Rural Aid Goes to Urban Areas

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By Gilbert M. Gaul and Sarah Cohen
Washington Post Staff Writers
Friday, April 6, 2007

PROVINCETOWN, Mass. -- In a few weeks, artists, lawyers and bankers will begin arriving here for the busy summer season on high-speed ferries that take 90 minutes to make the trip from Boston. They will land at a recently refurbished municipal dock that was built with the help of a $1.95 million low-interest loan from the U.S. Department of Agriculture.

A few blocks away, the Provincetown Art Association and Museum has used nearly $3 million in grants and loans from the Agriculture Department to add gallery space and renovate a historic sea captain's house. A short drive back down the Cape, the department is financing a new actors theater in Wellfleet and recently awarded a grant to a garden center in Hyannis to build a windmill.

Although Cape Cod is only a short trip from Boston and Providence, R.I., and is home to some of the wealthiest beach towns in the United States, to the Agriculture Department it meets the definition of rural America. That means it qualifies for aid originally intended for farmland and backwoods areas that were isolated and poor, struggling to keep their heads above water.

"Provincetown is many things to many people, and to USDA we're rural," said Keith A. Bergman, the town manager. "We'll take it."

He isn't alone.

On Martha's Vineyard, the USDA guaranteed a $4.5 million loan for the popular Black Dog Tavern. The loan, which has since been repaid, was to refinance the tavern's mortgage and expand Black Dog's retail clothing stores. On Nantucket, where the population swells to the size of a small city in summer months, the Agriculture Department provides rental subsidies for families priced out of the local market.

All told, the USDA has handed out more than $70 billion in grants, loans and loan guarantees since 2001 as part of its sprawling but little-known Rural Development program. More than half of that money has gone to metropolitan regions or communities within easy commuting distance of a midsize city, including beach resorts and suburban developments, a Washington Post investigation found.

More than three times as much money went to metropolitan areas with populations of 50,000 or more ($30.3 billion) as to poor or shrinking rural counties ($8.6 billion). Recreational or retirement communities alone got $8.8 billion.

Among the recipients were electric companies awarded almost $1 billion in low-interest loans to serve the booming suburbs of Atlanta and Tampa. Beach towns from Cape Cod to New Jersey to Florida collected federal money for water and sewer systems, town halls, and boardwalks. An Internet provider in Houston got $23 million in loans to wire affluent subdivisions, including one that boasts million-dollar houses and an equestrian center.

The USDA's regulations determining eligible rural communities vary from program to program and are often influenced by Congress. There are 40 separate programs under Rural Development. They include low-interest housing loans, USDA-backed loans for businesses, and grants for communities and nonprofit groups.

In some programs, awards are limited to towns with populations of less than 2,500. In others, it's 5,000, 10,000, 20,000 or 50,000. In still other cases, the USDA bases its decisions on individual streets or blocks, using census data.

"Nobody understands it. I don't understand it," said J. Gregory Greco, a business specialist who works out of the USDA's Rural Development office in Harrisburg, Pa. "You may find one area of town is eligible and another isn't. It can be by street: One side is eligible and another is not. I defy you to give the logic of it."


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© 2007 The Washington Post Company

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