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 | Setup Instructions |
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Moderator:
(Bill Finerfrock)
Operator: Good day everyone and welcome to the USDA Rural Development Community and Business Program. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Bill Finerfrock; please go ahead, sir. Bill Finerfrock: Thank you, Operator. This is the National Association of Rural Health Clinics, Rural Health Clinics Technical Assistance conference call. I appreciate everyone's participation today. Today's topic is Access to Capital. We have three
presenters today. We have Joseph Ben-Israel, Director of the Community
Program Guaranteed Loan Division, Department of Agriculture, Yoonie
MacDonald, who is the Community Programs Direct Loans and Grants
Division, of USDA, she is the Deputy Director of that program, and
we also have Chuck Andilucci who is loan specialist with the Business
Programs, USDA Rural Development. If, in the future you have questions you'd like to submit in advance, you can send those to info, I-N-F-O at narhc (info@narhc.org) and put RHC teleconference question in the subject line. Callers should have all received a copy of the presentation and you can follow along as you're listening. We've asked a speakers to indicate when they moved to the next slide. In addition, if you want other information about this series, you can go to our website which is www.narhc.org. I want to thank you and turn it over to our first speaker, Joseph Ben-Israel. Joseph Ben-Israel: Thank you, Bill and let me just say it's a privilege to be able to visit with you today. We at USDA Rural Development are proud to be partnering with the National Association of Rural Health Clinics and its members association and we think this partnership is a great thing for rural American and we're pleased to bolster support or it. Today, like to highlight three areas. We're going to be talking about one, USDA Rural Development and the Community Facilities Guaranteed Loan Program. Secondly, we're going to be talking about our Community Facilities Direct and Grant Program and, lastly, we'll be talking USDA Rural Development Business and Industry Guaranteed Loan Program. Next slide. Not so long ago, USDA Rural Development and its predecessor agency, Farmer's Home Administration was viewed as the lender of last resort. A lot has changed in the last five or six years. And, today, we're focused more on emerging opportunities and leveraging private, commercial investment in more sustainable, market driven programs. The mission of USDA Rural Development is two things, one, to create economic opportunities for rural communities and two, to essentially improve the quality if life of rural communities. We are, essentially, an investment bank for rural America with a current portfolio of 95 billion invested in infrastructure, housing, business development and essential Community facilities. You know, there are three big factors that draw people to a city despite the negative. You've got jobs. Secondly, opportunities for upward mobility and lastly, critical services, with health care and education at the top of the list. And what's so exciting today from the standpoint of USDA rural development is, probably for the very first time we have the Opportunity to level the playing field in all of these areas. And we feel that the bottom line is that rural communities that can offer good schools, quality health care, public safety and economic Opportunity are really a great place to live. Next. Well Community Programs administers programs designed to develop and/or improve essential Community facilities and services for public use in rural communities of 20,000 or less including, unincorporated areas. And these facilities include everything from schools to health care facilities to fire and rescue, police stations, child care, public buildings, to name a few. In fact, as my staff often reminds me that we have the flexibility to finance over a hundred separate types of essential Community facilities. Next slide. Community Programs has essentially three financing tools for helping develop an essential Community facility. One, a guarantee loan program. Two, a direct loan program and three, a small competitive grant program. Now, we have the challenge, as all of you do out there, of trying to allocate limited resources as sparingly and as cost effectively as possible. And quite frankly, from a national statewide basis, that's a hard thing to do given the level of demand. We push hard for guaranteed loans because it allows us to, to service and help more rural Americans, more rural communities and serve more essential Community facilities. And borrowers frequently push hard for direct loans because it gives them just a little better interest rate in some instances and the tension is never going to go away. However, our funding continues to, to move from direct loans and grants, towards guaranteed loans. These guaranteed loans essentially generate a multiplier on the tax payer's investment and allows us to serve more essential Community facilities and more rural communities at any given level of budget authority. Let me give you an example. Rural Development represents just 1.5 percent of all of the Department of Agriculture's congressional budget authority. But, Rural Development generates over 11.5 percent of all USDA's program level funding. And the reason for that is because of the multiplier effect with our guaranteed loan program. And, clearly, in terms of budget authority, the guaranteed loans allow us to really crunch way above our weight. Now the Community Facility Guaranteed Loan Program
is designed to foster the availability of commercial credit for
rural communities to develop their essential Community facilities.
