 242 and 243: Summary of Appropriateness • Good
Page 244 and 245: History of Appropriateness Criteria
Page 246 and 247: Risks: Inflated costs Understated c
Page 248 and 249: Gap Analysis • Financing gap •
Page 250 and 251: Rate of Return + Reasonable cost -
Page 252 and 253: Project Feasibility & Return • Te
Page 256 and 257: SECTION 108 (TOOLKIT CH 10) 256
Page 258 and 259: SECTION 108 OVERVIEW 258
Page 260 and 261: How much can communities borrow?
Page 262 and 263: Advantages of 108 • Leverage - Ac
Page 264 and 265: Eligible Activities • Acquisition
Page 266 and 267: Program Requirements • National o
Page 268 and 269: Section 108 Guarantee HUD Guarantee
Page 270 and 271: Players & Roles • Community • H
Page 272 and 273: Risks of Using Section 108 • Loan
Page 274 and 275: Risk Management • Avoid construct
Page 276 and 277: • Covers early payment Defeasance
Page 278 and 279: Overview of Process • Screen proj
Page 280 and 281: Application Types • Generic Appli
Page 282 and 283: Citizen Participation • Provide a
Page 284 and 285: HUD Review • Review by area offic
Page 286 and 287: Disbursing & Servicing • Custodia
Page 288 and 289: RELATED INITIATIVES 288
Page 290 and 291: Brownfields & BEDI • Brownfields:
Page 292 and 293: PROGRAM ADMINISTRATION (TOOLKIT CH
Page 294 and 295: PROGRAM DESIGN & ADMINISTRATION 294
Page 296 and 297: Typical Roles in ED Programs • In
Page 298 and 299: Policies & Procedures • Recommend
Page 300 and 301: Marketing • Develop a rollout str
Page 302 and 303: Program-Wide Records • Consolidat
Page 304 and 305:
Financial Records • Bank records,
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Subrecipient • Subrecipient appli
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HUD REPORTING 308
Page 310 and 311:
Objectives • Suitable living envi
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Indicators & Reporting • Grantees
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Job Reporting (cont) • For job re
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Businesses Assisted Reporting (cont
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MEASURING ED PROGRAM SUCCESS 318
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Monitoring • Grantees are respons
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Monitoring Actions • Technical As
Page 324 and 325:
Summary: Administration • CDBG ED
Page 326:
Wrap Up • Final questions • Eva
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