For decades, the rural housing program has been a mainstay of national and state efforts to improve the living conditions of low-income people in the U.S. At the federal level, Congress adopted a series of initiatives during the 1930s to stabilize rural families on family farms and rehouse the Depression-era rural poor, which laid the groundwork for a national rural housing program. At the state level, since the mid-1970s, the state of California has operated programs targeted specifically to small towns and rural communities and amelioration of the dismal living conditions of farm workers and Native Americans.

At the forefront of these efforts in California has been a strong network of community-based, nonprofit and public organizations and agencies located throughout the state and delivering a variety of housing services. These services include: acquisition, rehabilitation, construction, and operation of rental housing for low-income families, the elderly and disabled, homeless, and farm workers; construction supervision and loan packaging for families participating in owner-build programs; rehabilitation and retrofits of existing owner-occupied homes; installation of sewer, water, and other infrastructure improvements; provision of supportive services; and foreclosure prevention intervention, homeownership counseling, financial literacy training, and asset-building. These services have been funded by an array of federal, state, and local government housing and community development programs, lending institutions, such as banks and nonprofit financial intermediaries, private investors, and others.

The California Coalition for Rural Housing (CCRH) was created in 1976 to represent the interests of this network of rural affordable housing providers and their clients and ensure continuing funding and supportive land use and planning laws. CCRH is the oldest statewide affordable housing coalition in the U.S. Our members include some of the oldest nonprofit housing development organizations in the country, groups that emerged in the 1960s and 1970s to provide decent and affordable homes for California farm workers and other rural poor. They include the largest producers of mutual self-help housing in the country, a precursor of Habitat for Humanity. They also include some of the largest operators of farm labor housing for permanent and migrant workers.

It is this highly successful network of sophisticated, mission-driven, rural housing providers that is currently seriously threatened by shrinking funding resources. The threats are manifold. But, with the threats come several new opportunities.

Changing Rural Definition Threatens Loss of Millions of Dollars of Federal Housing Assistance in California

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According to the U.S. Department of Agriculture (USDA), nearly 100 California communities -- and more than 900 communities across the nation -- will lose their eligibility for USDA rural housing programs on October 1, 2012. Of the 97 California communities that will be impacted, 64 are cities and 33 are census-designated places in unincorporated areas. These communities are scattered throughout the state, but more than half (50) are located in the San Joaquin Valley (31) and Inland Empire (19). Not coincidentally, these two regions have been major magnets for population growth over the last several decades. A current list of communities can be accessed at http://ruralhousingcoalition.org/wp-content/uploads/2012/02/USDA-List-of-Impacted-Communities_06272012.pdf. The USDA could release a final list as early as August.

In relation to purposes of housing program eligibility, the USDA generally defines ‘rural’ as communities (1) with populations under 10,000 in metropolitan and nonmetropolitan counties that are not part of or associated with an urban area, and (2) with populations between 10,001 and 20,000 in nonmetropolitan counties, if they also have a serious lack of mortgage credit.

Since the 1990 U.S. Census, however, federal legislation has ‘grandfathered’ in communities that met population thresholds for eligibility in the 1980 Census and did not exceed 25,000 in any successive Census counts. This provision is due to sunset on September 30, 2012. Effective October 1, 2012, any community with 2010 Census population exceeding the aforementioned limits will be ineligible, even if they are still essentially rural in character. Eligibility for most USDA rural housing programs, with the exception of farm labor housing, is linked to these population limits.

In California, the impacts will be devastating. Unlike in many eastern, mid-western, and southern states, most of California’s rural communities are located in metropolitan counties (Note: Nationwide, about half of all rural residents live in metropolitan counties). County sizes are also larger. Thus, a county like San Bernardino, the largest in the contiguous U.S. with more land area than nine states, is considered metropolitan because it is anchored by the City of San Bernardino. Yet, it has vast areas inhabited by sparse populations living in small towns and unincorporated areas. The County of Fresno, the largest agricultural county in the U.S. in dollar value of production, is also considered metropolitan. If the sunset is allowed to expire, rural and agricultural communities that exceed 10,000 people within these counties according to the 2010 Census will no longer be eligible. A smaller number of communities with populations between 10,000 and 20,000 in nonmetropolitan counties will continue to be eligible, but communities between 20,000 and 25,000 in population will no longer be eligible.

