Van Buren, other Arkansas cities obtain Rural Development loan extension

For realtors and mortgage loan officers fearing the impacts of Van Buren's loss of eligibility for the Rural Development Loan program, it appears the city and others across Arkansas have been given a one year extension before any changes occur.

The news came from U.S. Sen. Mark Pryor, D-Ark., who released a letter from Department of Agriculture Secretary Tom Vilsack granting Van Buren, Russellville, Cabot, Paragould and Searcy an extension for the program.

According to a press release from Pryor's office, "USDA Secretary Tom Vilsack agreed to provide a one-year delay on 'rural in character' designations pertaining to a rural housing program that enables low-income Arkansas the opportunity to become homeowners."

News first came in late July that Van Buren would lose eligibility for the loan program, which allows individuals meeting requirements to be able to purchase a home for no money down.

Vickie Davis, an agent with Sagely & Edwards Realtors in Fort Smith, told The City Wire that eligibility requirements state that a community with no more than 35,000 residents must not be considered part contiguous part of a metropolitan statistical area. If the Arkansas River did not divide the two cities, Van Buren would be a contiguous neighbor of Fort Smith and is included in the MSA.

A meeting held July 31 at the USDA's office on Brooken Hill in Fort Smith featuring USDA State Director Lawrence McCullough, confirmed the loss of the loans for the community of 23,000.

Pryor criticized the USDA decision to eliminate Van Buren and the other Arkansas communities.

"USDA was out of bounds in denying these communities access to rural housing programs. Suspending its actions is the right thing to do. It allows Arkansas households to continue to benefit from this successful housing program and provides time for stakeholders to be part of the decision-making process,” said Pryor. “I appreciate Secretary Vilsack’s willingness to ensure the ‘rural in character’ designations are done right.”

Vilsack, in a letter to Pryor, said "work on determinations and any designations that would make a place ineligible solely based on 'rural in character' criteria" would be delayed until Sept. 30, 2015, ensuring another year of eligibility for the five communities in question.

"As you (Pryor) noted, USDA's rural housing programs provide many very low- and low-income rural Americans the opportunity to become successful homeowners. Therefore, "rural in character" designations have a direct impact on the lives of individuals, well-being of households, and housing options in communities across the country. I welcome this opportunity to review decision-making processes related to 'rural in character' determinations," Vilsack wrote to Pryor.

He said factors included in determinations "typically include population, density, and other data, some of which is subjective, as well as feedback from the public and stakeholders."

During the one year suspension, Vilsack said he would direct the Rural Housing Service (RHS) to "review and modify its determination procedures." Vilsack said situations like the Van Buren meeting would be addressed during this year-long suspension.

"RHS will also evaluate and standardize its communications processes to ensure there is appropriate opportunity for public comment and consideration before final designations are issued," he wrote.

Following is the full text of Vilsack's letter to Pryor:

"Thank you for your letter of August 5, 2014, concerning "rural in character" designations and the impact these designations can have on communities' eligibility for benefits under Department of Agriculture (USDA) Rural Housing Service (RHS) Section 502 Single Family Housing direct and guaranteed loan programs. In response to your concerns and others recently voiced, through September 30, 2015, I am suspending work on determinations and any designations that would make a place ineligible solely based on "rural in character" criteria.
 
"As you noted, USDA's rural housing programs provide many very low- and low-income rural Americans the opportunity to become successful homeowners. Therefore, "rural in character" designations have a direct impact on the lives of individuals, well-being of households, and housing options in communities across the country. I welcome this opportunity to review decision-making processes related to "rural in character" determinations.
 
"Factors considered in making "rural in character" determinations typically include population, density, and other data, some of which is subjective, as well as feedback from the public and stakeholders. Final "rural in character" designations are made at the discretion of State Offices, which have ready access to local information and residents, as well as knowledge of community characteristics. To ensure the reasonableness of these designations, the RHS program handbook (HB-1-3550 Paragraph 5.3C) directs State Offices to notify the public of any designation changes proposed.
 
"As stated above, through September 30, 2015, I am suspending work on determinations and any designations that would make a place ineligible solely based on "rural in character" criteria. During this suspension, RHS will review and modify its determination procedures. RHS will also evaluate and standardize its communications processes to ensure there is appropriate opportunity for public comment and consideration before final designations are issued. Absent further legislative changes, all other eligibility updates resulting from the newly enacted "rural area" definition in the 2014 Farm Bill will proceed for fiscal year 2015; on October 1, 2014, RHS will update the program area eligibility maps with only those changes unrelated to "rural in character" ineligibility determinations.

"Thank you again for sharing your concerns on this matter and for helping to make USDA's housing programs a success."