2. USDA Rural Development
Brownsfields 101
Funding Resources
March 31, 2011
Brandon Prough
Area Specialist
USDA Rural Development

3. USDA Rural Development
Agency Goals
Increase economic opportunity in rural America
Improve the quality of life for all rural Americans
Lead Federal Agency Serving Rural America

4. USDA Rural Development Over 40 Programs Delivered
Utilities / Infrastructure
Business
Housing (Single-family & Multi-family)

5. USDA Rural Development Community Development Programs
What are your community’s needs?
What capital projects is your community contemplating?
What capital projects should they be contemplating?

6. USDA Rural Development Community Development Programs
How might the projects be developed?
Have we prioritized our needs?

7. USDA Rural Development Community Development Programs
What does the list include?
Heath Care
Water Quality
Storm Shelter / Siren
Business Park
Child Care
Fire and Rescue
Community Transportation

8. USDA Rural Development Community Development Programs
Where might we find financial help?
Community Contributions
USDA Rural Development
Other financial partners

9. USDA Rural Development Community Development Programs
USDA Rural Development has numerous programs to help address community projects:
Water & Environmental Programs (WEP)
Essential Community Facilities (CF)
Housing development
Business development

10. Community Development Programs
Water & Environmental Program
Distance Learning & Telemedicine
Rural Electric Loan
Community Facility

11. Water & Environmental Program
(WEP)

12. Water & Waste Disposal Program
Purpose:
Develop and upgrade rural water distribution and waste water facilities
Eligible Areas:
Rural Communities with a population of less than 10,000

13. Community Facility Program
(CF)

14. Community Facility Program
Program Purpose:
Enhance / improve essential community services and/or facilities
Public Service
Public Safety
Health Care
Eligible Areas:
Rural areas with a population of less than 20,000

15. Community Facility Program
Eligible Categories
Rural fire truck, north central Kansas
Fire Trucks and Equipment.
Rescue and Ambulance Vehicles & Equipment.
Police Vehicles.
Fire department truck and equipment, southeast Kansas

16. Community Facility Program
Eligible Categories
Local Hospital
Hospitals/Admin. Buildings
Physicians Clinics
Out-Patient Care
Migrant Health Centers
County Health Department Facilities
Trego County

17. Community Facility Program Eligible Categories
Rural fire station, north central Kansas
Ambulance,
Fire, Police,
Rescue
Building
Rural fire station, northeast Kansas

18. Community Facility Program “Before & After”
Former Library
Former City Hall
New City Hall / Library

19. Guaranteed Rural Housing (GRH) Program
Your USDA lending partner

20. Home Buyer Benefits 103.5% LTV No Mortgage Insurance
30 Year Fixed Rate
Partner with Approved Lenders
No Loan Limit
Fees & Repairs may be Financed
Unlimited Gifts or Seller Contributions
LTV = Appraised Value + GRH Fee
Partner with State Finance Authority programs, other down payment or closing cost assistance programs, MCC’s, etc.
Income/debt ratio limits limit the loan.
Please check with investor. They may have further restrictions.

21. GRH Loan Purposes Purchase New Purchase Existing
Stick, Modular or Manufactured
Purchase Existing
Stick, Modular
Repairs (initial loan only)
Typical Loan Closing Costs to 100% of appraisal
3.5% GRH Fee can be financed above appraised value
Limited Refinance: RD Direct or GRH ONLY
Rural areas with a population up to 50,000
Typical Costs
“take out” financing for new construction
necessary appliances on a limited basis
2 loan discount points for low income applicants only

22. Prohibited Purposes Furniture & Personal Property
Existing Manufactured Home
Income Producing Property
In-Ground Swimming Pool
Existing Manufactured Homes unless already financed by RD
Non-Essential Assets – have obvious income potential; such as feedlots with large grain storage. Rural tracts may have one machine shed or smaller low value buildings.
Income Producing Property – duplexes, businesses
Special Provisions
Spec home without inspections and warranties can only be financed at 90% of market value
Homeowners association (HOA) acceptable when approved by HUD, VA, Fannie Mae or Freddie Mac.

23. 502 DIRECT RURAL HOUSING LOANS
Direct Housing Loans – loans made by USDA Rural Development to low and very low income applicants to buy, build or repair homes—payments may be subsidized.