And under the CF Guaranteed Loan Program, we can guarantee a loan
made by a commercial lender to a qualified borrower. The program's
essentially a lender driven program. So a lender will request a
guarantee, and, if approved, the lender will make and service the
loan. Also, the CF Guaranteed Loan Program can be made in conjunction
with a CF direct loan. Next slide. Eligible organizations include public bodies such as cities, towns and special service districts such as health care district. Non-profit organizations are eligible I they can demonstrate Community support and ties with the local Community as well as tribal - federal recognized Indian tribes. Next slide. Proceeds can be used to construct. They can be used to enlarge or otherwise improve essential Community facility. Includes everything from the purchase of machinery, equipment to vehicles. Reasonable professional service fees such as legal, engineering, architectural, feasibility studies. Proceeds can be used for interest on the interim financing, the construction loans. Basically, initial operating expenses for inaudible organizations as well as reasonable loan fees and costs. Next slide. Now, we may guarantee up to 90 percent of a loan or bond issuance made by a qualified lender to a borrower depending on risk of the credit. To date all requests for 90 percent guarantees have been honored and, I didn't' mention from the past, we've been administering the CF Guaranteed Loan Program since 1992. And, lastly, the lender may sell the guaranteed portion of the loan on the secondary market but, must retain 50 percent of the unguaranteed portion and continue to service the loan or bond instrument. Next slide. Now, under the CF Guaranteed Loan Program, USDA
only charges a one time, one percent guarantee fee on the guaranteed
portion. And unlike the majority of federal guaranteed loan programs,
there is no annual renewal service fee. Most Federal programs now
charge a two percent guaranteed loan fee and an annual renewal service
fee. Next slide. And loan terms may not exceed inaudible life of the asset or 40 years, typically whichever is less. Some States and local laws may further limit the terms. And, again, the term of the loan is negotiated between the lender and the borrower. Next slide. Lender benefits. There is an active secondary market for the CF guarantees significantly increasing the lenders return on investment. Again, all loans are eligible for 90 percent guarantee against loss with a Federal guarantee. Excellent Community public relations allows the lender to give something back to the Community. A lot of these banks, their employees live in these rural communities and lenders use their own forms, their own loan documents and security instruments. Next slide. The guarantee allows the bank to extend longer terms to their customers reducing the burden on cash flow. Funding outlooks excellent compared with limited and competitive CF direct loans. CF guaranteed loans may be leveraged with CF direct loans effectively buying down the overall interest rate, improving cash flow and helping to stretch the organizations limited resources. There's no down payment required for the CF guarantee loan program. We can guarantee up to 100 percent of the project costs, except packaging fees. And only game in town in most markets, access to financing for non-profits is extremely limited. There's no maximum loan limits. The amount is based on project feasibility, repayment ability and reasonable project costs. Again, USDA only charges a one time, one percent guarantee fee on the guaranteed amount and there is no annual renewal fee. And we'll go to the next slide. Now just a quick snapshot of the application process. Basically what happens is the lender and the borrower will submit a joint pre-application for an eligibility determination and USDA field staff from our Rural Development State offices or one of our local area offices will meet with all the parties at the project site, usually within 15 days of submitting a pre-application to make a preliminary eligibility determination and to determine whether or not there might be any environmental issues. At that point, if eligible, the lender and the applicant will submit a joint pre-application. And what - Rural Development at that point will conduct - pretty simultaneously they'll conduct their financial credit analysis and conduct the environmental assessment. And, if approved, Rural Development at that point will obligate the funds and issue, what we call a conditional commitment for guarantee to the lender. And when that conditional commitment for guarantee, the lender will complete their interim construction financing and then project development will commence. And once development work is completed and the facility is operational, the lender, at that point, will close their take out financing and they request the loan note guarantee. And Rural Development just verifies that the conditions have been met and issues the loan note guarantee. And under some - some lenders and applicants may choose to submit a complete application in lieu of a pre-application. Also, typically, loan approval takes approximately 30 to 60 days from the date of completion of the complete application and, again, obviously, depending on the nature, scope and complexity of the project. Next. Since conception of the Community Facility Guaranteed Loan Program we've invested approximately 59 percent of our guaranteed loans made in health care facility, about 14 percent in schools, 13 percent in public bodies and the remainder in public safety, recreation and others. Next slide. And based on or outstanding loan portfolio, our delinquency - current delinquency rate based on the number of loans inaudible compare to that total loan portfolio is approximately 2.5 percent. Generally its an average that range from about two percent. Now, if you look at our delinquency rate based on dollars, our delinquency rate is actually only one-half of one percent. We attribute this to the fact that these programs - these projects have close ties to the Community and significant Community support. So, in times of need what you'll see is that the Community will come band together to help keeps the doors open. I think that's really important when your looking at these essential Community facilities. Next slide. And with that I will turn it over to Yoonie. Yoonie MacDonald: Thank you, Joseph. Joseph gave a very good overview of the Community Facilities Direct Loan and Grant Programs in addition to his presentation on the guaranteed program because much of what he said also applies to the direct loans and grants. As he indicated, Community facilities direct loans and grants can be used to develop essential Community facilities such as health care, public safety, public service and educational projects and since the inception of the direct loan program in 1974 as Joseph indicated, we have funded over approximately a hundred different types of Community facilities projects. Essential Community facilities, what are we talking about. We're talking about those facilities which provide essential service to the local