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RCAC Loan Fund provides vital environmental infrastructure loans

May 10, 2012

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West Sacramento, Calif. — Most of us take clean drinking water for granted, but for many low-income communities in the rural west providing such a basic necessity is a challenge. Rural Community Assistance Corporation (RCAC) is helping to make safe drinking water available and affordable to hundreds of these communities.

RCAC has worked hand-in-hand with communities for more than 30 years, providing advice and consultation on everything from operating systems, budgeting and rate setting, to finding funding to pay for costly, but much-needed utility system repairs and upgrades. RCAC’s Loan Fund often provides the hard to find feasibility and predevelopment capital for these projects. And in many cases, RCAC’s Environmental Services consultation combined with capital from the Loan Fund are the catalyst that enables projects to move forward that would not otherwise.

Second quarter loans

This quarter, RCAC funded four environmental infrastructure projects and provided vital technical assistance to two of the projects. All told, RCAC provided more than $700,000 to four communities with critical infrastructure needs.

Picacho Mutual Domestic Water Consumers Association

RCAC worked with the unincorporated community of Picacho, near Las Cruces New Mexico. It is officially designated as a Colonia. Colonias are small unincorporated communities along the U.S. Mexico border. They typically lack many basic services, have poor infrastructure and housing, and are home to very low-income residents. Picacho has nearly 1,300 residents. Water service is provided by the Picacho Mutual Domestic Water Consumers Association (PWDWCA).

The community needed to make major upgrades to its aging water system. With help from RCAC staff the Association secured a commitment for more than $2 million in loan and grant funding from the U. S. Department of Agriculture (USDA) Rural Development. However, to close on the financing, the community needed to complete the engineering and other closing requirements. PWDWCA had no way to pay for this work and the lack of funding could have been a deal breaker. RCAC Rural Development Specialist Olga Morales worked closely with PWDWCA to accomplish the preliminary requirements and to build management’s capacity to operate the system after the project was completed. RCAC structured a $400,000 loan, which will be repaid when the USDA funding closes and project construction begins. “RCAC helped the association’s board with a rate analysis to generate the revenue needed to repay the financing, and we created long-term sustainability for the utility,” Morales said. Construction on the needed improvements is slated to begin next March.

Rio Alto Water District

Lake, in Northern California, was originally developed as a master planned community in the 1960s. When the developer went bankrupt, Rio Alto Water District (RAWD) was formed to take over the water and sewer systems, which were never completely finished. The sewer system is now operating under a cease and desist order due to the environmental contamination that resulted from system operations.

Both the State Water Resources Control Board (SWRCB) and USDA will provide funding for the repairs. However, both agencies have required RAWD to form a community services district to be the recipient for their respective financing. RCAC environmental services staff helped the community with financial and asset management; and assisted RAWD to access financing for its utility repairs.

The small water district has paid more than $300,000 in predevelopment expenses and was unable to pay any more to move its project forward. RCAC’s Loan Fund provided a $100,000 loan, which will fund the balance of system engineering. Once the district is formed, RAWD will be able to access $6.2 million in financing to complete system repairs.

RCAC created its Loan Fund in 1988 and was later certified as a CDFI. RCAC finances affordable housing, environmental infrastructure and community facility projects; and now finances small businesses.

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.

RCAC provides assistance to small municipal and nonprofit water systems, wastewater systems and solid waste management programs in 11 western states. We build local community capacity through training and technical assistance and our established network to access resources. Our services are directed to low-income communities, nonprofit organizations and small water and waste systems that need help to comply with state and federal regulations. In most cases, our assistance is offered at no charge and is covered by state and federal contracts.

To find out more about RCAC's Loan Fund products, visit www.rcac.org/doc.aspx?82

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