The Planning and Development department of the Buffalo Trace Area Development District is responsible for administering grant applications and developing plans, including Comprehensive Plans, Land Use Plans, Solid Waste Plans, and Water Supply Plans. Staff provides assistance to County and City Governments in obtaining financing for different types of community facility projects and infrastructure projects such as water lines, sewer lines, gas lines, and road improvements. The CD department also assists Water Districts and Water Associations in the Buffalo Trace area.

The Planning and Development staff work with the following funding sources: Community Development Block Grant, Farmers Home Administration, Land and Water Conservation, Economic Development Administration, Appalachian Regional Commission, Kentucky Infrastructure Authority, Kentucky Rural Economic Development Authority and the Kentucky Housing Corporation.

The Wooden Covered Bridge Authority began actively meeting during 2003. The main objective of the Authority is to provide guidance and oversight in the preservation of historic covered bridges.

For additional information, contact Community Development Director, Kristie Dodge at (606) 564-6894.


Development Grants/Loans

The tools for accomplishing community/economic development projects are the funding sources available from various federal, state, and local programs. Historically, many projects have been undertaken with a single source of funding assistance. However, as public dollars become more difficult to obtain, the combination of sources is often required to successfully package a project.

The following is a listing of federal, state, and local agencies that provide grant and/or loan assistance:

Community Development Block Grant (CDBG)

Each project must involve job creation or retention and federal regulations require that 51 percent of those hired by companies receiving CDBG assistance be persons from low and moderate income families. When a loan is made for a for-profit entity, the borrowing business firm repays the loan to the local government which can then use the money for other economic development projects. Rate and terms for loans are set by the state based upon a necessary and appropriate analysis of the particular project

USDA Rural Development (Farmers Home Administration)

All communities in the Buffalo Trace Area Development District are eligible for Rural Development funding by location within a rural area.

Water/sewer: funds are available to undertake water and sewer projects in the form of grants and loans.

Community facilities: below market rate loans are available for community projects such as hospitals, community buildings, airports, etc.

515 Program: loan funds are available for the construction of multi-unit housing to benefit the elderly and low income. Rent subsidies or tax credits are inducements to private developers. Public agencies and non-profit groups are also eligible.

Business and industry loans: loan guarantees are available up to a maximum amount of ten million dollars for eligible business and industry projects.

Appalachian Regional Commission (ARC)

Supplemental grants are classified into two elements, one which is termed as ‘distressed counties’ and the other, economic development. Of the 49 Kentucky ARC counties, a portion are determined to be ‘distressed’. These counties are eligible to receive grant assistance to supplement other funds used for water, sewer, and solid waste improvements. The economic development program provides supplemental funding for job producing projects, such as a shopping center of manufacturer. Supplemental grants must be matched 50-50 and with grant assistance the total federal grant assistance cannot exceed 80 percent.

Economic Development Administration (EDA)

Businesses may be eligible for loans guaranteed by the Economic Development Administration. The guaranteed loans can be used to finance both fixed assets and working capital. No assistance can be given for relocation, for lines of credit, to finance debt, or for real estate for investment or speculations.

EDA can guarantee up to 80 percent of the loan made by a private lender. Priority is given to guarantees of 75 percent or less. Generally, EDA loan guarantees are for larger firms and range from about $500,000 to $10,000,000. Priority is given to projects that are labor intensive, with assistance usually limited to no more than $20,000 per permanent job created or saved.

A minimum borrower equity of 15 percent is required for either fixed assets or working capital guarantees. Personal and/or corporate guarantees are required of borrowers. Collateral for guaranteed loans can be land, buildings, equipment, inventories, accounts receivable, and personal assets. Liens on collateral securing an EDA guaranteed loan cannot be in a subordinated position.

Terms for guaranteed loans for fixed assets cannot exceed the weighted average economic life of the project’s fixed assets. For working capital, terms ordinarily may not exceed five years. Interest rates are set by the lender, with limits set by EDA. Guarantee fees of about one percent are charged by EDA.

There are two programs of primary interest. These are public works and technical assistance. The public works program provides grant assistance to cities and counties in a percentage amount as pre-determined by EDA. In the Buffalo Trace area, maximum grant amounts range from 60 to 80 percent. Examples of EDA projects are water, sewer, and industrial park projects. The technical assistance grants are available to provide financial support for a technical report needed in support of economic development.

