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Mar 16, 2010 12:59 PM by Rob Kirkpatrick

New Loan Program Available In Gustav/Ike Recovery Areas

BATON ROUGE, La. - The state of Louisiana is launching a $25 million "gap financing" loan program to create additional mixed-income and Permanent Supportive Housing in the 53 parishes damaged by hurricanes Gustav and Ike in 2008.

The funding is part of $1 billion in disaster recovery Community Development Block Grant dollars awarded to Louisiana by the U.S. Department of Housing and Urban Development for damages inflicted by hurricanes Gustav and Ike. As part of this allocation, HUD is requiring the state to dedicate 11.2 percent of the total funding to affordable rental housing.

The $25 million Gustav-Ike Piggyback Program will award zero-interest loans to developers who "piggyback" the CDBG money with other funding sources to create mixed-income housing for market-rate and low-to-moderate income tenants, and for the creation of Permanent Supportive Housing units.

The projects may be either new construction or rehabilitation of existing rental housing.

Louisiana Recovery Director Robin Keegan said, "These developments will provide affordable rental housing for our workforce, filling a demand that has become ever more critical in the wake of hurricanes Gustav and Ike, which damaged or destroyed more than 6,500 rental units."

The competitive loan program, which requires each project to provide a letter of endorsement from the local government, initially will be allocated to the following pools:

$10 Million Permanent Supportive Housing Pool: Available for Permanent Supportive Housing projects located in the Gustav-Ike impacted parishes. PSH units are linked to supportive services for vulnerable populations in non-institutional settings, reducing emergency room visits and other high-cost health and social service interventions for people with chronic disabilities. The model is a national best practice with cost savings that outweigh the expense of the services. Supportive services will be provided by local lead agencies, with funding and oversight from the Louisiana Department of Health and Hospitals. The local lead agencies will receive applications from individuals seeking PSH units and will refer eligible tenants to Piggyback projects.
$10 Million Mixed Income Pool A: Available for mixed-income projects in the 10 most impacted parishes: Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, Iberville, Jefferson, Lafourche, St. Mary and Terrebonne.
$5 Million Mixed Income Pool B: Available for mixed-income projects located within Gustav-Ike impacted areas, but outside the ten parishes listed in Pool A.
General Pool: Remaining funds from Mixed Income Pools A and B will be transferred to this pool after the second round of funding. Permanent Supportive Housing Pool funds will remain within the PSH Pool.
The application period will begin April 8. The application deadline for the first round of funding is April 30. Subject to availability of funds, the deadline for a second and third round of funding will be June 30 and Aug. 31, respectively.

Projects must be either mixed-income developments or Permanent Supportive Housing projects.

For mixed-income developments, at least 30 percent of the units must be for market rate tenants, at least 51 percent must be for low and moderate income tenants and at least five percent must be Permanent Supportive Housing.

For Permanent Supportive Housing developments, at least 51 percent of the units must be affordable, and at least 15 percent, but no more than 50 percent, of the units must be PSH. All projects must have a minimum of 30 residential rental units and include PSH units.

The CDBG loans, which mature in 35 years, are to be used solely for gap financing and the hard costs of rehabilitation and construction.

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