Missouri gets a boost
Rural Missouri just
got a huge economic shot in the arm. Soon thousands of dollars will
be pouring into rural parts of the state for all types of economic
development projects. Better yet, this huge influx of funds known as
the Rural Economic Development
Loan and Grant Program comes at no cost
to the taxpayers.
REDL&G, as the
program is known, was first introduced in 1989 to increase electric
cooperative investment in local economic development projects. In 2002
Congress, with strong leadership from the Missouri delegation and recognizing
the value of the program, authorized more funding for the program that
year as part of the farm bill.
in issuing regulations by the Office of Management and Budget led to
it being less effective than Congress intended. That’s
where two friends of rural people, U.S. Rep. Jo Ann Emerson and Sen.
Jim Talent, got involved. They jointly signed a letter to OMB Director
Joshua Bolten strongly urging his agency to issue the necessary rules
That letter was one
of the strongest congressional letters I have ever seen on a particular
issue. With copies going to the USDA and the White House, it had the
intended effect of getting the ball rolling. In October 2004, final
rules were issued and electric cooperatives wasted no time getting
In the past, REDL&G
funding came from interest on money from co-ops that paid off their
loans from the Rural Utilities Service (RUS) early. Under the new regulations,
RUS provides guarantees to cooperative banks so they can issue bonds
to help finance electric cooperative operations. Fees paid by these
institutions are then earmarked to fund the program.
Finance Corporation, or CFC, is a bank created by electric co-ops
to provide supplemental financing. When REDL&G rules were finalized
in October 2004 CFC immediately applied for $1 billion in bond guarantees
under the new program. CFC’s fees will be enormous.
government analysis, these fees will support about $150 million
in grants or $700 million in zero-interest loans while leveraging an
additional $750 million of other funding and creating 20,000 jobs.
For the first time in our nation’s
history, the rural electric lending program will be making private
donations to allow more rural development dollars to flow back to rural
In Missouri REDL&G
grants and loans have been used to make improvements to hospitals,
to help manufacturers expand and add new jobs, to build spec buildings
to attract new industry, for sewer lines to an industrial park, to
gain a center for abused children and for a library. The list goes
on and on.
Since 1989 Missouri’s
RECs have made 19 loans and eight grants to establish revolving loan
programs worth more than $7.7 million. Together they leveraged an additional
$43 million in funding and created 1,176 jobs.
Improving the REDL&G
program has been one of the chief priorities for the nation’s
electric co-ops. Thanks to help from Rep. Emerson and Sen. Talent
to get the ball rolling, good things are in store for the communities
For more information
on this program call the USDA Rural Development office at (573) 876-9321
or (573) 876-0995.
Hart is executive
vice president of the Association of Missouri Electric Cooperatives.