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USDA Programs Boost Communities, Rural Minnesota Economy

January 07, 2010 By Lee Egerstrom, Economic Development Fellow Lee Egerstrom

In all the talk about stimulus packages, Keynesian pump priming and public investment in infrastructure, existing programs for people in rural Minnesota are frequently overlooked. That can be costly because tried and true programs are in place to stimulate local economies, strengthen communities, help stabilize local housing markets and assist local entrepreneurs create and expand businesses.   
These programs were giving an extra boost this past February when Congress approved and President Obama signed the American Recovery and Redevelopment Act in response to the severe U.S. recession. More federal money was made available to use USDA Rural Development programs to stimulate the local economy through as many as 40 various federal programs.
Despite these Keynesian-type actions, however, a problem persists in getting rural people to understand the breadth of programs that are available, said Colleen Landkamer, state director for USDA Rural Development.

She was at a conference with rural community leaders recently when a central Minnesota economic development representative complained that a technology business in her community had trouble finding financing for equipment improvement. When Landkamer suggested her agency might be able to help, the local official said, "But (we're) not involved with agriculture."

"We still have a problem getting people to realize (USDA) Rural Development isn't just agriculture," Landkamer said.

Minnesota 2020 earlier reported on the U.S. Small Business Administration programs that are helping Minnesota entrepreneurs launch and expand businesses against recession pressures and problems finding venture capital ("Minnesota's Small Banks Deserve Credit for Keeping Entrepreneurship Afloat." Nov. 16, 2009.). This companion report looks at USDA Rural Development programs and opportunities for rural Minnesota.

The existence of rural housing and economic development programs are outgrowths of recognition that agriculture and the rural economy are interrelated. Since some of the programs are extensions of past economic crisis responses in America, including the Great Depression, federal lawmakers and national administrations have recognized that linkages between community and agriculture are fragile.

Congress and the federal administration, however, returned to those tools with an infusion of funds in the Recovery Act. More than $740 million in loans, grants and loan guarantees were made available in Minnesota in the past fiscal year to aid recovery, aid communities, and help businesses.

A sampling of these programs include a $100,000 grant to the Renville County Housing and Redevelopment Authority and Economic Development Authority to help local businesses, a $90,000 grant to the city of Frazee to help local tourism and manufacturing, $14.1 million in grants and aid to Granite Falls area governments and businesses from various programs, a $3 million loan guarantee for a new YMCA center in Worthington, and a $600,000 loan to Western Community Action in Marshall to convert a vacant building into a headquarters for the multi-county service organization.

Along the way, it also made a $99,335 grant to Minnesota State Community and Technical College at Detroit Lakes for its business and entrepreneurial services center, a $100,000 grant to Watonwan County at St. James to help establish a revolving loan fund for small businesses, and a $1.3 million loan guarantee for an 18-unit apartment complex at Cloquet.

With these tools, former county commissioner Landkamer said she's now arrived at "the dream job. Everything we do helps people and communities."      
Landkamer was a Blue Earth County commissioner for 20 years before President Obama nominated her to the USDA post in January and she took office in July. While in county government, she served as president of the National Association of Counties (NACo) in 2006-2007, and served key positions with the Minnesota Counties Research Foundation, the Rural Policy Center, Greater Minnesota Housing Fund, Minnesota Transportation Alliance, Minnesota Rural Partners, State Community Health Advisory Committee, Minnesota Health Improvement Program, the Children, Families and Learning Planning Committee, and the Delivery of Correctional Services State Committee.  

She succeeds Steve Wenzel, a former state representative from Morrison County who had extensive service linking central Minnesota communities with state and federal programs.

A snapshot of USDA Rural Development programs includes Housing and Community Facilities, Business and Cooperative development and Utilities categories.

A summary of the housing programs in the past fiscal year prepared by USDA communications officer Adam Czech shows the agency helped 4,228 families with $467.5 million in grants and loan guarantees for single-family housing in mostly small population communities and farms. In addition, about half that amount was made available for multi-family housing guarantees and grants and housing preservation grants in rural Minnesota communities.

For entrepreneurial development and rural business expansions, USDA provided about $56.8 million in direct loans, loan guarantees and grants to rural businesses and cooperatives under various programs. And what may broadly be described as infrastructure, USDA provided $79.5 million in Utilities program assistance to Minnesota communities in the last fiscal year.

The latter included grants, loans and loan guarantees for communities to develop water and waste disposal and management systems, electric and telecommunications utilities, distant learning and telemedicine communications, and rural broadband loans and loan guarantees.

All of these programs go to the heart of making livable and sustainable communities, Landkamer noted. And it will get even better; USDA has a nationwide study underway mapping where broadband service is in place and where it is needed. The University of Minnesota is part of that study and is mapping Minnesota broadband service, she said.

Going forward, Landkamer said she wants to draw on her past county experiences to help make rural people more aware of programs that are available. And, she said, she wants USDA Rural Development to work more closely with state and local development organizations, nonprofits, housing groups and researchers to make the programs more effective.

As an example of that, Landkamer and counterparts from North Dakota and South Dakota held a three-state forum in Wahpeton, N.D. to explore ideas for creating jobs and economic development.
In turn, state and local groups need to engage USDA Rural Development and the U.S. Commerce Department's Small Business Administration (SBA) to learn what tools exist and how they might be used to stimulate the state's economy.

The American Recovery and Reinvestment Act, signed into law in February, is pumping federal funds into communities and states where local programs and state budgets fall far short of meeting needs and stimulating economic activity. USDA and SBA have "shelf-ready" programs that are known to work. Let's use them.


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