United States 

Department of Agriculture 

 $85 Million

Working to Improve the Quality of Life

 for the People of Rural Arizona 

Fiscal Year 2002 

Annual Report 
Thomas C. Dorr 

Under Secretary for Rural Development 

U.S. Department of Agriculture

A strong and vibrant economy in rural America serves as the cornerstone of 

President Bush’s economic agenda. USDA Rural Development is working hard to

expand economic opportunities and improve the quality of life for all of the 59

million Americans living in rural communities. Through the efficient and effective 

delivery of Rural Development initiatives, new jobs have been created, home

ownership has increased and families and businesses have been strengthened. New

investments and entrepreneurial spirit will continue to grow, bringing increased opportunity to rural areas. 

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I know and understand that rural Americans are resilient and share a pioneering spirit that will once again 

forge new frontiers in the future. In this same spirit, USDA Rural Development’s challenge is to look

beyond today and to envision a better way to work with America’s rural communities to improve existing 

partnerships, and forge new ones. 

In looking back over the last year, we have begun to build an economic foundation, shaped like what 

President Bush advocates. I am proud of the aggressive efforts by USDA Rural Development employees 

to quickly turn many of the 2002 Farm Bill provisions into new economic hope for America’s farmers, 

ranchers and rural families. These efforts ensured the delivery of $703 million to finance 377

communities’ water and wastewater infrastructure projects. Additionally, $37 million helped support the

development of 231 agricultural value-added ventures that will bring new opportunities for increased 

revenues to our American farmers and ranchers. In total, over $12 billion was invested through USDA 

Rural Development programs in rural America in Fiscal Year 2002. 

From fire hydrants to fiber optic cable -- from sewers to symphonies -- USDA Rural Development financial

and technical assistance is making a positive difference. In Fiscal Year 2002 alone -- 42,000 rural residents 

became first time homeowners, nearly 7,000 homeowners received loan and grant funding to make needed 

repairs and improvements, and 1,400 loans and grants were provided to assist communities finance 

essential community facilities. Electricity, telephone, water and wastewater infrastructure funding totaled

over $6.8 billion. Distance learning and telemedicine funding helped communities in 37 states gain access 

to modern technologies. Over 1,100 rural areas have clean drinking water and sanitary waste systems. 

I am proud of what we have been able to accomplish. However, to meet ongoing and future challenges, 

USDA Rural Development will focus in 2003 on four critical areas of economic opportunity: Housing;

Broadband; Bio-Mass; and Equity Capital.

Housing -- Rural Development has created a Five Star commitment to improving single-family housing lending to rural

minority families as part of the President’s minority homeownership initiative. 

Broadband – Rural Development will implement approximately $1 billion in Broadband programs, including a onetime “Community Connect” grant program to help small communities obtain access and training related to broadband

services.

Bio-Mass – Rural Development will assist in the development of alternative energy combustibles to replace petroleumbased products through value-added grants and business and industry loan guarantees. 

Equity Capital – The Farm Bill provides $44 million in operational assistance grants and $280 million in debenture 

guarantees for the Rural Business Investment Program (RBIP). The RBIP will increase the amount of capital available

for investment in rural businesses and will provide technical assistance to these businesses. 

Again, we have accomplished much in Fiscal Year 2002. I commit USDA Rural Development to

administer all our programs and policies fairly, equitably, and honorably. It is the right thing to do, it is

what I believe, and I will tolerate nothing less. Through our collective hard work, we will continue to

increase the economic opportunities in rural communities and improve the quality of life for all rural

Americans. 
2 Ann M. Veneman 

Secretary of Agriculture 

This past year the Bush Administration continued a strong

commitment to expanding jobs and bringing renewed economic 

opportunities to rural America through strong leadership and 

strengthened programs. 

