FY 1998 Annual Report of the Secretary of Agriculture
USDA: Preparing for a New Millennium
USDA: Preparing for a New Millennium
The mission of Rural Development is to enhance the ability of rural communities to develop, to grow, and to improve their quality of life by targeting financial and technical resources in areas of greatest need through activities of greatest potential.
The following is a summary of the number of loans and grants made by each program in USDA’s Rural Development mission and of the economic benefits provided by each:
| Hero of Ice Storm Named Maine
Multi-Family Housing Site Manager of the Year A former tenant of the RHS rural rental housing-financed apartment complex called Stonington Manor in Maine, Eric Hoard is now its manager. During the January 1998 ice storm, Mr. Hoard brought wood from his own home for a community room stove and used his own resources to arrange for a barbecue on a gas grill so residents in the all-electric complex would have heat and food while the housing was without power. In recognition for his efforts, Mr. Hoard has been named the USDA Maine Multi-Family Housing Site Manager of the Year for 1998. When asked what the best thing about his job is, Mr. Hoard says, “Working with the tenants.” |
Direct Rural Housing Loan Program (Section 502 direct)
This program offers low-interest homeownership loans to rural America’s
working people. Approximately 40 percent of the people it serves earn less than
50 percent of the median income of the rural area in which they live; the
remainder earn between 50 and 80 percent. In FY 98, the program obligated
$999.8 million to enable approximately 17,200 families to become homeowners.
Mutual Self-Help Housing Program
This program makes mortgage costs affordable to people with very low and low
incomes by allowing them to contribute “sweat equity,” which they
earn by building their own homes. The program provides grants to nonprofit and
municipal technical assistance providers, who supervise small groups of
families in the construction of their own homes. The families typically finance
their homes through USDA direct rural housing loans. In FY 1998, the Rural
Housing Service (RHS) provided 117 grantees in 43 States with a total of $26
million in technical assistance grants. In turn, the grantees supervised 1,520
families in the construction of their own homes. The families received $110.4
million in direct rural housing loans from USDA.
Guaranteed Rural Housing Loan Program (Section 502 guarantee)
This program provides guaranteed loans of up to 90 percent to low- and
moderate-income rural Americans who otherwise would not be able to obtain
credit. It also allows borrowers to obtain loans for 100 percent of the
appraised value of a house, thereby removing the downpayment barrier that
prevents many people from becoming homeowners. In FY 1998, the program
obligated $2.8 billion to allow approximately 39,400 families to purchase
homes.
Rural Home Repair Loan and Grant Programs (Section 504)
These programs provide funds to help very low-income people undertake the vital
improvements necessary to make their homes habitable. These include
weatherizing the homes, removing electrical and fire hazards, repairing
roofing, and installing or improving water and waste-water disposal systems.
The grant program serves people ages 62 and up, while the loan program is open
to all very low-income rural people. In FY 1998, the home repair loan and grant
programs obligated $54.4 million to allow approximately 11,100 families to make
vital improvements to make their homes safe and liveable.
| RHS Community Facilities Program Helps
Rural New York Teen Chemical Dependency Treatment Center To Double Its Capacity
The Rose Hill Foundation, Inc., in Massena, New York, is a unique, freestanding chemical dependency treatment center devoted to adolescents, ages 12-18. Not only does it provide treatment to help chemically dependent teens overcome their addictions, but it also offers post-rehabilitation treatment counseling, which has been completed by 89 percent of its patients. The treatment center has been in existence for 10 years and has served 900 adolescents. Approximately 50 percent of its patient base is homeless. In April 1998, the facility received an RHS Community Facilities direct loan of $700,000, an $855,000 grant from the Office of Temporary and Disability Assistance Homeless Housing Program, and a $50,000 grant from the New York State Community Facilities Enhancement Fund. Through these funds, Rose Hill will be able to double its bed capacity from 15 to 30. Four beds will be designated for adolescent parents, their children, and pregnant teens. In addition, Rose Hill will be able to double the number of people it serves each year, going from 100 customers to 200. Rose Hill makes its unique and vital services available to the entire State of New York. |
Economic benefits provided by Single-Family programs
Together, Single-Family housing programs provided 83,183 full-time jobs in
construction and construction-related industries, $1.3 billion in wages, and
$700.9 million in combined Federal, State, and local revenues and fees.
Total number of homes financed: 56,500
Total number of homes rehabilitated: 11,100
Total financing provided: $3.98 billion
Rural Rental Housing Direct Loan Program (Section 515)
This program makes low-interest loans to developers of affordable rural rental
housing. In 1998, RHS obligated $93.7 million toward construction of 122 new
rental complexes providing approximately 2,400 units. It also obligated $56.3
million toward the repair and rehabilitation of existing units in 228 rural
rental facilities.
