#1USDA United States Department of Agriculture Rural Development USDA - Rural Development Your Partner in Advancing Rural Prosperity Puerto Rico Rural Lending Investment Summit March 7, 2019 ' March 7, 2019 Puerto Rico Rural Lending Investment Summit 1#2Bette Brand Administrator Rural Business-Cooperative Service Acting Administrator Rural Utilities Service 2 March 7, 2019 Puerto Rico Rural Lending Investment Summit#3USDA Rural Development Task Force on Agriculture and Rural Prosperity Led by Agriculture Secretary Perdue . . Established by Presidential Executive Order in 2017 22 federal agencies and departments Focused on agriculture, economic development, job growth, infrastructure, innovation, energy security, and quality of life Recommended over 100 legislative, regulatory, and policy actions Actions aim to build robust, sustainable rural communities for generations to come 3 ORD#4Task Force on Agriculture and Rural Prosperity Task Force Report: Answering the Call to Action Identified five key indicators of rural prosperity e-Connectivity for Rural America Improving Quality of Life Supporting a Rural Workforce Harnessing Technological Innovation Economic Development#5Our Role: How RD Drives Rural Prosperity Infrastructure, Partnerships, and Innovation (IPI) Sec. Perdue has focused Rural Development efforts on IPI • . • Robust, modern infrastructure is a necessity, not an amenity Interagency and public-private partnerships are the best way to get things done Complex and constantly-evolving challenges require innovation Each element plays an invaluable role in facilitating economic development and improving rural quality of life. March 7, 2019 Puerto Rico Rural Lending Investment Summit 5#6Our Role: How RD Drives Rural Prosperity Acting Assistant to the Secretary Joel Baxley is focusing RD on superior customer service Internal Focus • Modernization of Rural Development's IT service . Increasing sustainability of Rural Development's workforce Program Focus . Maximizing effectiveness by partnering with rural communities Efficiently utilizing funding, time, and human capital March 7, 2019 Puerto Rico Rural Lending Investment Summit 6#7The Four Pillars Four Pillars of Guaranteed Lending Programs 1. Economic Development / Marketing / Technical Assistance 2. Origination and Processing 3. Compliance and Oversight 4. Program Management and Policy Four Pillars of Direct Lending Programs 1. Economic Development / Marketing / Technical Assistance 2. Underwriting 3. Loan Servicing (credit and risk analysis) 4. Special / Troubled Assets. March 7, 2019 7 Puerto Rico Rural Lending Investment Summit#8The Farm Bill The Agriculture Improvement Act of 2018 . RD requires 40 regulations and 40 administrative actions to fully implement Expands the Rural Broadband Access Loan and Loan Guarantee Program to allow the use of grants • Authorizes Congress to appropriate an additional $350 million Creates the Rural Broadband Integration Working Group Increases population limit for USDA's guaranteed water, community facilities, and broadband programs to 50,000. Establishes a Council on Rural Community Innovation and Economic Development as the successor to the Interagency Task Force on Agriculture and Rural Prosperity March 7, 2019 Puerto Rico Rural Lending Investment Summit#9The Farm Bill The Agriculture Improvement Act of 2018 ● Provides over $125 million in mandatory funding for RD's renewable energy programs Creates Local Agriculture Market Program, bringing together Value Added Producer Grant and Agriculture Marketing Service's Farmers Market and Local Food Promotion Programs ● Will receive $50 million in mandatory funds annually RD will continue to administer VAPG program Transfers the administration of the Biobased Markets Program to Rural Development Mandates 20% of Distance Learning and Telemedicine funding go toward combating opioid and substance misuse 9#10The One RD Guaranteed Loan Program What is One RD Guaranteed? ➤ A standard RD regulation guaranteed loan making in four programs: . Water and Waste Community Facilities • • Business and Industry Rural Energy for America End-to-End: Filing, Processing, Servicing Reporting Standardize documents across programs What are the benefits? ✓ Supports One USDA Initiative and the Administration's guidance for Reducing Regulation and Controlling Regulatory