One of the President’s top priorities is to create new jobs and help spark

economic growth. The tax relief package that the President signed into

law in 2001 continues to help families throughout America and 

USDA’s Rural Development programs are also creating new 

opportunities. In 2002, for example, economic grants and loans provided by USDA helped create or

protect more than 150,000 rural jobs. As well, rural development programs provided more than $12 billion 

in economic infrastructure grants and loans, helping improve education, health care, telecommunications, 

water treatment facilities, fire protection efforts, and other community centers. 

However, USDA’s commitment to improving rural America didn’t stop there. Employees worked with

local communities to provide homeownership financing for more than 42,000 families. These efforts are 

helping move closer to reaching the President’s goal of increasing minority homeownership by fifty percent 

in five years.

The Farm Security and Rural Investment Act of 2002 signed by the President last May provides new

resources and programs aimed at making continued progress in rural America. This includes new grant

programs to assist in the development of renewable energy sources; funding to expand the availability of

information technologies; and financing for community water and wastewater improvements. 

As we embark upon a new year, we have a strong agenda and many opportunities to strengthen America’s 

rural communities. The Administration will continue to build upon the principles outlined in our policy

publication, “Food and Agricultural Policy: Taking Stock for the New Century”. Our team at USDA will 

continue working with all interested parties and build new coalitions to help families, create jobs and invest

in America’s rural sectors.

Edward (Eddie) L. Browning

USDA Rural Development - Arizona State Director

On behalf of the entire Arizona USDA Rural Development staff, it is 

my pleasure to present this Fiscal Year 2002 Annual Report for your

review. This report quantifies our efforts to enhance the capacity of

all rural residents, communities, and businesses to prosper.

In 2002, Rural Development employees traveled over 338,000 miles

to deliver our programs to the rural residents of Arizona. We also 

serve the Navajo Nation in southern Utah and in northern New 

Mexico. We are very committed in delivering programs that are

results-oriented, as it is our goal to improve the quality of life for rural 

Arizonans. 

USDA Rural Development has had a long history of providing housing, basic infrastructure and community

facilities to help strengthen our rural communities. Employees of Arizona Rural Development have played

a vital role in the overall success of our programs. 

We will continue to focus on the programs, as identified at the national levels, with one-on-one, face-toface grass roots efforts to provide our services to the many needs of Arizona. I salute our past 

achievements and look forward to our future successes.
RURAL HOUSING 3 SERVICE

Rural Housing Service (RHS) is one of the agencies within the United States Department

of Agriculture’s (USDA) Rural Development mission area. RHS is a lending agency, 

like its predecessor, the Farmers Home Administration, but RHS emphasizes a 

community development mission. RHS programs provide people in rural areas with 

loans and grants for repairing their homes or buying or building new ones. USDA 

provides financing for rental housing at affordable prices and rental assistance to the

elderly, the homeless, farm laborers, and people whose income are less than those of 

most of their neighbors. In partnership with many other organizations, RHS creates 

packages of technical assistance and loan funds from several sources, rather than 

providing all the assistance for a project. This leveraging and partnering stretches 

resources to benefit more rural individuals and communities. 

HOME OWNERSHIP LOANS 

SEC. 502 DIRECT LOANS 

This program serves rural people whose 

incomes are at or below 80 percent of the 

median for the area where they live. 

Fiscal Year 2002 - Rural Development

assisted 275 families obtain a direct 502 RH 

loan for a total of $17,631,103. 

LEVERAGED LOANS

This program uses 502 loans funds to expand 

homeownership opportunities for rural

communities. The term leveraged loan refers 

to a home purchase that is financed by at least

two lenders - Rural Development and another 

participating lender. Leveraging allows lenders 

to expand their market by making loans that 

they would not have been able to approve 

without Rural Development financing. 

Fiscal Year 2002 - Rural Development 

provided $1,513,290 to assist families in 

purchasing a home through the Leveraging 

program. 

GUARANTEED LOAN PROGRAM

Families with low to moderate incomes, but 

without funds for a down payment or closing

costs, can buy home with loans made by a local 

bank and guaranteed by Rural Development. 

