Section 108 provides low-cost, federally backed financing for economic development, public infrastructure, housing and property acquisition projects that benefit low- and moderate-income residents. Key advantages include increased financing capacity, competitive interest rates, repayment terms of up to 20 years, and the ability to attract private investment by filling funding gaps. Eligible uses include commercial and industrial development, street and park improvements, community facilities, affordable housing development or rehabilitation, and real property acquisition or clearance.
However, Section 108 financing also carries significant risks. The City must pledge current and future Community Development Block Grant funds as collateral, creating long-term financial obligations if projects underperform or borrowers default. Additional federal compliance requirements, underwriting standards, security requirements, and eligibility restrictions can increase administrative costs and extend project timelines.
The Affordable Housing Advisory Committee will review the Section 108 program in November and provide feedback on whether and how the City of Bend should consider utilizing this financing tool.
