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Federal loan compliance: town told to set aside $5,796 reserve for USDA loan
Summary
A Midwest Assistance Program representative told trustees a reserve account required by Buffalo Gap's 1996 USDA loan was never funded; Rural Development instructs the town to set aside $5,796 into a reserve until payoff (payoff reported about $35,007.96).
A representative of the Midwest Assistance Program told the Board of Trustees that a reserve account required when the town took a USDA loan in the mid-1990s was never established and must now be funded to meet Rural Development compliance requirements.
Hope Block (speaker 8), introduced to the board by the chair, said Rural Development advised the easiest path to compliance for the loan that financed a second well is for the town to make a motion to set aside $5,796 into a reserve account until the loan is paid off next year. "We're setting aside $5,796 in this reserve fund until it's paid off, and then you can use the money," Block said.
Trustees discussed the option of paying off the loan entirely instead of creating the reserve, but noted budget constraints and the administrative simplicity of establishing the required account for one year. Block said Rural Development could provide payoff figures for the loan and suggested staff check whether an early payoff is feasible.
Next steps: staff will confirm the exact loan payoff amount and report options (establish the reserve per Rural Development guidance, or pay off the loan if funds allow) at a follow-up meeting.
