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In an effort to secure a $3 million federal loan to build a neighborhood community center, the City Council this week will consider putting up the Columbia Memorial Space Center as collateral.
Downey applied for the HUD loan in January as a way to construct an 18,000 square foot facility to house the city's space shuttle replica, which was built by North American Rockwell in 1972.
The shuttle mockup, named Inspiration, currently sits underneath a tent outside the space center.
In its application to HUD, city officials said the Inspiration Neighborhood Center could also house "lesser known" artifacts from Downey's extensive role in the Apollo and space shuttle programs. It would also provide meeting space for neighborhood residents.
Brian Saeki, community development director for the city of Downey, said it "appears likely that HUD will approve the loan" but on the condition of additional collateral.
"Staff is requesting that the City Council consider pledging the land improvements at 12400 Columbia Way as the source of collateral for the HUD loan," Saeki wrote in a report to council members.
The interest rate is expected to be about 2.54 percent on the 20-year loan. Downey officials are proposing to pay down the interest in years 1-4, followed by 15 annual payments of $187,500 to cover the principal.
The debt would be paid using federal Community Development Block Grant (CDBG) money, which has historically been used to help fund social programs and reduce blight in low- to moderate-income neighborhoods.
CDBG funding, however, has been reduced by the federal government over the last several years, including a recent $400,000 cut, from $1.5 million in 2011 to $1.1 million last year. If the program is eliminated entirely, the city would have to find another way to pay down the debt, and "this could include using general fund dollars if no other funding source can be identified," Saeki said in January.