Farm Labor Housing Loan and Grant Program (Section 514/516)
The only national source for farm labor housing construction funds, this
program provides low-interest loans and grants to developers of affordable
rural rental housing for farmworkers, who are among the most poorly housed
people in the country. These developers may be public or nonprofit agencies or
farmers. In 1998, the program obligated $27.1 million to build 419 new units
and rehabilitate seven rental complexes.
| RHS Teams Up with Partners To Help
Kentucky Couple Move From Log Cabin to New Home In 1998, Rayburn and Sarah Watson contacted Kentucky Rural Development seeking funds to repair their log cabin, built in 1866 and occupied continuously since then by family members. Rural Development determined that the house was beyond repair: the foundation was severely deteriorated, the home lacked running water and bathroom facilities, and the home was heated by a wood-burning cook stove and a gas heater. Rural Development teamed up with the Federation of Appalachian Housing Enterprises (FAHE) and Peoples Self Help Housing, Inc., to provide a leveraged USDA Section 502 direct rural housing loan to build Mr. and Mrs. Watson a new home. The Watsons are so pleased that they no longer have to carry water for cooking, washing dishes, and doing laundry; that they have a bathtub; that they have level floors and carpet; and that their house is warm and insulated. Mr. and Mrs. Watson appreciate the attention to detail and workmanship that they feel make their house such a beautiful home. Mrs. Watson states that “We also appreciate the forethought the builders displayed by always taking into consideration my height and physical shortcomings.” Mr. and Mrs. Watson expressed their appreciation for the hard work of staffs of Rural Development, FAHE, and Peoples Self Help Housing. |
Rental Assistance Program (Section 521)
This program makes rents in USDA rural rental housing and farm labor housing
affordable to the tenants. In FY 1998, RHS provided over $540 million in rental
assistance to more than 39,000 tenants.
Rural Rental Housing Guaranteed Loan Program (Section 538)
This program guarantees loans for developers of affordable rental housing. In
FY 1998, the Section 538 program approved loan guarantees worth $39.7 million
to build 28 rural rental housing developments with a total of 1,110 apartments
in 14 States.
Housing Preservation Grant Program (Section 533)
This program provides grants to nonprofit organizations, Indian tribes, and
Government agencies to bring up to code deteriorating single- and multi-family
housing for very low- and low-income families. In 1998, the program provided
$11 million to 165 organizations to rehabilitate 2,975 houses and apartments.
Economic benefits provided by Multi-Family programs
Together, Multi-Family housing programs provided 4,147 full-time jobs in
construction and construction-related industries, $136.8 million in wages, and
$72.4 million in combined Federal, State, and local revenues and fees.
Total number of new apartments financed: 3,940
Total number of apartment buildings renovated: 235
Total number of single-family homes and/or apartments renovated:
2,975
Total financing provided: $775.5 million
| Business Loan Adds Jobs in Tennessee
A $400,000 Rural Business-Cooperative Service loan to the Meriwether Lewis Electric Cooperative in Centerville, Tennessee, will be re-loaned, interest free, to the Stewart Houston Industrial Park Board in Houston County to construct a 40,000-square-foot industrial building to house Southern Gage, Inc., producer of a full line of gauge products for industrial manufacturing processes. Southern Gage currently employs 70 people and expects to add 124 new jobs as the result of its $1.8 million planned expansion. Over the past several years, Houston County has consistently experienced unemployment ranging 2 to 3 times higher than the national average. The new employment opportunities will have a dramatic effect on the economy of Houston County and neighboring Stewart County. |
Community Facilities Direct Loan Program
This program provides direct loans to rural communities for essential community
facilities. These include child care centers, adult care centers, hospitals,
clinics, schools, municipal buildings, and community centers, as well as
emergency rescue equipment, among others. In 1998, the program obligated $210.9
million to fund 423 projects.
Community Facilities Guaranteed Loan Program
This program provides loan guarantees of up to 90 percent to rural communities
to build essential community facilities. These include child care centers,
adult care centers, hospitals, clinics, schools, municipal buildings, and
community centers, as well as emergency rescue equipment, among others. In FY
98, the program obligated $65.5 million to fund 69 projects.
