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Community Facilities Programs

Presented by: Terence McGhee, CPA, M.Ed, MBA

South Region Asset Risk Manager

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.

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 ProgramsProgram Requirements

• Education Residence Halls Administrative Buildings Educational Buildings Research Facilities

• Healthcare Clinic ConstructionMedical Office Buildings Hospitals (Renovation and New Construction) Equipment

Community Facilities ProgramsTypes of Projects

Rollins Campus Center Young Harris College -GA

• Other Funding Opportunities JailsMunicipal Buildings Libraries Fire stations and trucks Parking lot paving Equipment purchases Debt refinance (Must be less than 50% of funding

request)

Community Facilities ProgramsTypes of Projects

University of PikevillePikeville, Kentucky

Types of Loan Products

Direct Loan Program

Guarantee Loan Program

Community Facilities ProgramsTypes of Products

Guarantee Loan Program – Lender Benefits

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

Loans may be sold on the secondary market through an assignment

of guarantee

Expanded project opportunities


Black River Technical CollegePocahontas, AR

Guarantee Loan Program – Quick Facts

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


Guarantee Loan Program – Quick Facts

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

Tax-exempt notes or bonds cannot be used as security for a guarantee loan.


Guarantee Loan Program – Fees

Rural Development charges the lender a guarantee fee, which may

be passed on to the borrower and is normally included in the loan.

The guarantee fee is calculated on one-percent (1%) of the

guarantee amount. The one-time guarantee fee is paid when the

Loan Note Guarantee is requested. There is no annual renewal fee.


Portfolio Snapshot


CF Guarantee Portfolio Snapshot

Healthcare46%

Public Safety3%

Cultural and Education26%

Utilities (Gas)0%

Public Buildings13%

Industrial Development0%

Other12%

USDA Guarantee Loans Portfolio639 Active Loans

CF Guarantee Portfolio Snapshot

Healthcare63%

Public Safety2%

Cultural and Education22%

Utilities (Gas)0%

Public Buildings6%

Industrial Development0%

Other7%

CF Outstanding Principal$1.2B

Program Funding


Guarantee Funding Allocation

Fiscal

Year

2011 167,411,000$

2012 201,000,000$

2013 101,000,000$

2014 130,000,000$

2015 135,455,969$

2016 246,052,017$

Community Facilities Program Level

CF Loan Guarantees

$179,296,245


CF Guarantee Program Available Funding

Public Private Partnership


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

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.


Questions to ask:

• Am I investing in projects located in eligible rural communities?

• Have I funded eligible projects with eligible applicants in eligible rural

communities?

• Did I consider the community facilities guarantee program?

• Did I contact a local USDA Rural Development office prior to investing

alone?

• With money available what's my hesitation?


Get Connected


Open for Business

Community Infrastructure Tool Kit

• Applicable to various industries

• Includes best practices and lessons learned when developing infrastructure projects

• Marketing resource to expand the USDA’s investment foot print in Rural America

• Educational resource for applicants that can be used to undertake and expedite new projects or advance delayed projects

Get Connected

Questions


www.rd.usda.gov

Thank youTerence McGhee, CPA, M.Ed, MBA

[email protected]

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

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