Community. And this service is one that is typically provided by the local Unit of government. It's a facility that's needed for the orderly development of a Community. And the facility for a direct loan cannot include private, commercial or business undertakings. Eligible areas for the program as same as the guaranteed program. It's rural areas such as cities, towns and Unincorporated areas with a population of 20,000 or less according to the latest e san e o census. Eligible organizations are the same, public bodies, federally recognized Indian tribes and non-profit corporations. And for non-profit corporations, again, that is if they can demonstrate significant ties with the local rural Community. And significant ties or significant Community support can be demonstrated by the applicant by having a broadly based board of directors that's representative of the Community served or if they're receiving public funding through taxes or Community fund raising. Or, if the not for profit has association or has support from the local public body. Again, that is the requirement for the non-profit organizations. Legal authority. All our applicants must have the legal authority to own, construct operate and maintain the facility. They must also have legal authority to issue security and repay debt. I'm sorry, I haven't been saying next slide for quite awhile. But, anyway, next slide. Test for other credit. Applicants for Community facilities direct loans must provide certification that they're unable to obtain credit elsewhere at reasonable rates and terms and that they're unable to finance the proposed project from their own resources. Also, they must have legal authority to issue security and repay the debt. Next slide. Community facilities direct loan terms are, as Joseph said, the same, the useful life of the facility or maximum of 40 years. There are no balloon payments allowed and, of course, these terms are subject to State laws and organizational structures. The interest rates - next slide. The interest rates for the direct loans are adjusted quarterly and are tied to the bond buyer index. We have three categories. Poverty rate, intermediate rate and the market rate. The poverty rate is set by law at four and a half percent. The intermediate and market rates apply to all loans that do not meet the poverty rate. And the intermediate and market rates are adjusted quarterly in accordance with the bond buyer index and those are based on current use or municipal obligations. Next slide. In fiscal year 2006, we provided under the CF Direct Loan Program, 574 loans totaling over $394 million. The average loan size was $686,882. In 2007, we have available $297 million in the direct loan program authority. Next slide. Community facilities grants. As with the Direct Loan Program, our Community facilities grants provide financial assistance for public use facilities to primarily serve rural residence and communities. The purposes again are the same as for those with Direct and Guaranteed Programs. The amount of grant assistance which is eligible is based on the financial feasibility of the project. CF grants funds are generally made for smaller projects and those that are not economically feasible without the grant. Recently, grant funds have primarily been used for equipment purchases. Grant determinations are made on a sliding or a graduated scale based on the population and the median household income of the area. Next slide. In fiscal year 2006, 563 grants were made for over $17.9 million. In fiscal year '06 the average size grant was $31,959. In fiscal '07 we have $17 million for a special initiative grant program for rural communities with extreme unemployment and severe economic depression. What do we mean by that? These are areas where the not employed rate is greater than 19.5 percent as determined by Department of Labor of the State or the Community is located. These grants are in addition to the CF Grant Fund. The program administration and eligibility requirements for the economic impact initiative grants are the same as for our CF Grant Program. Next slide. I just wanted to recap that in fiscal year 2007 in direct loan funds we had - we have $297 million dollars and in grants, 17 million. That's our regular Community Facilities Grant program. Then we also have the Special Initiative Economic Impact Grant program of 17 million. Next slide. As you can see, of those projects funded in fiscal year 2006, most of our direct loan and grant dollars went toward health care such as clinics. This amounts to about 46 percent of all direct loan and grant funds in '06 which went to health care. Next slide. As of March 30, 2007 the Community Facilities Direct Loan portfolio was 3,422 borrowers with 4,898 loans totaling approximately $2.3 billion. The direct program is 98 percent current. And, as also with the guaranteed program, the delinquency rate has been averaging around two percent or lower for many years. Next slide. Application process. Applications are processed at the Rural Development field offices and we would like you to check out our website - the Rural Development website for State office address and phone numbers. For additional information on our programs or about the application process, ask for the Community Programs Director or Community Programs staff member. Next slide. I want to take a few minutes to go over the types of projects financed with Community Facilities Program funds. I know we keep these hundred different types of projects. Next slide. Since the inception of the program - Direct Loan Program in 1974, approximately 50 percent of all program funds, that's direct, guaranteed and grant, have gone toward the development of health care projects. Some examples of these projects are hospitals - and that includes critical access hospitals, assisted living facilities, nursing homes, clinics and office buildings. We have funded over 500 clinics with our direct, guaranteed and grant funds and I want to go over some of these clinics which were funded. In Ashley, Arkansas, Main Line Health Systems Incorporated received $1,000,405 direct loan and a $100,000 grant. The funds were used to construct a 12,000 square foot medical center for delivery of medical and dental services to the low income residents of Southeast Arkansas. In Yerington, Nevada, the Gray Basin Primary Care Association received a $35,000 grant to be used for purchase of dental equipment. This equipment included an x-ray Unit, operatory lights, two operatory chairs, a film processor and a doctor's stool. $35,000 grant went a long ways on that project. In All Knack, Washington, we funded the Okanogan Behavioral Health Care Center. This is a psychiatric center. A $3,540,000 guaranteed loan was made for construction of a 29,328 square foot office building which included 18 medical examination rooms to treat clinical dependency. This also included private offices with exam rooms, training rooms, a waiting room and four conference rooms. In New Castle, Pennsylvania, we funded a group home, The Human Services Center. A $500,000 direct loan and a $100,000 grant was used to renovate and expand