RURAL DEVELOPMENT PROGRAMS

1. OVERVIEW OF RURAL UTILITIES SERVICE (RUS) and RURAL DEVELOPMENT (RD) GRANT AND LOAN PROGRAMS February 26, 2013Jessica Zufolo, Rural Utilities Services Deputy AdministratorChris J. Kanazawa, State DirectorUSDA Rural DevelopmentHawaii/Western Pacific/American Samoa State Office

2. RURAL DEVELOPMENT PROGRAMS Over 40 Grant, Direct and Guaranteed Loan and Technical Assistance Programs Providing Access to Capital and Credit for Rural Communities Rural Housing Programs Community Programs Rural Utilities Programs Rural Business and Cooperative Programs Rural Energy Programs

3. REGION OF RESPONSIBILITY State of Hawaii Guam Commonwealth of the Northern Mariana Islands American Samoa Federated States of Micronesia Republic of the Marshall Islands Republic of Palau

4. USDA Rural Utilities Service Seventy-Seven Year History in serving rural America • RUS is a rural policy, planning and lending agency which provides loan and grant financing to electric, telecommunications, broadband, water and sewer utilities serving rural Americans. • Celebrating 77 years since the creation of the Rural Electrification Administration and 76 years since the signing of the Rural Electrification Act.

5. RUS’ Historic Partnership with Local Leaders to bring technology to rural communities Community involvement was key to implementation then, and continues for all RD Programs today

6. The RUS Electric Programs impact and reach across rural America In the United States, Electric Cooperatives: ► Service 75% of total land mass ► Service 12% of population ► Own 42% of total distribution miles ► Own 6% of total transmission miles ► Own 5% of all generation ► Sales - 57% residential, 20% commercial, 22% industrial and 1% other ► Average Price - 9.5¢ residential, 8.7¢ commercial, 5.7¢ industrial

7. The RUS Electric Programs RenewableEnergy • Loans for eligible Renewable technologies include: Wind, Biomass, Solar and Geothermal • The technology must be commercially available, and • The funds must be spent on furnishing or improving electric service to persons in rural areas. • Loans are not limited to Rural Electric Cooperatives • No waiting in line behind traditional Fossil Fuel Projects

8. RUS Electric Loan Program Currently RUS provides loan financing to 625 electric borrowers and 32 grant recipients in 47 states • $43 Billion in principal outstanding • 42 million people in 2,500 counties

9. Overview of RUS Telecommunications Programs More than $22 billion invested in rural America since 1949 • Telecommunications Infrastructure Loan Program: Loans to improve and build telecommunications service in rural communities (<5,000 population) Newly expanded funding for E911 Service • Rural Broadband Loan Program (Farm Bill): Loans to build and upgrade broadband services in rural high cost areas (<20,000 population) • Community Connect Grant Program: Grants for broadband service providers and others who offer broadband services in rural and remote areas (<20,000 pop) • Distance Learning/Telemedicine Loan and Grant Program: Loans and grants for providing Distance Learning and Telemedicine services to rural residents and anchor institutions • Public TV Grants: grants for rural public TV stations for the digital TV transition • Weather Radio Grants: grants for weather radio systems in rural communities

10. RUS Telecommunications Infrastructure Loan Program • Current Telecom portfolio: $4.6 Billion • Approximately $3.6 billion principal outstanding for Telecom Infrastructure Loan Program borrowers (traditional program) with 487 borrowers • Approximately $.5 billion principal outstanding for Farm Bill Broadband Loan Program borrowers with approximately 73 borrowers • Approximately $1.1 billion has been advanced for broadband loans and grants under the American Recovery and Reinvestment Act of 2009

11. The RUS Telecom Infrastructure loan Program • Assists the private and non profit sector in developing, planning, and financing the construction of telecommunications infrastructure in Rural America. • Eligibility: Rural utilities, Municipalities, Limited Liability Companies, Public Utility Districts, Tribes, Cooperative, nonprofit, limited-dividend or mutual associations • Loan funds may be used for full range of new and existing plant modernization activities: • New Construction • Improvements • Expansions and Acquisitions • Refinancing

12. RUS Telecommunications Infrastructure Loan Program • Since 1949, the RUS has provided financing for new and improved telecommunications infrastructure in rural communities of 5,000 or less. • Applications are accepted year-round. • Interest rates are set at current U.S. Treasury rates, depending on loan maturity at the time of each advance. • Term of loan is based on life of facilities financed. • Guaranteed loans from the Federal Financing Bank and Hardship loans at a fixed 5% rate of interest are also available. • All infrastructure financed must be broadband capable.

13. RUS Broadband Loan Program • Loans for providing broadband service to communities with 20,000 or less not in urbanized areas. • 25% of proposed service area is underserved (max. one provider) • Service area cannot overlap an existing borrower • $100 million maximum loan • Term of loan is based on life of facilities financed • One year principal deferment • 10% minimum matching equity investment from borrower required • All construction must be completed within 3 years from the date when funds are made available • Minimum funded speed of 5 Mbps (up+down) For more information visit: http://www.rurdev.usda.gov/utp_farmbill.html

14. RUS Distance Learning and Telemedicine Grant Program • The Distance Learning and Telemedicine (DLT) Grant Program provides funding for rural communities to obtain educational and medical services from distant locations utilizing communications technologies. • $510 million in DLT grants and loans have been awarded total. • Serving rural communities of 20,000 or less. • Minimum grant $50,000; maximum grant $500,000. • 15% required matching contribution. • Eligibility: Any entity providing education and medical care via telecommunications including, partnerships, Indian tribes or tribal organizations, state or local units of government or for-profit entities.

15. RUS Community Connect Broadband Grant Program • A nationally competitive grant program to provide broadband service to the most rural and economically challenged communities. • Since inception, the program has provided 215 grants and invested $112 million. • FY 12, ninety applications were received, requesting $70 million in funding; program funding available is $14 million. • 22% of FY 2011 grants went to projects serving tribal areas; 39% went to persistent poverty counties; 22% went to projects with minority populations over 30%.

16. RUS Community Connect Grant Program: eligible purposes for Grant Funds Grant funds may be used to finance: The construction, acquisition, or leasing of facilities, including spectrum, to deploy Broadband Transmission Service to all participating Critical Community Facilities and to offer such services to residential and business customers in the community. The improvement, expansion, construction, or acquisition of a Community Center that furnishes free access to broadband Internet service. These costs cannot exceed the greater of 5% of the grant amount or $100,000. End-User Equipment needed to carry out the Project. Operating expenses incurred in providing Broadband Services to Critical Community Facilities for 2 years of operation and in providing training and instruction. These costs cannot exceed $250,000. The purchase of land, buildings, or building construction needed to carry out the Project

17. RUS Community Connect Broadband Grant Program Eligibility An incorporated organization, An Indian Tribe or tribal organization, as defined in 25 U.S.C. 450b(b) and (c), A state or local unit of government, or A cooperative, private corporation or limited liability A company organized on a for-profit or not-for-profit basis. Individuals and Partnerships are not Eligible. Applicants must have the legal capacity and authority to apply for funding and enter into a contract with RUS.

18. Water and Environmental Programs • Water Programs • Loans, Grants, and • Technical Assistance • Engineering & Environmental • Engineering support for • Water Programs and • environmental support • for all of USDA Rural Development’s utilities programs.

19. RUS Water and Environmental Programs Different Challenges Require Different Responses Focus on providing community water services to rural areas: -- Not easily extended to remote locations with low density -- Municipal boundaries and political structures fit well - They provide the organizational structure to manage a system

20. RUS Water and Environmental Programs Congressional Set Asides • Colonias • Alaska Native Villages • Native Americans • Empowerment Zones/ • Enterprise Communities • Technical Assistance programs • Household water well systems • Revolving loan fund program

21. RUS Water and Environmental Programs • Over 8,200 borrowers in 50 states, • Puerto Rico, and the Western Pacific • $12.1 Billion in principal outstanding • over 8,200 borrowers with over 18,000 loans • ARRA $3.2 Billion in Loans and Grants

22. Substantially Underserved Trust Area (SUTA) Provisions • Amended the Rural Electrification Act of 1936 • Affects Rural Utilities Service Programs Only • Rural Electrification Loans and Guaranteed Loans, including High Cost Energy Grants • Water & Waste Disposal Loans, Guaranteed Loans and Grants • Telecommunications Infrastructure Loans & Guaranteed Loans • Distance Learning and Telemedicine Grants • Broadband Loans and Guaranteed Loans • No additional funding was appropriated

23. The provision allows RD to provide loans at a lower interest rate, over a longer period of time, to help make financing projects more affordable in Substantially Underserved Trust Areas (SUTA) through certain Rural Utilities Service Programs. • The RUS Administrator can also waive certain restrictions and requirements as well as provide priority to designated projects in SUTA. SUTA Overview

24. Trust Areas Definition for SUTA Cites Title 38 Section 3765 (Department of Veterans Affairs) The term ‘‘trust land’’ means any land that— • is held in trust by the United States for Native Americans; • is subject to restrictions on alienation imposed by the United States on Indian lands (including native Hawaiian homelands); • is owned by a Regional Corporation or a Village Corporation, as such terms are defined in section 3(g) and 3(j) of the Alaska Native Claims Settlement Act, respectively (43 U.S.C. 1602(g), (j)); or • is on any island in the Pacific Ocean if such land is, by cultural tradition, communally-owned land, as determined by the Secretary. Trust Areas Defined

25. To contact Rural Utilities Service for more information please visit: Electric Programs General Field Representatives – http://www.rurdev.usda.gov/UEP_GFR_map.html Telecommunication Programs General Field Representatives – http://www.rurdev.usda.gov/UTP_GFRContact.html Water and Environmental Programs State Directors – http://www.rurdev.usda.gov/StateOfficeAddresses.html

26. Rural Development Community Facilities Program • Program of sister agency RHS • Loans & grants • Municipal or Non-profit applicant • Broad authority • Has been used for public safety needs including emergency communications equipment • USDA State Offices of Rural Development

27. USDA Rural Development’s Community Facilities Programs Rural Development’s Community Programs assists rural communities in financing critical community facilities including schools, hospitals, day care centers, fire and police stations Through its Community Programs, the USDA is striving to ensure that such facilities are readily available to all rural communities.

28. Rural Business Programs • Program of sister agency RBS • Private or Non-profit applicant • Business development in rural areas • - Grants to encourage business development • Entrepreneurial support - technical assistance, regional planning, adult training, feasibility studies, incubators, infrastructure. • - Capitalize revolving loan funds • Loans or grants to entities that relend the funds to small rural businesses • USDA State Offices of Rural Development

29. BUSINESS AND INDUSTRY GUARANTEED LOAN PROGRAM 60% - 80% Guarantee on Commercial Loans Land Acquisition Start Up Working Capital Site Development Equipment, Machinery, Supplies & Materials Processing and Distribution Facilities

30. BUSINESS PROGRAMSRURAL BUSINESS ENTERPRISE GRANTS • Acquisition and Development of Land • Construction of Buildings, Plants, Access Streets, Parking Areas • Acquisition of Equipment • Utilities • Rural Distance Learning • Refinancing of Debt Within Communities with Populations of 50,000 or Less

31. Rural Energy for America Program Available to Agricultural Producers and Rural Small Businesses to Finance Renewable Energy Systems and Energy Improvements • Construction or Improvements • Purchase and Installation of Equipment • Energy Audits • Feasibility Studies and Business Plans • Fees for Professional Services Within Communities with Populations of 50,000 or Less