Your Partner in Advancing Rural Prosperity Puerto Rico Rural Lending - - PowerPoint PPT Presentation

USDA – Rural Development

Your Partner in Advancing Rural Prosperity

Puerto Rico Rural Lending Investment Summit March 7, 2019

Bette Brand

Administrator Rural Business-Cooperative Service Acting Administrator Rural Utilities Service

Led by Agriculture Secretary Perdue

• Established by Presidential Executive Order in

2017

• 22 federal agencies and departments
• Focused on agriculture, economic

development, job growth, infrastructure, innovation, energy security, and quality of life

• Recommended over 100 legislative, regulatory,

and policy actions

• Actions aim to build robust, sustainable rural

communities for generations to come

Task Force on Agriculture and Rural Prosperity

USDA Rural Development

Task Force Report: Answering the Call to Action

Identified five key indicators of rural prosperity

e-Connectivity for Rural America Improving Quality of Life Supporting a Rural Workforce Harnessing Technological Innovation Economic Development

Task Force on Agriculture and Rural Prosperity

Our Role: How RD Drives Rural Prosperity Infrastructure, Partnerships, and Innovation (IPI)

• Sec. Perdue has focused Rural Development efforts on IPI
• Robust, modern infrastructure is a necessity, not an amenity
• Interagency and public-private partnerships are the best way to get things done
• Complex and constantly-evolving challenges require innovation

Each element plays an invaluable role in facilitating economic development and improving rural quality of life.

Our Role: How RD Drives Rural Prosperity

Acting Assistant to the Secretary Joel Baxley is focusing RD on superior customer service

Internal Focus

• Modernization of Rural Development’s IT service
• Increasing sustainability of Rural Development’s workforce

Program Focus

• Maximizing effectiveness by partnering with rural

communities

• Efficiently utilizing funding, time, and human capital

The Four Pillars

Four Pillars of Guaranteed Lending Programs

• 1. Economic Development / Marketing / Technical Assistance
• 2. Origination and Processing
• 3. Compliance and Oversight
• 4. Program Management and Policy

Four Pillars of Direct Lending Programs

• 1. Economic Development / Marketing / Technical Assistance
• 2. Underwriting
• 3. Loan Servicing (credit and risk analysis)
• 4. Special / Troubled Assets

The Farm Bill

The Agriculture Improvement Act of 2018

• RD requires 40 regulations and 40 administrative actions to fully implement
• Expands the Rural Broadband Access Loan and Loan Guarantee Program to allow

the use of grants

• Authorizes Congress to appropriate an additional $350 million
• Creates the Rural Broadband Integration Working Group
• Increases population limit for USDA’s guaranteed water, community facilities, and

broadband programs to 50,000.

• Establishes a Council on Rural Community Innovation and Economic

Development as the successor to the Interagency Task Force on Agriculture and Rural Prosperity

The Farm Bill

The Agriculture Improvement Act of 2018

• Provides over $125 million in mandatory funding for RD’s renewable energy

programs

• Creates Local Agriculture Market Program, bringing together Value Added

Producer Grant and Agriculture Marketing Service’s Farmers Market and Local Food Promotion Programs

• Will receive $50 million in mandatory funds annually
• RD will continue to administer VAPG program
• Transfers the administration of the Biobased Markets Program to Rural

Development

• Mandates 20% of Distance Learning and Telemedicine funding go toward

combating opioid and substance misuse

The One RD Guaranteed Loan Program

What are the benefits?  Supports One USDA Initiative and the Administration’s guidance for Reducing Regulation and Controlling Regulatory Costs.  Simplifies, improves and enhances delivery of these four program  Reduces burden on lenders, applicants and staff  Becomes a common platform to all for efficient delivery  Standardizes and improves customer experience

What is One RD Guaranteed?

