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Oregon Rural Development


Water and Waste Program


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The Rural Utilities Service administers a water and wastewater loan and grant program designed to improve the quality of life and promote economic development in rural America.

The Rural Utilities Service programs provide needed facilities to ensure health and safety and stimulate local economy by allowing access to new and advanced services and job opportunities.

Program funds can be used for water, sewer, solid waste, and storm drainage projects. The most common uses are to restore deteriorating water supplies, or to improve, enlarge, or modify inadequate water or waste facilities.

Applicant Eligibility
Eligible applicants for Rural Utilities funds include public bodies and Indian Tribes. Non-profit corporations with significant ties to the local rural community may also be eligible.

Funding is targeted to rural areas with populations of 10,000 or less.

Applicants must be unable to obtain commercial financing at reasonable rates and terms or finance the project from existing resources.

Project Eligibility
The proposed project must serve a rural area not likely to decline in population below that for which the project is designed.

The project should serve the present population and provide for foreseeable growth.

Proposed projects should be necessary for orderly community development consistent with a comprehensive community or county development plan.

Facilities must be modest in design, size, and cost. Water meters, a primary instrument for promoting conservation, are required by the agency.

All water and wastewater systems must meet the standards set by the State Department of Environmental Quality.

Project Scoring
The Rural Utilities staff review each project to determine need based on various priority points.

Prioritization is necessary due to limited funding and to make sure the most deserving projects receive assistance.

Loan Terms
When possible, loan funds are combined with other federal and state financing to reduce the end cost to users of the system.

Depending on median household income and need, communities may qualify for grant funds of up to 75% of the eligible project costs.

These grants can help reduce water and waste disposal rates to reasonable levels.

Rural Utilities loans have a term of up to 40 years or for the useful life of the facility, whichever is less.

Loan Rates
There are three different interest rates available for Rural Utilities loans.

The poverty line rate of 4.5% per annum applies to communities with a median household income below the state poverty level or 80% of the non-urban population. There must be a health standard violation to receive the poverty loan rate.

The intermediate rate applies to projects in communities that are not eligible for the poverty rate and have a median household income of less than 100 % of the non-urban or state median household income.

The intermediate interest rate is set halfway between the poverty line interest rate and the market rate.

The market rate applies to projects in communities who do not qualify for the lower rates and who have median household income exceeding 100 % of the non-urban income for the state.

The agency sets the intermediate and market rates quarterly, based on the bond market. The final rate for the project is the lowest rate in effect at the time of loan approval or closing.

Security Requirements
To ensure the federal investment, the best security position practicable must be acquired.

Acceptable forms of security for utility systems and public bodies include revenue bonds; other pledges of taxes or assessments; GO Bonds; and assignment of income.

Grant Eligibility
Grant fund eligibility is determined based on population, median household income, and user rates. Priority for grant funding is given to projects with populations of less than 5,500.

Communities with low median household income may receive grant funding to reduce user costs to a reasonable level for rural residents.

User rates are considered reasonable if they are less than or equal to existing prevailing rates in similar communities with similar systems.

Total grant funding cannot exceed the following percentages of eligible project development costs:

Grant funds may be authorized if reasonable user rates have not been achieved due to unusually high Operation and Maintenance (O&M) costs or other unusual factors.

Grant Fund Limitations
Grant funds may not be used to: