Geothermal project funding opportunities through USDA-RURAL DEVELOPMENT

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Geothermal project funding opportunities through
USDA-RURAL DEVELOPMENT

• Richard Carrig
• Rural Business Programs Director
• USDA-Rural Development
• [phone]
• Richard.Carrig_at_ut.usda.gov

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Who is USDA-Rural Development

• Federal agency, whose mission is to help improve
  the quality of life for rural Americans.
• Administratively divided into 3 rural development
  program areas the Rural Business-Cooperative
  Service (RBS), the Rural Utility Service (RUS),
  and Rural Housing Service (RHS)

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Who is USDA-Rural Development

• Rural Development programs are delivered at
  National, State, Regional, and Local levels
• Each state has a USDA-Rural Development state
  office responsible for program delivery for that
  state
• RBS focuses on rural economic and business
  development programs
• RUS focuses on rural municipal development
  programs
• RHS focuses on rural housing development programs

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Websites for USDA-Rural Development

• National USDA-Rural Development website is
  http//www.rurdev.usda.gov
• National USDA-RBS website is
• http//www.rurdev.usda.gov/rbs
• Utah State Office USDA-Rural Development website
  is http//www.rurdev.usda.gov/ut
• National USDA-Rural Development 2002 Farm Bill
  website is http//www.rurdev.usda.gov/rd/farmbill
  /9006resources.html

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RBS programs promoting geothermal projects

• Renewable Energy/Energy Efficiency
• (RE/EE) program
• Guaranteed Business Industry loan
• (BI) program
• Value-Added Producer Grant
• (VAPG) program
• Rural Business Enterprise Grant
• (RBEG) program
• Rural Business Opportunity Grant (RBOG) program
• Rural Economic Development Loan and Grant (REDLG)
  program
• Intermediary Relending Program (IRP)
• Rural Business Investment Program (RBIP)

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RE/EE program

• Authorized by section 9006 of the Farm Security
  and Rural Investment Act of 2002 (Farm Bill)
• Two part program to assist eligible farmers,
  ranchers, and rural small businesses purchase
  renewable energy (RE) systems, or make energy
  efficiency (EE) improvements.
• RE/EE grant component enacted in 2003
• RE/EE direct loan and guaranteed loan
• components should be enacted in 2004

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RE/EE program

• Grant requests cannot exceed 25 of eligible
  project costs
• In-kind contributions or other Federal grants
  cannot apply toward the applicants 75 matching
  funds requirement
• Combination grant/direct/guaranteed requests
  cannot exceed 50 of eligible project costs

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RE/EE program

• Maximum RE grant assistance is 500,000
• Maximum EE grant assistance is 250,000
• Minimum RE/EE grant request is 10,000

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RE/EE program

• RE requests are for wind, solar, biomass,
  geothermal or hydrogen powered systems
• RE requests must be supported with a project
  specific independent feasibility study
• RE requests must also include a interconnection
  agreement, (only required if the project will
  generate power for sale into the power grid)

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RE/EE program

• EE requests must be supported with a independent
  energy audit
• EE program requests must improve energy
  consumption by at least 15 (as compared to the
  previous 12 months), and pay for itself within 11
  years

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RE/EE program

• RE/EE requests must be supported with a technical
  report from a engineer or architect.
• RE/EE Program is not meant to fund unproven
  technologies, RD projects, or demonstration
  projects

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RE/EE Applicant Eligibility Requirements

• U.S. agricultural producers deriving 50 or
  greater of their gross income from the sales of
  farm products
• U.S. Small businesses (including cooperatives)
  which do not exceed SBA size standards

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RE/EE Rural Area Requirements

• All RE/EE projects must be located in a rural
  area
• Small businesses must also be located in a rural
  area
• Rural areas are defined as Any area, other than
  a city or town that has a population of greater
  than 50,000 inhabitants and the urbanized area
  contiguous and adjacent to such city or town

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Eligible RE/EE Project Costs