• A standard RD regulation guaranteed loan

making in four programs:

• Water and Waste
• Community Facilities
• Business and Industry
• Rural Energy for America
• End-to-End: Filing, Processing, Servicing

Reporting

• Standardize documents across programs

ReConnect Pilot Program

Deploying high-speed, reliable broadband e-connectivity

• $600 million available in loans and grants to expand broadband infrastructure
• Loans, grants, and 50/50 loan/grant combinations available
• Available for rural areas with populations under 20,000
• Expanding broadband service to areas without sufficient access:
• 90% of households lack access to service delivering 10 megabits per second downstream

and 1 megabit per second upstream

• Goal: 25 Mbps downstream, 3 Mbps upstream
• Technology neutral
• USDA will be accepting applications for these funds soon and is providing technical

assistance to applicants seeking this opportunity.

• USDA.gov/Reconnect

Some 2019 Rural Development Goals

• Utilize our projects to fight the opioid epidemic
• Increase assistance to distressed communities
• Modernize rural homes and businesses with energy efficiency
• Deliver Broadband Pilot Program for rural areas lacking service
• Maximize Rural Water Works for modern water systems
• Increase leverage of guaranteed loans into RBS projects by 1%
• Achieve B&I and REAP delinquency rate of not more than 4%
• Achieve Multi-Family Housing delinquency rate for reach state of less than

2%

• Maintain 3% or less delinquency rate for Single Family Housing program
• Increase Community Facilities applications for rural transportation

Joseph Ben-Israel

Assistant Deputy Administrator for Community Facilities Rural Housing Service

Mark Brodziski

Deputy Administrator Rural Business-Cooperative Service

Business & Industry (B&I)

This program is authorized by the Consolidated Farm and Rural Development Act Purpose is to improve, develop, or finance business, industry, and employment, and improve the economic and environmental climate in rural communities Bolster the existing private credit structure through the guarantee of quality loans that will provide lasting community benefits

Eligible Borrowers

• For-profit businesses
• Nonprofits
• Cooperatives
• Federally-recognized Tribes
• Public bodies
• Individuals

Business & Industry (B&I)

Guarantee Percentages/Rates/Terms

• 80% for loans of $5 million or less
• 70% for loans between $5 and $10 million
• 60% for loans exceeding $10 million, up to $25 million maximum
• The initial guarantee fee is 3% upon issuance of the Loan Note Guarantee
• An annual renewal fee of 0.5% is due based on the 12/31 principal balance
• Rates and Terms – Same as REAP

Business & Industry (B&I)

Eligible Purposes

• Business conversion, enlargement, repair, modernization or

development

• Purchase and development of land, buildings, or facilities
• Purchase of equipment, machinery, supplies, or inventory
• Debt refinancing when refinancing improves cash flow and

creates or saves jobs

• Business and industrial acquisitions when the loan will create
• r save jobs

Business & Industry (B&I)

2016 Regulation Enhancements More Eligible Purposes:

• Business Ownership Conversions through

ESOPs or Cooperative Ownership

• Projects that use New Markets Tax

Credits as an equity source

• Local Food Hubs

Business & Industry (B&I)

FY 2019 Loan Authority: $1,375,000,000 Year-to-Date Loan: $455,000,000

USDA Loan Guarantees

Mitigate Risk Increase ROI

Lender Benefits

Expand Legal Lending Limits Secondary Market

Single or Multi note sale of Guarantee

Increase ROI

Sales Premium Interest Strip Servicing Fee Collection

Mitigate Risk

Guarantee against potential loss Reduces risk of specialized collateral

New Business Development Opportunities Community Reinvestment Act Consideration Local People and Local Access

USDA Loan Guarantees

Opportunities on Secondary ry Market

• Lenders have the ability to sell all or part of the guaranteed portion of the

loan to holders on the secondary market.

• Lenders may charge a servicing fee to the holders.
• Lenders are encouraged to utilize the secondary market and pass the

interest-rate savings on to the borrower.

