Working to find actionable solutions to the nation's key challenges.

How Rural Areas are Defined is of Critical Importance

By Christopher S. “Kit” Bond

Tuesday, October 1, 2013

It’s a common misconception that housing affordability is a problem that exclusively affects our nation’s urban families. Despite getting most of the attention by policymakers, urban areas do not have a monopoly on housing needs. The truth is that paying for housing is also a continuous struggle for many families in rural America.

Although housing costs are generally less expensive in our nation’s rural areas, lower incomes, fewer job opportunities, and higher poverty rates make housing unaffordable for many rural residents. In fact, more than seven million families–or nearly 30 percent of all rural households—spend more than 30 percent of their monthly income just to cover housing costs.

Today, the U.S. Department of Agriculture provides critical housing support to our nation’s most vulnerable rural families through a variety of grant, loan, and loan guarantee programs. These programs provide much-needed rental assistance, support the construction of new affordable rental housing, and help creditworthy lower-income families enter the homeownership ranks. Over the years, these programs have assisted millions of rural households while being both cost-effective and efficient.

To be eligible for assistance under a USDA housing program, a family must live in a “rural area.” How this term is defined is obviously of critical importance.

As of today, October 1 of this year, the USDA is reverting to an old definition of what constitutes a “rural area” using data from the 2010 Census. Under this definition, eligibility will be limited only to those families living in communities with a population of less than 10,000, or between 10,000 and 20,000, provided the community is not located in a metropolitan statistical area (“MSA”). This definition is more restrictive than the standard in effect today, which allows communities with as many as 25,000 residents to benefit from USDA housing programs.

Unfortunately, this change will sweep up many small towns and farming communities into larger metro areas. It’s expected that more than 900 communities will no longer qualify as “rural” under the old definition. According to some estimates, as much as eight percent of the currently eligible rural population could be shut out of USDA’s housing programs. The USDA is now notifying some of the affected communities about their potential loss of access.

In the past, the U.S. Congress has acted to ensure that rural communities remain eligible for USDA housing assistance. Congress should take similar action today to ensure vulnerable Americans in rural communities do not lose access to critical assistance.

In its report, the commission suggests a longer-term legislative solution by recommending that “any area currently classified as ‘rural’ for the purposes of USDA housing programs should remain so at least until after the receipt of data from the decennial census in 2020, provided the area’s population does not exceed 25,000.” With about one-half of our country’s rural population living in an MSA, and with many rural families residing in communities whose populations exceed 20,000, it’s clear that the older, more restrictive standard fails to reflect the changes now taking place in rural America.

Fortunately, a growing number of Members of Congress recognize this problem and are working on a fix. Rep. Jeff Fortenberry (R-NE) has introduced legislation (H.R. 858) grandfathering communities currently eligible for USDA housing programs for an additional ten years. This bill has 63 cosponsors, evenly split among Democrats and Republicans. A bipartisan team of Senators that includes Tim Johnson (D-SD) and Mike Crapo (R-ID) has introduced similar legislation (S. 766) that would also increase the population limit for eligible rural communities from 25,000 to 35,000.

In May, the Senate passed a Farm Bill that included a provision extending the current “rural” definition until the 2020 Census. If enacted, it would also increase the population threshold for all previously eligible communities from 25,000 to 35,000. Likewise, both the Senate and House FY14 Agriculture Appropriations bills include language to extend current law until the end of the fiscal year.

Let’s hope these efforts succeed. With our economy still struggling, now is not the time to ignore the significant housing-affordability challenges of many families in rural America.

2013-10-01 00:00:00
As the USDA reverts to an old definition, hundreds of communities will be shut out of housing programs