An application for federal loans tied to two downtown hotel developments was pulled into Rockford's deepening public housing fray Monday.
And it was pulled out of City Council for at least two weeks.
Gorman & Company and Joseph James Partners have asked the city to help them land $3 million each in Section 108 loans for their projects. Gorman aims to turn the former Amerock building into a $67 million, 150-room Embassy Suites. Joseph James wants to redevelop 134 N. Main St., into a $16.4 million, 76-room boutique hotel.
The Section 108 loan program allows cities to underwrite certain economic development loans with federal Community Development Block Grants. If the loans go into default, the city's block grants could be used to repay the debt.
Section 108 is run by the U.S. Department of Housing and Urban Development, an agency that has riled the City Council. A letter from the agency warned the city and Rockford Housing Authority that they could be in violation of fair-housing laws if they don't continue with plans to redevelop Fairgrounds Valley. HUD wants to deconcentrate poverty in the near-west-side housing complex. Ald. Venita Hervey, D-5, a HUD critic, asked that the matter be put on hold until aldermen have deeper discussions with HUD officials about the letter.
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