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The Rural Electric and Telecommunications Development Center

Communities build, grow with development financing

by Nancy Jorgensen

For the growth challenges now facing North Dakota communities, the Rural Development Finance Corporation (RDFC) is playing a valuable role. In Bottineau, RDFC financial services helped remodel a clothing store and build new apartments. In Buffalo, RDFC resources are helping finance a new fire hall. In a rural Minot neighborhood, the corporation is assisting a water district get back on its feet after a flood. And in Maddock, RDFC is financing microloans for small businesses.

“We provided $256,000 to six communities in 2011,” says Pat Downs, co-op development specialist for the North Dakota Association of Rural Electric Cooperatives (NDAREC). “We’re proving that small loans can make a big difference.” RDFC is owned by North Dakota’s rural electric and telecommunications co-ops.

  • Clothes, apartments in Bottineau
  • Buffalo Fire Hall
  • Minot Water District
  • Microloans in Maddock
Clothes, apartments in Bottineau
When the owner of Bottineau’s only clothing store retired recently, Todd and Julie Mears stepped in to purchase the business and the building. They own a similar business in Rolla.

“They knew they needed new heating, air conditioning, windows and carpeting,” says Diane Olson, director of the Bottineau County Economic Development Council (CEDC). “But the cost of remodeling went beyond what they expected. When they found they needed a new roof and wiring, they came to me for help.”

A county mill levy and a city sales tax support the Bottineau CEDC, but taxes don’t meet all community needs. Bottineau CEDC had already participated in the project with $50,000, and then worked to access an additional $50,000 from RDFC at 2 percent interest for 10 years.

RDFC offers participation loans, like the one provided for Bottineau, through local lenders at interest rates of 1 to 2 percent. RDFC can also lend directly to local economic development corporations. In addition, the Flex PACE loan program, available through the Bank of North Dakota, finances economic development corporation projects at 0 percent interest.

“Bottineau’s Golden Rule Clothing Store re-opened in May, and we’re delighted,” Olson says. “It sells shoes and clothing for men, women and children, and looks like a store you’d find in a much larger community.”

With 2,500 residents, Bottineau serves as a regional retail center. At the same time, the area’s population continues to grow as a result of increased oil activity and federal jobs along the Canadian border. The growth has led to a housing shortage. A few years ago, a group of local business leaders built a 10-unit apartment complex, which has been fully occupied. Recently, a group of five local investors – some of whom were involved in the 10-plex – purchased land to build an eight-plex.

When the group needed to extend water and sewer services to the site, which was outside the city limits, the Bottineau CEDC provided $50,000, and RDFC helped with an additional $50,000 10-year loan at 2 percent interest.
Buffalo fire hall
Jim Jager spends more hours volunteering as a fireman and emergency medical technician (EMT) for the Buffalo Rural Fire District than he does at his full-time job hauling U.S. mail.

Jager is one of 27 volunteers with the fire district, which serves about 600 people. Most operating funds come from taxes paid by local citizens. In addition, the firemen gather donations each February, when people drive from miles around to taste the fire crew’s homemade sausage at a pancake feed. But neither taxes nor pancakes generate the dollars necessary to build a much-needed new fire hall.

“Without more space, we can’t upgrade any of our four fire trucks or our quick response vehicle,” Jager says. “We need a place for larger equipment, and room to conduct our own training.”

Jager began volunteering with the fire department 26 years ago when he was in high school. Today, he’s a member of the department’s building committee and acts as liaison with the architectural firm.

“We’ve been trying to raise funds for the new hall for years, but we ran into brick walls wherever we went,” he says. “We requested federal stimulus dollars, but that money went to places like Los Angeles. With the growth in North Dakota’s oil economy, builders are busy, and every year adds zeros to construction costs.”

Then a letter from NDAREC arrived, outlining the RDFC loan program. The district applied, and RDFC provided a $50,000 loan at 1 percent interest for 10 years through the Buffalo branch of First State Bank of North Dakota. The fire district also sought a PACE Flex loan through the Bank of North Dakota. “These programs will save us $166,000 in interest over the life of the loans,” Jager says. “RDFC’s been wonderful to work with.”
Helping Minot area water district
Dick Lokken retired from his job as an electrician a few years ago, but he, too, keeps busy volunteering for local causes. Lately, Lokken has been rewiring his church, damaged by the Minot area flood. He also chairs the board of West River Water District, which provides water and sewer services to 173 homes and businesses in a rural area near Minot – or at least it did until the flood prompted almost everyone in the district to evacuate.

“The flood destroyed a lot of beautiful homes here – it was a tremendous economic hit,” Lokken says. He and his wife, Gloria, were relatively lucky – only their basement was damaged.

Flooding damaged water and sewer lines for the water district. “We hope that most of our expenses will be covered by FEMA (the Federal Emergency Management Agency) and the state,” Dick says. “But we’re taking on added debt for emergency work and repairs.”

Expenses to rebuild water and sewer lines, as well as controls in a sewer lift station, will run more than $200,000. More damage may come – the flood scoured out ground beneath sewer lines, and a hard freeze could take them out.
Beyond the cost of repairs, the district suffered lost income when it was forced to cut off services to customers. Some are back online, but winter weather will suspend most construction until spring. About 50 members of the district don’t plan to rebuild.

The district got a boost when it heard about low-interest loans from RDFC. West River Water District received a $50,000, 10-year loan at 1 percent interest for immediate repairs. “The application went through quickly, and we appreciate it,” Dick says.
Microloans for Maddock
Maddock leaders are using RDFC to usher in an era of microloans for the community. Leveraging a $15,000, 10-year, 1 percent loan from RDFC, the Maddock EDC will soon offer loans of $1,000 to $5,000 to small businesses or individual entrepreneurs around the town of 382. Borrowers can use the funds to start or expand businesses, rehabilitate or reface buildings, or purchase equipment.

“Reduced access to capital has hurt many small businesses,” says Erin Markestad, director of the Maddock Economic Development Corporation. “Many find it difficult to continue let alone grow – they need this tool to make it in today’s economy. The money will be well-spent in our community.”

Nancy Jorgensen is a freelance writer residing near Tucson, Ariz.

Our Partners

Sponsored by the North Dakota Association of Rural Electric and Telephone Cooperatives, the North Dakota Coordinating Council of Cooperatives, USDA Rural Development.


For overall rural development questions contact:
Lori Capouch, Economic Development Director

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