• Purchase and installation of a eligible renewable
  energy system
• Energy improvement costs
• Feasibility studies, energy audits, permit fees,
  most other related professional service fees

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Ineligible RE/EE Project Costs

• Land acquisition
• Working capital
• Residential improvements
• Operating or maintenance expenses
• Application processing fees
• Agricultural tillage equipment
• Vehicles

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Ineligible RE/EE Project Costs

• Costs incurred prior to the date of application
  EXCEPT predevelopment costs such as energy
  audits, feasibility studies, business plans,
  permit fees, or architectural/engineering fees

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RE/EE program changes in 2004

• A draft regulation of the RE/EE Program including
  new guaranteed loan and direct loan components
  will be published soon
• There will be a 60 day public comment period
• The draft regulation will be posted on the
  National USDA-RBS Website when available

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2004 RE/EE Application Process

• 2004 RE/EE applications will be requested after
  the public comment period has expired on the
  draft regulation
• Request for applications will be posted on
  National USDA RBS website
• Estimate Spring/Summer of 2004

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2003 RE/EE Funding Levels

• Over 21 million dollars in projects funded in
  the RE/EE program nationwide in FY 2003
• 114 funded projects in 24 states.
• 35 projects supporting wind energy
• 46 projects supporting anaerobic
  digesters
• 6 projects supporting solar energy
• NO GEOTHERMAL PROJECTS FUNDED
• NO UTAH PROJECTS FUNDED IN 2003

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2004 RE/EE funding levels

• Funding levels for the RE/EE program in 2004 are
  currently undetermined
• USDA-Rural Development still does not have an
  approved budget
• Congress reconvenes on 1/20/04 to discuss budget
  and other issues

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Value Added Producer Grant (VAPG) program
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Value Added Producer Grant (VAPG) program

• Authorized by Section 6401 of the Farm Security
  and Rural Investment Act of 2002 (Farm Bill)
• Purpose is to increase value-added profit margins
  to producers of agricultural commodities
• Many renewable energy projects can qualify in
  this program
• Applicants must be a agricultural producer,
  eligible producer group, farmer/rancher
  cooperative, or a majority controlled producer
  based venture.

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Value Added Producer Grant (VAPG) program

• Requests can be either a planning grant or a
  working capital grant (but not both)
• Planning grant funds can be used to develop
  business plans, conduct feasibility studies, or
  develop marketing plans
• Working Capital grant funds can be used implement
  business plans or marketing plans

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Value Added Producer Grant (VAPG) program

• VAPG funds cannot be used for planning, repair,
  rehab., acquisition, or construction of a
  building or facility (including a processing
  facility)
• VAPG funds cannot be used for the purchase,
  rental, or installation of fixed equipment

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Value Added Producer Grant (VAPG) Program

• Maximum award per grant is 500,000
• VAPG awards cannot exceed 50 of relevant project
  costs
• Applicant matching funds or eligible in-kind
  contributions are required
• Applicant matching funds can include direct or
  guaranteed loans
• Other Federal funds cannot count as eligible
  matching funds

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VAPG program application process

• VAPG requests are solicited once per year
• Proposed regulation published in the
• Federal Register on June 27, 2003, and
• comment period closed August 12, 2003
• Final regulation pending
• Regulation and application solicitation request
  will be posted on the National USDA RBS website
• Request for this years funding cycle will likely
  be late spring/early summer

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The Guaranteed Business Industry (BI) Program
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Guaranteed BI program

• A commercial lender is the applicant to USDA for
  a BI guarantee on the lenders loan
• USDA will not guarantee marginal or substandard
  loans
• Encourage rural lenders to finance good quality
  businesses that support a diversified economic
  base and provide or save good quality jobs in
  rural areas

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Guaranteed BI program

• Commercial lenders that are subject to credit
  examination and supervision by a Federal, State
  or Farm Credit system institution with direct
  commercial lending authority are eligible to
  participate in the BI program

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Guaranteed BI program

• Eligible borrowers include
• a. Individuals, corporations,
• partnerships, cooperatives, or
• other legal entities. Corporation
• or non-public entities must be
• primarily owned by a bona fide
• U.S. citizen(s) or legal
• resident(s)