Fiscal Year 2002 - Rural Development 

assisted 195 families obtain a guaranteed loan

for a total of $17,037,662.
RURAL HOUSING 4 SERVICE 

SEC. 504 HOME REPAIR LOANS &

GRANTS 

This program is offered to elderly persons and

very low income families who own homes that

need repair. Rural Development provides 

funds so the recipients can repair or replace a 

leaking roof, insulate a home, install electric

lines, replace a wood stove with central 

heating, install running water, a bathroom, and

a wastewater disposal system, or make a home

accessible to family members with disabilities. 

Fiscal Year 2002 - Rural Development 

assisted 203 rural families with the 504 

program for a total of $1,464,600. 

SELF-HELP HOUSING LOANS 

Homes become more affordable because low 

and very-low income families perform 65% of 

the labor needed to construct their home. The 

families’ investment or “sweat equity” reduces 

the total amount borrowed. 

Fiscal Year 2002 - Rural Development 

provided 154 self-help housing loans for a

total of $10,027,650, and 4 technical 

assistance grants for a total of $765,000. 

SEC. 533 - HOUSING PRESERVATION 

GRANTS 

HPG funds are used to renovate deteriorating

homes occupied by families whose incomes

fall into the low and very-low categories. 

Nonprofit organizations and public bodies 

receive grants to repair these properties and

bring them up to Uniform Building Code 

(UBC). This program encourages projects that

bring in outside funds, so most grantees 

substantially leverage their Rural Development 

dollars with funding from other sources. 

Fiscal Year 2002 - Rural Development funded 

1 HPG for a total of $58,740 for repair of 10 

homes. 

An example of two separate selfhelp groups working side-by-side 

in San Luis, Arizona. Comite de

Bien Estar, Inc., and Housing 

America Corporation of

Somerton. 
RURAL HOUSING 5 SERVICE 

MULTI-FAMILY HOUSING

SEC. 515 - RURAL RENTAL HOUSING 

LOANS 

Loans with interest as low as 1% are provided 

to developers of affordable rural rental housing

for the construction or rehabilitation of

apartment-type housing for low, very low, and 

moderate income households in rural Arizona. 

Fiscal Year 2002 - Rural Development 

provided a total of $4,370,967 in rural rental 

housing loans. 

- 3 new construction loans for 70 units 

totaled $3,000,000

- 4 rehabilitation loans totaled $1,370,967 

SEC. 521 - RENTAL ASSISTANCE

PROGRAM

This program provides subsidized rent to low

income individuals, families, and the elderly in

rural rental projects across Arizona. Tenants 

living in units with rental assistance pay no 

more than 30% of their incomes for shelter. 

Fiscal Year 2002 - Rural Development 

provided 448 units for a total of $8,606,780 in

rental assistance loans.

SEC. 538 GUARANTEED RURAL 

RENTAL HOUSING LOANS 

This Rural Rental Housing program guarantees 

loans made for development of affordable 

rental housing in rural Arizona. The 

apartments built under this program are 

intended for families whose incomes are no 

more than 115% of the median income for their 

area. Because the loan guarantee program

serves low to moderate income tenants, it 

complements the Direct 515 Rural Rental 

Housing program. 

Fiscal Year 2002- Rural Development funded 

2 guaranteed rural rental housing loans for 

46 units that totaled $1,518,000. 

Los Quintas de Adobe Apartments - a

27 unit elderly housing complex

located in San Luis, Arizona, to serve 

elderly, handicapped and disabled

tenants of the area.
RURAL BUSINESS - 6 COOPERATIVE SERVICE 

The Rural Business-Cooperative Service (RBS) helps businesses and cooperatives 

develop and prosper in the global marketplace from the underserved rural areas of 

Arizona. RBS accomplishes this mission by investing its financial resources and/or 

technical assistance in businesses, cooperatives, and communities, and by building 

partnerships that leverage public, private, and cooperative resources to stimulate rural 

economic activity. 

