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RCAC Loan Fund ends fiscal year on high note

October 13, 2010

In its fourth quarter ending September 30, RCAC lent more than $8.6 million to rural communities in California, Colorado, New Mexico and Utah to finance important  community projects. RCAC ended its fiscal year with 39 closed loans totaling more than $30.6 million and leveraged $65 million to support affordable housing, environmental infrastructure and community facilities.

In August, RCAC lent Gateway Preparatory Academy, Inc. (GPA), a nonprofit, K-8 charter school serving Iron County, Utah more than $5.8 million to finance a portion of its acquisition of a school facility. GPA leased the 52,902 sq/ft. facility with lease payments escalating at 3 percent each year. The purchase of the facility provides the school with future financial stability as the new, long-term financing decreases the school’s facility expense on an annual basis.

In FY10, RCAC continued to fulfill unmet needs for utility financing in rural communities. In its fourth quarter, RCAC made seven environmental infrastructure loans. Many small, rural communities lack the resources necessary to pay engineering and legal costs necessary to meet closing conditions for federal loans and grants to improve their systems. RCAC’s lending products enable these communities to access federal and state funds for system improvements including added service capacity, improved water quality and other system renovations.   

Two environmental projects that received RCAC funding this quarter included Desert Aire Mutual Domestic Water and Sewer Works Association (DAMDW) and the Coyote Creek Mutual Domestic Water Users Association (CCMDWUA).

The RCAC feasibility loan to DAMDW will provide for the Preliminary Engineering Report (PER), Environmental Report (ER) and other feasibility costs required by U.S. Department of Agriculture (USDA) Rural Development for consideration of loan and grant funding to install a new wastewater system.

CCMDWUA does not own the association’s current water supply that consists of a well and two springs that the developer allows the residents to use as a water source. That system was constructed approximately 25 years ago. The yield of the water sources has declined significantly over time. CCMDWUA received colonia funding from USDA-Rural Utility Service (RUS) consisting of three grants of more than $1.2 million for a new well, new pump, pump house and 5,000 gallon storage tank. As a condition of the colonia grants, CCMDWUA must complete an audit for compliance with the Federal Single Audit Act and cannot use grant funds to do so. In addition, the water quality exceeds the standards for iron, chloride, and arsenic requiring a treatment system. USDA Rural Development is requiring a new PER and ER to obtain an additional grant from USDA-RUS for water treatment to use the new well. RCAC lent CCMDWA $40,000 to meet the federal audit requirements and complete the necessary engineering reports to enable the association to secure additional USDA Rural Development grant funding.

In partnership with Loan Fund investors and rural communities, RCAC is fortunate to be able to provide the critical capital necessary to move community sustainability efforts forward. We thank both our investors and borrowers for making it all work,” said Michael Carroll, RCAC Loan Fund director.

RCAC FY10 new and renewing Loan Fund investors included Catholic Healthcare Initiatives, Catholic Healthcare West, Charles Schwab Bank, Community Economics, Communities at Work, Morgan Stanley Bank, Opportunity Finance Network, Pacific Rim Bank, Sisters of the Holy Cross, the USDA Intermediary Relending Program and the US Department of Treasury CDFI Fund.  

RCAC created its Loan Fund in 1988 and was later certified as a CDFI. As of September 30, 2010, RCAC closed 584 loans which totaled $300,654,570 and leveraged more than $1.2 billion for projects in rural communities. These loans supported 46,675 individual water and wastewater connections for rural citizens, 11,378 housing units and 1,149,471 feet of community facility space. These loans created or retained 13,296 jobs. RCAC currently has 141 loans under management, totaling more than $47 million. Additionally, RCAC manages 45 loans totaling $50,898,112 on behalf of other lenders and investors. The RCAC Loan Fund is capitalized at more than $68 million with investments from foundations, religious organizations, banking institutions and government entities.

In FY 10, RCAC loans supported 9,100 individual water and wastewater connections for rural citizens, 367 housing units and 258,477 feet of community facility space. Additionally, RCAC loans in FY 10 created or retained 332 jobs.

Founded in 1978, RCAC provides a wide range of community development services for rural and Native American communities, agricultural workers and community-based organizations in 13 Western states. RCAC has strong core services and expertise in housing, environmental infrastructure (water, wastewater and solid waste), leadership training, economic development and financing. To find out more about RCAC's Loan Fund products, visit www.rcac.org/doc.aspx?82.

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