Community Facilities Grant Program
The grant program helps very low-income communities finance their facilities by
reducing the amount of debt which must be incurred to acquire facilities. These
facilities include child care centers, adult care centers, hospitals, clinics,
schools, municipal buildings, and community centers, as well as emergency
rescue equipment, among others. In 1998, the grant program obligated $9.5
million in grants to help fund 267 projects.
Economic benefits provided by Community Facilities programs—
Together, Community Facilities programs provided 9,911 full-time jobs in FY
1998.
Total number of communities with new or improved essential community
facilities: 422
Total financing provided: $285.9 million
| Rural Development Program Purchases
Equipment To Establish Tribal Business A Rural Business Enterprise Grant (RBEG) was approved for the Red Lake Band of Chippewa Indians (Tribe), Red Lake, Minnesota, in the amount of $180,000, which will be used to acquire manufacturing equipment. The grant is a portion of the funding needed to complete the project. The tribe will own and lease a building and equipment to a tribal-owned manufacturer of window blinds and shades, Anderson Fabrics, Inc. The unemployment rate on the reservation is one of the highest in the State. This project brings together a number of Federal, State, and local resources to finance a multi-purpose facility to assist with the transition of tribal members from unemployment into a fully trained and educated work force. It is projected that 30 new jobs will be created. |
Rural Business Programs Business and Industry Guaranteed Loan Program
In a partnership with the Department of Treasury and the North American Development (NAD) Bank, the USDA Business and Industry Guaranteed Loan Program provided $73 million in loans that created or saved over 2,000 jobs in areas impacted by NAFTA-related trade. The total cost to the Government was under $500 per job.
Electric Program
The Electric Program approved 74 loans for a total of $539 million to Rural Utilities Service (RUS) borrowers serving counties identified as persistent poverty counties. In addition, 72 loans for a total of $286 million were approved for borrowers serving counties identified as having persistent outmigration. Based upon financial and statistical information provided by RUS borrowers, 2.7 million consumers benefited from electric system improvements that were made during FY 1998.
Telecommunications
During FY 1998, the Telecommunications Program improved the information superhighway for rural America by making loans and loan guarantees of $565 million for 53 rural telecommunications projects that provided improved service to more than 1.2 million rural residents, including new service to 225,000 residents. Improvements will include installation of $94 million of new digital switching technology and nearly 7,000 miles of fiber optic cable and associated electronic equipment costing $210 million. Some of these facilities will be used specifically to connect an additional 16 schools to distance learning systems. These and other system enhancements are making advanced telecommunications services available to more rural Americans than ever before. For every million dollars of loan funds spent by RUS/RTB (Rural Telephone Bank) borrowers, an additional $4.7 million in private investments was spent by these borrowers on telecommunications facilities.
RUS Supports Distance Learning and Telemedicine
RUS provided $7.9 million in grants and $2.6 million in loans for 35 distance learning projects and $4.6 million in grants and nearly $1 million in loans for 25 telemedicine projects that will serve rural residents through educational centers and health care providers at approximately 300 separate sites. Eight of the awards will be used to assist people in Empowerment Zones and Enterprise Communities.
| EC Funding Begins Flood Prevention
Project in Missouri EC In the past, residents in the East Prairie, Missouri, EC had to be evacuated when the river rose, flooding the 130,000-acre St. Johns Basin. Flood control measures, authorized in 1954, had continually been hampered by financial limitations. Now, thanks to funding from USDA and the Army Corps of Engineers, residents can rest easy. EC designation “has been the enabling factor to get the project to move forward,” says Eddie Belk, project manager of the Memphis District Corps of Engineers. The program enabled USDA to provide all but 5 percent of the local community’s cost share for the first phase of this $42.5 million project. This funding provided momentum for other sponsors. |
Water and Environmental Programs
During FY 1998, the Water and Environmental Programs provided more than $1.3 billion in loans and grants for over 1,200 rural water or wastewater projects that serve 9 million people, creating over 55,000 jobs.
Water 2000
About 1 million residents of rural America lack safe, clean drinking water in their homes. RUS has been spearheading the Water 2000 initiative to provide this basic resource that most Americans take for granted. RUS conducted State-by-State need assessments and determined that 25 million rural residents experience water-related health problems, are forced to haul water, or are under orders to boil water. In the first 3 years of this program, RUS invested more than $735 million in loans and grants to the Nation’s highest priority Water 2000 projects. The average median household income for the service areas is only $18,662. Water 2000 funded 87 projects in 1998 to improve the drinking water systems serving over 77,000 households, to improve service to over 250,000 people, and to provide first-time public water to over 39,000.
