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Auburn staff seek HUD Section 108 loan of up to $3 million to renovate Auburn Resource Center
Summary
City staff proposed applying for a HUD Section 108 loan to redevelop the Auburn Resource Center into a multi‑service facility with community court space and provider offices; staff estimate construction near $2.4 million and plan to repay from annual CDBG entitlement and program income.
Auburn’s human services director and CDBG coordinator asked the City Council on June 9 to approve submitting a Section 108 loan application to the U.S. Department of Housing and Urban Development to rebuild the Auburn Resource Center (ARC) and adjacent community court space.
Kent Hay, Human Services Director, and Jody Davidson, CDBG coordinator, said the project would be a public‑facility reconstruction to convert the ARC into staffed provider offices, a secure community court room that doubles as meeting space, and private offices for service providers. Hay said the city applied for a maximum $3,000,000 HUD Section 108 loan because HUD allows borrowers to request up to five times their annual CDBG allocation; Auburn’s current annual CDBG entitlement is $584,178.
Hay described the project scope and policy rationale. He said the ARC sits in an area with high rates of low‑income families, provides an existing food bank and shelter adjacency, and is intended to expand weekday access to multiple services rather than the current limited‑hours model. The plans include private meeting rooms for providers, a police substation entrance, and a community court room that would also be available for public meetings when not in use. Hay said the loan proceeds would be drawn on a reimbursement basis and the likely project cost is about $2.4 million in current architect estimates.
Hay and Davidson explained repayment plans and risks. The Section 108 loan “starts with a variable rate” and may convert to a fixed market rate later; HUD’s introductory variable rate was cited in the meeting as about 6.25% at the time staff asked HUD. City staff said plan A is to repay the loan from the city’s entire annual CDBG entitlement and that the city would not use the entitlement for other projects during the loan period. Staff also noted HUD considers the city’s annual entitlement as the loan collateral and that the loan allows up to a 20‑year repayment term though the city aims to retire the debt in about 6½ years if feasible.
Council discussion focused on timeline, security and operations. Councilors asked whether municipal or community court would continue; staff said community court would continue and municipal court is expected to operate community court in the space after the county ILA ends in December 2026. Council members also asked about staffing, potential subtenant agreements with service providers, whether revenue from leasing would be treated as HUD program income, and whether the community court would require on‑site police officers (staff said security screening would be by private security; the police substation need not be continuously staffed).
No final loan commitment was approved in the study session; staff said they will continue design work, complete underwriting with HUD, and bring formal applications and resolutions back for council action. Hay asked council if members wanted a site tour and council asked staff to arrange one ahead of construction.
