|Sep 24, 2012 --
Rural Electric Economic Development, Inc. (REED) is a 501.c.3 (nonprofit foundation) organized by electric cooperatives to provide financing and leverage investment in underserved rural areas. To that end REED members, 21 electric cooperatives, have partnered with USDA Rural Development on 45 REDL&G awards that provide capital for electric cooperatives to provide 0-interest loans to non-profit projects. These awards, along with 7 IRP loans, have resulted in a well-capitalized and high performing revolving loan fund serving eastern South Dakota and western Minnesota. Eighty-seven percent of REED financed projects are in communities of less than 4,000 and 98% are locally owned.
The USDA Rural Development, Rural Economic Development Loan and Grant (REDL&G) program was essential to bring needed capital to a wide range of public and nonprofit projects such as East River Electric Power Cooperative’s loan to help recapitalize a revolving loan fund operated by First District Development Company in Watertown, SD and Kingsbury Electric Cooperative’s loan to the City of DeSmet for essential infrastructure upgrades. Four additional cooperatives have received approval for 0% loans and are awaiting project completion before they can issue the funds. The repayments on these and other REDL&G loans plus the cooperative’s matching funds form the capital base for REED.
REED has also obtained seven (7) Intermediary Relending Program (IRP) loans from USDA Rural Development to enhance REED’s capital base. Since 2009 REED has issued over $10.6 million in loans to 34 projects using IRP and REDL&G funds for the majority of projects. The ability to access USDA funding to capitalize and recapitalize the loan fund provided not only capital but enabled the cooperatives to build a sound base, attract private capital and other Federal funds.
“Without the partnership of USDA Rural Development, and the REDL&G and IRP programs, the REED fund would not exist, and over $50 million in financing (issued through REED) would not have been able to leverage over $375 million in additional investment in our region,” stated Linda Salmonson, Economic Development Manager at East River Electric Power Cooperative and a member of the back office team that manages the REED fund.
The 21 electric cooperative members of REED are pleased with the impact their fund has made on the rural areas they serve. For example, a variety store now operates on Main Street of Clark; a snack food processor has expanded nationally and doubled their employment; a healthy foods business in now selling flax-based mixes from their Raymond location; and an implement dealer is operating in an expanded facility thanks to financing from Codington Clark Electric Cooperative.
Impact is measured primarily in jobs, and the REED fund’s members have helped businesses to retain and create over 6,500 jobs since inception in 1997. Equally important are the improvements in facilities and access to goods services locally, as well as insuring there is capital available for entrepreneurs. REED member cooperatives have touched the lives of people throughout the eastern South Dakota and western Minnesota region in many ways. Lyon Lincoln Electric has helped two businesses expand, one business to begin and financed additional community meeting space. Northern Electric has assisted with numerous business expansions in the Aberdeen area resulting in over 400 new jobs since 2009. And the list goes on….
From supporting the growth in agriculture to helping Main Street, to partnering to see that the infrastructure and emergency services are in place to meet local needs, the fund sees itself as a partner with the communities, commercial lenders and USDA Rural Development to build a sound foundation for the future of rural America.