U.S. Department of Agriculture Rural Development

Water & Sewer Loan/Grant Program

Community Facility Loan/Grant Program

Community Programs • Rural Development has two programs for

rural communities:

o Community Facilities (town halls, fire halls, DPW buildings, fire trucks, police cars, libraries, etc.)

o Water & Waste (water & sewer projects)

Website - http://www.rurdev.usda.gov/mi/

• In 2013, for all programs, USDA Rural Development invested approximately $950 million in Rural Michigan.

• Programs include:

o Water & Waste

o Community Facilities Loans and Grants

o Telecommunications, Distance Learning Grants, Broadband

o SFH Direct & Guaranteed Home Loans

o Home Repair Grants & Loans

o MFH Direct & Guaranteed Loans

o MFH Rental Assistance

o MFH Housing Preservation Grants

o Guaranteed Business and Industry Loans

o Renewable Energy Grants

Community Programs

• Community Facilities: eligible entities include: – Public bodies, non-profits, & tribes located in communities or a

service area less than 20,000 population.

• Water & Waste: eligible applicants include: – Public bodies, tribes, non-profits located in communities or a service

area less than 10,000 population.

2013 Water & Waste/Community Facility Totals

Loan $89,216,000

Grant $15,310,868

TOTAL - $104,526,868

Water & Waste – approximately 32,129 residents benefited from 31 projects

Community Facilities – 70 equipment and/or construction

projects in over 54 communities.

Expected Water & Waste 2014 Regular Allocation :

Direct Loan: $32,510,000

Direct Grant: $10,935,000

Expected Community Facilities 2013 Regular Allocation:

Loan: $42,000,000

Guarantee: $ -0-

Direct Grant: $ 214,000

Economic Impact

Initiative Grant: $ -0-

FY2014 budget has been signed – waiting for state allocation.

2014 Levels of Funding:

Pending Applications • Backlog of CF and WEP projects seems to be easing. Loan and

grant funds are not as limited as last fiscal year

• MI application backlog - 26 Water & Sewer Projects = $ 57,147,000 - 18 CF loans & 13 CF grants = $ 25,976,481

CHALLENGES TO LIMITED FUNDING!

• REFINANCING EXISTING DEBT-

o Limited to <50% of total project.

o Refinancing previous debt is an eligible for loan funds only.

o However, refinancing projects does not provide new environmental/public health benefits to water quality.

o If a portion of your project includes refinancing, you will receive two expected funding timeframes – one without refinancing and one with refinancing.

CHALLENGES TO LIMITED FUNDING!

• LEVERAGING – Funds from other sources including: CDBG SRF/DWRF MDOT DDA Applicant’s general and/or enterprise funds

• The percentage of leveraging may give your project priority over another project by assigning additional priority points!

CF and WEP Loan Terms

o Up to maximum 40 year loans, dependent upon the life of facility, State/Local laws, or Repayment ability

o CF Equipment and/or vehicle loans are normally 15 years or less when using Act 99 Installment Purchase Agreement – very dependent upon the useful life of the equipment being purchased.

o Capital Improvement Bonds have a 30 year limit.

o Revenue, Junior Lien Revenue & Special Assessment bonds have a 40 year limit.

WEP Interest Rates

Updated on a quarterly basis

Current interest rates – 1/1/2014 – 3/31/2014

• Poverty Interest Rate o MHI of less than $41,678 with a third-party documented violation of a health or sanitary

standard 2.625%

• Intermediate o MHI between $41,678 - $52,097 3.500%

• Market o MHI over $52,097 4.375%

You get the best interest rate at the time of loan closing!

CF Interest Rates Updated on a quarterly basis

Current interest rates – 1/1/2014 – 3/31/2014

• Poverty Interest Rate o MHI of less than $41,678 with a third-party documented health or safety issue

4.500%

• Intermediate o MHI between $41,678 - $52,097 4.375%

• Market o MHI over $52,097 4.375%

CF Rule of Thumb for Grants MHI Population Legal % Grant

less than of or less than Maximum Recommended

HHS Poverty Level $23,050 5000 75% 70%

60% of state MHI $31,258 5000 75% 55%

70% of state MHI $36,468 12000 55% 40%

80% of state MHI $41,678 20000 35% 25%

90% of state MHI $46,887 20000 15% 10%

State MHI $52,097

Grant Funding Programs

Predevelopment Planning Grants

• Funding Limit - $25,000 or 75% of the project cost, whichever is less.

• Available to communities under population of 10,000

• Restricted to communities with MHI below 80% of SNMHI or $41,678

• Grant pays for the costs associated with developing a complete application (Preliminary Engineering Report, Environmental Report, draft Engineering Agreement, and other application documents) for a proposed project AND must be agreed to and accepted by the Agency prior to disbursement.

• Applicants must prove that they are unable to pay these development costs on their own.

• PPG funds cannot be used to pay for work already completed.

• Costs incurred prior to grant approval will not be considered eligible.

• If the Agency does not provide additional funds for any portion of the proposed project, the grant will not need to be paid back.not require repayment.

