Davis County to pursue HUD Section 108 loan option to accelerate 60‑unit supportive housing effort

Davis County staff asked the commission Wednesday for permission to apply for HUD Section 108 loan guarantees to help secure land and accelerate a proposed 60‑unit permanent supportive housing (PSH) project.

Community Services staff outlined the PSH proposal as a facilitation role for the county—bringing together developers, public housing agencies and nonprofit operators—rather than running the property itself. “We are wanting to facilitate and help coordinate the production of a 60 unit PSH or TH project,” the presenter said, describing a 12‑month goal to get projects moving with partners.

Staff presented a cost range for a comparable 60‑unit project of roughly $10 million to $20 million, depending on design and site. They estimated operating and service costs for such a development at about $440,000 annually for supportive services and roughly $292,000 for property operations; using conservative assumptions staff modeled an effective gross income near $831,000 and an illustrative annual surplus of about $99,000 before debt service.

To speed site acquisition when opportunities arise, staff recommended applying for HUD's Section 108 loan guarantee program, which allows jurisdictions to borrow up to five times their annual CDBG allocation. “Section 108 is a program within HUD … that allows the county to borrow up to 5 times our annual allocation,” staff explained, estimating the county’s available guarantee at about $4.7 million.

Staff described Section 108 as a line‑of‑credit mechanism: the county would submit an application to HUD to secure borrowing authority and could draw against it for land acquisition, infrastructure, or construction as projects are ready. Staff noted that HUD’s guarantee means the loan is issued by private lenders and that the county pledges future CDBG allocations as security for the loan.

Commissioners discussed risks and collateral. Staff acknowledged that in a theoretical extreme the elimination of CDBG by Congress would expose the county to repayment obligations, and commissioners asked how collateral would be structured. “If Congress decided to get rid of the CDBG program, we would be on the hook to pay back that loan,” staff said, describing the procedural and collateral implications.

After discussion, commissioners agreed to proceed with an application for Section 108 authority so the county would have funding capacity available to act quickly when a suitable property becomes available. Staff said further specific approvals would follow before any borrowing or land purchase took place.

Next steps include preparing the Section 108 application, continued coordination with local public housing agencies and developers, and returning to the commission for any required formal approvals prior to making draws or closing on property transactions.