an existing farm house for adolescence with mental disorders. Prior to this group home being available, the service was not available to the area and the children had to be placed outside the Community which caused tremendous hardships for the children and the parents. In DeLeon, Texas we funded a migrant clinic. This was The Cross Timbers Health Clinic Incorporated. This was a migrant health center which was leasing space that was not adequate to meet the growing demand of the area. So, a guaranteed loan of $575,000 was made and with that they purchased an existing building which was large enough to accommodate the growth. They also purchased examination tables, office furniture and computers. Next slide. Some other examples of projects funded are public safety projects. We funded fire stations, fire trucks, ambulances, police stations, rescue and ambulance buildings as well as purchase of equipment. Next slide. Examples of educational facilities financed. Public schools, charter schools, colleges, libraries, vocational schools as well as equipment for those schools. Next slide. Finally, some other examples of facilities financed are child care and adult day care centers, homeless shelters, domestic violence centers, Community centers and municipal office buildings. Next slide. The Community Facilities contact - I'm representing Chad Parker today, so this is what's on the slide - is Chad Parker. He is the Director of the Community Programs Direct Loan and Grant Division and this - his mailing address and also his phone and e-mail address. If you need additional information you can always go to the Rural Development website, www.rurdev.usda.gov. This concludes the presentation on the Community Facilities Direct Loan and Grant Program and I would like to turn this back over to Joseph. Joseph Ben-Israel: OK. Thank you, Yoonie. I'd just like to make two, two quick comments. One is two months ago Secretary Johanns rolled out the President's proposal for the 2007 Farm Bill. And outside of farm country a lot of people have this view that the Farm Bill is all about farmers and the safety net. But, really, the Farm Bill is about a lot more. It's about expanding America's export market. It's also about renewable energy opportunities and building stronger rural communities and it's about many other things. It's also about having access to critical quality health care services that are vital to rural communities. You know, in a critical moment following a farm accident, it can be a heart attack or some other health care emergency. Time wasted inaudible to reach a emergency room or some other critical care facility, obviously, can mean the difference between life and death. And I think many of you know that first hand. So, rural health care is going to be a key priority for the 2007 Farm Bill. The Administration is proposing funding to complete the reconstruction, as well as rehabilitation of many of our 1200 plus rural critical access hospitals over the next five years. And because of subsidy costs for this guaranteed loan and the direct loan are relatively low, it's going to take a relatively small amount of investment to address this problem. So, what this initiative will do is proposing to invest approximately 85 million in budget authority to support over 1.6 billion in Community facility guaranteed loans and direct loans for these critical access hospitals. Another issue I'd like to bring up is that rural - using rural development through our Community programs, we entered into a memo of understanding with the Department of Health and Human Services Health Resource and Service Administration, also known by the acronym of HRSA. And what this agreement does is provide - HHS provides projects with annual operating grants, if needed, during the life of the Community facility direct or guaranteed loan in amounts sufficient to essentially amortize annual loan costs and, obviously, to the extent funds are available. But, I just wanted to add those two other notes. And with that, I will turn it over to Chuck. Chuck Andilucci: OK, good afternoon. I'm here to speak about the Business and Industry Guaranteed Loan Program. Next slide please. Our program is the Rural Business Cooperative Service. Next slide. Our program, as you heard before, probably has some of the same qualifications as previously discussed but, we have some differences. But, again, we also like to finance business, industry, unemployment in rural areas and we also like to bolster the existing private credit structure to the guarantee of quality loans. Next slide please. Location. Important the definition of rural area. Rural area, you'd have to be located in that. Of course, inaudible, you have to be for profit, inaudible deal with the for profit side of this. You heard previously about not for profit. We are for profit. You have … Male: Can I interrupt a second just to make a point that in your program, rural is defined as 50,000? Chuck Andilucci: I was ready to inaudible, that was my inaudible slide … Male: OK. Chuck Andilucci: Yes. Male: Thank you. Chuck Andilucci: The boundaries of the city or town with no more than 50,000 inhabitants or the organized area of a city and town. Next slide please. The borrower can be any legal entity, federally recognized, tribal group, public body or individual, cooperative, corporation, partnership, et cetera and also deal with various sectors, various inaudible codes, main factions, wholesaling, retailing, service oriented. So, we're not hospitals. Hospitals, medical facilities are part of us but, our spectrum of offering loans is very wide. Next slide please. Partnership. We have types of lenders. We have traditional lenders such as the Federal or State chartered banks, farm credit banks, savings and loans inaudible lenders. We have non-traditional lenders also that inaudible approval from inaudible office and we recognize. And we insist that all lenders must have adequate experience and expertise to make service and collect V and I loans. Next slide please. Loan purposes. Common purposes is to finance loans proceeds, real estate purchase and improvement, machinery and equipment, working capital, integrated agricultural production, debt refinancing, feasibility studies, and things such as that. Next slide please. The fee and percentage. We are a little bit different than what you heard before, we do charge fees. We have an annual renewal fee which is .25 percent and which is due on the balance every December 31st and that does change annually. Right now, it currently is .25 percent and a guarantee fee is two percent and some occasions one percent but, it's two percent normally. Loan limits for us are $25 million. And we have a sliding scale for the percentage of guarantee limits. If the loan is up to and including $5 million, that's an 80 percent guarantee. If it's more than $5 million and less and including 10 million it's a 70 percent guarantee. And if it's over 10 million, it's a 60 percent guarantee. Next slide please. Calculation annual renewal fee is based on the following. The outstanding - as I said, the outstanding principal balance as of December 31st, multiplied