Costs. ✓ Simplifies, improves and enhances delivery of these four program ✓ Reduces burden on lenders, applicants and staff ✓ Becomes a common platform to all for efficient delivery ✓ Standardizes and improves customer experience March 7, 2019 Puerto Rico Rural Lending Investment Summit 10#11ReConnect Pilot Program Deploying high-speed, reliable broadband e-connectivity • ● • • $600 million available in loans and grants to expand broadband infrastructure Loans, grants, and 50/50 loan/grant combinations available Available for rural areas with populations under 20,000 Expanding broadband service to areas without sufficient access: 90% of households lack access to service delivering 10 megabits per second downstream and 1 megabit per second upstream Goal: 25 Mbps downstream, 3 Mbps upstream • Technology neutral USDA will be accepting applications for these funds soon and is providing technical assistance to applicants seeking this opportunity. USDA.gov/Reconnect Puerto Rico Rural Lending Investment Summit 11#12Some 2019 Rural Development Goals • Utilize our projects to fight the opioid epidemic Increase assistance to distressed communities Modernize rural homes and businesses with energy efficiency Deliver Broadband Pilot Program for rural areas lacking service Maximize Rural Water Works for modern water systems • Increase leverage of guaranteed loans into RBS projects by 1% • Achieve B&I and REAP delinquency rate of not more than 4% Achieve Multi-Family Housing delinquency rate for reach state of less than 2% • Maintain 3% or less delinquency rate for Single Family Housing program • Increase Community Facilities applications for rural transportation 12#13Joseph Ben-Israel Assistant Deputy Administrator for Community Facilities Rural Housing Service March 7, 2019 Puerto Rico Rural Lending Investment Summit 13#14Mark Brodziski Deputy Administrator Rural Business-Cooperative Service March 7, 2019 Puerto Rico Rural Lending Investment Summit 14#15March 7, 2019 Business & Industry (B&I) This program is authorized by the Consolidated Farm and Rural Development Act Purpose is to improve, develop, or finance business, industry, and employment, and improve the economic and environmental climate in rural communities Bolster the existing private credit structure through the guarantee of quality loans that will provide lasting community benefits Puerto Rico Rural Lending Investment Summit 15#16Business & Industry (B&I) Eligible Borrowers • For-profit businesses • Nonprofits • Cooperatives • Federally-recognized Tribes • Public bodies • Individuals March 7, 2019 Puerto Rico Rural Lending Investment Summit 16#17Business & Industry (B&I) Guarantee Percentages/Rates/Terms . 80% for loans of $5 million or less • 70% for loans between $5 and $10 million • 60% for loans exceeding $10 million, up to $25 million maximum • The initial guarantee fee is 3% upon issuance of the Loan Note Guarantee • An annual renewal fee of 0.5% is due based on the 12/31 principal balance Rates and Terms - Same as REAP March 7, 2019 Puerto Rico Rural Lending Investment Summit 17#18Business & Industry (B&I) ● Eligible Purposes Business conversion, enlargement, repair, modernization or development Purchase and development of land, buildings, or facilities • Purchase of equipment, machinery, supplies, or inventory Debt refinancing when refinancing improves cash flow and creates or saves jobs Business and industrial acquisitions when the loan will create or save jobs March 7, 2019 Puerto Rico Rural Lending Investment Summit 18#19Business & Industry (B&I) GLU Foo Co GLU 130) CO-OP 4005 34 St Mainey, MD 779 1978 CHI 40 x 1 oz (28 g) PACKS GROSS WEIGHT 3.5 (1.50kg) March 7, 2019 Ruffins 2016 Regulation Enhancements More Eligible Purposes: Business Ownership Conversions through ESOPS or Cooperative Ownership . Projects that use New Markets Tax Credits as an equity source Local Food Hubs FY 2019 Loan Authority: $1,375,000,000 Year-to-Date Loan: Puerto Rico Rural Lending Investment Summit $455,000,000 19#20USDA Loan Guarantees Expand Lending Opportunities Expand Customer Base Portfolio Management March 7, 2019 Credit Enhancements Mitigate Risk Increase ROI Puerto Rico Rural Lending Investment Summit 20 20#21USDA Loan Guarantees Lender Benefits ✔Expand Legal Lending Limits ✓ Secondary Market Single or Multi note sale of Guarantee ✓ Increase ROI ✓ Sales Premium ✓Interest Strip ✓ Servicing Fee Collection ✓Mitigate Risk ✓ Guarantee against potential loss ✓ Reduces risk of specialized collateral ✓ New Business Development Opportunities ✓ Community Reinvestment Act Consideration ✓ Local People and Local Access March 7, 2019 Puerto Rico Rural Lending Investment Summit 21#22USDA Loan Guarantees • Opportunities on Secondary Market Lenders have the ability to sell all or part of the guaranteed portion of the loan to holders on the secondary market. • Lenders may charge a servicing fee to the holders. • Lenders are encouraged to utilize the secondary market and pass the interest-rate savings on to the borrower. • Lender must retain title to the notes and security interest in the collateral. The lender is required to hold a minimum of 5% of the total loan amount, which must be of the unguaranteed portion. Unguaranteed portions may be participated to another lender. March 7, 2019 Puerto Rico Rural Lending Investment Summit 22 22#23USDA Loan Guarantees Benefits for Borrowers Provides the ability to receive: Longer Repayment Terms • Full Amortization Higher Loan Amounts Competitive Interest Rate March 7, 2019 Puerto Rico Rural Lending Investment Summit 23 23#24Rural Business-Cooperative Service Programs • Business and Industry Guaranteed Loans Intermediary Relending Program • Rural Economic Development Loan and Grant Program • Rural Business Development Grants • Rural Energy for America Program • Biorefinery Assistance Program Value Added Producer Grants • Cooperative Development Assistance March 7, 2019 Puerto Rico Rural Lending Investment Summit 24#25Aaron Morris Assistant Deputy Administrator for Energy Programs Rural Business-Cooperative Service March 7, 2019 Puerto Rico Rural Lending Investment Summit 25 25#26Energy Programs Programs We Administer Rural Energy For America Program (REAP) Advanced Biofuel Program • Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program (9003 Progam) March 7, 2019 Puerto Rico Rural Lending Investment Summit 26#27Energy Programs Rural Energy for America Program (REAP) March 7, 2019 Agricultural Producer Rural Small Business • Individual or entity that receives 51 percent or more of their gross income from agricultural production - crops, livestock, aquaculture, forestry operations, nurseries, dairies For-profit small business-as defined by the Small Business Administration (SBA) Rural area or non-metro community of ≤ 50,000 Puerto Rico Rural Lending Investment Summit 27#28Energy Programs REAP Continued Lighting Energy Efficiency Renewable Energy Solar Wind o Heating કારણ શ Cooling Ventilation Fans Automated Controls et Insulation March 7, 2019 Small Hydroelectric Anaerobic Digesters Biomass Geothermal Wave/Ocean Power Puerto Rico Rural Lending Investment Summit 28#29Energy Programs REAP Continued Minimum Loan $5,000 Amount Total eligible project costs > $6,667 Maximum Loan $25 million Amount Total eligible project costs > $33.4 million Details March 7, 2019 USDA guarantees a commercial loan; applicant must have a willing lender. Terms are negotiated between the lender and borrower. Fees, appraisals, equity & collateral requirements apply. Puerto Rico Rural Lending Investment Summit 29 29#30Energy Programs REAP Continued S Renewable Energy Systems Minimum Grant $2,500 Request Total eligible project costs > $10,000 Maximum Grant $500,000 Request Total eligible project costs > $2 million Energy Efficiency Improvements Minimum Grant $1,500 Request Total eligible project costs > $6,000 Maximum Grant $250,000 Request Total eligible project costs > $1 million March 7, 2019 Puerto Rico Rural Lending Investment Summit 30#31Energy Programs $350 Million March 7, 2019 Puerto Rico Rural Lending Investment Summit 31#32Energy Programs . 