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USDA Rural Development Programs Summary

USDA Rural Development has requested assistance with getting the word out on their Community Facilities program. Their budget year will come to a close on September 30th and they still have funds available and they are encouraging eligible interested communities to inquire or to apply as soon as possible.

Below you will find information about the program from Brian Queen with USDA-Rural Development. Please contact Brian or the USDA contact person for your region (see attached map) if you have any questions or need additional information:

The Community Facilities (CF) program is a loan program with a grant component. The program may be used to develop essential community facilities or purchase necessary equipment in rural areas and towns with a population of less than 20,000. Typically operating expenses, such as salaries, are not an eligible assistance purpose. The amount of grant assistance available depends upon the median household income and the population in the service area and the availability of grant funds. Grant funds are extremely limited. In most instances, projects which receive grant assistance have a high priority and are highly leveraged with other loan and grant awards.

Who may apply: Community Programs can make and guarantee loans to develop essential community facilities. Loans and guarantees are available to public entities such as municipalities, counties, and special-purpose districts, as well as to non-profit corporations and tribal governments. Applicants must have the legal authority to borrow and repay loans, to pledge security for loans, and to construct, operate, and maintain the facilities. They must also be financially sound and able to organize and manage the facility effectively. Repayment of the loan must be based on tax assessments, revenues, fees, or other sources of money sufficient for operation and maintenance, reserves, and debt retirement. Feasibility studies prepared by a third party are normally required for start-up facilities.

Fund Uses: Loan funds may be used to construct, enlarge, or improve community facilities for health care, public safety, and public services. This can include costs to acquire land needed for a facility, pay necessary professional fees, and purchase equipment required for its operation. Refinancing existing debts may be considered an eligible direct or guaranteed loan purpose if the debt being refinanced is a secondary part of the loan, is associated with the project facility, and if the applicant creditors are unwilling to extend or modify terms in order for the new loan to be feasible.

Rates and Terms: Current rate is 3.25%, but does change on a quarterly basis until fixed at loan approval. Loan repayment terms may not exceed the applicant authority (under State law or organizational structure), the useful life of the facility, or a maximum 40 years.

Security Requirements: bonds, notes pledging taxes, assessments on revenue and/or a mortgage may be taken on real and personal property

Application Processing: Applications are handled by USDA Rural Development area offices and can be submitted at any time. Area staff can provide application materials and current program information, and assist in the preparation of an application. The CF application process is a two-stage procedure (preapplication and application). After an application is submitted, time to process the application depends upon the scope of the project, environmental review, and legal issues.

More information can be obtained by visiting the USDA website or by contacting the area office that covers the respective county listed on our attached PDF Boundaries Map.


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