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Guaranteed BI program

• b. Public entities, such as towns,
• county governments, special
• improvement districts, etc.
• c. Federally recognized tribal
• groups

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Guaranteed BI program

• Borrowers should be able to obtain better rates
  and terms on their loan if the loan is guaranteed
  by USDA
• USDA does not negotiate loan rates and terms

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Guaranteed BI program

• Eligible rural areas are defined as any area,
  other than a city or town that has a population
  greater than 50,000 inhabitants (2000 census),
  and areas contiguous to these communities
• Most of Utah, including many communities along
  the Wasatch front, are eligible rural areas for
  the BI program

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Guaranteed BI program

• Eligible loan purposes
• Some restrictions, but most typical
  commercial loan purposes are eligible
• BI loan limit is 25 million dollars
• Loan guarantee limits
• a. 80 for loans up to 5 million dollars
• b. 70 for loans of 5 million dollars up
• to 10 million dollars
• c. 60 for loans of 10 million dollars and
• above

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Guaranteed BI program

• Maximum repayment terms
• a. Working capital- max. 7 years
• b. Equipment- max. 15 years
• c. Real estate- max. 30 years

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Guaranteed BI program

• A one time guarantee fee is required.
• Guarantee fee is 2 of the guaranteed loan amount
  (typically 1.6 of the full loan request for
  loans up to 5 million dollars)

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Guaranteed BI program

• For existing businesses, A minimum 10 opening
  tangible balance sheet equity is required.
• For startups or newly established businesses, a
  minimum 20 opening tangible balance sheet
  equity is required
• All loans must be adequately collateralized

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Guaranteed BI program

• Guaranteed BI requests are funded throughout the
  year.
• There should be sufficient BI funding authority
  to continue to fund acceptable BI loan
  applications throughout 2004

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Rural Business Enterprise Grant (RBEG) program
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RBEG program

• Eligible applicants are limited to
• a. Public bodies
• b. Private non-profit organizations
• c. Federally recognized tribes

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RBEG program

• RBEG funds are used by an eligible applicant to
  promote the economic development of multiple
  small and emerging rural businesses
• Small and emerging businesses must have fewer
  than 50 employees, and have less than 1 million
  dollars in gross annual sales

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RBEG program

• Eligible rural areas for the RBEG program are
  defined as communities with a population of
  50,000 or less (2000 census), and not located
  adjacent to urban areas of more than 50,000
  population
• Same definition as BI and RE/EE

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RBEG program

• RBEG funded projects must be unable to obtain
  funding elsewhere at reasonable rates and terms
• a. Including loans, loan
• guarantees, and personal
• resources

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RBEG program

• RBEG funds may be used to
• a. Construct, improve, or purchase
• buildings and equipment (no
• pass through grants)
• b. Provide economic development
• technical assistance
• c. capitalize a rural revolving loan
• fund

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RBEG program

• RBEG funds CANNOT be used for
• a. Production agriculture purposes
• b. Comprehensive planning
• c. Pass through grants
• d. Residential housing
• e. Startup or working capital
• (except as a loan from a RLF)

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RBEG program

• RBEG requests are competitively funded
• No minimum or maximum limit, but most funded
  projects are under 100,000
• RBEG requests are funded at multiple intervals
  throughout the year.
• Contact the State Office for USDA-Rural
  Development for an RBEG application packet

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Other RBS programs

• Please visit our state website for a summary of
  other RBS programs that can benefit geothermal
  projects.
• Contact us to discuss your project and how USDA
  can assist you to develop your project

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Contact information

• Richard Carrig
• Rural Business Programs Director
• USDA-Rural Development
• Phone [phone]
• Email Richard.Carrig_at_ut.usda.gov
• Mailing address
• USDA-Rural Development
• Wallace F. Bennett Federal Bldg.
• Room 4311
• Salt Lake City, Utah 84138
• ATTN RICHARD CARRIG