WESLACO, RGV – The Rio Grande Valley will be losing hundreds of millions of dollars that come into the area for housing, infrastructure, and community programs due to a change in the way rural cities are defined.

Under the new definition, a small city that sits adjacent to a large city will no longer be classified as rural by the U.S. Department of Agriculture. And without such a classification a small city will find it much harder to get USDA Rural Development grants and low-interest loans.

An example of a city that would lose out is Hidalgo because it sits adjacent to McAllen. Last October, Hidalgo received a $2.9 million grant and a $3 million loan from USDA to expand its wastewater treatment facility. USDA Rural Development State Director Francisco ‘Paco’ Valentin, Jr., visited Hidalgo to make the announcement.

Another example of a Valley city that will lose its “rural” designation is Penitas. Under the new rules it is deemed close enough to Mission to lose the classification. Last July, USDA Under Secretary Judith Canales visited Penitas to announce USDA was providing $18 million for a new water and wastewater treatment system. The system will benefit 1,500 colonia residents.

The Lower Rio Grande Valley Development Council on Wednesday passed a resolution opposed to a USDA rule change on what constitutes a 'rural city.'
The Lower Rio Grande Valley Development Council on Wednesday passed a resolution opposed to a USDA rule change on what constitutes a ‘rural city.’

“This change in the definition of what constitutes a rural city will be devastating for the small cities in the Valley,” said Rolando Vela, chair of the RGV Regional Small Cities Coalition and city manager for the Town of Laguna Vista.

“It is very important for our small cities to be able to continue to apply for loans and grants from USDA. But this issue is not just about the small cities. It is about the future of the Valley and our ability to grow,” Vela said.

The Regional Small Cities Coalition recently passed a resolution opposing the USDA rule change. On Wednesday, Vela spoke at a meeting of the Lower Rio Grande Valley Development Council. He successfully urged the LRGVDC to pass a similar resolution.

The LRGVDC provided the Guardian with a list of the cities that will be impacted by USDA’s rule change. Cities that have housing programs funded by USDA that stand to lose out include Alamo, Alton, Donna, Hidalgo, and La Joya. Cities that have business programs funded by USDA that stand to lose out include Alamo, Alton, Donna, Hidalgo, La Feria, Mercedes, Palmview, Penitas, Pharr and Weslaco. Cities that have community programs funded by USDA that stand to lose out include Alton, Hidalgo, and Raymondville.

“The rural city designation for the smaller Valley cities is very important when we apply for grants because it gives us an extra designation and higher points for our applications,” said Steve Brewer, president of the LRGVDC and mayor of La Feria.

“It is important to remember, small cities do not get entitlement money. We really need grants, especially through USDA. We borrow money from them. We do a lot of things with USDA that are critical to our growth.”

Brewer said representatives from the Valley’s small cities have been in discussions with the offices of Congressmen Rubén Hinojosa and Filemon Vela, and U.S. Sen. Ted Cruz.

“Our congressmen are planning to insert language in the Farm Bill but that it is a complicated process,” Brewer said. Asked when things would get serious, he replied: “We are probably okay for a few more months, until September, but we have got to work now.”

Brewer said small cities in the Valley could still apply for grants and low-interest loans from USDA Rural Development under the rule change but they would likely not score high enough to be successful. “USDA helps us with housing programs, it helps us with infrastructure. It helps us with a lot of things. We are talking about hundreds of millions of dollars across the Valley,” Brewer added.

In 2000, Congress enacted a grandfather clause that allowed a community that was “rural” in 1990 to continue to be eligible for USDA Rural Development funding until the 2010 Census, as long as it had a population below 25,000. However, the grandfather clause is set to expire and under the new definition, 923 communities currently eligible for USDA Rural Development programs will be cut off from what is often their only source of federal funding.

The LRGVDC resolution points out that the Valley has 44 communities and 33 of these have a population of 20,000 or less. The resolution says the change in USDA’s ‘rural definition’ will “severely impact” the cities of Alamo, Donna, Hidalgo, La Feria, La Joya, Mercedes, Palmview, Penitas, Pharr, Sullivan City and Weslaco.

The LRGVDC wants the USDA rule change to be altered to include areas that are rural in character. It wants the agency to use criteria such as population density and economic conditions. Small communities that have chronic unemployment in excess of statewide averages, a sudden loss of employment due to a natural disaster or the loss of a significant employer, and those with chronic poverty should be included, the resolution states.

USDA issued its 21-page “Report on the Definition of Rural” in February. Its conclusion reads:

“The USDA Rural Development mission area provides financial and technical assistance through 40-plus programs to support economic and community development for rural residents and their communities. Simplifying the eligibility determination for these communities is a key step in the streamlining program implementation and providing a more transparent process for accessing financial and technical assistance from the Mission Area.

“Having a 50,000 population limit for all programs would remove confusion over what constitutes a rural area and would encourage more multi-jurisdictional collaboration. The convergence of a new 2010 Census data adoption and new Farm Bill development offer a unique opportunity for a long-term solution on hose best to ensure that resources appropriated to Rural Development are appropriately targeted to rural people and places of greatest opportunity and greatest need.”