Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Economic Development topic
No spam. Unsubscribe anytime.
City reviews Section 108 loan request for downtown hotel redevelopment
Summary
Developers seek a $3.6 million HUD Section 108 loan guarantee toward a $43.2 million downtown hotel/retail redevelopment; staff said the city would request a public‑benefit waiver for job‑creation thresholds and stressed rigorous underwriting and collateral. Commissioners questioned default risk and monitoring.
City staff presented a Section 108 loan guarantee request from Woodmont Lodging Group to redevelop downtown properties including the Hotel Gordon and Rosenberg Building into a mixed‑use hotel and retail project. The total project budget cited in the presentation was $43,228,708; the developer is requesting $3,600,541 in Section 108 funds to be part of the capital stack.
Staff explained HUD’s public‑benefit standard for CDBG economic development projects — generally $50,000 of Section 108 funds per full‑time equivalent job — and said the city plans to request a waiver of that aggregate public‑benefit standard because the project is in a HUD‑designated enterprise community and neighborhood revitalization strategy area. The developer projects about 50 FTE jobs; staff flagged that the $3.6 million request would nominally require roughly 72 FTEs under the $50,000 per job metric.
Speakers described the proposed financing structure: Morgan Stanley as a primary financing partner, a prior city loan of $9 million that would be repaid from taxes, potential historic tax credits (federal and hoped‑for state credits), and other elements of the capital stack. Staff said HUD underwriting and additional collateral would be required and that if a loan defaulted the city’s future CDBG allocations could be used to repay HUD — potentially reducing funding for other local CDBG projects.
Commissioners asked about default scenarios, collateral and how interest/principal flows would be handled; staff said HUD would typically receive principal and interest payments but the city could negotiate retention of some interest in certain structures. Staff emphasized a thorough underwriting process and referenced precedent (a waiver sought previously for the Hilton Garden Inn project). If the commission authorizes application submission, the city would trigger a 30‑day public comment period as part of HUD process.
Action and next steps: staff asked the commission to adopt authorizing resolutions to submit a Section 108 loan application and to submit a waiver request to HUD; if approved staff will proceed with the 30‑day public notice and HUD underwriting process.