2018 Farm Bill Impacts on REAP Changes the definition of Renewable Energy System to include other components or ancillary parts of a renewable energy system, such as a storage system. • Allows Agricultural Producers to access loan guarantees for the purchase or installation of energy efficient equipment and systems (Limited to 15 percent of guaranteed loan funding available each year). • Reauthorizes mandatory appropriations of $50 million in budget authority for fiscal years 2019-23. March 7, 2019 Puerto Rico Rural Lending Investment Summit 32#33Energy Programs Biorefinery, Renewable Chemical, and Biobased Products Manufacturing Assistance Program (9003 Program) Most entities are eligible borrowers as long as you have the legal authority to construct, operate, and maintain a facility that produces an advanced biofuel, renewable chemical, or a biobased product. • All well capitalized, regulated lenders are eligible to be lenders. • Loans of up to $250 Million (no minimum) • Loan amount cannot exceed 80% of eligible project cost • 20% of total eligible project costs must be funded from non-Federal sources • New technology is eligible • Not limited to rural locations • Loan Note Guarantee may be issued prior to construction March 7, 2019 Puerto Rico Rural Lending Investment Summit 33#34Energy Programs 9003 Program Continued Two types of projects by Statute: 1. Commercial-scale Biorefineries using Eligible Technology 2. Biobased Product Manufacturing Facilities March 7, 2019 Puerto Rico Rural Lending Investment Summit 34#35Energy Programs 9003 Program Continued Eligible projects are the development, construction, or Retrofitting of a Commercial-Scale Biorefineries using Eligible Technology. • Must May produce an advanced biofuel ("some amount") • May produce biobased products and renewable chemicals March 7, 2019 Puerto Rico Rural Lending Investment Summit 35#36Energy Programs 9003 Program Continued March 7, 2019 ✓ Maximum $250 Million loan to one borrower ✓ Guarantee Percentages 80% for loans of $150 Million or Less 70% for loans >$150MM but less than $200MM 60% for loans >$200MM up to $250MM *Loans $150MM or Less could receive 90% guarantee if they meet certain conditions Puerto Rico Rural Lending Investment Summit 36#37Energy Programs 9003 Program Continued . . The 9003 Program uses a 2-phase application process. Two application cycles each fiscal year. Applications may be submitted at any time. • Letter of Intent deadlines are 30 days prior to the application closing date Application closing dates are October 1 and April 1 (or next business day) March 7, 2019 Puerto Rico Rural Lending Investment Summit 37#38Energy Programs Thank You! • Aaron Morris, Assistant Deputy Administrator - Tel. (202) 720-1501, email. [email protected] • Kevin Boone, West Regional Energy Coordinator, Tel. (337) 262-6601, 133, email. [email protected] • Will Dodson, South Regional Energy Coordinator, Tel. (202) 768-0592, email. Will. [email protected] • Lisa Noty, Midwest Regional Energy Coordinator, Tel. (712) 254-4366, email. [email protected] • Debra Yocum, Northeast Regional Energy Cordinator, Tel. (402) 499-1198, email [email protected] March 7, 2019 Puerto Rico Rural Lending Investment Summit 38#39Edna Primrose Assistant Administrator for Water and Environmental Programs Rural Utilities Service March 7, 2019 Puerto Rico Rural Lending Investment Summit 39#40Water and Environmental Programs (WEP) Finance the acquisition, construction or improvement of: • Drinking water sourcing, treatment, storage and distribution Sewer collection, transmission, treatment and disposal Solid waste collection, disposal and closure Storm water collection, conveyance and disposal Eligible areas: . Cities with populations of 10,000 or less; Rural areas; tribal lands in rural areas; Colonias Eligible borrowers: Most state and local governmental entities; private non-profits; and federally-recognized tribes. March 7, 2019 Puerto Rico Rural Lending Investment Summit 40#41Water and Environmental Programs (WEP) WEP Funding Portfolio: $1.8 billion in direct loan, loan guarantee and grant programs is currently available. In FY 2018, WEP invested nearly $3 billion for over 1,000 projects that will provide new or improved service to enhance water quality for nearly 3 million rural residents nationwide (pop. of 10,000 or less). In FY 2018, WEP partnered with financial institutions to guarantee $25.5 million in private capital investment in rural water and waste infrastructure. March 7, 2019 Puerto Rico Rural Lending Investment Summit 41#42Water and Environmental Programs (WEP) Rural Challenges People per Square Mile by Census Tract 10,000.0 to 47,457.6 5,000.0 to 9,999.9 1,000.0 to 4,999.9 Rural communities face multiple challenges in disaster relief and recovery including, but not limited to, the following: • U.S. density is 88.4 500.0 to 999.9 250.0 to 499.9 88.4 to 249.9 • Less than 88.4 