The city of Omaha will use $20 million in recently awarded federal grant money to make loans to real estate developers to build affordable housing.
These funds are part of $75 million in loan guarantees recently announced by the Biden administration for four US cities. It’s coming from the Section 108 Loan Guarantee Program of the U.S. Department of Housing and Urban Development.
Omaha will use $20 million to create a loan pool through which for-profit and non-profit developers can borrow money at low interest rates, Omaha Mayor Jean Stothert said Monday. This will stimulate the development of affordable housing, she said.
“Successful loan applicants can use the funds to purchase property or for pre-development work, such as infrastructure improvements, or to rehabilitate or construct housing in neighborhoods located primarily east of 42nd Street in South and North Omaha,” Stothert said.
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A HUD official from Kansas City and Stothert made remarks at the mayor’s office Monday when he gave her a large ceremonial check to announce the funding.
“As you all know we are in the middle of a housing crisis, it is these types of innovative ideas that provide funds to create more affordable housing,” said Ulysses Clyburn, HUD’s regional director for the Great Plains.
Clyburn noted that he recently participated in a ribbon-cutting for the 50 Sienna Francis Tiny Homes, a groundbreaking achievement for the Highlander Choice Neighborhoods Initiative in North Omaha, and another major check ceremony for $50 million to help redevelop the Southside Terrace Homes in South Omaha.
He said Stothert and her team should be “proud to know” that Omaha is one of only four cities to receive Section 108 loan guarantee funds.
Stothert said she expects applications to be available in the first quarter of 2024. She said the city will work with a partner agency, which has not yet been identified, to help administer the program.
These funds are for housing that is affordable to people with low to moderate incomes. The loans will target housing developments for households with incomes at or below 80 percent of the Omaha area median income, Omaha Housing Director Greg Pascash said.
Loans are typically 2% less than the market rate, he said. Section 108 loans will help leverage other financing, essentially serving as ongoing support. Savings on interest payments reduces the overall development cost, so developers can sell or rent at a lower price.
The developments will be in Strategic Neighborhood Revitalization Districts, parts of Omaha identified by the city for development under HUD Community Development Grant Guidelines.
It’s a revolving loan fund, Pascash said. Therefore, when the loans are repaid to the city, the funds will be used to obtain loans for additional developments.
Stothert noted that the city also previously allocated $20 million in federal American Rescue Plan Act funds for affordable housing, and philanthropies allocated another $20 million.
“With our partner Front Porch (investments), we will have already awarded approximately $12 million in loans from our initial ARPA allocation,” Stothert said. “These projects are in various stages of development and represent about 500 residential units.”
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