Monday, July 28, 2014

Speak Your Piece: Plan Could Hurt Rural

03/01/2013

EDITOR’S NOTE: The Daily Yonder will run a series of responses to a USDA report on how to define “rural” for its development programs. We start today with one from Aleta Botts. She served on the Agriculture Committee staff of U.S. Rep. Collin Peterson (D-MN-7) and helped draft legislation that became the 2008 farm bill. Next week we will hear from Doug O’Brien, deputy undersecretary for rural development at USDA. Other commentaries are welcome. 

USDAPopulation Density. Red areas have highest population density; light yellow areas have least. Click to enlarge.A new federal definition of rural that would include much larger towns could put small communities at a disadvantage when it comes to competing for federal grants and programs.  

USDA released a report on the definition of rural on Friday, February 22. Along with describing the current rural definitions and how they affect USDA programs, the report is supposed to recommend ways to better target rural development funds.  The report was required by the 2008 farm bill and was due to Congress by June 2010. 

Over two years past that due date, the Department has chosen to better target funds by recommending a dilution of the definition of rural to its highest level – 50,000 people – arguing that having a consistent definition will streamline program delivery and ensure predictability for the constituent communities. The Department argues that the existing different population thresholds set up “arbitrary barriers to regional strategies” and harm their ability to provide integrated program delivery.

A shift to this population level from the population caps that exist currently (10,000 for rural water/wastewater programs, 20,000 for community facility programs) means additional seats at the table for programs distributing ever smaller pots of money.  House Agriculture Committee Chairman Frank Lucas (R-OK-3) and Ranking Member Collin Peterson (D-MN-7) expressed similar concerns in a press release issued this week.

In response to this concern, USDA Rural Development suggests that it will be able to ensure that those smaller communities currently eligible will retain priority over larger communities by allocating those smaller areas priority points.  When applications come into the agency, they are vetted for eligibility and then scored based on a set of criteria.  The higher you score, the better your chance for receiving funding.  

An attachment to the USDA report provides a fuller picture of these priority points and suggests instead that large communities will easily be able to make up those points simply by responding to any one of several other priorities USDA identifies.

For example, a community with only 3,000 people will receive 10 points for being a small community.  A town of 43,000 people will receive just 1 point based on its size.  However, what if that town of 43,000 is proposing a project that “reuses a developed site”?  Then it receives another 5 points.  It’s quite possible that it might also be a project that “addresses water quality or air quality problems in the service area.”  That would be worth another 5 points.  These sorts of criteria may even favor larger cities, because they are more likely to have an existing industrial site and have air and water quality problems that need addressing.

Suddenly through the consideration of just two factors of many listed, that larger town has completely offset the advantage that was supposed to ensure that the town of only 3,000 was first in line due to its small size.  

That scoring, combined with the greater institutional capacity that larger population centers have to turn around high-quality grant applications, could squeeze out the smaller communities from the very programs delivering the infrastructure benefits that they most need. USDA even acknowledges that smaller communities typically have few paid staff, if any, and no professional grantwriter or engineer to put together their applications. USDA suggests that by setting the population limit higher, its staff will be able to work more closely with all of these communities to develop a more integrated, regional approach. What it does not address is how exactly the agency would do that, given that the number of Rural Development field offices and their staffs are decreasing.

The one-size-fits-all definition of rural also blurs important differences among the various rural development programs, which are currently geared toward different size communities. Rural business programs, for example, have a population limit of 50,000 currently, recognizing that many residents of smaller rural areas commute to larger towns for work.  Therefore, providing loan guarantees to businesses in those areas with up to 50,000 residents directly helps both the residents in that area and the workers from the surrounding more rural areas.  

USDARural-Urban Communting Areas. Red shows urban core; green shows rural areas. Click to enlarge.This is fundamentally different from infrastructure programs, which were targeted at smaller rural areas that lack the population and tax base to support infrastructure improvements. These infrastructure programs recognize that smaller areas cannot benefit from the economy of scale of larger communities, which can spread their costs for that new water line over more households and achieve a much lower per-person cost.

USDA argues that regional initiatives will blossom once the population limit is lifted, since smaller communities will work with larger nearby communities – all of whom will now be eligible – and greater cooperation will be achieved, since the entire system will be eligible for funding.  However, what incentive will larger communities have to work with smaller communities when those larger areas will now be eligible for grants and low-interest loans regardless of whether they develop an integrated system or not?

The USDA report issued Friday mirrors the Senate’s version of the farm bill, passed by that chamber last year but which never made it through the House. Senate Agriculture Chair Debbie Stabenow commended the agency for their report for addressing an issue “that has long frustrated small town mayors and other members of rural communities.”  However, which small-town mayors are more troubled by multiple definitions of rural than by efforts to allow larger, more developed neighboring communities to squeeze out the applications of smaller locales? 

USDA is to be commended for taking on the challenge of figuring out how rural development programs can be improved.  However, it is hard to understand why – in a time of lower budgets for these programs – they would want to disadvantage smaller communities by expanding the eligibility beyond current levels.

"Report on the Definition of 'Rural'" and its addenda are available for download here.