BUSINESS & INDUSTRY GUARANTEED 

LOANS 

This guaranteed program helps create jobs and 

stimulate rural economics by proving financial 

backing for rural businesses. This program 

guarantees up to 80% of a loan made by a 

commercial lender. Loan proceeds may be 

used for working capital, machinery and 

equipment, buildings and real estate, and 

certain types of debt refinancing. 

Fiscal Year 2002 - Arizona ended the year 

with $17,296,878 in 7 B&I guaranteed loans.

Four out of the 7 obligations were Native

American projects. 

RURAL BUSINESS OPPORTUNITY

GRANTS (RBOG) 

This funding provides for technical assistance, 

training and planning activities that improve 

economic conditions in rural areas. RBS has 

designed this program to promote sustainable 

economic development in rural communities 

with exceptional needs. 

Fiscal Year 2002 - RBOG funding was not 

allocated to the states this year; however,

reserve funding in the amount of $137,962 

was available from the National Office to 

fund a Native American project for a land use

study.

RURAL BUSINESS ENTERPRISE 

GRANTS (RBEG) 

These grants help public bodies, private 

nonprofit corporations and federally recognized

tribal groups finance and facilitate development 

of small and emerging private business 

enterprises located in rural communities. 

Fiscal Year 2002 - Arizona utilized more than 

$1,041,172. This funding assisted 11 different

projects across rural Arizona that supported 

small business development and job creation. 

Six out of the 11 were Native American

projects and one a Border Area project. 

Arizona provided an 80% guarantee on the $4,860,000 permanent loan from Valley 

Independent Bank to Texas Hill following the completion of the pictured lettuce cooling

facility. 
RURAL UTILITIES 7 SERVICE 

The mission of the Rural Utilities Service (RUS) is to help improve the quality of life and

promote economic development in rural America. It does this by administering USDA’s

rural utility programs in a service-oriented, forward-looking, and financially responsible 

manner. 

WATER & WASTE DISPOSAL 

PROGRAM

RUS provides financial assistance through loan

and grants for drinking water, sanitary sewer,

solid waste, and storm drainage facilities in

rural areas and cities and towns of less than

10,000 in population. Public bodies, nonprofit

organizations and recognized Indian tribes may 

qualify for assistance. Funds can be used for

improvements to existing systems or for

construction of new projects. 

Fiscal Year 2002 - A total of $10,307,451 was 

funded to provide services to families in rural 

Arizona.

TECHNICAL ASSISTANCE AND 

TRAINING GRANTS 

The RUS can make grants to nonprofit 

organizations to provide technical

assistance and/or training to associations 

located in rural areas and to cities and 

towns with a population of 10,000 or less. 

Assistance may be provided to identify and 

evaluate solutions to water and waste

disposal problems, to improve the

operation and maintenance of existing 

water and waste disposal facilities, and to 

assist associations in preparing applications 

for water and waste disposal facilities. 

Fiscal Year 2002 - Arizona communities 

continue to receive technical assistance

through funding provided to organizations, 

i.e., Nation Rural Water Association, the

Arizona Small Utilities Association and Rural

Community Assistance Programs. These

programs provide funding for a circuit rider 

program that covers all parts of the state 

including tribal areas. The circuit rider’s

technician provides hands-on technical 

assistance on source, storage, treatment,

distribution, operation and maintenance of 

existing systems. 

Town of Duncan Water Tank - Rural 

Development assisted this small mining town

with a complete rehabilitation of its water 

system. The Town shows its pride in the local 

high school with this new tank. The tank is 

painted with the school’s colors. 
RURAL UTILITIES 

SERVICE 

COLONIAS

ASSISTANCE PROGRAMS 

The Colonias Grant Program targets funds to

rural communities near the U.S.-Mexico 

border. Colonias are residential subdivisions 

located within 150 miles of the U.S.-Mexico 

border and are generally characterized by substandard housing and a lack of potable water, 

adequate sewage, disposal systems, roads

and/or drainage. Grant awards under this 

program help provide water and waste disposal 

systems in low-income Colonia communities 

where residents often face significant health 

risks as a result of the lack of services. The

Colonia areas for the state of Arizona 

encompass those eligible communities located 

within 150 miles of the U.S./Mexico border 

and include nine tribal reservations: Ak-Chin, 

Cocopah, Colorado River, Gila River, Salt 

River Pima-Maricopa, San Carlos, Tohono

O’odham, and the Pascua Yaqui Indian 

Reservations. 