The practical effect is that Rural California will lose millions of dollars in USDA housing assistance to other states for single-family home purchase, self-help owner construction, housing rehabilitation, and rental housing production. The loss of rural eligibility does not mean that these communities will now ‘graduate’ to other federal housing programs serving larger communities. The highly decentralized and customized housing assistance, including direct loans, that has been the hallmark of the USDA and its system of regional and county offices for over 60 years, is irreplaceable. The U.S. Department of Housing and Urban Development (HUD) has an important role to play in rural communities, but its programs are not equivalent. And, its delivery system and orientation are mostly tailored to larger urban places. In other words, there is no substitute for a robust and present USDA.

In addition, the loss of USDA housing assistance in many rural communities will create financial hardships for the nonprofit housing organizations that have dutifully served these communities for decades. For example, California has led the nation since the 1960s in the production of mutual self-help housing. Via this method, for the better part of a year, groups of eight-12 low-income families build their own homes in subdivisions under the supervision of a local nonprofit. Loans and grants made by the USDA pay for land acquisition and improvement, construction management, and construction costs. Upon completion of construction, the ‘sweat equity’ earned by families through their labor serves as the down payment to secure a USDA direct mortgage with an interest rate as low as 1 percent. Typically, these organizations purchase and ‘bank’ land while it is still affordable many years before construction.   If this land is no longer within the boundaries of an eligible community, self-help home construction will come to a complete standstill and these organizations will be left with land they may not be able to develop.

To address this urgent problem, rural housing advocates around the country have mobilized. Through the leadership of the National Rural Housing Coalition, legislative language has been proposed to resolve the issue in the short and long terms. In the Senate, Senator Ben Nelson (D-Nebraska) is pushing for language in the Farm Bill (S. 3240) that would extend the grandfather until the 2020 Census and raise the population limit to 35,000. Proposed language in the Senate FY 13 Agriculture Appropriations Bill (S. 2375) would extend the current grandfather for another year. Congressman Jeff Fortenberry (R-Lincoln, NE) plans to introduce a similar amendment in the House FY 13 Agriculture Appropriations Bill (H.R. 5973). To date, it has 14 co-sponsors and bipartisan support.

While the rural definition is one of the few issues that is sure to garner votes from both sides of the aisle, the outcome is uncertain. Given the election season, there is real doubt whether the FY 13 appropriations bills in either house will be acted upon before October 1, 2012. A series of continuing budget resolutions may be the result leading up to and following the election until a new Congress is seated and the overarching issues of whether or not to extend the Bush tax cuts and avoid across-the-board budget cuts (sequestration) are resolved. The Farm Bill is also in question. In the absence of a quick fix, hundreds of rural communities will be left in limbo and new home production for many needy rural residents will grind to a virtual halt.

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Since 1993, Dr. Robert Wiener has been a lecturer in the Department of Human and Community Development, where he teaches in the area of housing and social policy and conducts a summer abroad course on Housing and Community Development in Barcelona, Spain. In 2004, Dr. Wiener was recognized as a “Distinguished Educator” by the UCD student government. In addition, he has been the Executive Director of the California Coalition for Rural Housing (CCRH), one of the oldest state low-income housing coalitions in the country, for 27 years Under his leadership, CCRH has played a major role in federal and state housing policy and program efforts in rural housing, farm labor housing, housing preservation, and other areas of housing provision. In 1999, he co-edited and -wrote a landmark book on Housing in Rural America and is currently working on another book on affordable housing practice in California. He has a doctorate in urban and regional planning from UCLA. In 2006, he was honored as the “Inspirational Nonprofit Housing Leader of the Year” by the Nonprofit Housing Association of Northern California and as a “Housing Hero” by the Cabrillo Economic Development Association.

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