U.S. Agriculture Secretary Tom Vilsack came to Berea College on Thursday to launch a $401 million federal program to reduce rural poverty across the nation.
The federal program basically provides funds guaranteed by private lenders to groups with a track record of successful programs to help reduce poverty in some of the nation’s poorest and most isolated rural communities.
It will make long-term, low-interest financing available to 26 community development organizations, who will “re-lend” the money to to build, acquire, maintain or renovate essential community facilities and services, such as education, health care and infrastructure.
Vilsack, a former governor of Iowa, said the program will provide “a game-changing level of investment capital to reduce poverty in targeted rural areas where the capacity for growth has not been realized.”
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Nearly nine out of 10 counties where 20 percent or more of the population has lived in poverty for 30 years or more are rural, said Vilsack.
U.S. Rep. Andy Barr, R-Lexington, said the program will be a boon to rural poor in his Central Kentucky district and to those in U.S. Rep. Hal Rogers’ Eastern Kentucky district.
Kentucky recipients include Community Ventures in Lexington, Federation for Appalachian Housing Enterprises in Berea, and Kentucky Highlands Investment Corp. in London.
About 20 representatives of the recipients and private lenders met with Vilsack and Under Secretary for Rural Development Lisa Mensah in a roundtable discussion at Berea College before Vilsack officially announced the program.
Barr said he would like to see some of the money go to provide transitional housing for those suffering from Kentucky’s drug abuse epidemic.
Under the program, private financial institutions, including $100 million from Bank of America, will provide guarantees for a portion of the loans. The recipient organizations, or “re-lenders,” also may seek grants provided by seven of the nation’s premier philanthropic organizations through a $22 million fund.
Justin Maxson, executive director of the Mary Reynolds Babcock Foundation in North Carolina, will manage the grant fund.
Kevin Smith, president and chief executive officer of Community Ventures, said in his 30-year career that he has never seen “anything so creative out of the federal government” as the program Vilsack announced.
Vilsack is the only member of the U.S. Cabinet who has held the same position since President Barack Obama took office. He said he told Obama about the new program earlier this week and that Obama wants a briefing on his Kentucky trip.
“He’s very excited about this,” Vilsack said.
Vilsack made the program’s announcement at Berea College because Berea has received funding from his department to help businesses become more energy efficient. Earlier this year, the city was awarded a $10 million loan to renovate and expand its city hall and public safety facilities.
Last year, Berea was chosen as one of 10 pilot sites for a USDA program to address needs of vulnerable children and their parents, with the goal of increasing parents’ employment and education and improving health of the children and parents.
Berea Mayor Steven Connelley said his city has “tremendously benefited” from the federal grants.