Helping to establish or expand businesses and rural infrastructure adds value to rural America and builds load. Providing economic development loans to our Class A members is part of Basin Electric's service to our members and the people and communities they serve.
Economic Development FAQs
Why was the Basin Electric Economic Development Fund established?
Basin Electric's Vision Statement states that the Cooperative "...will provide cost-effective wholesale energy along with products and services that support and unite rural America." The Basin Electric board of directors believes that economic development is necessary if we are to maintain the quality of life in rural areas and see our service territory prosper. The board also noted that economic development programs are best operated at the local level, and Basin Electric would be most effective in supporting economic development through a lending program to be used by our members. The board authorized staff to set up a lending program and committed $5 million toward that end.
Who is eligible to borrow funds?
All Class A members of Basin Electric are eligible to borrow funds.
How much can I borrow?
A Class A member is eligible to borrow its pro-rata share of the $5 million dollars based upon the 2001 margin allocation.
What types of economic development projects qualify for loans?
The Basin Electric board has established some broad guidelines with respect to qualifying projects. The project must enhance the quality of life in rural America, create or retain jobs in rural areas, or contribute to load development. The Class A members are free to develop their own criteria regarding their economic development programs that may be more stringent than these. For example, under the Basin Electric criteria, the project does not necessarily have to receive electric service from a cooperative. It could qualify if it is creating jobs in a rural area. If the Class A member wants to limit borrowing to only new loads they serve, that is acceptable. However, these funds may not be used by Class A or Class C members for operating or capital expenditures.
Who determines if an economic development project meets the qualifications?
The Class A member will make the determination and certify to Basin Electric that the funds requested will meet the criteria.
Must a Class A member establish an “Economic Development Foundation” as a mechanism to obtain loan funds?
No. Some Class A members currently have established economic development programs and others have no current formalized program. Either can obtain loan funds. If the Class A member chooses to participate in an economic development program on a case-by-case basis rather than have a formal program, that would still qualify.
What are the terms and conditions of the loan?
The loan is from Basin Electric to the Class A member. Basin Electric will look only to the Class A member for the repayment of the loan and it will be an unsecured obligation of the member. The loan funds can only be used to “match” other funds that will be the part of a loan to an economic development project. These other funds must come from the Class A member. If the Class A member has received a grant, those funds would qualify as matching funds. Grant monies received directly by a project developer or sponsor would not qualify. These funds are not to be used to "match” the equity contribution of the project developer.
The loans from Basin Electric will have bullet maturity. That is, the principle will be due in a lump sum payment on December 31, 2017. The interest rate will be 1 percent per annum, with interest payable on June 1 and December 1 of each year. There is no prepayment penalty. Partial draw-downs are permitted and the Basin Electric commitment will function as a revolving line of credit.
How long will I have to borrow my share of the fund?
There is no specified time within which a Class A member might borrow from the fund. The Basin Electric board recognizes it may take some time for Class A members to establish the infrastructure to administer a program. The Board plans to review the program annually to monitor its performance. This review will be done to ascertain the cost of operating the program and its effectiveness. The Board, of course, has the right to expand, amend, or end the program at any time. However, the Board has represented that no changes will be made to the program for the first three years nor will loans existing at the time of any modification be callable prior to 2017.
Can I borrow more than my pro-rata share of the loan funds if other Class A members fail to utilize the program?
Not at this time.
How do I apply?
Contact the Deputy General Manager at Basin Electric who administers the program and will provide you a copy of the loan contract, note, certificate, and other documents needed. Fill them out and return them. Basin Electric will then inform you if the loan is granted.
Is there any follow-up information required?
Yes. Each year the Class A member shall provide Basin Electric a brief written report signed by the manager on each economic development project for which it has utilized the Basin program. This report should include a status report on the project and a report on the performance of the loan. To the extent permitted by its other contracts, the member should include a brief report on all of its economic development efforts.