Stimulus funds aimed at rural areas dumped into metro regions

Nearly a quarter of the stimulus aid assigned to rural areas— most of it in loan guarantees for home buyers— has actually gone to large metropolitan areas, reports USA Today. The money has been channeled to outlying regions of metropolitan areas with more than a million inhabitants.

The problem, according to the report, lies in the definition of “rural.”

(Flickr, cc; tipiro)
(Flickr, cc; tipiro)

Congress defines what qualifies as rural. The rules vary from program to program, but most focus on an area’s population and how close it is to a large city. Small towns in metro areas can qualify for rural home loans if the Agriculture Department decides they are “rural in character”…

Still, the result is that money originally intended for rural areas is also streaming into major population centers. Metropolitan Phoenix has received $191 million so far, federal records show; greater Dallas has received $110 million. Counties around New York City received $32 million.

Queen Creek, a desert boomtown about 45 minutes from downtown Phoenix, typifies the paradox. The town’s population mushroomed from barely 3,700 at the start of the decade to more than 24,000 last year, making it the nation’s eighth-fastest-growing community. Yet Agriculture Department maps show much of the town remains eligible for rural loans, under which middle-income buyers can purchase houses with no money down.

The news follows an April report from the U.S. Department of Agriculture that found the Rural Utilities Service, charged with expanding broadband access in rural areas, was still giving money to urban areas. The Department noted they were particularly concerned because the Rural Utilities Service was scheduled to receive an additional $2.5 million from the stimulus package.

Wrote ProPublica:

The Rural Utilities Service’s broadband program faced heavy criticism in 2005 when auditors found irregularities [2] (PDF) with a quarter of the funds the program had received in its first four years of operation. In one case, the program loaned $45 million to wire affluent subdivisions in the Houston suburbs—including one that was built around a golf course and another outside one of the richest cities in Texas.

Monday’s report found that the Rural Utilities Service continues to grant loans to areas that already have broadband service and to communities near major cities…

More than 90 percent of the loan applications the agency has approved since the critical report in 2005 went to areas that already had broadband service, the report said. “OIG remains concerned because the overwhelming majority of communities…receiving service through the broadband program already have access to the technology,” [Assistant Inspector General Robert W. Young] wrote.

That matters for a state like Colorado—which has real gaps in broadband service.

At the recently-built, $21 million Weld Central High School, for example, students can’t download music or watch streaming video. They have to take turns going online to look at colleges. And for that, the district pays $8,000 a month, receiving only 7.5 Mbps of bandwidth, or 3.5 kilobits per student.

Maybe Weld should build a world-class golf course next to the school.

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