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FAYETTE — A new initiative to provide capital investment for facilities in rural Mississippi was announced Thursday by federal officials.
The U.S. Department of Agriculture’s (USDA) Community Facilities Re-lending Program said it will provide $40 million to Hope Enterprise Corporation and Hope Credit Union to be used as a low-cost, long term debt capital for projects in rural areas of the state. The money will be used to provide community facilities and services such as education, health care and infrastructure.
“What we are doing today is obligating $40 million in the hands of an experienced lender that lends at the community level,” said Lisa Mensah, under secretary of USDA Rural Development.
HOPE is among 26 community lenders nationwide that will receive more than $400 million to re-lend to rural American to aid persistent-poverty counties and high-poverty areas.
HOPE must lend to projects in areas of high poverty and in areas of less than 20,000 population, according to federal guidelines for the program. The funds will be loaned for 40 years at a fixed 2¾ percent interest rate.
“What we are giving them is a certainty about their costs,” Mensah said. “Many times when you have more years on a mortgage — a mortgage of 40 years as opposed to 10 — you will have more ability to repay and manage the debt that is needed to create a real structure. Something that will last. That’s what we see being passable here in the state of Mississippi and the rest of the country.”
Bill Bynum, HOPE CEO, said participation in the USDA program “allows us to make more loans.”
“A lot of these communities don’t have economic development staff so we will work with them to help them identify needs and put together financing that can help them finance health care centers, rebuild crumbling school facilities, non-profit facilities that provide critical services in these places that are often in inadequate buildings, money for fire stations,” Bynum said.
“We can now provide them with reasonable financing and long term financing that will help them provide these services in a much more efficient and stable manner,” he said.
Trina George, the Mississippi director for USDA Rural Development, said that her experience within the state has shown her the need for a program like the one announced Thursday.
“As the state director since 2009, I have seen the issues that many of these rural communities have and that is capacity: being able to put a project together and find the funding that is needed in order to get a project from beginning to end,” George said.
“With this initiative I think we will be able to go into these rural communities and make sure we can help them go from the beginning to the end and build the facilities that we need in rural America,” George added.
Bank of America and the National Cooperative Bank, two private financial institutions, will be providing guarantees for a portion of the loans.
Dan Letendre, CDFI Managing Director for Bank of America, said, “What the bank is doing for USDA is providing capital to HOPE. HOPE then uses that capital to make projects happen. I think of the capital as the fuel, but the direction is all set by HOPE.”
“They pick the projects, underwrite the projects, and provide the technical assistance” Letendre said. “They make these things happen. We’re providing capital, but they are doing all the really hard work.”
Chris Masingill, federal co-chairman of the Delta Regional Authority, said that the partnership with HOPE could greatly improve access to essential services in rural Mississippi.
“This is another opportunity for us to leverage another public-private partnership,” Masingill said. “This is going to put funds into development. We can’t even begin to describe the level of need in the Delta. This partnership is about not being government as usual.”