• Lender must retain title to the notes and security interest in the collateral.
• The lender is required to hold a minimum of 5% of the total loan amount,

which must be of the unguaranteed portion. Unguaranteed portions may be participated to another lender.

USDA Loan Guarantees

USDA Loan Guarantees Provides the ability to receive:

• Longer Repayment

Terms

• Full Amortization
• Higher Loan Amounts
• Competitive Interest

Rate

Benefits for Borrowers

Rural Business-Cooperative Service Programs

• Business and Industry Guaranteed Loans
• Intermediary Relending Program
• Rural Economic Development Loan and Grant Program
• Rural Business Development Grants
• Rural Energy for America Program
• Biorefinery Assistance Program
• Value Added Producer Grants
• Cooperative Development Assistance

Aaron Morris

Assistant Deputy Administrator for Energy Programs Rural Business-Cooperative Service

Energy Programs

Programs We Administer

• Rural Energy For America Program (REAP)
• Advanced Biofuel Program
• Biorefinery, Renewable Chemical, and

Biobased Product Manufacturing Assistance Program (9003 Progam)

Energy Programs

Rural Energy for America Program (REAP)

Energy Programs

REAP Continued

Energy Programs

REAP Continued

Energy Programs

REAP Continued

Renewable Energy Systems Energy Efficiency Improvements Minimum Grant Request

$2,500

Total eligible project costs > $10,000

Minimum Grant Request $1,500

Total eligible project costs > $6,000

Maximum Grant Request $500,000

Total eligible project costs > $2 million

Maximum Grant Request

$250,000

Total eligible project costs > $1 million

Energy Programs

$350 Million

Energy Programs

2018 Farm Bill Impacts on REAP

• Changes the definition of Renewable Energy System to include other

components or ancillary parts of a renewable energy system, such as a storage system.

• Allows Agricultural Producers to access loan guarantees for the purchase or

installation of energy efficient equipment and systems (Limited to 15 percent of guaranteed loan funding available each year).

• Reauthorizes mandatory appropriations of $50 million in budget authority

for fiscal years 2019-23.

Energy Programs

Biorefinery, Renewable Chemical, and Biobased Products Manufacturing Assistance Program (9003 Program)

• Most entities are eligible borrowers as long as you have the legal authority to construct,
• perate, and maintain a facility that produces an advanced biofuel, renewable chemical, or a

biobased product.

• All well capitalized, regulated lenders are eligible to be lenders.
• Loans of up to $250 Million (no minimum)
• Loan amount cannot exceed 80% of eligible project cost
• 20% of total eligible project costs must be funded from non-Federal sources
• New technology is eligible
• Not limited to rural locations
• Loan Note Guarantee may be issued prior to construction

Energy Programs

9003 Program Continued

Two types of projects by Statute:

• 1. Commercial-scale Biorefineries using Eligible Technology
• 2. Biobased Product Manufacturing Facilities

Energy Programs

9003 Program Continued

Eligible projects are the development, construction, or Retrofitting of a Commercial-Scale Biorefineries using Eligible Technology.

• Must May produce an advanced biofuel (“some amount”)
• May produce biobased products and renewable chemicals

Energy Programs

9003 Program Continued

 Maximum $250 Million loan to one borrower  Guarantee Percentages 80% for loans of $150 Million or Less 70% for loans >$150MM but less than $200MM 60% for loans >$200MM up to $250MM *Loans $150MM or Less could receive 90% guarantee if they meet certain conditions

Energy Programs

9003 Program Continued

• The 9003 Program uses a 2-phase application process.
• Two application cycles each fiscal year. Applications may be

submitted at any time.

• Letter of Intent deadlines are 30 days prior to the application

closing date

• Application closing dates are October 1 and April 1 (or next

business day)

Energy Programs

Thank You!

• Aaron Morris, Assistant Deputy Administrator – Tel. (202) 720-1501, email.

Aaron.Morris@wdc.usda.gov

• Kevin Boone, West Regional Energy Coordinator, Tel. (337) 262-6601, 133, email.

