USDA official offers details on Kulpmont loan process
HARRISBURG - Thomas Williams, Pennsylvania director for the U.S. Department of Agriculture (USDA) Rural Development Office, responded to the following questions emailed by The News-Item regarding the federal agency's approval of a loan for Kulpmont to build a new municipal building and garage.
Q. Who actually OK'd the loan?
A. The loan was approved by the Pennsylvania USDA Rural Development Office in accordance with underwriting criteria established by our regulation 1942-A (Community Facilities Project Guide.)
Q. Is the USDA providing the money or merely backing a loan from a lending institution?
A. It is a direct loan from the federal government.
Q. The loan was approved based on what criteria?
A. The loan was approved based on information provided to the agency from the applicant.
Q. Did the USDA study the borough's current costs of heating, maintenance and utilities versus what would be saved in the new building to determine how this small borough, with a 30 percent elderly population, could afford such an amount?
A. There are many things taken into consideration during the underwriting process. At the time of approval, it was understood that a tax raise was needed to fund the building and the current building was at the end of its useful life. The agency was advised that, in general, the residents were in agreement and in favor of the project.
Q. Is 40 years a standard loan repayment term?
A. Many of our loan terms are 40 years to allow the smallest monthly payment to our borrowers. There is no prepayment clause and borrowers can pay the loan off at any time.
Q. Can the borough take as much money as it needs of the $1.47 million, or does it need to take the full amount?
A. The loan has been approved for $1.47 million. They can take any amount up to that figure, or nothing at all. They can modify their application and the scope of the project so that the residents are in agreement. The loan has not yet been closed and the borough is not obligated to the USDA in any way. We are here to help and will do so when they are all in agreement.
Q. What is the status of the project with the USDA?
A. We do not have a lot of specifics right now. We are under the impression the site and the plans are in development.
Q. The USDA has told the borough to plan on a 3.125 percent interest rate. Is that locked in?
A. The final interest rate will be determined at the actual loan closing.
Q. Will the problems the East End Fire Company in Kulpmont is having with meeting its USDA loan payment for its new social hall affect the borough's standing with the USDA?
A. I cannot comment on the fire company's loan status except to say that they are separate transactions and have no bearing on the borough's loan status.