Transcript Financing Through RUS

Financing Through RUS:
Bringing Urban Telecom
Services to Rural Areas
Teri Nilson Baird
General Field Representative
Rural Utilities Service
US Department of Agriculture
303-646-5856
Who is RUS?
 Part
of USDA’s Rural Development initiative
 Formerly called REA (Rural Electrification
Agency), RUS changed our name in early
1990s to more accurately reflect what we do
 Finance rural electric and telephone
companies; finance rural water and
wastewater programs
RUS Telecom Program
 Finances
independent rural telephone
companies
 Predominant service area must be rural,
towns less than 5000 people
 Several different loan rate programs
 Hardship
 Cost
of Money
 Federal Financing Bank (FFB)
Hardship Program
 Interest
rate 5%
 Terms based on composite life of facilities
plus three years; usually a 17—20 year loan
 Must have fewer than four subscribers per
route mile of cable or fiber
Cost of Money
 Interest
rate = Treasury rate
 Interest rate determined at time of draw
 Terms same, composite life + three years
 Currently lower interest rate than hardship
FFB Loans
 Guaranteed
loan, may be administered
through a separate institution
 Select the term yourself; shorter terms are
lower interest rates
 Short-Term rate now less than 2% interest but
for three-month term; rates higher with
longer term
Broadband Program
 In-depth
discussion Wednesday
 Finances facilities to provide high-speed data
services
 Separate from Telecom program, don’t need
to be the telephone company
 Can operate in a competitive environment
Distance Learning and
Telemedicine Grants
 Nationally
competitive grant program
administered yearly
 BIA schools are eligible; IHS facilities are not
yet
 Up to $500,000 grant to bring distant classes
to local areas (ie, from UNM to a classroom
in Mescalero)
 Based on need
Who Have We Financed?
 Fort
Mojave Telecommunications, Inc.
 Tohono O’Odham Utility Authority
 Gila River Telecommunications, Inc.
 San Carlos Apache Telecommunications, Inc
 Cheyenne River Sioux Tribe Telephone
Authority
 Mescalero Apache Telecom, Inc.
Working with RUS
 Find
your area representative at
www.usda.gov/rus/telecom/contact.html
 Initial visit
 We
look at what is there and what’s needed
 Talk with you about your expertise: How much
help do you need?
 General discussion of how the process works
 What do you need to do and in what order?
Other Considerations
 Must
incorporate as a legal entity
 FCC involvement
 State Public Utility board involvement?
 Legal advice; need to use two different
attorneys, one for state and one for FCC
 How will you pay for staff salaries and
benefits while ramping up?
 Tribal commitment
What does RUS finance?
 Facilities
 Copper
cable
 Fiber
 Telephone
central office
 Digital loop carrier equipment
 Initial
loans, will also finance office
equipment and work vehicles
 Acquisition costs
What Will it Cost?
 Not
inexpensive; most loans we make are $10
million or more
 Acquisition costs likely $2000 per access line
 Improvements: Must spend more on
improvements than on the acquisition
 Is Qwest likely to sell off rural exchanges?
The RUS Loan Design
 Input
from tribe or community
 Input from Consulting Engineer
 How much money will it take to install
telephones for each household?
 Engineer will do an initial pre-loan
assessment and put together loan design
paperwork
What Information Do We Need?
 Number
of households
 Number of households projected to subscribe
to telephone service
 Number of businesses
 What other services will you offer?
 How will you serve your customers?
Paperwork
 Many
of the required forms can be found on
our website
 Certifications: general in nature and state
that your company is not prohibited from
doing business with the government, that you
aren’t delinquent on any federal debt
(includes student loans) and that you haven’t
lobbied or paid an elected official for
consideration of the loan
Contact Information
 Washington,
 Northwest
DC offices
Area
 Southwest Area
 Eastern Area
202-720-1025
202-720-0800
202-690-4673
Field Representatives
 Eastern
Area:
Steven G. Coyner
(715) 833-2415
Northern Wisconsin
 Gary Honis
(570) 788-0908
Delaware, Maryland, New Jersey, New York, Eastern Pennsylvania
 Wayne Jorewicz
(608) 356-4151
Southern Wisconsin
 Stephen M. McKenzie (603) 895-8433
Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island,
Vermont
George J. Schweighofer (614) 860-9732
Ohio,
Western Pennsylvania, West Virginia
 Randall W. Brummitt (803) 481-7441
South Carolina, Puerto Rico, U.S. Virgin Islands

Questions