Melissa Cook, director of the Department of Housing and Citizen Services, told the Pueblo City Council on Dec. 22 that staff want to add a substantial amendment to the city’s consolidated plan to allow application to HUD’s Section 108 loan guarantee program to address residential and commercial blight.

Cook said Pueblo receives roughly $1.5 million annually in Community Development Block Grant (CDBG) funds and about $1.0 million in HOME Investment Partnership funding. She described a blight inventory that identified roughly 60 residential homes needing demolition and another ~230 single-family homes that could be rehabilitated. "All that this is doing is allowing the city to further explore the loan opportunity," Cook said, and stressed that adding the loan to the plan as a priority would not obligate the city to borrow funds.

Under the Section 108 model described by staff, an entitlement jurisdiction such as Pueblo could borrow up to five times its annual CDBG allocation. Based on 2025 figures, staff cited an illustrative amount of about $7.1 million. Cook said HUD’s rate is tied to recent Treasury bills plus a small margin (staff cited an example rate of 3.88%), and the program allows amortizations (staff noted HUD offers up to a 20-year amortization). Using rough assumptions (60 houses at an average demolition cost of about $90,000), Cook said annual debt service could be under $400,000 and paid from CDBG with strategies to offset the burden — for example, targeting properties inside urban renewal districts to create future tax increment financing.

Cook described a planning timeline: staff expect planning through February 2026, would add the loan as a priority in the consolidated plan so HUD application could be opened in spring 2026, and — if successful — aim to launch the program in late 2026 with demolition beginning in 2027. She warned the proposal remains high-level and that program implementation would require subsequent council actions.

Councilors pressed on principal and amortization details. Cook clarified the obligation would not be interest-only: "It is not interest only. It is principal and the interest," she told the council. Councilors also asked whether sale of cleared lots could recoup costs; Cook said most single-family lots in targeted neighborhoods are low value (often less than $10,000) and any proceeds would likely be modest and applied to principal.

Next steps: staff asked the council to place the loan guarantee priority into the consolidated plan to allow HUD discussions and a possible application; any later decision to accept financing or authorize debt would require separate council approvals.