USDA pumped $2.1B into state in last 8 years

  • To help 32 communities in Western Alaska, USDA-Rural Development in partnership with Alaska Growth Capital provided Bering Air Inc. with a $10.5 million Business and Industry guaranteed loan. The funding was used to purchase six new Cessna Caravan aircraft. (Photos/Courtesy/USDA)

A small federal office has quietly injected more than $2.1 billion into Alaska over the past eight years with almost no impact to the national debt.

The U.S. Department of Agriculture Office of Rural Development has done that through its 35 programs that help fund everything from water and sewer systems in the most remote villages in Alaska to startup businesses in every corner of the state.

The Rural Development Alaska progress report covering President Barack Obama’s time in office lists 236 communities in which the office has funded projects. Appropriately absent from that list is Anchorage, given the agency’s rural focus.

Despite providing $2.16 billion in loans and grants since 2009, outgoing USDA Rural Development Alaska Director Jim Nordlund said one of the biggest hurdles for his staff is getting the word out that they are here to help.

“It’s always been a constant challenge for us as an agency to let the public know, let Alaskans know, particularly rural Alaskans, what we do,” Nordlund said. “Everybody thinks USDA only deals with farms and farmers, but that’s not exactly true.”

The office has managed to fund $775 million in housing projects, another $683 million in telecom and electric infrastructure development and nearly $300 million in water and environmental work over that time while being net neutral to the federal Treasury, as Nordlund is quick to note, because more than 75 percent of the $2.16 billion issued was in the form of loans.

In Alaska the Rural Development programs are one of the biggest things the Agriculture Department does — outside managing two of the three largest national forests, of course.

Nationwide, the Rural Development wing of the USDA has a loan portfolio of about $215 billion, which would make it the eighth-largest bank in the country, he added.

The focus on loans is something Nordlund, a longtime Alaskan, said needs to happen more generally in Alaska particularly given the state’s massive reoccurring budget deficits that have evaporated almost all state grant programs.

He acknowledges that some situations require grant funding or subsidies due to a lack of revenue for loan repayment but also said his staff often presents a loan option to an entity only to be turned down because the group wants free money.

“I just think that as a state we need to be more creative in terms of looking at leveraging money, being creative with the use of loans, marrying loans and grants and tax credits in order to get projects done,” Nordlund said. “It’s that kind of creative financing and leveraging that’s going to have to happen in Alaska given the times that we’re facing and a lack of pure grant funding.”

Nordlund added that he has seen a shift — slowly and reluctantly — among those looking for funds to accept that reality as the state’s fiscal situation has deteriorated rapidly over the past two years.

Last year the Rural Development Office issued a $165 million loan to the Yukon Kuskokwim Health Corp. for a new clinic and hospital expansion in Bethel, the largest Community Facilities Program loan in the history of the program nationwide.

And the loans are being paid back. According to Rural Development Business Programs Director Renee Johnson, Alaska’s $119 million Business Loan Guarantee Program finished 2016 with no delinquencies to report.

The program has a 3.3 percent delinquency rate nationwide; and Johnson credited the Alaska results to the expertise and lending practices of the government office’s private lending partners.

As a presidential appointee, Nordlund will be leaving the Rural Development Office when the Obamas vacate the White House. He said he hopes his successor can continue the work the agency has done over the past eight years and especially build on efforts to make home mortgages more accessible to village residents, a means Nordlund sees as crucial to improving rural Alaska’s housing stock.

“There’s nothing more unique than rural Alaska,” he said. “The opportunity to serve rural Alaskans has really been a great honor and I’m going to miss this job a great deal but that’s just the way it goes.”

Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com.

Updated: 
02/01/2017 - 12:31pm