New Grant Funding Program! SEARCH Grant Program :

• Only available to communities under population of 2,500

• Funding Limit - $30,000 or 100% Grant funding, whichever is less

Other Miscellaneous Items • Rural Development accepts applications year round and can

fund projects any time, subject to funding availability and approval of the federal budget.

• If project is not selected for funding, the project remains on our application list until withdrawn by the applicant.

• For those pending applications, it is strongly suggested that either the applicant or the engineer keep us informed on any changes of project scope and amount of funds needed.

• Rural Development projects funded with our regular allocation are not required to comply with Davis Bacon.

• St Clair County – Village of Avoca/ Kenockee Twp

• Sewer Project

• $2,200,000

• Grant WWTP Expansion Project

• $2,862,000

• City of Essexville - $7,485,000

• Hampton Township - $18,000,000 Separate/joint sewer improvement project

300 Horsepower Directional Boring Rig

Project involved directional

boring a 24” force main under

the Saginaw River. The bore

took 2 weeks. Max depth was

50 feet below the bottom of the

river bed.

• Harbor Beach Area District Library

Building Addition

• Village of Bangor Police Vehicle

• Boyne EMS Rescue Vehicle

Single Family Housing

• USDA Rural Development provides programs

to assist low income individuals an dfamilies

who live in rural communities with the

opportunity to purchase or rehabilitate

housing.

502 Direct Housing Loans • Income cannot exceed limits established for the county,

with household size considered: o Low – 80% of the area median income

o Very low – 50 – 79% of the area median income

• Acceptable credit history.

• Have sufficient income to repay the loan. Total debt to

income ratio cannot exceed 41%; total housing cost

(principal, interest, taxes and insurance) to income ratio

cannot exceed 33% for low income and 29% for very low

income families.

• Be unable to qualify for conventional financing.

• Must be at least 18, U.S. citizen or acceptable status.

502 Direct Housing Loans • Must be located in an eligible rural area (generally towns with a

population of 10,000 or less). Some towns with larger populations may qualify, log onto these websites to determine eligible areas throughout Michigan: o www.rurdev.usda.gov/mi/mapsmain.htm

o http://eligibility.sc.egov.usda.gov/eligiblity/welcomeAction.do

• Must be a single-family dwelling – existing, new construction, new modular, manufactured, townhouse, condominium or duplex.

• Existing dwellings must be decent, safe and sanitary, be structurally sound and in good repair or be placed in good repair.

• The home must be considered modest and cannot exceed established value limits for the area.

• Cannot have an in-ground swimming pool, be located on a private road, be commercially zoned or a farm, or be designed for income producing purposes.

• The land cannot be split or exceed the minimum allowable buildable site for single family housing under existing zoning ordinance requirements.

• Land value cannot exceed 30% of total value.

502 Direct Housing Loans • Do NOT have to be first time homebuyer. • No down payment required and zero PMI.

• Borrower must agree to occupy the home on a permanent basis as their primary residence.

• Loan payments are subsidized and based on income. • Interest rate can go as low as 1%. • Repayment period is 33 years (30 years for manufactured homes) or up

to 38 years for very low income borrowers. • Must be without adequate housing and unable to obtain conventional

financing. • Applicants pay a one-time, non-refundable fee for a mortgage credit

report. • Loans require a promissory note, a first mortgage as security, title

insurance and set up of escrow for taxes and insurance. • Approved borrowers pay customary closing costs; appraisal fee, tax

escrow service, two months insurance and taxes. Fees may, in some cases, be included in the total loan amount.

• Borrowers must obtain home ownership counseling prior to closing.

504 Housing Repair Loans • This program provides loans to very low

income home owners, meeting the general

applicant and property eligibility

requirement, with loans to improve or

modernize their home, making it decent,

safe and sanitary.

504 Housing Repair Loans • This program provides loans to very low

income home owners, meeting the general

applicant and property eligibility

requirement, with loans to improve or

modernize their home, making it decent,

safe and sanitary.

504 Housing Repair Loans • Maximum loan amount is $20,000.

• Interest rate is 1% for up to 20 years.

• Borrower must own and occupy the home as a permanent residence.

• Major health and safety hazards must be corrected. Funds can also be used to modernize the home.

• All work must be performed by a licensed contractor and meet local codes.

• Repairs disturbing a lead-based surface must be addressed.

• Non-retirement cash assets cannot exceed $20,000 (age 62 or older) or $10,000 (under 62).

• Loans under $7,500 require a promissory note only, loans $7,500 and over require a promissory note, mortgage and title insurance.

504 Housing Repair Grants • This program provides grants to very low

income home owners to make repairs and

improvements to remove health and safety

hazards.

504 Housing Repair Grants • Maximum grant amount is $7,500.

• Applicant must be 62 years of age or older

• Borrower must own and occupy the home as a permanent residence.

• Grant funds can only be used to remove health and safety hazards, e.g. roof, septic system, well, heating system, weatherization, and accommodations for a family member with a disability.

• All work must be performed by a licensed contractor and meet local codes.

• Repairs disturbing a lead-based surface must be addressed.

• Lack personal resources (cash or assets to do the repairs.

• Grant recipient must sign an agreement which stipulates they will repay the grant if the property is sold or transfer of title occurs within 3 years.