USDA Rural Development--Missouri Home Page--Water and Waste Disposal Loans and Grants

Missouri

WATER & WASTE DISPOSAL GUARANTEED LOANS AND GRANTS	RUS Instruction 1779

PURPOSE:	Provide financing for water, sanitary sewerage, solid waste disposal and storm wastewater facilities for rural residents.

Eligibility	Population Limit	Test For Credit	Eligible Loan Purposes
Ineligible Loan Purposes	Loan Terms	Interest Rates	Security
Grant Eligibility		Application


ELIGIBILITY:	Public bodies such as municipalities (cities, towns and villages), counties, and special purpose districts (water districts and sewer districts) Nonprofit corporations Federally recognized Indian tribes

POPULATION LIMIT:	Loans and/or grants will not be made to a city or town with a population in excess of 10,000 population. Priority will be given to communities of less than 5,500 population.

TEST FOR CREDIT:	Applicant must certify, and USDA Rural Development must concur, that it is unable to finance the proposed project from their own resources or through commercial credit at reasonable rates and terms.

ELIGIBLE LOAN PURPOSES:	Construct, enlarge, extend or otherwise improve water or waste disposal facilities Pay fees necessary for the project development such as legal and engineering Interest on loan until facility is self-supporting (up to three years) Cost of acquiring land, rights-of-way, permits, etc Purchase of necessary equipment Initial operating expenses Refinancing existing debts in limited circumstances Debts being refinanced are secondary part of loan (less than 50%) Debts being refinanced were incurred for facility or service being currently financed Arrangements cannot be made with present creditors to extend or modify terms of the existing debts

INELIGIBLE LOAN PURPOSES:	Facilities which are not modest in size, design and cost Loan or grant finder's fees New combined sanitary and storm water sewer facilities That portion of a water and/or waste disposal facility normally provided by a business or industrial user

LOAN TERMS:	Missouri Statutes limit the term of public body revenue bonds to 35 years. Normally, principal is deferred the first two years. Not-for-profit corporations may borrow for up to 40 years. Guaranteed loans provide up to a 90% guarantee to the lender for water or sewer system construction or improvements. Interest rates are negotiable with the lender. The loan will not exceed 35 years. The borrower and lender must certify that credit is not available without the guarantee.

INTEREST RATES:	There are three interest rate levels: poverty, intermediate and market. The type of rate applicable to a project is dependent on the Median Household Income of the service area. The poverty rate is appropriate if the median household income of the service area is below the poverty* line or is below 80% of the state nonmetropolitan median household income ($31,234) and the loan is to upgrade existing facilities or construct new facilities required to meet applicable health or sanitary standards. The intermediate rate applies to loans that do not meet the requirements for the poverty line rate or for which the median household income in the service area is below the poverty line or not more than 100% of the nonmetropolitan median household income of the state ($39,043). The market rate applies to all loans that do not qualify for the poverty or intermediate rates. Currently, the poverty rate is 4.5%. The market rate is adjusted quarterly based on a bond buyer index. The intermediate rate is midway between the poverty and market rates. *The poverty line amount is updated annually. As of April, 2007, the poverty line is $20,650.

SECURITY:	Loans will be secured by the best security position practicable to protect the interest of the Government during the repayment of the loan. In Missouri, water and waste disposal loans to public bodies are normally secured by revenue bonds. In some cases, general obligation bonds can be taken as security if the test for credit requirement can be met. Loans to nonprofit corporations are secured by a note and real estate deed of trust.

GRANT ELIGIBILITY:	Grants are considered only after a determination is made on the maximum amount of loan the community can afford and still have reasonable user rates. When those and other available funds are not sufficient to do the project as the community and USDA Rural Development have agreed upon, they can be considered for grants funds. Applicants will be considered for grant assistance when the debt service portion of the average annual user cost (for users in the service area) exceeds the following percentages of the median household income (MHI): 0.5% when the MHI of the service area is below the poverty line or below 80% (whichever is higher) of the state nonmetropolitan median household income ($31,234) 1% when the MHI of the service area exceeds the 0.5% requirement but is not more than 100% of the state nonmetropolitan median household income ($39,043) Grants may not be made in excess of the following percentages (whichever is higher) of the eligible project development costs: 75% when the MHI of the service area is below the poverty line or below 80% of the state nonmetropolitan median household income ($31,234) 45% when the MHI of the service area exceeds the 75% requirement but is not more than 100% of the statewide nonmetropolitan median household income ($39,043) In addition, the percentage contained in the above paragraphs are maximum amounts and may be further limited due to availability of funds or grant determination processes.

APPLICATIONS:	Standard Form 424.2, Application Preliminary Engineering Report/Facility Plan with CF Guide 20 State Intergovernmental Review Applicant's Certification on Other Credit Latest audit or latest annual statement of income and expenses with balance sheet

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Revised on: April 9, 2008

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