The Brockton Downtown Restaurant Infrastructure Fund (“BDRI” or the “Fund”) has been created with the intent to establish a funding mechanism to promote the establishment of new, full-service restaurants and dining opportunities in the heart of Brockton’s downtown business district. The Fund will be geared toward the creation and promotion of full-service restaurants and will be authorized to make loans to eligible borrowers within the Downtown District. The Brockton Redevelopment Authority (“BRA”) will administer the Downtown Restaurant Infrastructure Fund on behalf of the City of Brockton.
The DBRI has been capitalized using the proceeds of a United States Department of Housing and Urban Development (“HUD”) Section 108 Loan Guarantee. The Section 108 Loan Program carries with its certain regulatory requirements that mandate certain eligibility criteria be met for a Borrower to participate in the program. Section 108 of the Housing and Community Development Act of 1974provides for a loan guarantee component of the Community Development Block Grant (CDBG) Program.
The Section 108 Loan Guarantee Program (Section 108) provides communities with a source of financing for economic development and can be loan via the City to a third party to undertake the eligible projects. Eligibility for participation in the Section 108 Loan Guarantee program is governed by the regulations found at 24 CFR 570 Subpart M. Given the federal funding source for the DBRI requires that the City of Brockton (acting by and through the Brockton Redevelopment Authority) must strictly adhere to the regulatory requirements in administering the loan program.
The DBRI will be capitalized with $1.5 million in HUD Section 108 Loan Guarantee funds and administered by the City of Brockton’s Brockton Development Authority subject to the credit decisions rendered by the Fund Loan Committee (see criteria set forth below under Section 4). Under the DBRI program applicants may apply for loans between $50,000 and $350,000 depending upon eligibility, underwriting review, and overall creditworthiness. Pursuant to HUD regulations eligible borrowers are required to create at least one (1) full time equivalent (FTE) job for each increment of $35,000 borrowed under the program.
Interest rates will be determined according to HUD’s cost of funds plus an agency spread of 20 basis points on the cost of funds. The HUD rate is calculated as 3-month LIBOR + 20 basis points. The City of Brockton in order to cover the costs of the Loan program may at its sole discretion, charge 100 basis points (or 1%) over HUD’s cost of funds. Therefore, loans made to end Borrowers pursuant to the Downtown Restaurant Infrastructure Fund may feature an interest rate that represents 3-month LIBOR plus 120 basis points (1.20%). Loans originated under the DBRI shall have terms that may range from 5 to 20 years. In general, the loans created under this program will be self-amortizing but shall in no case exceed a 20-year term.
The Brockton Redevelopment Authority is responsible for Fund oversight and ensuring compliance with applicable HUD regulations. The DBRI funding is currently not available for applications. The funding application will be uploaded hereto when funding is available.