Community Facilities Programs Presented by: Terence McGhee, CPA, M.Ed, MBA Community Facilities Programs Region Coordinator

Rural Development’s Mission Rural Development is committed to helping improve the economy and quality of life in all of rural America by providing financial programs to support essential public facilities and services as water and sewer systems, housing, health clinics, emergency service facilities and electric and telephone service. Rural Development promotes economic development by providing loans to businesses through banks and community-managed lending pools, while also assisting communities to participate in community empowerment programs. 2 Tusculum College Tusculum, Tennessee

Community facilities programs funding foot print include investments in communities with a population of 20,000 or less Eligible applicants include: municipalities, counties, special purpose districts, nonprofit corporations and federally recognized Indian tribes The applicant must have the legal authority to incur debt Eligible loan purposes include: construct, enlarge, extend or other wise improve essential community facilities Community Facilities Programs Program Requirements 3

Residence Halls Administrative Buildings Educational Buildings Research Facilities Parking lot paving Renovation Debt refinance (Must be less than 50% of funding request) Interior furnishing Equipment Purchases Community Facilities Programs Types of Projects 4 Rollins Campus Center Young Harris College

Types of Products  Direct Loan Program  Guarantee Loan Program Community Facilities Programs Types of Products 5 Rollins Campus Center Young Harris College

Direct Loan Program USDA is the lender Terms Up to 40 years (based on useful life of project) Fixed interest rate Payment options: monthly, semi annual and annual *No prepayment penalty Community Facilities Programs Types of Products 6 Rollins Campus Center Young Harris College

Direct Loan Program – Interest Rate(s) Poverty The median household income of the service area is below the poverty line for a family of four or below 80 percent of the Statewide nonmetropolitan median household income. Project must address health and sanitary issues. Intermediate Apply to loans that do not meet the requirements for the poverty line rate and for which the median household income of the service area is below the poverty line or not more than 100 percent of the nonmetropolitan median household income of the State Market The market rate will apply to all loans that do not qualify for poverty or intermediate interest rates Community Facilities Programs Types of Products 7 Rollins Campus Center Young Harris College

Direct Loan Program – Market Interest Rate Community Facilities Programs Market Interest Rate 8

Direct Loan Program Collateral requirements  Each applicant must have or will obtain the legal authority necessary to pledge security for the loan  Loans will be secured by the best security position practicable in a manner which will adequately protect the interest of Rural Development during the repayment period of the loan Community Facilities Programs Types of Products 9 Mansfield University of Pennsylvania

Direct Loan Program Collateral requirements – Joint Financing  When adequate security of more than one type is available, the lender may take one type of security with the USDA taking another type  Projects utilizing joint financing with the same security to be shared by the USDA and another lender, a parity position may be considered Community Facilities Programs Types of Products 10 Under Construction

Direct Loan Program – Example Construction of Residence Hall - $28,000, Years – Term of Loan 3.125% - Interest Rate $1,235,945 – Annual Payment Community Facilities Programs Types of Products 11 Your New Campus Project

Guarantee Loan Program  Loan is guaranteed up to 90% by Rural Development  Mitigates risk for lender  Lender must be unwilling to make the loan without obtaining the loan guarantee  Guaranteed portion of loan does not count against the lender’s legal lending limits  Expanded project opportunities *Great program to utilize when there is an established relationship with local lender Community Facilities Programs Types of Products 12 Black River Technical College Pocahontas, AR

Guarantee Loan Program  Lender and applicant negotiate the interest rate  Variable interest rates cannot adjust more than quarterly and must be tied to a base rate (ex. WSJ Prime or LIBOR) published in a recognized national or regional publication  Balloon payments are prohibited  Lender sets the term of the loan which can not exceed 40 Years Community Facilities Programs Types of Products 13

Guarantee Loan Program  Security must be of such a nature that repayment of the loan is reasonably ensured when considered with the integrity and ability of project management and soundness of the project  Joint Financing - Projects utilizing joint financing with the same security to be shared by the USDA and another lender, a parity position may be considered Community Facilities Programs Types of Products 14

Available Funding Community Facilities Programs 15

Funding Availability 2016 CF Loan Guarantees amount Includes Carryover Funding 16

CF Portfolio Health Care $3.5 Billion 1,488 Facilities Public Safety & Other $1.3 Billion 6,172 Facilities Total $7.7 Billion Direct & Guaranteed Loans and Grants Another $3 Billion in Unclosed Obligations As of February 24, ,721 Facilities

CF Education Portfolio Total $1.3 Billion Direct Loans Only As of February 24, 2016 Public & Charter Schools $429 Million 1,009 Facilities Childcare $77 Million 265 Facilities Other Educational $516 Million 285 Facilities Colleges $215 Million 57 Facilities Libraries $58 Million 106 Facilities 900 Facilities

Public Private Partnership Community Facilities Programs 19

 Community Facilities has taken a leadership role in facilitating Public Private Partnerships (P3) to better serve rural communities  The initiative was so successful in FY12 that the initiative was rolled into the White House’s Domestic Policy Council’s “We Can’t Wait” Initiative.  P3 has bought together critical financial, project development and technical expertise, resources and innovation to large complex community infrastructure projects  The initiative has also spurred strong participation from our private sector lending partners to supplement CF Financing Public Private Partnership Initiative 20

 From FY2012 to 2015, CF invested in 416 Public Private Partnership community infrastructure projects across rural America in 49 states.  CF leveraged over $2.7 billion in CF direct loan funds, with $1.4 billion from institutional investors and the capital credit markets  CF investments are projected to create or save 97,474 quality paying jobs. Public Private Partnership Initiative Continued 21

Types of Projects Funded Community Facilities Programs Types of Projects 22

Clarion University was established in 1867 and serves 6,520 students, but had aging infrastructure that needed updating. 728-bed, four-story student dormitory with 245,000 square feet of space that is prewired for internet and cable connections, which replaced two older dorms that were subsequently demolished. The $66.4 million total cost was financed with a $45 million CF Direct loan and $21.4 million in public market bonds. Clarion University employs almost 400 people. Clarion University – Student Housing 23 Clarion, Pennsylvania

9-story clinical facilities building to increase medical student capacity. The $35 million total cost was financed with a $26.5 million CF Direct loan, $4 million in NMTC’s, $2.5 million in grants and $2 million from University of Pikeville. PMC employs over 200 people in a persistent poverty area The building will allow 200 more medical students to enroll, which will help address physician shortages in the Appalachia areas. University of Pikeville – School of Osteopathic Medicine 24 Pikeville, Kentucky

Claflin University was founded in On campus water system infrastructure was deteriorating beyond maintenance repair due to the aging system. The $2,995,000 total project cost was funded using the USDA Rural Development’s Community Facilities Direct Loan The project will improve system delivery and adequately address the quality of water on campus. Claflin University – On campus water system upgrades Orangeburg, South Carolina 25

Talladega College was founded in Construction of a 203 bed, 43,000 square foot student residence hall and 45,000 square foot campus center. The $16,000,000 total project cost was funded using the USDA Rural Development’s Community Facility Direct loan program This project upon completion will address the increasing demand for student housing, provide a solution for limited meeting space and student activity common areas. Talladega College– Residential Halls and Student Center Talladega, Alabama 26 Chambless King Architects

How to get connected? Community Facilities Programs 27

Community Facilities Infrastructure Tool Kit Best practices and lessons learned when developing infrastructure projects Community Facilities Programs 28

Questions? Community Facilities Programs 29

Thank you Terence McGhee, CPA, M.Ed, MBA