# Presentation: 168903

## USDA, RURAL DEVELOPMENT2004 National Conference

**New Programs**
- Rural Development
- Water & Environmental Programs
- Susan Card
- Portfolio Management Branch Chief

## Household Water System

- 7 CFR 1776
- Funded at $1m for FY 2004
- Grant(s) will be awarded to private, non-profit organization to establish a revolving loan program

## 7 CFR 1776

- Eligible grant purposes
- Capitalize a revolving loan fund to homeowners for the construction, refurbishing, and servicing of individual household water systems in rural areas that will be owned by the homeowner.
- Administrative expenses up to 10% maximum
- Governed by grant agreement

## 7 CFR 1776

- Applicant requirements
- Minimum 25% matching funds
- Experience in managing and servicing revolving loans

## 7 CFR 1776

- The grant application package will be similar to the TAT/SWM grant applications, with a required work plan that describes the details of the lending program and servicing process.

## 7 CFR 1776

- _[www.grants.gov](http://www.grants.gov/)_ may be used for initial submission
- Any required accompanying paperwork must be submitted either electronically or in hard copy

## 7 CFR 1776

- Applications will be evaluated using parameters established in the Staff Instructions
- Grant(s) will be awarded for a period of one year
- Future funding is dependent on appropriations – House mark-up of FY05 appropriations currently has same funding level

## 7 CFR 1776

- A loan received from an intermediary may be used for the purposes of:
- Constructing, refurbishing, and servicing of individual household water systems in a rural area that will be owned by the homeowner.
- Connecting to a cluster groundwater system that will provide adequate water supply.
- Connecting to a public water system that meets State and Federal standards that will provide adequate water supply.
- Water testing in association with items above

## 7 CFR 1776

- Adequate Water Supply
- Defined as one that provides a quantity that is adequate for the household and a finished water quality that meets the Safe Drinking Water Act Primary Standards.

## 7 CFR 1776

- A homeowner may receive a loan from the Intermediary if:
- The members of a household have a combined income that is not more than 100 percent of the median non-metropolitan household income for the State or territory in which the individual resides, according to the most recent decennial census of the United States.

## 7 CFR 1776

- They own and occupy the dwelling where the household water system will be located.
- The homeowner is a U.S. citizen or a non-citizen who qualifies as a legal alien.
- The homeowner is unable to obtain financial assistance at reasonable terms and conditions from other non-RD sources and lack the personal resources to meet their needs.

## 7 CFR 1776

- The homeowner must demonstrate adequate repayment ability
- Homeowners must have a credit history that indicates reasonable ability and willingness to meet debt obligations
- The homeowner must have the legal capacity to incur the loan obligation

## 7 CFR 1776

- Ineligible loan purposes
- Purchase land.
- Refinance any existing indebtedness.
- Provide funding if an adequate water supply already exists.
- Fund construction or improvements which do not result in significant progress in meeting the primary drinking water standards as established by the Safe Drinking Water Act.
- Fund construction or improvements to a water treatment system unless any effluent from the water treatment system complies with any State and Federal Water Pollution Control requirements.
- Finance a household water system for new home construction.

## 7 CFR 1776

- Terms of the Loan
- 1% Interest Rate
- Maximum 20 year term, but should be as short as possible based on ability to repay
- Maximum loan per household is $8,000

## 7 CFR 1776

- For as long as any part of the Agency grant to an intermediary remains available for lending, and the loans to the homeowners have an outstanding balance due, the intermediary must maintain the revolving fund.
- Grant application processing, evaluation, obligation, and servicing will be handled at the National office.

## 7 CFR 1776

- All loans will be serviced at the CSC – Central Servicing Center
- Programmatic Environmental Assessment will be done for this program
- State/Area/Local RD offices will answer inquiries on program – no additional duties for processing or servicing

## 7 CFR 1776

- The regulations and staff instructions are currently under development
- Publication date is tentatively scheduled for this summer to early fall
- Grant applications will be accepted after that time – more information will follow!

