The Federal Way City Council, in a 6-1 vote, approved the use of up to $30,000 for technical assistance in establishing a Community Development Block Grant (CDBG) Section 108 loan fund.

The city will partner with the National Development Council to complete the work in establishing the fund, which would potentially hold up to approximately $3 million and could be put towards a variety of projects in Federal Way, most notably the proposed Performing Arts and Conference Center (PACC).

“This is a loan that can be provided against five years of our grant (CDBG funds), and paid back over up to 20 years,” said Director of Community and Economic Development Patrick Doherty at the Council’s March 4 meeting. “What we’re talking about this evening is the loan fund program. And the professional services to help us with that. This is not specifically the project loan for the proposed Performing Arts and Conference Center or any other project, for that matter. It’s a loan fund program, and that loan fund can be used for any number of projects.”

Jay Bennett, community services manager for the city, said the city had received verbal confirmation that the Section 108 loan fund would be approved. With that confirmation, the city will have to complete some due diligence fairly quick, given the requirements of the Section 108 program.

“Once that paperwork comes through, and the Council accepts those terms and conditions of the fund, then we have 12 months to have a project completely vetted and reviewed,” he said.

This would also include holding a public hearing and final approval from the Council, Bennett added. The other benefit of the Section 108 program is that approval comes from the Seattle regional office of the United States Department of Housing and Urban Development (HUD), meaning a quicker turnaround than if the information had to head to HUD’s headquarters in Washington, DC.

Councilmember Bob Celski asked Bennett if the money that would be pooled into this loan fund could be used for a number of different projects, or if it would be limited to just one.

“It’s a $3 million pool. We’d be working … with the National Development Council to identify several projects that would be eligible,” Bennett replied.

“So there’s flexibility with this?” Celski followed up.

“Absolutely. It’s a loan fund pool, we just have to have one through the entire process, by the end of the 12 months,” Bennett reaffirmed.

Councilmember Susan Honda, the lone dissenting vote, expressed her continued reservations about the city’s efforts at finding funding sources like these, especially if the intent is to use them for the PACC.

“I remain very concerned about … taking a loan of any kind, to build the Performing Arts and Conference Center. I remain very concerned, especially with using CDBG funding, because we need that funding for our citizens who need help with housing and education,” she said. “I realize it can also be used for economic development, and economic development is certainly something we need to get going in this community. I do remain very concerned about taking on debt for the PACC.”

In recent years, the city’s CDBG allocation was approximately $600,000.

If the city is allowed to create the loan fund, $175,000 of that $600,000 would be diverted towards the loan fund.

Deputy Mayor Jeanne Burbidge noted that the city also puts significant funds towards human services issues outside of the CDBG funds.

“We would still have the majority of the balance of (that) $600,000,” she said. “Since we became an entitlement city, we do have more resources and programs available to use and I believe we’re being very prudent in our use and application of those programs. I personally believe we need to continue to broaden our economic base for our city. If we do not do that, we can be at risk in the future. That’s what this money was intended for, in addition to the human services allocation we make every year, in addition to using over $500,000 every year from our general fund for human services. I feel very confident that this is an extremely appropriate use of this funding source.”

Councilmember Dini Duclos agreed with Burbidge, saying the Section 108 program is a valuable and useful resource.

“It is a wonderful source of funding and it does allow you to do things that you couldn’t normally do,” she said. “It’s a great resource, and I would hate for us to not have it available to us.”

For more information about the PACC, visit www.federalwaypacc.org.