24. Direct Guidelines Loan Terms Up to 100% of the Appraised Value
Maximum repayment period is 33 years & under certain conditions, 38 years
Interest rate currently 4.675% - Interest rate can be subsidized to as low as 1%. Borrowers will always pay at least 24% of adjusted gross income.
Rural areas with a population up to 50,000
Not a competition for lenders. Talk about timelines for closings and the differences from banks.

25. Business Programs Business and Industry Guaranteed Loan
Rural Economic Development Loan & Grant
Rural Business Enterprise Grant
Renewable Energy / Energy Efficiency

26. Business & Industry Guaranteed Loan Program
(B&I)

27. B&I Guaranteed Loan Program
Program Purpose:
Create and maintain employment & improve the economic climate in rural communities.
Assist in creating and saving jobs
Eligible Area:
Rural areas with a population up to 50,000

28. B&I Guaranteed Loan Program
Eligible Entities:
Any legal entity, including individuals, corporations, public and private organizations and federally recognized Indian tribal groups

29. B&I Guaranteed Loan Program
Eligible Purposes – eligibility includes, but not limited to:
Business acquisitions
Construction / Expansion
Repair / Modernization
Development Costs
Equipment purchase
Start-up working capital
Refinancing under certain conditions

30. Manufacturing facility Grain handling facility
central Kansas
southeast Kansas

31. Cotton Gin
southwest Kansas

32. Rural Economic Development Loan and Grant Program
(REDLG)

33. Rural Economic Development Loan & Grant Program
Program Purpose:
Loans to eligible utilities to make a pass-thru loan to a rural business
Grants to eligible utilities to establish revolving loan funds to initially make loans to eligible rural projects
Eligible Areas:
Rural areas with population up to 50,000

34. Rural Economic Development Loan & Grant Program
Eligible Entities:
Electric and Telephone Rural Utility Cooperatives
Eligible Ultimate Loan/Grant Recipients:
Any legal entity, including individuals, public bodies, and federally recognized Indian Tribes

35. Rural Economic Development Loan & Grant Program
Term (Loan):
Maximum of 10 years
Interest Rate (Loan):
0% (Loan)

36. Rural Economic Development Loan & Grant Program Eligible Types of Projects
Grocery Store
Community College Improvements
Livestock Handling Equipment
Feed Mill
Seed Company
Industrial Building
Repair Shops
Hospital Improvement
Library
Furniture Business
Supply Store
Implement Dealer
Fire / Emergency Vehicles
Hotels

37. Rural Economic Development Loan & Grant Program
Grocery store southeast Kansas
Electrical repair company northeast Kansas

38. Rural Energy for America Program (REAP or 9007)

39. What size of grant is available?
Not exceed 25% of total eligible project costs
Minimum grant request
Renewable energy system - $2,500
Energy efficiency improvements - $1,500
Maximum grant request
Renewable energy system - $500,000
Energy efficiency improvements - $250,000
If grant recipients sell the project to a buyer that is not eligible under the above definitions, the Government may recapture a prorated portion of the grant funds for up to 20 years.
Applicant must provide at least 75% of eligible project costs to complete the project
Applicant in-kind or other federal grant awards cannot be used to meet 75% match requirement
Third-party in-kind contributions allowed, but will be limited to 10% of the 75% match requirement
Third party in-kind contributions are acceptable within accordance with 7 CFR part 3015
Maximum grants per applicant per fiscal year is $750,000

40. What size of Guaranteed Loan (GL) is available?
Not exceed 75% of total eligible project costs
Maximum combination GL and grant cannot exceed 75% of total eligible project costs
Minimum GL request is $5,000 (less grant amount)
Maximum GL request is $10 million
Guaranteed loans opens Section 9006 program to much larger projects and no need to demonstrate financial need.
Guaranteed loans
will be processed continuously throughout the year (anticipated application deadline end of July)
First in, first out
Can combine with 9006 grant funds
Make projects more attractive to lenders, could improve loan terms
Only 50 percent of total eligible project costs can be guaranteed, but better loan terms than similar programs. (20-year equipment)
Application similar to grants, but lender submits application
Can combine with up to $25M of Business and Industry GL for larger projects