Community Facilities Program Finances More Child Care Centers Than Ever Before
The Community Facilities program has made financing child care centers a high priority. In FY 1998, the program provided $13.1 million in loans, grants, and guarantees to fund 46 child care centers.
| Rural Residents Receive High-Tech
Hardware and New Skills in Ohio EC Through the President’s Education Technology Program, USDA has made 72 computers (with an estimated value of $10,000) available to Greater Portsmouth, Ohio, EC schools. The EC is dedicating an additional $192,000 of its $2.95 million EZ/EC Social Service Block Grant funds for in-service computer training for teachers. More support for this program is expected—Greater Portsmouth has learned that it is eligible for funding under a State program that helps low-income communities obtain computers. |
Community Facilities Program Provides More Funding Than Ever Before for Indian Facilities
In FY 1998, the Community Facilities program provided 18 loans, grants, and guarantees worth $14.2 million going to fund 14 projects on 14 Indian reservations. Projects included three child day care centers, one adult day care center, two social services centers, two college buildings, one outpatient care facility, one physician-staffed clinic, one city hall, one fire department, one community center, and one assisted-living facility.
Rural Utilities Service and the Federal Energy Regulatory Commission
RUS has continued to be actively involved in proceedings at FERC on matters affecting restructuring of the electric utility industry and RUS borrowers. FERC regulates wholesale electric power markets and interstate transmission of electricity by public utilities. RUS electric borrowers are not generally subject to FERC regulation. However, FERC’s initiatives at opening up the Nation’s transmission systems to promote robust competition among electric generators are increasingly bringing RUS borrowers before the Commission.
Community Facilities Programs at an All-Time High Number of Borrowers Current on Their Loans
Fully 100 percent of Community Facilities direct loan program borrowers and 99 percent of Community Facilities guaranteed loan program borrowers are current on their loans. The Community Facilities programs are doing an excellent job of both serving their rural customers and protecting taxpayers’ investments.
| Electricity for the First Time RUS provided financing for facilities that The Socorro Electric Cooperative, Inc., headquartered in Socorro, New Mexico, constructed to electrify a very remote part of rural America. Socorro is building up to 20 miles of 14.4 kV line and secondary power extensions to serve consumers in Riley, New Mexico, who have never received central station electrical service. This unserved area is so remote that it requires a 50-mile drive from Socorro’s headquarters, of which 20 miles is on dirt roads. The people of this area are mostly Hispanics and Native Americans, and they have been living here all their lives without electricity or running water. Initially, 14 residents will receive electric service. |
Multi-Family Housing Reaches Record-Low Loan Delinquency
The Multi-Family Housing loan program reached a record-low delinquency rate of 1.9 percent as of September 30, 1998. This is an all-time low and is lower than almost all private-sector rates. This delinquency rate is based on a loan portfolio of 18,002 projects and an outstanding loan principal of $11.9 billion. The Multi-Family Housing program is doing an excellent job of both serving its rural customers and protecting taxpayers’ investments.
RHS Develops Partnerships With the Nonprofit and Private Sectors To Provide Affordable Rural Single-Family Housing
RHS has been actively developing partnerships to leverage its limited single-family housing program dollars and increase affordable homeownership opportunities for rural America’s working people. In FY 1998, RHS significantly expanded its Rural Home Loan Partnership with the Federal Home Loan Bank System and the Rural Local Initiatives Support Corporation. RHS’s partners leveraged RHS’s contribution of $12.9 million with $6.9 million of their own funds.
RHS also initiated a partnership with various Community Development Financial Institutions (CDFIs) and their private-sector partners throughout the country. The purpose of the partnership is to provide homeownership opportunities to very low- and low-income applicants by combining the resources of RHS, the CDFIs, and their private-sector partners. Through 15 local partnerships, 55 rural families have received home loans at rates significantly more affordable than those in the private sector. RHS provided $2.9 million, which the CDFIs and their private-sector partners leveraged with $992,000 of their own funds.
| New Water System in New York Water and Environmental Programs provided a loan of $822,400 and a grant of $677,600 to install 20,420 linear feet of 8-inch water main, 35 fire hydrants, and 2 pressure-reducing valves in the Park Terrace Water District in the Town of Birmingham, New York. Water will be supplied from the City of Birmingham. This project will serve 155 users. The township has endured extreme hardship from depleted ground water resources. Public health concerns engendered by this situation include lack of adequate water for drinking and food preparation, lack of adequate water for personal hygiene and household cleaning, and inefficiency of the sanitary sewer system. Many residents were collecting rainwater, snow, and roof runoff for domestic use. Many properties had been abandoned since they have been inhabitable due to a lack of domestic water. Other residents hauled water to maintain their homes. Without RUS assistance, these homeowners would have been without water for a year or many years. |
Revolving Fund Launches Entrepreneurial Ventures in Pennsylvania Enterprise Community
Small, startup businesses are often unable to borrow startup money because banks and other lending institutions favor businesses with established track records. To help creditworthy startup businesses, the City of Lock Haven, Pennsylvania, allocated $200,000 in Enterprise Community (EC) funds to create the Commercial Revolving Loan Fund. Owners of retail, service, or commercial businesses in Lock Haven are eligible for low-interest loans of up to $25,000 to improve their facilities, expand an existing business, or start a new business.
