1. State of Louisiana Disaster Recovery Unit
CDBG-DR Economic Development
Project-Based Recovery Opportunity Program

2. Hurricanes Katrina & Rita (2005)
Hurricane Katrina
Hurricane Rita

3. Hurricanes Katrina & Rita (2005)
Total CDBG-DR Allocation to OCD-DRU:
$13.4 billion
Total Economic Development Programs:
$362 million (3%)
Programs Administered Directly by OCD-DRU:
1 ($41.3 million); 20 projects
Programs Administered by Subrecipients:
11 ($322 million); 45+ subrecipients and sub-grantees
Total OCD-DRU Staff:
5-8 FTE
Due to the nature and scope of Hurricanes Katrina and Rita, the state chose to primarily engage local, community-based subrecipients to implement the majority of the economic development programs that followed immediately after the storms. Providing funding through agencies that were based at the local level both helped to ensure the programs were implemented in a manner that best targeted the impacted communities as well as helped those organizations to build or re-build their capacity following the devastating impacts of the storm.

4. Project Based Recovery Opportunity Program (PROP):
Summary: OCD receives and reviews all applications, performs the underwriting and selects eligible participants for a low-interest, gap financing loan program. OCD directly monitors all projects for compliance with all CDBG-DR requirements, collects and tracks the principal and interest payments and financial documentation and maintains the revolving loan fund for future program applicants.
Approved Projects: 20
PROP is a highly successful program that is implemented by OCD.
Project types vary from theaters, grocery store, office space/incubator, healthcare clinics, nursing home, hotels….

5. PROGRAM GOALS:
Assist neighborhood and local economic development priorities
Invest in commercial corridor revitalization
Support key local and state industry sectors
Spur long-term job creation, economic revitalization and long-term sustainability
Employ disaster recovery resources to leverage private resources

6. ELIGIBLE ACTIVITIES: NATIONAL OBJECTIVES: WAIVERS:
105 (a) (14) and 105 (a) (17)- Assistance to private, for-profit and public or private non-profit entities
ELIGIBLE ACTIVITIES:
LMI Job Creation and/or Retention
LMI Area Wide Benefit
Elimination of Slum and Blight
Urgent Need
NATIONAL OBJECTIVES:
Public Benefit Standard
Documentation for business assistance
WAIVERS:
Program is eligible as a special economic development activity
95% of the PROP projects are out of Orleans Parish. The parish was designated Slum and Blight. The national objective for most of the PROP projects was elimination of slum and blight.
When the LMI national objective could be applied, it was utilized as a national objective or as an additional public benefit to the project for partial loan forgiveness.
Documentation for assistance- LMI job creation/retention- Waiver to apply individual salaries or wages per job and the income limits for a household of one rather than using the household income and limits by total household size

7. ELIGIBILITY: ASSISTANCE:
New business in an eligible parish or existing business in an eligible parish with plans to expand
Create a minimum number of jobs
Annual gross revenue of $250,000
Equity investment of 10% or greater of total project costs
CDBG funds cannot exceed 75% of total project costs
ELIGIBILITY:
Loans-$500,000-$5,000,000
Terms:
Minimum of 5 years and maximum of 30 years
1-2% interest rate
ASSISTANCE:
Acquisition
Construction/Rehabilitation
Equipment
Inventory
USE OF FUNDS:
Average award was $1M-2MApplicants are required to invest a minimum of 10% equity into the project
Loan terms is based on the project type, size and proposed use of funds; Interest rate is based on project’s cash flow, ability to service debt and risk assessment
Loan forgiveness is based on timely repayment and adherence to agreed upon project performance goals and plans. Performance goals could include creating a certain number of jobs or operating a certain number of years. Average forgiveness is 15%-30%
A portion of the loan may be forgiven if there is an additional public benefit. Forgiveness has to be requested.

8. REVIEW PROCESS: REVOLVING LOAN FUND:
Application review
Site visit
Underwriting
PROP Review Committee selection
REVIEW PROCESS:
Repayments to OCD are put into a revolving loan fund and used for more PROP projects
REVOLVING LOAN FUND:
OCD monitors the borrowers for compliance with CDBG and loan agreement requirements
MONITORING:
Applications are reviewed by ED PROP team, which consists of four individuals. The application/project is presented to the PROP committee to determine if the project will move forward in the review process for a site visit. Questions/concerns are asked, site visit is conducted and underwriting occurs. PROP committee makes a decision.
Having all funding sources committed (term sheet or soft commitment) is important in the review process. This shows that the project is financially ready and no financial stalls will occur and project can start.
Monitoring occurs throughout the term of the loan. The loan agreements require borrowers to provide financial statements quarterly(unaudited) and annually (audited). Also monitor by quarterly reports that are provided, job creation support and an official monitoring visit for CDBG compliance.

9. St. Thomas Community Health Center Total Project Cost $5,400,000 | CDBG-DR Funding = $2,000,000
Before…
After
Federally Qualified Health Center that services low-income, uninsured and underinsured target population of Orleans Parish.
Funding sources: Private and non-profit funds, CDBG and $1.2M in NMTC.
NMTC were included in about half of the projects. There is a seven year compliance period that OCD has to work through. OCD had to obtain feasible guarantors and additional collateral in these types of deals to get comfortable with taking sometimes second or third position.
St. Thomas had two clinic prior to receiving funds and through the CDBG funding expanded its capacity by purchasing a historic building and expanding that building by adding 12,000 sq ft. to the building and nearly doubling the size of the center’s capacity
Healthcare environment changed as a result of Hurricane Katrina since five hospitals closed in Orleans Parish.
Working with New Market Tax Credits and Historic Tax Credits can be challenging, but it is best to get an expert (legal counsel) on the team that has experience in those deals.
75% of patients are uninsured
The Health Center provides comprehensive primary care services and now offers cardiovascular services

10. Circle Food Store
Total Project Cost $8,000,000 | CDBG-DR Funding = $2,000,000
Before…
After….
Circle Food Store is a staple in its community. Prior to the Hurricane the store had been around for _____ years and is one of the few African American owned grocery stores in the South.
22,000 sq ft
It took around several years to get the financing in order for the store to rebuild and reopen.
This project also included NMTC, federal and state historic tax credits.
Requirement for flood insurance to be maintained because it is in a 100-yr floodplain. This was a great requirement because the store flooded again just last year from heavy rainfall.

11. Lessons Learned
Ensure you have an underwriter who is comfortable with lending and lending principals
Have programmatic and CDBG requirement discussions early in the process
Don’t be the only funder to take on all the risk in a deal; it is critical that the owner has skin in the game
Ensure All Deliverables and Requirements are Contained in Loan Agreements
Document, Document, Document!!! Every File Must Tell the Full Story
Begin with the End in Mind: What are the expected outcomes, monitoring and compliance needs? Think through the details of the processes needed to select and implement a program. Think Through and Document Process & Procedures for Every Eligible Expense Associated with the Program (Environmental Review, Labor Compliance (Davis Bacon), Flood Insurance Requirements, Procurement, etc.)
Assess Internal and External Capacity: Who Should Administer the Program(s)? Combination of state and local implementation? Consider Experience and Past Performance in Project and Subrecipient Selection

12. Contact Us… Lasonta Davenport Economic Development Manager
Office of Community Development – Disaster Recovery Unit
Phone: (225)