Fiscal Year 2002 - Rural Development 

awarded 11 Colonia grants/loans for a total of

$3,100,000. 

306C WATER WASTE WATER 

DISPOSAL SYSTEMS GRANTS 

The 306C Grants facilitate the use of 

community water and/or waste water disposal 

systems by the residents of Colonias. This 

grant program pays reasonable costs for 

individuals to extend service lines from the 

system to a residence, connect service lines to a

residence’s plumbing, charges or fees for

connecting to a system; and the installation of 

plumbing and related fixtures when they are 

lacking or absent. 

Fiscal Year 2002 - Rural Development 

assisted 110 families with the 306-C program 

for a total of $478,435. 

Note: This program is funded under Rural Housing Service. 

DISTANCE LEARNING AND 

TELEMEDICINE PROGRAM (DLT) 

The Rural Development RUS administers the

DLT program. This program is specifically

designed to meet educational and health care 

needs of rural America. Through loans, grants, 

and loan and grant combinations, advanced 

telecommunications technologies provide 

enhanced learning and health care opportunities 

for rural residents.

Fiscal Year 2002 - Rural Development funded 

one DLT project in the State for a total of

$391,455 in grant funding.

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RURAL UTILITIES 9 SERVICE 

Arizona Western College - Through a DLT 

grant, the college will be able to convert 

analog to digital signals thus improving the 

capacity and quality of their distance

learning program. The enhancements will 

expand telecourse offerings, provide

extended cablecast and will extend webbased instructional and learner support 

services. This distance education system

will assist those students who cannot

overcome the distance barrier (some drive

100 miles to attend class) while at the same

time, provide a way to offer a range of

courses and services needed by students, 

which are not currently available through 

instructional staff at remote locations. 

Counselors, advisers, registrars and other 

support staff spend more time traveling

than they do in face-to-face interactions 

with students at rural sites. The most cost 

effective means to meeting community and 

learner needs in rural, economicallychallenged areas is to implement this kind 

of comprehensive distance education 

system.

Maricopa Community 

Health Center, 

NogalesThis facility allows 

patients to receive 

quality medical 

attention from doctors 

across Arizona

without leaving the 

clinic. 
COMMUNITY FACILITY 

PROGRAMS 

Rural Development has made important contributions to the economic welfare of rural 

communities through its Community Facility Programs. Loans and grants assist rural 

communities in financing essential public structures and services. These amenities help 

communities attract and retain businesses that provide jobs and services for their

residents. Through CF programs nationally, USDA funding has been provided for more

than 75 different types of projects, from child care centers to hospitals to fire trucks. 

GUARANTEED COMMUNITY

FACILITIES LOANS 

The Guaranteed CF program allows all 

loans to be eligible for up to 90% 

guaranteed against loss. They are made 

and serviced by lenders such as banks, 

savings and loans, and mortgage 

companies. 

The Peeples Valley Fire Department is 

very proud of their new truck (nicknamed

- Twinkie) which was purchased and 

renovated with a $20,000 USDA Rural 

Development CF Grant. Its Town is very 

appreciative... 

Mariposa Community Health Center - 

This is the second time Rural Development 

has helped the City of Nogales meet the 

health care needs of its residents. The 

facility has full dental and prenatal

medical care services. 

