How May Funds Be Used?

Loan and grant funds may be used to construct, enlarge, or improve community facilities for health care, public safety, and public services in rural areas and towns of up to 20,000 in population. This can include costs to acquire land needed to develop the facility, pay necessary professional fees, and purchase equipment required for its operation. Examples of essential community facilities include:

• Health Care: Clinics, ambulatory care centers, hospitals, rehabilitation centers, and nursing homes.
• Telecommunications: Medical and educational telecommunication links.
• Public Safety: Communications centers, police and fire stations, fire trucks, rescue vehicles, and jails.
• Public Services: Adult and child care centers, city halls, courthouses, airports, garages, off-street parking facilities, sidewalks, street improvements, college classrooms and dormitories, libraries, museums, schools, fairgrounds, and animal shelters.

Loans, grants and guarantees are available to public entities such as municipalities, counties, and special purpose districts. Nonprofit corporations and tribal governments may also apply.

In addition, applicants must have the legal authority to borrow and repay loans, to pledge security for loans, and to construct, operate, and maintain the facilities. They must also be financially sound and able to organize and manage the facility effectively.

Repayment of the loan must be based on tax assessments, revenues, fees, or other sources of money sufficient for operation and maintenance, reserves and debt retirement.

The maximum term for all loans is 40 years. However, the repayment period is limited to the useful life of the facility or any statutory limitation on the applicant's borrowing authority.

Interest rates for direct loans are based on current market yields for municipal obligations, although loans for facilities impacting prime or unique farmland may require a slightly higher rate. Certain other direct loans may qualify for a lower interest rate, depending upon the median household income of the residents of the community to be served. The interest rates for guaranteed loans may be fixed or variable and are determined by the lender and borrower, subject to agency review and approval.

Bonds or notes pledging taxes, assessments, or revenues will be accepted as security if they meet statutory requirements. Where State Laws permit, a mortgage may be taken on real and personal property. Tax-exempt notes or bonds may be issued to secure direct loans, but cannot be used for guaranteed loans.

How Are Applications Made?

Applications and further information about the Community Facilities can be obtained from the Rural Development office nearest you.  The Rural Development staff will be glad to discuss a community's needs and the services available.