41. Who is eligible to apply for funding?
Agricultural producers directly engaged in ag production (≥ 50% of their gross income)
Rural small businesses that meet the SBA Size Standards
Demonstrated financial need
Project must be located in a rural area
Non-profit organizations and public entities are excluded
Demonstrated Financial Need: The applicant must demonstrate that it is unable to finance the project from its own resources or other funding sources without grant assistance. Factors to consider when assessing financial need will include, but not limited to the following:
Grant amount relative to total project cost.
Cash flow and debt service coverage - Applicants are responsible for providing, within the technical report, financial information regarding income, expenses, and cash flow requirements of the proposed project. If the grant has only a minimal impact on the cash flow and minimal impact on enhancing the debt service coverage, the demonstrated financial need likely has not been met.
Letters from commercial lenders that indicate an unwillingness to provide commercial financing for the project without grant assistance.
Industry consideration: Certain industries are more established, with a history of profitable operations and a history of successful projects.
Based upon Applicant’s financial resources or the project’s cash flow.
Size standards: Are for the most part expressed in either millions of dollars or number of employees. For the most part size standards are the average annual receipts or the average employment of the firm. North American Industry Classification System (NAICS) codes: – Biodiesel plant – less than 1000 employees; – Ethanol plant – less than 1000 employees; there are 3 choices for production of ethanol or methanol – 2 have limits of less than 1000; employees and the third has a limit of less than 500 employees; – Supermarket (grocery store) – less than $23 million and less than 500 employees; – Restaurant – full service – less than $6 million; – Electric Power distribution – less than 4 million megawatt hours/year
Actual Definitions available in 7 CFR Part 4280

42. What projects are eligible?
Purchase RE or make EE improvements
Pre-commercial or commercially available, and replicable technology (No Research and Development)
Technical Merit and located in a rural area
Sufficient revenues for O&M, Maintenance & Debt Service
Applicant must own the project and control the revenues and expenses, including O&M
Pre-commercial: At least one commercial unit in operation for at least 1 full year in the U.S.
Pre-Commercial: at least one commercial unit in operation for at least 1 full year in U.S.

43. Eligible uses
Post-application purchase and installation of equipment; (except agricultural tillage equipment & vehicles)
Post-application construction or project improvements; (except residential)
Energy audits or assessments;
Permit fees and Feasibility Studies;
Professional service fees; (except application preparation)
Ineligible project costs include any costs not identified above as eligible costs. Pre-application construction, residential improvements, energy efficiency improvements related to new construction, vehicles or agricultural tillage equipment, and applicant in-kind contributions.
Only costs identified in the Energy Audit for energy efficiency improvements are allowed (EE)

44. Energy Efficiency Examples
Building Envelope
Lighting
HVAC Systems
Water Heating
Power Systems
Refrigeration
Grain Drying and Curing
Irrigation
Fans and Blowers
Compressors
Pumps
EE Projects must have the previous 12 months history of energy use in order to measure savings from the project improvements.
Some examples here are improved insulation, improved pump motors or HVAC apparatus. It could involve changing the time of day of peak usage.
Envelope – 1) Reduce heat losses –ceiling roof, walls/floors, and windows/doors; 2) Reduce heat gain - windows/doors; and 3) Reduce infiltration
Lighting – 1) Reduce lighting required; 2) Install more energy-efficient lighting; and 3) Use daylighting
HVAC Systems – 1) Air distribution system; 2) Water/steam distribution; 3) Heating plant; 4) Cooling plant; 5) Control systems; 6) Water Heating; 7) Reduce water heating loads; 8) Reduce system losses; 9) Install more efficient water; and 10) Heating system
Power Systems – 1) Reduce power system losses; 2) Install energy-efficient motors; and 3) Reduce peak power demand
Refrigeration – 1) Improve controls; 2) Reduce refrigeration system losses; and 3) Improve refrigeration system efficiency
Miscellaneous – 1) Heat recovery; and 2) Install more efficient ancillary equipment

45. USDA Rural Development
Who to Contact?
USDA Rural Development
2715 Canterbury Drive
Hays, KS
(785) phone
(785) fax