Lorain looks to restart its revolving loan program

LORAIN — Lorain could have a revolving loan fund to help spur development in the city. City Council briefly came back from its August recess to accept a donation of $100,000 in services from Enterprise Community Partners for technical assistance in its application for a federal loan program. The matter passed 9-0; Mary Springowski, D-at Large, and Josh Thornsberry, D-8th Ward, were absent. Enterprise Community Partners received a Robert Wood Johnson Foundation grant to help several communities apply for U.S. Department of Housing and Urban Development Section 108 Loan Guarantee Funds to spur economic development, housing and infrastructure projects. The agency selected Lorain as one of those communities, granting the city technical supports for its Section 108 application. Section 108 loans allow a city to borrow up to five times its annual Community Development Block Grant entitlement from the federal government to fund revolving loan programs. In Lorain's case, it is requesting about $6.3 million to kick-start its revolving loan program. Building, Housing and Planning Director Matt Kusznir was adamant that the funds — both from the federal government to the city, and any money the city will lend to businesses or developers — must be repaid with interest. If the city were to default on the loan from HUD due to a borrower from the city defaulting, Lorain could have to pay that amount back using its Community Development Block Grant funds. "We plan on using those funds to re-create the revolving loan program, loan those dollars out and also recoup those dollars. We will not be using any of these funds as a grant because, at the end of the day, we do have to pay HUD back every dollar that we borrow," Kusznir said. "We will pass on that interest rate (from HUD) and then some onto businesses loan these funds out to, but these funds can be loaned out for any CDBG-eligible activity." The city's plan, Kusznir said, is for these loans to be larger than its current revolving loan programs — upwards of $100,000 or more. If HUD approves the city's program, all future loans from the fund would have to come to City Council for approval. Safety/Service Director Rey Carrion noted the city previously had a revolving loan program like this decades ago that backed projects like the Colorado Avenue Industrial Park and the Antler's Hotel renovation. The city plans to submit its application to HUD at the end of October. There is no set timeline when Lorain could hear back on its application. Contact Carissa Woytach at (440) 329-7245 or cwoytach@chroniclet.com.