## QUESTIONS?

## Revolving Fund Program		

- 7 CFR 1783
- Funded at $500,000 in FY 04
- Grant will be made to a private, non-profit to establish a revolving loan program

## 7 CFR 1783

- Eligible grant purpose is to capitalize a revolving fund program for the purpose of providing direct loan financing for:
- Pre-development costs associated with proposed or with existing water and wastewater systems; **or**
- Short-term costs incurred for equipment replacement, small-scale extension of services, **or**
- Other small capital projects that are not part of the regular operations and maintenance activities of existing water and wastewater systems.
- Governed by grant agreement

## 7 CFR 1783

- Applicant requirements
- Minimum 20% matching funds
- Experience in managing and servicing revolving loans, with an acceptable delinquency rate

## 7 CFR 1783

- Ineligible grant purposes
- Administrative expenses are NOT an allowable cost

## 7 CFR 1783

- Loan details
- Loans will be made to entities who would be eligible for the regular loan/grant RUS program
- Purpose of loans will be pre-development costs associated with a proposed project
- OR small extension projects
- OR small capitol improvement projects not normally associated with regular O&M

## 7 CFR 1783

- Maximum loan will be $100,000
- Maximum term will be 10 years
- The rate will be negotiated between the lender and borrower, and approved by RUS

## 7 CFR 1783

- Applications will be accepted at the National office for a period of 30 days (date to be determined)
- Applications must include a work plan describing the lending _and servicing_ programs for the proposed revolving loan funds

## 7 CFR 1783

- Applications will be scored by an evaluation team of three Specialists who will review the documents individually, then work as a team to develop the recommendation of award

## 7 CFR 1783

- Scoring Criteria:
- Intermediary contributions
- Service area (national, regional, state)
- Experience
- Needs assessment
- Goals and objectives
- Work plan
- Evaluation method
- Administrative discretionary points

## 7 CFR 1783

- Grant funds will be advanced based on loan applications received and approved
- Loan approval authority will be granted to the non-profit – they must demonstrate sufficient experience in maintaining and servicing a revolving loan program to receive the grant

## Potential Impact on You

- All loans involving construction will be subject to an Environmental Review, with State Environmental Coordinator concurrence.
- Loan application packets with all required documentation will be submitted to the Program Directors of the applicable state from the grantee with the recommendation for approval.
- Loans approved by the grantee under this program must receive concurrence by the Program Directors from the applicable state before funds are disbursed.

## 7 CFR 1783

- The revolving fund program will remain in existence as long as there are funds to advance; repayment of loans will generate new loan funds
- Future funding is dependent on appropriations – House mark-up of FY05 appropriations currently has same funding level
- Regulations are in the approval process, with an anticipated publication date of this calendar year

## Subject to Change!

- The regulations for both programs will be published as Direct Final Rules.
- We will be taking comments and responding, while running the programs initially.
- This initial publication is minimal in detail to allow change and enhancement as needed as the programs develop.

## QUESTIONS?

## Servicing Regulations

- 7 CFR 1782
- Combines the water and waste loan and grant servicing regulations found in 7 CFR Parts 1951, 1955 and 1956 into one regulation

## 7 CFR 1782

- Implements Sec. 6018 of the Farm Security and Rural Investment Act of 2002.
- This change will allow the borrower or grant recipient to use property (real and personal) purchased or improved with the loan or grant funds or proceeds from the sale of property (real and personal) purchased with such funds, for another project or activity.

## 7 CFR 1782

- The RUS proposes to include language to implement this provision in 7 CFR 1782.23.
- These provisions will also be applicable to the RBS and RHS programs by adding §1951.218 to 7 CFR 1951, subpart E.

## 7 CFR 1782

- This consolidated regulation will clarify for RUS field staff, and most importantly our borrowers, the available servicing tools and the requirements to utilize these tools.

## 7 CFR 1782

- RUS proposes to remove all administrative processes from the regulations, leaving only regulatory actions that impact the public.
- This streamlining will make the regulation more concise and much easier to read and understand.

## 7 CFR 1782

- The Agency will issue a Staff Instruction that will include the administrative portion, which outlines the Agency’s internal processing procedures.

## 7 CFR 1782

- The regulation is in the final stages of approval
- We anticipate publication of the Final Rule this fiscal year
- Staff Instructions are being refined this summer in anticipation of the regulation publication

## QUESTIONS?

## Contact Information

- Susan Card, Branch Chief, Portfolio Management Branch, WEP
- _[Susan.loney@usda.gov](mailto:Susan.loney@usda.gov)_ (soon to be susan.card@usda.gov)
- (202) 720-9633
- Nica Mathes, Loan Specialist, Operations Branch, WEP
- _[Nica.mathes@rus.usda.gov](mailto:Nica.mathes@rus.usda.gov)_
- (202) 205-3656
- Steve Saulnier, Loan Specialist, Portfolio Management Branch, WEP
- _[Stephen.saulnier@rus.usda.gov](mailto:Stephen.saulnier@rus.usda.gov)_
- (202) 690-2526