Puerto Rico Source: US Census 2010 March 7, 2019 • Higher rates of poverty Low population and more vulnerable to outmigration Isolation/remoteness - affecting delivery of assistance during disasters Low capacity and access to information to apply for assistance Accurate data/vulnerability assessment and emergency plan 42 42#43+ -> https://esrimedia.maps.arcgis.com/apps/View/index.html?appid=7713cad12b6c4bffb816332544f04542 File Edit View Favorites Tools Help 6130 O Certified Economic Opportunity Zones PUERTO RICO OPPORTUNITY ZONES - WEP Investment - $5.4 million landfill project (grant) Aguadilla Mayaguez Hato Arriba Quebradillus Arecibo San Juan Dorado Vega Baja Carolina Lares Utuado Corozal Bayamon Guaynabo Trujillo Alto Fajardo Ванов Palomas Cayey Coamo Cabo Rojo Lajas Yauce Ponce Guayama Santa Isabel Note: The areas in white are NOT Opportunity Zones. March 7, 2019 Humacão Find address or place A The tax code now encourages long-term, patient private capital to invest in eligible low-income rural and urban communities, called Opportunity Zones, all across the United States. To learn more visit eig.org/opportunityzones ECONOMIC INNOVATION GROUP Puerto Rico Rural Lending Investment Summit 43 Esri, HERE, Garmin, FAO, METI/NASA, USGS, NPS | Esri, HERE, Garmin, FAO, METI/NASA, USGS, NPS | Esri, HERE, Garmin, FAO, METI/NASA.... POWERED BY esri#44+ Rincón Ag dilla Agoda Moca • Isabela Hatillo Quebradillas Arecibo Antonio (Nery) Juorbe PR-22 Vega Baja Toa Baja San Juan Cataño Loiza Vega Alta Pol Regional Airpo Bayamón Río Piedras Toa Alta Florida Guaynabo Carolina Trujillo Alto Rio Grande Luquillo San Sebastián Ciales Añasco Utuado Las Marias Mayagüez Maricao Hormigueros Cabo Rojo Sabana Grande Lajas Guánica Guayanilla Adjuntas Peñuelas Jaya Villalba Bosque Nacional El Yunque Narito Aguas Buenas Gurabo Caguas Juncos Sam orenzo Las Pedras Humacao Orocovis Comerio Barra quitas C mo Juana Díaz Cidra Aibonito Cayey Ponce Aeropuerto Internacional Mercedita Guayama Salinas Santa Isabel Arroyo Patillas Maunabo Fajardo Ceiba Nadabo Aeropuerto José Aponte de la Torre Infrastructure and Community Facilities programs become a recovery priority due to nature of the devastation caused in these two areas. Also, the entities that are usually responsible for execution of recuperation work are the primary eligible participants: Municipalities, Public Bodies and NGO's. Puerto Rico has 237 non-PRASA water systems, all of which serve less than 2,000 people. 78% serve less than 500. Red indicates the high-priority systems in need of assistance due to health-based concerns or lack of water. March 7, 2019 Puerto Rico Rural Lending Investment Summit Water Infrastructure in Puerto Rico: Puerto Rico Non-PRASA Small Water Systems 44 44#45Water and Environmental Programs (WEP) Lender Partnership Opportunities • Public-Private Partnerships are needed. Co-funding to leverage public-private funds: ✓ Guaranteed loans can be combined with USDA's direct loan program. ✓ Blended rate for borrowers and greater affordability for users. Interim construction financing by commercial lenders. Graduation of current borrowers to private capital. Refinance to improve interest rates/loan terms/liquidity. RD Apply and ePreliminary Engineering Report (ePER) make it easier to do business with WEP. • NOTE: The new Farm Bill raises eligible population limits to 50,000 for guaranteed loans. USDA United States Department of Agriculture Rural Development Apply Online with RD Apply • Safe and secure portal • Convenient, 24/7 access • Faster processing • Less paper https://rdapply.usda.gov Apply Today! Innovation! Apply Online with RD Apply ife and secure pe Convenient, 24/76 er processing V.usda.gov day! ucture for merica stance Leaming dicine muncons Tratnait#46Panelist Contact Information Bette Brand Administrator Mark Brodziski Deputy Administrator Rural Business-Cooperative Service Rural Business-Cooperative Service [email protected] [email protected] Joseph Ben-Israel Assistant Deputy Administrator for Community Facilities [email protected] Edna Primrose Assistant Administrator for Water and Environmental Programs Rural Utilities Service [email protected] Aaron Morris Assistant Deputy Administrator for Energy Programs Rural Business-Cooperative Service [email protected] March 7, 2019 Puerto Rico Rural Lending Investment Summit 46 46