by the percentage of the guarantee. inaudible rate is annually published in the Federal Register, right now its .25 as we said here for 2007 and the fee remains fixed at half percentage - at the percentage for the life of the loan. Next slide please. The loan structure. Negotiated by the lender and borrower and approved by the agency. It can be a fixed rate. It can be a variable rate. It can be a combination thereof. Its maximum terms are for real estate, 30 years, for machinery, equipment the lesser of 15 years or useful life, for working capital, seven years. We do not have inaudible payments. Next slide please. We encourage a pre-application for all loans in excess of $10 million. So we encourage that. Again, just to understand all this and to get more specifics, you must - it would be very good to contact our State office and at the end of this discussion I will give you a web address for that. Application, we have an application form 4279 dash 1, Parts A and B and it must be signed by the lender, the borrower. If it's created jobs, jobs creation is an important part of our program. So, if it needs a Department of Labor clearance, creates more than 50 jobs, we need that. A form 194020, Environmental Assessment Analysis, it's a very important part of this whole process. Personal and commercial credit reports, appraisals as well as financial statements on annual - well, for the application and the pre-application. Next slide please. The application. The lenders written analysis are very important part of this. Included in that are spreadsheets for three previous years for an existing business and two years pro forma before a balance sheet at start up and on closing. And as I said, two years projected year end balance sheets or income statements with ratios, comparisons with industrial standards and data shown in complete dollars and in common size form. Next slide please. Other elements of the application and of the credit - lender's credit analysis. Lender's primarily responsible for determining credit quality. The lender needs to document the necessity of debt refinancing, determining the project - whether or not the project is viable and, if necessary, approve cash flow and create new or save existing jobs. Also in that analysis the lender must address the borrower's management, the history of the debt repayment, necessity of any debt refinancing and credit reports of the borrower and/or their principals. Next slide please. Also, the proposed loan agreements attached, a business plan, a feasibility study will be required if the new business and as well as a lender's certification. Next slide please. The feasibility study, it's five elements that we insist on be included in it. Economic feasibility, market feasibility, technical feasibility, financial feasibility and management feasibility and remember a business plan is not a feasibility study. So, identify as such. For equity, we require some different from the others. The tangible balance sheet equity. We require a minimum of ten percent for existing businesses and a minimum of 20 percent for new businesses. We ask for financial statements prepared in accordance with GAAP, except for the inaudible soft purchase program. But for - what we're talking about here for hospitals and/or clinics, financial statements prepared in accordance with GAAP. So, next slide please. Tangible balance sheet equity. Appraisal surplus for the most part is not allowed. Subordinate debt is debt, not equity and so again, including that can also include intangibles, good will, R and D, customers list, et cetera. Again, when it's presented to the State office, be very clear on how your equity is being calculated. Next slide please. Collateral. Sound and sufficient to protect interest of the lender and Agency. Appropriately discounted and normally, inaudible know, for machinery and equipment, all depends on the useful life of it and the condition of it at the time through the appraisal. V and I guarantees are not collateral and cannot secure a guaranteed portion with other collateral separate from the guaranteed loan. Next slide please. Planning and performing development. Lenders responsibilities include if there is a design on this structure, for instance, they would have to do - they would have to monitor and as far - and in addition, project control. Next side please. We also require insurance and the various types of insurance that we require are hazard insurance, life insurance or worker's compensation and flood insurance, among others. Conditional commitment. Once the application is sent into the State office and it's within their authority limits - each State office has different authority limits. If it's within theirs, then they handle it there and would approve it as such and would issue conditional commitment. If its in excess of their authority limit, would - brought into the State office where that would be analyzed and, again, a memo would be, you know, be approved or denied. And with the approval, be sent back to the State office and they would issue a conditional commitment which would include the Agency's requirements, all conditions that must be met and incorporated into the final loan agreement. And, always a caution, please never let that expire. Next one. OK. On this next one, the just - we're just trying to explain the - and reference the CFR regulations of our program. Its 4279-A, 4279-B and 4287-B. Next slide please. Now, you've heard me - at other presentations of our fair examples of health care projects - and we've had several. The Sabine Medical Center in Many, Louisiana. That loan was for $7.28 million, loan guarantee to fund salary - inaudible finance, working capital and re-finance existing debt. This facility is a one story structure with slightly over 28,000 square feet of space, has 48 acute care beds, including four intensive care Unit beds. Another one we're proud of is Potomac Valley Hospital of West Virginia in Keyser, West Virginia. This hospital is currently being constructed. It's a $10 million guarantee loan to construct a new 25 bed critical access hospital. Next slide please. Other examples, the Desert View Regional Medical Center in Nevada, for instance, was a $17.5 million guarantee loan to construct a 25 bed acute primary care hospital. And another one is - was the Northern Dutchess in Rhinebeck, New York. It was 12.43 million guaranteed loan. And it took out construction financing and debt refinancing of a 68 bed acute care facility. Next slide please. One more here, a CareSouth Carolina in Darlington, South Carolina. This a 1.25 million guaranteed loan for permanent working capital to a private, for profit health and human services provider located in the Pee Dee District of South Carolina. And now its CareSouth Carolina and it operates nine medical centers in seven communities in the Pee Dee region. Web links. If you need to contact us further on the web, it's rurdev.usda.gov and for any area eligibility we have a site here, www.rurdev.usda.gov/rda. Next slide please. This completes my discussion and presentation; I would like to return it to the facilitator for questions.
