USDA Rural Development Presentation

Community Facilities Programs

Presented by: Terence McGhee, CPA, M.Ed, MBACommunity Facilities Programs Region Coordinator

Rural Development’s Mission

Rural Development is committed to helping improve the economy and quality of life in all of rural America by

providing financial programs to support essential public facilities and services as water and sewer systems,

housing, health clinics, emergency service facilities and electric and telephone service. Rural Development

promotes economic development by providing loans to businesses through banks and community-managed lending pools, while also assisting communities to

participate in community empowerment programs.

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Tusculum CollegeTusculum, Tennessee

• Community facilities programs funding foot print include investments in communities with a population of 20,000 or less

• Eligible applicants include: municipalities, counties, special purpose districts, nonprofit corporations and federally recognized Indian tribes

• The applicant must have the legal authority to incur debt

• Eligible loan purposes include: construct, enlarge, extend or other wise improve essential community facilities

Community Facilities Programs Program Requirements

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• Residence Halls• Administrative Buildings• Educational Buildings• Research Facilities• Parking lot paving• Renovation• Debt refinance (Must be less than 50% of funding request)• Interior furnishing• Equipment Purchases

Community Facilities Programs Types of Projects

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Rollins Campus Center Young Harris College

Types of Products

Direct Loan Program

Guarantee Loan Program

Community Facilities Programs Types of Products

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Direct Loan Program

USDA is the lender

• Terms• Up to 40 years (based on useful life of project)• Fixed interest rate• Payment options: monthly, semi annual and annual

*No prepayment penalty


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Direct Loan Program – Interest Rate(s)• Poverty

The median household income of the service area is below the poverty line for a family of four or below 80 percent of the Statewide nonmetropolitan median household income.

Project must address health and sanitary issues.

• IntermediateApply to loans that do not meet the requirements for the poverty line rate and for

which the median household income of the service area is below the poverty line or not more than 100 percent of the nonmetropolitan median household income of the State

• MarketThe market rate will apply to all loans that do not qualify for poverty or intermediate interest rates


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Direct Loan Program – Market Interest Rate

Community Facilities Programs Market Interest Rate

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2016 2016 2015 2015 2015 2015 2014 2014 2014 2014 2013 2013 2013 2013 2012 2012 2012 2012 2011 20110.000%

0.500%

1.000%

1.500%

2.000%

2.500%

3.000%

3.500%

4.000%

4.500%

5.000%

3.125% 3.250%

3.625% 3.500%3.750%

4.000% 4.000% 4.125%4.375%

4.625%

3.500% 3.500%

3.125%

3.500% 3.500% 3.375%

3.750% 3.750%

4.250%

4.750%

Community Facilities Direct Loan Program Interest Rates2011 - 2016

Direct Loan Program• Collateral requirements

Each applicant must have or will obtain the legal authority necessary to pledge security for the loan

Loans will be secured by the best security position practicable in a manner which will adequately protect the interest of Rural Development during the repayment period of the loan


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Mansfield University of Pennsylvania

Direct Loan Program• Collateral requirements – Joint Financing

When adequate security of more than one type is available, the lender may take one type of security with the USDA taking another type

Projects utilizing joint financing with the same security to be shared by the USDA and another lender, a parity position may be considered


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Under Construction

Direct Loan Program – Example• Construction of Residence Hall - $28,000,000

40 Years – Term of Loan 3.125% - Interest Rate $1,235,945 – Annual Payment


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Your New Campus Project

Guarantee Loan Program Loan is guaranteed up to 90% by Rural Development Mitigates risk for lender Lender must be unwilling to make the loan without obtaining the

loan guarantee Guaranteed portion of loan does not count against the lender’s legal

lending limits Expanded project opportunities

*Great program to utilize when there is an established relationship with local lender


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Black River Technical CollegePocahontas, AR

Guarantee Loan Program Lender and applicant negotiate the interest rate Variable interest rates cannot adjust more than quarterly and must

be tied to a base rate (ex. WSJ Prime or LIBOR) published in a recognized national or regional publication

Balloon payments are prohibited Lender sets the term of the loan which can not exceed 40 Years


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Guarantee Loan Program Security must be of such a nature that repayment of the loan is

reasonably ensured when considered with the integrity and ability of project management and soundness of the project