Kevin.Boone@wdc.usda.gov

• Will Dodson, South Regional Energy Coordinator, Tel. (202) 768-0592, email. Will.Dodson@wdc.usda.gov
• Lisa Noty, Midwest Regional Energy Coordinator, Tel. (712) 254-4366, email. Lisa.Noty@wdc.usda.gov
• Debra Yocum, Northeast Regional Energy Cordinator, Tel. (402) 499-1198, email

Debra.Yocum@ne.usda.gov

Edna Primrose

Assistant Administrator for Water and Environmental Programs Rural Utilities Service

Water and Environmental Programs (WEP)

Finance the acquisition, construction or improvement of:

• Drinking water sourcing, treatment, storage and distribution
• Sewer collection, transmission, treatment and disposal
• Solid waste collection, disposal and closure
• Storm water collection, conveyance and disposal

Eligible areas:

• Cities with populations of 10,000 or less; Rural areas; tribal lands

in rural areas; Colonias Eligible borrowers:

• Most state and local governmental entities; private non-profits;

and federally-recognized tribes.

WEP Funding Portfolio:

• $1.8 billion in direct loan, loan guarantee and

grant programs is currently available.

• In FY 2018, WEP invested nearly $3 billion for
• ver 1,000 projects that will provide new or

improved service to enhance water quality for nearly 3 million rural residents nationwide (pop.

• f 10,000 or less).
• In FY 2018, WEP partnered with financial

institutions to guarantee $25.5 million in private capital investment in rural water and waste infrastructure.

Water and Environmental Programs (WEP)

Rural Challenges

Rural communities face multiple challenges in disaster relief and recovery including, but not limited to, the following:

• Higher rates of poverty
• Low population and more vulnerable to
• utmigration
• Isolation/remoteness – affecting delivery of

assistance during disasters

• Low capacity and access to information to apply for

assistance

• Accurate data/vulnerability assessment and

emergency plan

Water and Environmental Programs (WEP)

PUERTO RICO OPPORTUNITY ZONES

• WEP Investment - $5.4 million landfill project (grant)

Note: The areas in white are NOT Opportunity Zones.

• Infrastructure and Community Facilities programs become a recovery priority

due to nature of the devastation caused in these two areas. Also, the entities that are usually responsible for execution of recuperation work are the primary eligible participants: Municipalities, Public Bodies and NGO’s.

• Puerto Rico has 237 non-PRASA water systems, all of which serve less than 2,000
• people. 78% serve less than 500. Red indicates the high-priority systems in need
• f assistance due to health-based concerns or lack of water.

Water Infrastructure in Puerto Rico: Puerto Rico Non-PRASA Small Water Systems

• Public-Private Partnerships are needed.
• Co-funding to leverage public-private funds:

Guaranteed loans can be combined with USDA’s direct loan program. Blended rate for borrowers and greater affordability for users.

• Interim construction financing by commercial lenders.
• Graduation of current borrowers to private capital.
• Refinance to improve interest rates/loan terms/liquidity.
• RD Apply and ePreliminary Engineering Report (ePER) make it

easier to do business with WEP.

• NOTE: The new Farm Bill raises eligible population limits to 50,000 for

guaranteed loans.

Lender Partnership Opportunities

Water and Environmental Programs (WEP)

Panelist Contact In Information

Bette Brand Mark Brodziski Joseph Ben-Israel

Administrator Deputy Administrator Assistant Deputy Administrator for Rural Business-Cooperative Service Rural Business-Cooperative Service Community Facilities Andrew.Shaeffer@usda.gov Mark.Brodziski@usda.gov Joseph.Ben-Israel@usda.gov

Edna Primrose Aaron Morris

Assistant Administrator for Water and Environmental Programs Assistant Deputy Administrator for Energy Programs Rural Utilities Service Rural Business-Cooperative Service Edna.Primrose@usda.gov Aaaron.Morris@usda.gov