Operator: If anyone does have a question, you can signal at this time by pressing star one on your touch tone telephone. If you're on a speakerphone, please make sure your mute function has been turned off to allow your signal to reach our equipment. A voice prompt on your phone line will indicate when your line is open to ask a question, please state your name before posing your question. Again, that is star one if you have a question. We'll pause for just a moment to assemble the queue. Again if you have a question, please press star one now. Male: Just also if you would identify yourself by your name and your state and city if possible so we know where you're calling from.
Operator: We have no questions at this time. Male: All right, I have a couple. What - Chuck what is the advantage of your program as opposed to just going to your local bank and securing financing? Why would someone go through your program as opposed to just going directly to the local bank? Chuck Andilucci: Well, possibly a more favorable interest rate might be secured, for one. Other, it's just the type of loan that we give and, of course, the breadth of them. I mean, we have - we can deal in amounts of the 25 million, for instance, up to and we have authority, you know - a large authority, close to a billion dollars. So, those two things alone probably would be advantageous for the borrower to consider us. Male: So, a project that a local banker might not find attractive doing on his or her own would perhaps find attractive because they would be able to have a USDA backing behind it? Chuck Andilucci: That's correct. For those limitations and in for profit, that's correct. Male: Yoonie, you mentioned that the - under the - they had to demonstrate significant Community support was on one of your slides. It indicates a broadly based board representing Community served, public funding through taxes, fund raising, support by a local body. Is that financial support? Or would a letter of support? If you had a non-profit health care facility and they had a letter of support from the Community, would that be indicative of support by a local public body? Yoonie MacDonald: That would but, we would prefer if they could give us a monetary value to that. Male: OK. All right and I don't know if any of you - where in the Department of Agriculture Appropriations Bill is this program funded? Male: In the terms of the appropriation pact? Male: Yes. Male: I don't have that in front of me. I inaudible if Yoonie or … Yoonie MacDonald: I'm sorry, what was the question? Male: Where in the Department of Agriculture Appropriations Bill is this program funded? Yoonie MacDonald: Oh, you mean the Con Act. Male: Not - I don't - I think you're talking about - you mean the annual appropriation. Male: Your annual appropriation. Male: I believe its under rural development. Yoonie MacDonald: inaudible. Male: Somewhere. Bill Finerfrock: OK. All right, I was - inaudible question for me for just - for when I follow up. We had some questions that were submitted before the call, let me get to those. This one it says they're an independent rural health clinic. They have six physicians, three nurse practitioners. Independent is just how they're classified by CMS. With a need to expand to a larger facility. Are there grants available to help fund construction? And this clinic is Family Medicine of Port Angeles, Washington. And I suspect I know the answer to the question but, somebody want to take a stab at that? Male: Yoonie you want to … Male: Yes. Yoonie MacDonald: We typically do not like - our grant agreement has some items in there which specifically state that if, for some reason or, some purpose - the purpose for which the grant was made cannot continue. For example, if we put money toward construction that they would have to repay us. So, for that reason we typically use the grant money for such things as purchase of equipment, for fire fighting - such as fire fighting equipment or we purchase -- things that have a short life. inaudible cars, that type of thing. Bill Finerfrock: OK. Also, to the extent that you give grants, the entity getting the grant would also have to be a non-profit, correct? Yoonie MacDonald: Yes, that is correct. Its not to say that a grant could not be made with a guaranteed loan, because I think there were a couple instances in which this was the case. Bill Finerfrock: I think it said in like some of your examples it was the combination of both the loan guarantee as well as the grant? Yoonie MacDonald: The examples I gave had - the direct loans had a grant with them. Male: Right. Yoonie MacDonald: There were no grants associated with the guaranteed loans. Bill Finerfrock: So they may want to contact the person whose identified on your website as the contact for the State of Washington and then pursue the conversation with them to see what might be feasible. Yoonie MacDonald: Absolutely. The name and the State of Washington? Bill Finerfrock: Yes, this particular question came from Washington. Yoonie MacDonald: OK. Yes, the Program Director has been there for many, many years and she's very experienced so she could provide them with a lot of information. Bill Finerfrock: OK. The next question I have came from the Kessler Community Clinic in Mc Caysville, Georgia. They have a building that's paid for and renovations there are almost complete. Their biggest need is some type of support for salaries. It doesn't sound like any of your programs are really geared towards salary support. Yoonie MacDonald: For the direct and the - excuse me, for the direct and the grant program, no, we could not use those funds for salaries. Bill Finerfrock: OK. Joseph Ben-Israel: And, likewise for the Guaranteed Loan Program. We have many for initial operating expenses for start up entities but, unfortunately we don't have any type of like permanent, working capital on an ongoing basis. Bill Finerfrock: Right. OK. Operator, do we have any calls yet - or questions yet?