Kentucky Rural Economic Development Act (KREDA)

Eligible companies include corporations, partnerships, sole proprietorships, or business trusts that establish new manufacturing plants or expand existing manufacturing operations in qualifying Kentucky counties.

Kentucky counties whose average annual unemployment rate has exceeded the state average for the five preceding calendar years are eligible.

Eligible projects include land, buildings, fixtures and equipment for new and expanding manufacturing companies, and related office facilities. Eligible costs include expenditures for land acquisition, architectural and engineering services, building construction or rehabilitation, and installation costs.

A KREDA approved company receives a 100% credit against the Kentucky income tax liability to the annual amount of debt service (principal and interest) paid to a lender in connection with the eligible project financing. The tax credit remains in place for the term of the financing or for 15 years, whichever occurs first. Unused credits may be carried forward for the term of the KREDA agreement.

An approved company may also utilize the Job Development Assessment Fee. This entails a withholding from the employees hired as a result of the KREDA approved project for 2% of the employees’ gross wages. The employees recoup the JDAF through a state income tax credit equal to the amount withheld. Either option is limited to the annual amount of debt service paid to a lender in connection with the eligible project financing.

Since the benefits under the KREDA program are related to debt service payments, the company must incur debt for the project’s fixed asset financing. The financing may be provided through any source, the most typical being banks or industrial revenue bonds. However, the approved company may not recover debt service paid in connection with financing from the Community Development Block Grant (CDBG) program.

Kentucky Infrastructure Authority (KIA)

The Kentucky Infrastructure Authority was created as a program of assistance to governmental agencies in the state with respect to the construction and acquisition of infrastructure projects including wastewater facilities, drinking water systems, transportation networks, and other utilities. The Authority assumed all the powers, duties, and obligations of the Kentucky Pollution Abatement and Water Resources Finance Authority. Programs offered by the Authority are as follows:

Fund A: Federally Assisted Wastewater Revolving Fund – Finances local wastewater treatment and collection facilities that are on the ‘project priority list’ of the Division of Water, Natural Resources and Environmental Projection Cabinet.

Fund B: Infrastructure Revolving Fund – Provides financial assistance to governmental agencies for the construction or acquisition of infrastructure projects that promote economic development. The projects must be evaluated as a Priority One by the Kentucky Department for Local Government, based on criteria that include unemployment data, job creation potential, cost-benefit analysis, and effectiveness in accomplishing objectives. <p”>Fund C: Governmental Agencies Program – Provides governmental agencies access to funding for any type of infrastructure project that benefits the general public. Funding is through the municipal bond market at better terms than could be obtained on an individual basis.

Fund D: Construction Loan Program – Available to governmental agencies that have obtained a permanent financing commitment from the Rural Development (formerly Farmers Home Administration) or the Kentucky Infrastructure Authority. The project cannot be a ‘private activity’ type.

Fund E: Solid Waste Revolving Loan and Grant Program – Provides loan/grant funds to governmental agencies for solid waste projects evaluated and prioritized by the Division of Waste Management in the Natural Resources and Environmental Protection Cabinet.

Small Business Administration (SBA)

Small businesses that are unable to obtain financing on reasonable terms from private lenders may qualify for loans or loan guarantees by the U. S. Small Business Administration. Loans made by private lending institutions can be guaranteed by the SBA for up to 90 percent of the loan. The maximum SBA guaranteed loan is $750,000. SBA director loans can be up to $150,000.

To be eligible for an SBA loan guarantee, a small business must be independently owned and operated, have sufficient equity, have adequate collateral, and have a repayment ability. Additionally, the business must not be able to obtain the funds from commercial lending institutions on reasonable terms nor be able to provide personal funds for the project without undue financial hardship.

Proceeds from the loans can be used for working capital; to construct, expand or convert facilities; and, to purchase machinery, equipment and supplies. SBA loan guarantees are not made for speculation, for newspapers, for lending or investment, or for purchases of real property for sale or investment.

Maximum maturities for these business loans are 25 years for land, buildings, and equipment and 7 years for working capital.