Streamline - Spring 2015 - (Page 21)

USDA Rural Development UTILITY SERVICES ARE the foundation of rural infrastructure. Reliable and affordable water, waste treatment, electric power and telecommunications services help rural areas expand economic opportunities and improve the quality of life for rural residents. Property values are improved, businesses are attracted and the environment is protected through reliable and safe utility systems. USDA Rural Development is proud to be a part of bringing affordable public utility financing to rural areas. The utility projects are critical and revitalize rural communities with a variety of infrastructure improvements. It is critical that these vital utility systems generate sufficient income to sustain themselves. This means that each utility system must generate sufficient cash flow to pay for its operating expenses, any debt service and for future system repair and maintenance. We all know that rural community budgets are often stretched and utility projects are expensive to finance and maintain. Rural Development is seeking to strike a balance between providing affordable rural utility financing and insuring that our borrowers generate sufficient income to continue operation in a well maintained system. Our regulations require that all applications have reasonable rates when compared with other similar systems. Historically, Virginia has mirrored the National Office policy of first considering all applications for rural utility grant funding that have an end equivalent dwelling unit (EDU) cost at 1.5 percent of the area's median household income (MHI). In Fiscal year 2015 we have modified that policy and lowered the EDU percentage as follows: 1.  HI from $42,795 to $53,493 will M use 1.25 percent MHI threshold 2.  MHI of $42,794 and below will use a 1.00 percent MHI threshold. (If the area's MHI is above $53,493, they are not eligible for grant assistance.) The 1.5 percent MHI is calculated in this way. The average equivalent dwelling unit (EDU) cost must equal or exceed 1.5 percent of the service area's median household income (MHI). The service area's MHI is $35,267, and 1.5 percent of the MHI equates to $529.00 per year divided by 12 = $44.08 per month EDU cost. The EDU cost at 1.25 percent of MHI calculates like this; $35,267 X 1.25 percent equals 440.84 or $36.74 per month EDU cost. The EDU cost at 1 percent MHI would then be $29.39. You can see the lower MHI results in a lower required EDU cost before Rural Development will consider infusing grant funds. Again, all applications will be evaluated to determine how their proposed rate structure compares with other similar systems and to insure that they are generating enough income to operate successfully. The EDU costs explained above are just a minimum standard. Once we spend Virginia's allocation of grant funds projects will have to go to the National Office to compete for funding. That means two things; projects that continue to have EDU costs at 1.5 percent of MHI will compete better at the National Office level. Get your projects into us as soon as possible, before any of Virginia's unspent funds are pooled at the National level. Virginia expects to receive almost $31 million in loan funds and another $8.5 million in grant funds for Fiscal Year 2015. We plan to spend all of this money in Virginia and secure additional funds through our National Office. Currently our poverty rate is 2.375 percent, the intermediate rate is 3.25 percent and the market rate is 4.0 percent. In order to qualify for the poverty rate the service area's MHI must be below $42,795 AND you must have a letter from an independent, qualified third party that your proposed project will correct a public safety or health hazard. To qualify for the intermediate rate the MHI of the service area must be between $42,795 and $53,493, and the market rate is any MHI above $53,494. We believe that these historically low interest rates and our new MHI thresholds will allow Rural Development to offer attractive financing to the most distressed areas. I want to thank all of the good people at Virginia Rural Water Association for the opportunity to advise communities of this important change. We look forward to working with you this year to invest in rural Virginia's infrastructure. Branch Office: 706 Hamilton Blvd., South Boston, VA (434) 372-3393 w 673183_BB_Consultants.indd 1 w w . v r w a . o r g 21 AM 12/20/13 5:11

Table of Contents for the Digital Edition of Streamline - Spring 2015

From the President: Power Failure
From the Executive Director: Highlights from 2014
The Sustainability Managed Utility
Communication… Say What?
Flushing Away the Ebola Threat
Hazard Communication Standards – Guidelines for OSHA Compliance
State Water Control Board Approves Controversial Permit
VRWA Said Goodbye to Past Executive Director
USDA Rural Development
The RATES Program
Adequate Rates versus Affordability
NRWA Recap
Debt Refinancing: An Alternate Source of Capital
How the Cloud is Revolutionizing the Future of Water Utility Management
Southern Corrosion Supports Victory Junction
Throwing My Loop: Call Me Anytime
Wastewater Math
Booster Club
eLearning Benefits
Membership Application
Do You Know What Your VRWA Benefits Are?
VRWA Mailbag
New Members
Board of Directors
VRWA Committees
Index to Advertisers/

Streamline - Spring 2015