USDA Rural Development Community Facilities Community Facilities Programs Community Programs USDA Rural Development, Oregon
USDA Rural Development Community Programs We make loans, grants, and Loan Guarantees for the following types of projects: Health Services: Hospitals, Clinics, Assisted Living Community, Cultural, or Social Services Transportation Facilities: Roads, streets, bridges Major End Items of Equipment X-Ray Machines or similar medical equipment Solid waste collection vehicles Fire and Rescue, Emergency Services, Ambulance Police and Safety Purposes City Hall, Library, other Public Services Community Programs USDA Rural Development, Oregon
USDA Rural Development Community Facilities Program Financial Programs Loan Guarantees Direct Loans Special Programs CF Small Loans / Grants Equipment, Fire and Rescue Rural Economic Development Loans / Grants Energy Efficiency Purposes Application Processing Feasibility Studies Technical Assistance Applications
USDA Rural Development Community Facilities GUARANTEED LOANS WHY THE GUARANTY PROGRAM? INCREASES FUNDS FOR RURAL AREA NEEDS LEVERAGES LOCAL BANK FUNDS REDUCES LENDER RISK ENHANCES SERVICES TO RURAL COMMUNITIES STRENGTHENS ECONOMIC BASE GOOD FOR COMMUNITY USE OF FUNDS: COSTS RELATED TO THE CONSTRUCTION, ENLARGEMENT, EXTENSION OR OTHER IMPROVEMENTS OR EXPANSIONS OF ESSENTIAL COMMUNITY FACILITIES, INCLUDING EQUIPMENT. Typical project size is $1MM - $25MM. Community Programs USDA Rural Development, Oregon
Community Facility - Financial Programs Common Elements BETWEEN Loan Guarantees and Direct Loans Improve, develop, or finance essential community facilities (especially health care) Located in rural areas under 20,000 population Terms limited to lesser of useful life or 40 years, or by state law May be used together with other funding sources Economic Feasibility Required
Community Facility Financial Programs Guaranteed Loans Lender driven Keeps investments local Rates close to prime 1% Fee Up to 90% Guarantee Loans under $3 MM approved in 30 days No upper limit on size of loan Direct Loans RD Processes at Area Offices Rates Fixed at 4.5% No added fees Loans in excess of $3,000,000 not common but possible
Community Facility Financial Programs for Small Projects Community Facility Grant Health Care, Public Safety, Emergency Services typically under $90,000 dependent on need Rural Economic Development Loan / Grant Loans up to $740,000 / Grants to $300,000 Loan or grant made to an eligible utility to establish a revolving loan fund for an eligible purpose Community, Health Care, Public Safety, Emergency Services Up to 10 years to repay Usually a 20% minimum match Recipient relends funds to ultimate recipient at zero interest with a small servicing fee Best used with equipment purchases under $750,000 Rural Business and Cooperative Service Grants and Loans are available for energy efficiency projects through RBS and for communities larger than 20,000 population.
Community Facility Economic Feasibility Requirements An independent feasibility and architectural or engineering report prepared by a qualified third party is required for: Any project in excess of $500,000 or that is Dependent on facility revenues; or Where a new owner/entity with limited operating experience is applying A Preliminary Architectural/Engineering Report will also include preliminary cost estimates, drawings, and site plans
Community Facility Economic Feasibility Requirements Economic Feasibility Requirements Describes need Describes current facilities Describes proposed facility Includes management prepared assumptions Includes Financial Projections for 5 years Includes Balance Sheets, Statement of Income and Expenses, and Statement of Cash flows Includes Comparison data for facilities in area for most recent year
Community Facility Feasibility Assumptions Management Experience and Effectiveness, Information management Accounting and Bookkeeping Policies and Practices Service Area Health care Environment- Age and specialty of physicians on staff and in the area; retired, limited practice or full time, staff turnover Competitive Environment Market Assessment and Demand for services Similar services, distance, practices and habits of residents, Economic Environment Employment, industry, rurality, inflation, assumed utilization Legal and Regulatory Environment State and Federal laws, changes Technological Environment Services to be provided, follow-up capability, etc.
USDA Rural Development Community Programs All applications are received and processed through the local area offices All approvals are subject to Environmental Review, completion of design phase, and subject to availability of funds Eligibility on direct loans determined in 45 days or Less Guaranteed Loans are initiated by Lender Guaranteed Loans will be approved in 60 days or Less Community Programs USDA Rural Development, Oregon
USDA Rural Development High Priority Projects are found in communities with - Population < 5,000, and Median Household Income (MHI) < $41,230, with Leveraged (Joint) financing > 20% And are for projects involving a - Health Care Purpose Public Safety Purpose Child Care / Day Care Renewable Energy or Energy Efficiency (Not for Resale) Community Programs USDA Rural Development, Oregon
Analysis - New Construction Construction Cost $10,000,000 HUD Financing Bldg Cost $10 MM HUD Fees $ 1.5 MM Davis-Bacon may add 25% Amt Financed $11.5 MM 30 Year Term @ 5% Total Payment $741,060 RD Community Facility Direct Loan $5 MM 30 Year Term @ 4.5% $304,200 Guarantee Loan $5 MM 30 Yr Term @ 7% $399,600 Total Payment $703,800 $37,260 lower than a HUD financed project
Analysis - New Construction In most cases: RD Financing is the preferred choice for financing since overall fees are lower. RD is the preferred choice for financing because cash flow is improved CAH Financing allows for reimbursement for debt obligations and higher levels of reimbursement There is no better time to finance new construction of health care facilities