The City of Lock Haven received a $500,000 USDA Rural Business Enterprise Grant to expand the loan fund; the city also developed a grant program in conjunction with the fund. Small businesses that are planning renovations or construction can apply for grants of up to $5,000.
Kentucky Highlands EZ Attracts 13 New Businesses
Since receiving its designation as an Empowerment Zone (EZ) 3 years ago, the Kentucky Highlands EZ has assisted 13 businesses that have either located or made commitments to locate within the EZ area. The EZ has invested more than $4.1 million in local businesses, which now employ more than 160 residents of Clinton, Jackson, and Wayne Counties.
| RUS Influences Telecommunications
Worldwide The influence of the RUS Telecommunications Program reaches around the world. The government of South Africa asked the National Telephone Cooperative Association (NTCA) to help find a way to get telecommunications services into the unserved and underserved areas of the country. NTCA is using RUS statistical reports from 1961 to1996 to profile the progress that rural cooperatives have made in the United States. Through analysis of this statistical information, NTCA expects to show how cooperatives start with little capital, grow stronger with time, and eventually can sponsor rural economic development projects of their own. The NTCA representative said that the RUS statistical information is the best in the industry, and that without it this task would be very difficult. |
Debt Refinancing Provides Savings
Electric program staff, working with five RUS rural electric cooperative power supply borrowers, produced annual savings of more that $30 million for rural consumers in four States by refinancing high-interest utility debt. These refinancing savings can be passed on to the power supply borrowers’ member distribution cooperatives and to their members—rural Americans. The North Carolina Electric Membership Corporation of Raleigh, North Carolina; Georgia Transmission Corporation of Tucker, Georgia; East River Electric Power Cooperative in Madison, South Dakota; and Sho-Me Power Cooperative in Marshfield, Missouri, refinanced $1,199,065,066 in Federal Financing Bank loans, guaranteed by RUS, to provide the savings.
Development of the Administration’s Comprehensive Electric Competition Plan
USDA and RUS actively participated in the development of the President’s Electric Competition Plan and proposed legislation. USDA participation on the White House Interagency Working Group on Restructuring increased awareness of the many challenges facing rural areas in maintaining access to affordable electric power.
As a result of interagency discussions, the President’s Plan and legislation sent to Congress in June 1998 contain a number of provisions to protect rural electric systems and their customers. The legislation requires the Federal Energy Regulatory Commission (FERC) to recognize the special nature of rural electric systems and to assure that RUS borrowers will, to the maximum extent practicable, be able to meet their loan obligations. The Plan also provides for a rural safety net to offset adverse economic consequences for rural systems to be administered through a public benefits fund.
| Village of Kongiganak, Alaska Kongiganak, a USDA Rural Development-designated Champion Community, received a $300,000 Rural Alaska Village Grant to match a $500,000 grant from the State of Alaska. These funds will upgrade wastewater treatment facilities and the community’s washeteria, which is the only source of drinking water for the community’s 349 native Alaskans. Currently, some residents use rain catchments during the summer and ice melt in the winter for their fresh water supply. Wastewater is removed by using honey buckets that are hauled by the village to a pretreatment plant at the sewage lagoon. The project will also locate and develop a potable water supply for this remote, rural Alaskan village. |
Community Facilities-Financed Hospital Named Best Hospital in the Nation With Fewer Than 350 Beds
Recently, Solution Point, a hospital survey company, named North Hawaii Community Hospital the best hospital in the Nation with fewer than 350 beds. The 50-bed hospital won a Best in Class Consumer Satisfaction Award for total processes. The hospital also won top awards among small hospitals for housekeeping and food services. The hospital combines modern medicine with health care not normally found in a hospital, such as psychology, naturopathy, chiropractic, massage therapy, and acupuncture. North Hawaii Community Hospital was funded through a $15 million Community Facilities guaranteed loan made by Bank of America. The State of Hawaii provided grant funds and the local community raised $6 million in contributions.
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