00-30872. Construction and Installation of Broadband Telecommunications Services in Rural America; Availability of Loan Funds

AGENCY:

Rural Utilities Service, USDA.

ACTION:

Notice of Funds Availability.

SUMMARY:

The Rural Utilities Service (RUS) announces a new loan program and the availability of loan funds under this program to finance the construction and installation of broadband telecommunications services in rural America. The President of the United States and the United States Congress have made $100 million in treasury rate loan funds available, through a one-year Pilot Program, to encourage telecommunications carriers to provide broadband service to rural consumers where such service does not currently exist. This program will provide loan funds, on an expedited basis, to communities up to 20,000 inhabitants to ensure rural consumers enjoy the same quality and range of telecommunications services that are available in urban and suburban communities. Loan funds are available immediately and applications will be processed and approved on a first-come, first served basis throughout FY 2001 until the appropriation is utilized in its entirety.

DATES:

Applications for loans will be accepted as of the date of this notice and will be accepted anytime on or before September 30, 2001; however, all applications must be postmarked no later than September 30, 2001. Applications will be processed and approved on a first-come, first-served basis until the $100 million appropriation is utilized in its entirety.

FOR FURTHER INFORMATION CONTACT:

Roberta D. Purcell, Assistant Administrator, Telecommunications Program, Rural Utilities Service, STOP 1590, 1400 Independence Avenue, SW., Washington, DC 20250-1590, Telephone [phone], Facsimile [phone].

SUPPLEMENTARY INFORMATION:

General Information

For FY 2001, $100 million in loans will be made available for the construction and installation of facilities and for other costs as RUS deems necessary to provide broadband services in rural areas. The broadband pilot program is authorized by 7 U.S.C. 950 aaa.

Applications

Applications will be accepted as discussed previously in the “Dates” section. All interested parties are strongly encouraged to contact the Rural Utilities Service, USDA to discuss its financial needs and eligibility.

Use of Loan Funds

Loan funds may be used to finance the improvement, expansion, construction, and operation of systems or facilities to furnish or improve broadband service in rural areas.

Definition of Broadband Services

As used in this notice, the term broadband services means providing an information rate equivalent to at least 200 kilobits/second in the consumer's connection to the network, both from the provider to the consumer (downstream) and from the consumer to the provider (upstream).

Definition of Rural Area

As used in this notice, rural area means any area of the United States not included within the boundaries of any incorporated or unincorporated city, village, or borough having a population in excess of 20,000 inhabitants.

Loan Terms

For FY 2001, $100 million in loans will be made available to eligible applicants. The loans will bear interest at the comparable Treasury rate for comparable maturities not to exceed ten years.

Eligible Applicants

Loans may be made to legally organized entities providing, or proposing to provide, broadband services in rural areas. Eligible entities may be public bodies, cooperatives, nonprofits, and limited dividend or mutual associations and must be incorporated or a limited liability company.

RUS Findings

Feasibility of and security for the Loan. A borrower shall provide RUS with satisfactory evidence to enable the Administrator to determine that the security for the loan is reasonably adequate and that the loan will be repaid on time. Factors used in making this determination include, but are not limited to:

(1) Evidence of sufficient revenues from the borrower's system, in excess of operating expenditures (including maintenance and replacement), for full repayment of the loan with interest;

(2) Reasonable assurance of achieving market penetration projections upon which the loan is based;

(3) Adequate security for the loan;

(4) Appropriate financial controls included in the loan documents; and

(5) Other factors determined relevant by RUS.

Loan Application

RUS suggests that an application for a loan pursuant to this notice include a loan design that contains a forecast of service requirements and a narrative describing the planned construction and delivery of broadband services. The narrative should detail the purposes and amounts of the proposed project including construction, the proposed service area, and the basis for subscriber forecasts. Other items include:

(1) Certified financial statements, if available;

(2) 10 years of pro-forma financial information;

(3) An environmental report;

(4) Depreciation rates for the equipment being financed;

(5) A sketch or map showing existing and proposed service areas;

(6) A description of the current level of service available;

(7) All other required forms for Federal assistance; and

(8) If not a current RUS borrower, information on the owners and principal employees' relevant work experience that would ensure the success of the project.

Loan Security

Loans must be repaid according to their terms. RUS will require security to be provided for each loan. RUS generally obtains a lien on all the property financed by the loans. The borrower will need to provide adequate security and execute the appropriate legal documents.

Evaluation Criteria

Loan applications will be accepted as of the date of this notice and will be processed and approved on a first-come, first served basis throughout FY 2001 until the appropriation is utilized in its entirety provided that:

(1) The loan is for approved loan purposes for broadband telecommunications services in rural areas;

(2) The loan is deemed to be feasible and adequate security is provided;

(3) The system design is appropriate; and

(4) All other applicable Federal requirements are met.

Dated: November 27, 2000.

Christopher A. McLean,

Administrator, Rural Utilities Service.