Joint Financing - Projects utilizing joint financing with the same security to be shared by the USDA and another lender, a parity position may be considered


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Available Funding


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Funding Availability

2016 CF Loan Guarantees amount Includes Carryover Funding

Fiscal Year2011 289,945,000$ 167,411,000$ 2012 1,300,000,000$ 201,000,000$ 2013 2,200,000,000$ 101,000,000$ 2014 2,200,000,000$ 130,000,000$ 2015 2,200,000,000$ 135,455,969$ 2016 2,200,000,000$ 246,052,017$

Community Facilities Program Level

CF Direct Loans CF Loan Guarantees

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CF Portfolio

Public Buildings$1.1 Billion

2,196 Facilities

Education$1.8 Billion

1,865 Facilities

Health Care$3.5 Billion

1,488 Facilities

Public Safety & Other$1.3 Billion

6,172 Facilities

Total $7.7 BillionDirect & Guaranteed Loans

and Grants

Another $3 Billion in Unclosed Obligations As of February 24, 2016

11,721 Facilities

CF Education Portfolio Total $1.3 BillionDirect Loans Only

As of February 24, 2016

Public & Charter Schools

$429 Million1,009 Facilities

Childcare$77 Million

265 Facilities

Other Educational$516 Million285 Facilities

Colleges$215 Million57 Facilities

Libraries$58 Million

106 Facilities

900 Facilities

Public Private Partnership


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Community Facilities has taken a leadership role in facilitating Public Private Partnerships (P3) to better serve rural communities

The initiative was so successful in FY12 that the initiative was rolled into the White House’s Domestic Policy Council’s “We Can’t Wait” Initiative.

P3 has bought together critical financial, project development and technical expertise, resources and innovation to large complex community infrastructure projects

The initiative has also spurred strong participation from our private sector lending partners to supplement CF Financing

Public Private Partnership Initiative

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From FY2012 to 2015, CF invested in 416 Public Private Partnership community infrastructure projects across rural America in 49 states.

CF leveraged over $2.7 billion in CF direct loan funds, with $1.4 billion from institutional investors and the capital credit markets

CF investments are projected to create or save 97,474 quality paying jobs.

Public Private Partnership Initiative Continued

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Types of Projects Funded

Community Facilities Programs Types of Projects

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• Clarion University was established in 1867 and serves 6,520 students, but had aging infrastructure that needed updating.

• 728-bed, four-story student dormitory with 245,000 square feet of space that is prewired for internet and cable connections, which replaced two older dorms that were subsequently demolished.

• The $66.4 million total cost was financed with a $45 million CF Direct loan and $21.4 million in public market bonds.

• Clarion University employs almost 400 people.

Clarion University – Student Housing

23 Clarion, Pennsylvania

• 9-story clinical facilities building to increase medical student capacity.

• The $35 million total cost was financed with a $26.5 million CF Direct loan, $4 million in NMTC’s, $2.5 million in grants and $2 million from University of Pikeville.

• PMC employs over 200 people in a persistent poverty area

• The building will allow 200 more medical students to enroll, which will help address physician shortages in the Appalachia areas.

University of Pikeville – School of Osteopathic Medicine

24 Pikeville, Kentucky

• Claflin University was founded in 1869.

• On campus water system infrastructure was deteriorating beyond maintenance repair due to the aging system.

• The $2,995,000 total project cost was funded using the USDA Rural Development’s Community Facilities Direct Loan

• The project will improve system delivery and adequately address the quality of water on campus.

Claflin University – On campus water system upgrades

Orangeburg, South Carolina25

• Talladega College was founded in 1867.

• Construction of a 203 bed, 43,000 square foot student residence hall and 45,000 square foot campus center.

• The $16,000,000 total project cost was funded using the USDA Rural Development’s Community Facility Direct loan program

• This project upon completion will address the increasing demand for student housing, provide a solution for limited meeting space and student activity common areas.

Talladega College– Residential Halls and Student Center

Talladega, Alabama26

Chambless KingArchitects

How to get connected?


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Community Facilities Infrastructure Tool KitBest practices and lessons learned when developing

infrastructure projects


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Questions?


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www.rd.usda.gov

Thank youTerence McGhee, CPA, M.Ed, [email protected]

http://www.rurdev.usda.gov/

USDA Rural Development Presentation

Documents

Transcript of USDA Rural Development Presentation