Bipartisan Legislation Would Enable Rural Electric Coops, Telecom Providers to Refinance RUS Debt, Support Stronger COVID-19 Recovery
MINNESOTA [08/20/20]— U.S. Sens. Tina Smith (D-Minn.) and John Hoeven (R-N.D.) are pushing Senate leaders to add their bipartisan plan to help stabilize the finances of the nation’s rural electric cooperatives and rural broadband providers in the next coronavirus relief package.
In a letter to Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Minority Leader Chuck Schumer (D-N.Y.), the Senators pressed their Flexible Financing for Rural America Act, which would make it possible for rural electric cooperatives and telecommunications providers to refinance their Rural Utilities Service (RUS) debt at lower interest rates. By taking advantage of current lower interest rates, these rural cooperatives and businesses would be able to better manage cash-flow, invest in rural communities, and pass savings on to customers. The letter was signed by a bipartisan group of Senators who back the measure.
Sens. Smith and Hoeven say that this bill would also spur stronger recovery from the economic challenges of the COVID-19 pandemic. Rural cooperatives and businesses have struggled due to a decline in electrical consumption from industrial sources and an increase in unpaid bills from customers who have faced financial hardship.
“The impact of the COVID-19 pandemic has reached every corner of our country, creating financial hardship for communities and businesses in almost every sector of our economy,” wrote the Senators. “Rural areas have not been spared, and the crisis has highlighted existing disparities in things like broadband that have made recovery an even larger challenge. At the same time, many member-owned cooperatives and broadband providers have struggled financially as a result of the economic downturn related to the COVID-19 pandemic.
“Allowing borrowers to refinance their RUS loans at the current lower interest rates would enable a stronger recovery by providing rural cooperatives and businesses flexibility in managing their cash flow. Some estimates have predicted that this move could save businesses millions per year in debt payments, allowing these companies to invest in electric infrastructure or rural broadband networks in their communities, and pass savings on directly to customers. These investments would be especially vital as rural communities work to recover from the COVID-19 crisis."
In addition to Sens. Smith and Hoeven, the letter was signed by Sens. Tammy Baldwin (D-Wis.), Kevin Cramer (R-N.D.), Kyrsten Sinema (D-Ariz.), John Boozman (R-Ark.), Amy Klobuchar (D-Minn.), Steve Daines (R-Mont.), Doug Jones (D-Ala.) and John Cornyn (R-Texas).
Sen. Smith has been working to get relief to rural electric coops during the COVID-19 pandemic. In May, Sens. Smith and Hoeven led a bipartisan group of Senators in urging the U.S. Department of the Treasury and the Small Business Administration (SBA) to support rural electric cooperatives and ensure their access to the Paycheck Protection Program (PPP). When Sen. Smith heard that Minnesota cooperatives were at risk of losing their tax-exempt status if they received grants to expand broadband or recover from a disaster, she wanted to reverse that. The key government spending package that was signed into law last year included her bipartisan bill with Senator Rob Portman (R-Ohio) to ensure co-ops can retain their tax exemptions when they receive government grants.
You can read a copy of the letter here.