Operator: We do. We'll take our first question. Please state your name before posing your question. Bill Finerfrock: Your line's open. Hello.
Operator: Hi, your line is open, please state your question. OK. No response, we'll move on to our next question. And, again, there is a voice prompt on your phone line that will indicate when your line is open. Please state your name before posing your question. And let's to our next question. Bill Finerfrock: Go ahead. Marty Bennett: Hi, this is Marty Bennett from Riverside Family Medicine in Mar a pahl Louisiana. This question is for Chuck regarding the BMI loans. Chuck Andilucci: Yes. Marty Bennett: How do we go about finding those lenders that are familiar with using your program? Chuck Andilucci: Well I think the best thing to do is just to contact the lender that you're interested in and then that person would - I mean that contact would say whether or not. Most lenders are - I explained what a traditional lender was versus a non-traditional. The only difference is if it would be a non-traditional one. Not a bank, not, as I said before. And that one has not received approval from us, then, there would have to be some time for that lender to be approved. But other than that, just contact and see if they're interested and/or familiar with our program. Marty Bennett: All right. Thank you. Bill Finerfrock: What - Chuck what is a non-traditional lender? Chuck Andilucci: That's anything other than what I stated before. Anything other than a bank or the co-op bank or - it could be - we've seen that - usually they're industrial development authorities. Bill Finerfrock: OK. Chuck Andilucci: That have lended under a State program and now want to under our program. Bill Finerfrock: OK. Chuck Andilucci: And so they come in and get approval for that and then they're just like any other lender, once they get the approval. Chuck Andilucci: OK. Joseph Ben-Israel: Bill, I might also add - it's Joseph Ben-Israel. A lot of times a non-traditional lender may be like a local economic and Community development entity. Like a CDC, for example. That may be another good example. Also, a non-traditional lender may be an investment banker or some type of organization that generally deals more with bond financing. Bill Finerfrock: We're not talking about your Aunt Millie who, you know, came into an inheritance who may be looking to make a loan. Joseph Ben-Israel: No, unfortunately, not Aunt Millie. No. Bill Finerfrock: OK. All right. Next question.
Operator: And moving to our next question. Caller please state your name before posing your question. Bill Finerfrock: Go ahead.
Operator: Caller, your line is open. Once again, a voice prompt on your phone line will indicate when your line is open, please state your name before posing your question. We will move to our next question. Bill Finerfrock: Go ahead. Len Hellworth: This is Leon Hellworth. Can somebody share with us the status of the Farm Bill as it relates to the critical access hospitals? Joseph Ben-Israel: Yes, I'll be glad too. This is Joseph Ben-Israel. I think I went over briefly, previously, the - as I mentioned Secretary Johanns rolled out the President's 2007 Farm Bill proposal about two months ago. And it's gone through a few gyrations working back and forth on The Hill. And, I believe, at this point, it's pretty much in the hands of our Congress. And they're going through their various clearance process now. That's about as much as I can tell you. We're hoping that we'll see something this summer. I know if you go back to the 2002 Farm Bill - I believe it was like in May of 2002 with the Farm Bill - 2002 Farm Bill was published. So, it looks like if you compare it with 2002, we're a little behind schedule but, we hopeful sometime this summer it will be published. But the 2007 Farm Bill will have a lot of opportunities for rural communities - again, I mention everything from critical access hospitals to renewable energy to just strengthening rural communities. As well as - there's some - there's a proposal for a half a billion dollars to fund the backlog - or reduce the backlog of USDA Rural Development direct loan and grant applications for water and sewer projects, as well as reduce the backlog for Community facility - direct loans and grants for first responders. And I think it also has some grant money in there for distance learning and tele-medicine as well as broad band. But that's as much as I know at this point. Bill Finerfrock: Len, where you from? Len Hellworth: Muenster, Texas. Bill Finerfrock: Texas. Thank you. Len Hellworth: Thank you.
