FARMERS HOME ADMINISTRATION

GRANTS FOR
WATER AND SEWER SYSTEMS

Eligibility Requirements

Public bodies and not-for-profit corporations are eligible applicants.

Projects must be in open country or towns of less than 10,000 people.

Ordinarily an applicant will be considered for grant assistance only when the debt service portion of the average annual user cost for either water or sewer exceeds the following percentages of the median household income:

0.5 percent when the median household income of the service area is below $25,628. FmHA grants to these borrowers cannot exceed 75% of the eligible project cost.

1.0 percent when the median household income of the service area is between $25,628 and $32,035. FmHA grants to these borrowers cannot exceed 55% of the eligible project cost. Income data is available from any FmHA District Office.

Other Information

FmHA grants are generally made in conjunction with FmHA loans.

FmHA loans and grants can be used with funds from any other source to finance projects.

FmHA District Offices have additional information about the program.

Farmers Home Administration has authority to make loans to public bodies and not-for-profit corporations in rural areas to construct or improve needed community facilities. Projects such as water and sewer systems, fire and rescue vehicles, fire stations, hospital improvements and other essential community facilities are eligible loan purposes. Applicants for these loans must be unable to get credit elsewhere at reasonable rates and terms. Communities with not more than 10,000 population may be eligible for water and sewer systems. Other essential community facilities must be located in communities with not more than 20,000 in population to be eligible.

Eligible applicants pay the lower of the interest rate in effect at the time of loan approval or the time of loan closing. Current interest rates are:

1. Market rate, if the median household income of the service area exceeds the current State of Illinois non-metropolitan median household income which is $32,035. The market rate for July 1-September 30, 1993, is 5.625%.

2. An intermediate rate, if the non-metropolitan median household income of the service area is not more than $32,035 and the applicant does not qualify for the poverty rate. The intermediate interest rate for July 1-September 30, 1993, is 5.250%.

3. Poverty line rate of 5%, if the median household income of the project service area is below $25,628 (80% of the statewide non-metropolitan median household income) and the project is needed to meet regulatory agency health and sanitary standards. Health care facilities need to meet only the income limitation to qualify for the 5% rate.

August 1993 / Illinois Municipal Review I Page 21

Median household income data is available from Farmers Home Administration.

Farmers Home Administration may guarantee loans made by eligible lenders to borrowers for the same purposes described above. Interest rates are negotiated between the lender and borrower and may be fixed or variable. Normally, guarantees will not exceed 80% of any loss of principal and interest on a loan. Guarantees cannot be issued on tax exempt debt.

Income data and information about Farmers Home Administration programs can be obtained from the FmHA District Offices located in Princeton, Morris, Galesburg, Jacksonville, Champaign, Flora, Nashville and Harrisburg or the State Office (telephone 217-398-5247).

NLC-State League Flood Relief Plan

We have allocated space in Nation's Cities Weekly (NCW) on ways cities and towns can provide assistance to communities adversely affected by the flooding and rain.

Leslie Wollack will serve as the NLC coordinator to work with state municipal leagues and cities on flood relief efforts — both to provide advice to cities that want to help and to help match up offered assistance to cities that need help.

We will provide coverage in NCW beginning August 2nd, and serve as a clearinghouse for the near future. We are in the process of compiling a list of ways cities can provide assistance to publish in this edition. If you are from a non-flood-impact state and would like us to publish information or anything that your state league is doing, please FAX it to NLC, c/o Leslie Wollack, Manager of Policy and Analysis, 202-626-3043, as quickly as possible. If you are from a flood-impacted state, we are planning, as we discussed, to print the list of impacted municipalities, a general description of key needs, and a contact person with phone and FAX number.

Page 22 / Illinois Municipal Review / August 1993