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Phone/Fax

STATE OFFICE 

Phoenix Corporate Center 

3003 North Central Avenue, Suite 900, Phoenix, AZ 85012

(602) 280-8701 

(602) 280-8770 

(602) 280-8705 TDD 

STATE DIRECTOR 

Edward (Eddie) L. Browning eddie.browning@az.usda.gov

(602) 280-8702 

(602) 280-8708 

ADMINISTRATIVE PROGRAM DIRECTOR 

Ernest J. Wetherbee ernie.wetherbee@az.usda.gov

(602) 280-8707 

(602) 280-8703 

RURAL HOUSING PROGRAM DIRECTOR 

Jim Martin

(602) 280-8764 

(602) 280-8879 

COMMUNITY & BUSINESS PROGRAMS DIRECTOR

Leonard Gradillas leonard.gradillas@az.usda.gov

(602) 280-8747 

(602) 280-8881 

AREA OFFICE 

Phoenix Corporate Center 

3003 North Central Avenue, Suite 900, Phoenix, AZ 85012

(602) 280-8737 

(602) 280-8770 

(602) 280-8705 TDD 

RURAL DEVELOPMENT MANAGER

Cecilio Torres cecilio.torres@az.usda.gov

(602) 280-8737 

(602) 280-8753 

LOCAL OFFICES 

CASA GRANDE (serves Pinal, Maricopa counties)

115 East First Street, Suite A, Casa Grande, AZ 85222 

(520) 836-1960 

(520) 836-1297

FLAGSTAFF SUB-OFFICE (serves Apache, Navajo, Coconino counties)

1585 South Plaza Way, Suite 120, Flagstaff, AZ 86001 

(928) 774-2401 

(928) 774-2780

HOLBROOK (serves Navajo, Gila counties)

51 West Vista, Suite 5, Holbrook, AZ 86025

(928) 524-2771 

(928) 524-6609 

KINGMAN (serves Mohave county)

101 East Beale Street, Suite B, Kingman, AZ 86401 

(928) 753-6181 

(928) 753-3254 

NOGALES (serves Santa Cruz county)

2585 North Grand Avenue, Suite 5, Nogales, AZ 85621

(520) 281-0221 

(520) 281-1460 

PHOENIX (serves Maricopa county)

3150 North 35th Avenue, Suite 6, Phoenix, AZ 85017 

(602) 353-0378 

(602) 353-0906 

PRESCOTT VALLEY (serves Coconino, Gila, Yavapai counties)

8841 Florentine, Suite B, Prescott Valley, AZ 86314

(928) 759-9301 

(928) 759-9284 

ST. MICHAELS (serves Apache, Navajo Coconino counties)

St. Michaels Professional Plaza, Hwy. 264, St. Michaels, AZ 86511 

(928) 871-5038 

(928) 871-4530 

SAFFORD (serves Graham, Gila, Greenlee counties)

305 East 4th Street, Safford, AZ 85546

(928) 428-0635 

(928) 428-4284 

TUCSON (serves Pima county)

4650 North Highway Drive, Suite 1, Tucson, AZ 85705

(520) 887-4505 

(520) 888-1467 

WILLCOX (serves Cochise, Graham counties)

658 North Bisbee Avenue, Willcox, AZ 85643

(520) 384-3529 

(520) 384-2735 

YUMA (serves LaPaz, Yuma counties) 

2450 South 4th Avenue, Suite 401, Yuma, AZ 85364

(928) 726-4707 

(928) 341-1499 

 The U.S. Department of Agriculture (USDA) prohibits disc imination in all its programs and activities on the 

basis of race, color, national origin, sex, religion, age, disability, political beliefs, sexual orientation, or marital or 

family status. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative 

means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA’s

TARGET Center at (202) 720-2600 (voice and TDD). 

r

 To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, Room 326-W, Whitten 

Building, 14th and Independence Avenue, SW, Washington, D.C. 20250-9410 or call (202) 720-5964 (voice or 

TDD). USDA is an equal opportunity provider and employer.

12
United States 

Department of Agriculture 

Visit the Rural Development Website 

www.rurdev.usda.gov

www.rurdev.usda.gov/az

USDA Rural Development 

3003 North Central Avenue 

Suite 900 

Phoenix, AZ 85012