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Rural Aid Goes to Urban Areas

Although Harrisburg is the state capital and is surrounded by growing suburbs, businesses still qualify for USDA-backed loans because the city's population -- 48,000 at the last census -- is 2,000 below the cutoff for certain programs. In 2004, the USDA guaranteed a $1.2 million loan for a new Hyundai dealership near a major interstate there. There are about a dozen other car dealers in the same Zip code, according to government data.

A few miles away, in Camp Hill, the USDA backed more than $5 million in loans to Coliseum Entertainment Group, which recently opened a restaurant and entertainment complex. And in State College, home of Pennsylvania State University, the USDA guaranteed a $4.6 million loan to United Entertainment of St. Cloud, Minn., to open a multiplex movie theater. A loan guarantee from the government allows businesses to borrow money at cheaper rates.

Patrick Myers, the president of Coliseum Entertainment, said he learned about the loan program from his bank.

"Apparently, it goes by population," he said of the "rural" designation. "I guess if we compare it to Washington, D.C., we are, but if you compare it to Kansas, we're not."

The Growing Program

The USDA's role in rural development dates to the Dust Bowl in the 1930s, when thousands of farmers went broke and many of the small communities where they lived dried up like the ground beneath their feet.

President Franklin D. Roosevelt responded with programs to resettle farmers and bring electricity to isolated corners of the nation. Rural electrification was a resounding success that brought many communities out of abject poverty. Over the years, programs followed for housing, telephones, business loans and community grants -- and the eligibility criteria expanded.

Today, 40 separate programs operate under the USDA's Rural Development division. They are included as a separate title in the Farm Bill, the government's five-year master plan for agriculture, currently up for renewal before Congress. There are programs for broadband Internet access, telemedicine and long-distance learning. Rural Development also provides billions in housing loans and rental subsidies for residents in more than 400,000 apartments scattered across the country.

The agency operates programs in every state, Puerto Rico and the U.S. Virgin Islands and has nearly 7,000 employees. Most states have multiple offices. New Jersey, for example, has five, as well as a satellite operation near the beach. Almost 50 employees in New Jersey work on sewer, housing and business programs, awarding loans and grants of nearly $50 million a year.

Thomas C. Dorr, the undersecretary for Rural Development, describes the division's role as the "venture capitalist for rural America." The program provides "equity, liquidity and technical assistance to finance and foster growth" and preserve rural communities, the political appointee said in testimony before Congress.

But as the program has expanded, it has become more complicated, bureaucratic and secretive. The USDA instructed its employees not to answer questions from a Post reporter, steering all queries to Washington. Some documents obtained under the Freedom of Information Act were heavily redacted, so reporters could not determine the amounts of loans or locations of businesses. New Jersey officials blotted out names and figures in one of their own news releases.

In general, USDA officials maintain that they are parceling out aid to rural areas according to the rules laid out by the department and Congress. "Rural America is vast," covering 75 percent of the nation's land mass, Dorr testified in October.

Members of Congress take a keen interest in Rural Development programs. Often a member will arrange a photo opportunity when the Agriculture Department awards a grant in the lawmaker's district. In several instances, members have interceded so towns and cities that would not otherwise be eligible could still get money, records and interviews show.


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