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Committee advances CDBG reprogramming to close out Section 108 loan portfolio
Summary
The committee voted to send a reprogramming amendment for Community Development Block Grant (CDBG) funds to formal consideration; city officials said the move will help meet HUD timeliness rules and repay remaining Section 108 loans so more CDBG dollars can support local programs.
Detroit’s Planning and Economic Development Committee voted to send a reprogramming amendment for Community Development Block Grant funds to formal consideration, a measure city officials said will meet federal timeliness requirements and finish repayment of remaining Section 108 loans.
The reprogramming would shift unused CDBG dollars to cover upcoming Section 108 debt service and to support affordable housing and a recovery housing project, freeing future CDBG allocations for direct resident services. Julie Schneider, director of the Housing and Revitalization Department, said the change is intended to “help us to make the annual timeliness requirement that we have on May 2 of each year.”
The nut of the issue is a HUD timeliness test: grantees must not hold more than 1.5 times their annual CDBG allocation in their line of credit on May 2 each year. Rebecca Labove, a housing department staff member, told the committee the reprogramming would also allow the city to prepay Section 108 notes now (due in August) so the city will not need to pull additional CDBG dollars later. Labove said, “To the chair, this, essentially does, yes, close out the entire portfolio of past investments. There is 1 additional payment that will happen in 2026, but that is already funded with a debt service reserve.”
Officials said the Section 108 obligations on the city’s books date mainly from the early 2000s, following large economic development projects; earlier loans from the 1980s have been satisfied. Labove named past projects tied to the portfolio, including the Book Cadillac Hotel and the Fort Shelby Hotel, and said completing repayment would free CDBG for programs that provide “more direct benefit now to residents.”
A council member moved to send line item 5.2 (the CDBG reprogramming amendment) to formal with the recommendation to approve; there were no objections and the motion was adopted. The committee record shows the reprogramming is intended to (1) meet HUD timeliness requirements on May 2, (2) prepay Section 108 debt coming due in August, and (3) support imminent affordable housing construction and a recovery housing project for people with substance-use disorders.
Next steps: the item will proceed to the formal docket with a recommendation to approve and the department will provide any additional documentation requested during formal consideration.