Operator: We'll move to our next question. Caller, please state your name before posing your question. Tristan Johnson: My name is Tristan Johnson from Townsend, Vermont. We have a four profit pharmacy that is part of our health care facility for which we desperately need to expand. But we want - this question, I believe is directed to Chuck. Male: OK. Tristan Johnson: So the question is would you - how would you - how would we go about funding with you the feasibility of a increased floor plan? Plus, a floor plan for an adequately sized, for profit pharmacy for the demand we've already established. Chuck Andilucci: OK. You're in a rural area? Tristan Johnson: That's correct. Male: inaudible Tristan Johnson: We're basically attached to a critical active hospital. Chuck Andilucci: OK. First, you're concerned about getting funding for the feasibility study separately? Is that work? Tristan Johnson: That's correct. Chuck Andilucci: Our program, per se, doesn't do that. But there - Joseph, from your other hat … why don't Joseph Ben-Israel: inaudible Chuck Andilucci: … you tell him about your other grant programs that inaudible. Joseph Ben-Israel: Yes, I'll jump in here. USDA Rural Development has some grant funding programs to provide technical assistance and training to rural business entrepreneurs as well as for economic development. There's two potential programs. One program that's fairly broad and flexible. It's called a Rural Business Opportunity Grant Program. Again, that The Rural Business Opportunity Grant Program. And I believe under that program you can use monies for conducting feasibility studies as well as economic planning type of activities and training. And then there's another program called the Rural Business Enterprise Grant Program. And that also can provide technical assistance and training, including conducting feasibility studies for small rural businesses as well. And those are two, two sources I can think of immediately that might meet your needs. And what you would do there is - I encourage you to contact our USDA Rural Development State office Program Director, or one of the specialists in the State office as well as they have designated area offices. And I just - let me add that all our programs, including the intake and processing of applications, are administered out of our USDA Rural Development State offices and their local designated area offices. Bill Finerfrock: I think, Joseph, I think one of the things - the point that you just made and I want to emphasize for folks is that there really are a variety of different programs that are USDA Rural Development, Community Development has available. And even if we haven't touched on something that specifically, you know, you may say, well, we're a little bit different in our Community. Or our clinic is a little different There maybe is a good chance there's some other program. And it would really be in your best interest to contact your USDA office. Explain to them what they do - or what you're interested in doing. And there may be something that we haven't been able to talk about in the time we have today, that could be of use to the clinic. Male: Yes, Bill, I would agree. I would encourage all of you. If you have an Opportunity to invite our USDA Rural Development Program Director in the State where you're located and especially - to come out to your facility and discuss all the programs they have available and explore how we can play a role. I think that's the best way to do it. And I would bring your Community leaders too. And you'll find out that we have numerous programs for helping rural development - rural communities develop their communities. Bill Finerfrock: We have time for one or two more questions. There any on the line?
Operator: We do have other questions. Caller please state your name before posing your question. Bill Finerfrock: Go ahead.
Operator: Caller, your line is open. Bill Finerfrock: Tell you a lot of folks that want to ask questions that maybe we've answered it already.
Operator: Hearing no response, we will move to our next question. A voice prompt on your phone line will indicate when your line is open. Please state your name before posing your question. Louise Blochess: Hello, this is Louise Blochess from Michigan. Do any of the four programs reviewed today have deadlines? Male: Do they have deadlines? Well, most of our programs have to be, you know, for example, let me talk about the guaranteed loan programs. Usually they're over the counter. Meaning on a first come, first served basis. But with many of our programs, you know, the goal is we try to obligate all our monies prior to the end of the fiscal year. So really, usually the timing cycle is pretty good for anywhere from October first to maybe July. And then after that it may get a little more tight. I can speak for the Community Facility Program. I could - I can't speak for the Business Industry Program. Yoonie, you want to discuss some of the timing for direct or grant program? Male: OK. Male: OK. Louise Blochess: Can I ask another … Bill Finerfrock: Sure. Louise Blochess: … question? Bill Finerfrock: Sure, if it's a quick one. Louise Blochess: There are some combo grants out there, four to one and nine to one, one is for EMR and the nine to one is for construction. Are they separate programs from the one you mentioned and the thing to do with inaudible my USDA State office? Joseph Ben-Israel: Yoonie, are you on the line? Yes, this is Joseph Ben-Israel again. I would, I would sit down and explore any - if you're looking for any grant opportunities with our USDA Rural Development State office and their area office. Again, there's a lot of Federal programs out there. Usually Congress will establish the criteria in terms of leveraging monies, whether it Federal or State. So, I'm not familiar with that particular program. But, again, contact the USDA Rural Development State or area office. Louise Blochess: Thank you. Bill Finerfrock: OK. One last question. Operator, if we have any more.
Operator: We have no further questions. Bill Finerfrock: OK. Great. I'd like thank all of our participants from the U.S. Department of Agriculture. Joseph, Yoonie, and Chuck. I inaudible presented some great information and I want to reiterate, I would encourage you that your USDA Rural Development Offices can be a tremendous asset for you. Even if you haven't heard of something today that meets your specific needs, they may be able to assist you with another program that would meet your needs. I want to encourage - if you know others who would be of value or benefit from this Raw Clinic Assistance Program, I would encourage them to register for the information. Our next Rural Health Clinic call is tentatively scheduled for Tuesday, July 10, two o'clock, Eastern time. We will get out the topic and the presenter information will be announced shortly. I want to remind everybody that, again, if you have questions to e-mail at info@narhc.org or suggestions for topics or speakers as the series continues forward. In the future, when you call in we encourage you to call in about one fifty-five, a few minutes before so we can try to get started on time. I want to thank the Federal Office of Rural Health Policy for their generous support for this initiative. It is a tremendous resource in terms of getting valuable information out to the rural health clinics Community in a very cost effective manner and we appreciate all of the support that they have given for this initiative. Again, thank you to our friends at the U.S. Department of Agriculture and thank you to everybody who participated in today's call. That concludes our call for today and look forward to talking to you at our next meeting.
Operator: As this concludes today's conference, we thank you for your participation and have a great day. |
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