A small part of the nearly $1 trillion farm bill with roots in Dodge City changes how the federal government defines rural and will have big implications for the west Kansas housing market

In the fifth year of working on a small amendment to the enormous federal Farm Bill, then-Assistant City Manager Cherise Tieben was sitting on a boat on Lake Texoma in May of last year, not catching any fish, and searching her phone for allies.

It was absurd, the thinking went, that the "beef triangle" cities of Dodge City, Garden City and Liberal weren't considered rural enough by federal standards to get access to USDA home loan programs.

By that point, the local housing market had been tightrope taut for more than half a decade and the lack of affordable housing was having a cost: the young professionals and technical workers city departments, the school district and employers fought to attract were leaving town frustrated with rent prices, roommates and home ownership just out of reach.

Rumors persisted among realtors and city staff members that banks were encouraging home-seekers to build outside city limits where the federal loan programs were available.

Instead of landing striper on the lake, Tieben was fishing Oklahoma's 3rd Congressional District, home of House Agriculture Committee Chairman Rep. Frank Lucas, for friendly connections. She found one in Ponca City Manager Craig Stephenson. Stephenson was the assistant city manager in Dodge City in the late 1980s.

"Remember me?" Tieben asked him. "I've got a favor to ask."

In Sen. Pat Roberts, Dodge City and the other of the Southwest Kansas Coalition cities had a strong ally in the upper chamber of Congress. In 2012, Roberts had included a change of the rural definition in his version of the farm bill and had continued to argue for the modification.

The Southwest Kansas Coalition also received help from legislative specialists in the offices of Sen. Jerry Moran and Rep. Tim Huelskamp. Though only Moran ended up voting for the bill, the group constituted a strong bloc in both chambers that enabled the small part of the massive bill to survive the contentious legislative process.

Under changes to the Farm Bill that just passed the House and Senate and is awaiting a signature from the president, the three largest cities in southwest Kansas will be considered rural enough for residents to get access to those programs, making home ownership accessible for education-rich and credit-worthy but cash-poor young adults.

It will also make it less risky for developers to build the kind of low-to-moderate income rental properties the city has been desperate for.  

"We were basically told in the beginning it would never happen," Tieben said of the bill amendment.

When she got news the bill had survived the Senate, Tieben said she was surprised her cheering wasn't heard inside the Daily Globe newsroom a block down Second Avenue.

A shot for the local housing market

"I'm not sure you know what you've accomplished," City Commissioner and realtor Brian Delzeit told Tieben. "It's bigger than what you think it is."

When the hospital recruits nurses and other workers, Delzeit is its go-to for showing them the area. He hears directly from potential employees their reasons for not taking job offers.

At the first stage of their careers, "they are essentially broke," but have good credit and good earning potential.

There's a risk that high rental prices will essentially keep them renting, siphoning funds that could be paying a mortgage at a lower rate, instead.

Under one type of rural home lending assistance Dodge City residents are now able to receive, homebuyers can get a loan for the entire cost of the property, that is, without a down payment.

Under the first time homebuyer program, which was renewed last Friday after a lapse in 2010, buyers can also receive up to 4 percent the cost of the loan toward the down payment and closing costs.

Marry the two together, Delzeit said, and you can get credit-worthy buyers in a home with no money down and no closing costs. Sellers win, too, as they no longer need to haggle over closing costs with the buyer: one less thing to worry about, and it can save buyers from having to produce $7,000 to $8,000 in cash per $100,000 before they can close on a house.

"This is something that is going to be a marketing tool that all the businesses in Dodge can use when it comes to their recruiting efforts," Delzeit said.

And "It should give confidence to the builders there is a new revenue stream, a new opportunity of buyers who can come through the front door."

The rural development loans will also help buyers who can't put down 20 percent of the total cost and have to pay for private mortgage insurance, which on a $200,000 property, can cost between $180 and $200 per month. Through the USDA program, those costs are about two-thirds smaller, Delzeit said.

Delzeit points to the next phase of the Summerlon development with owner-occupied duplexes expected to sell between $120,000 and $140,000.

"This could be a really grand avenue for helping to sell that product in an expeditious manner," he said, especially to those recent grad nurses and teachers.

Something that could pass

Tieben and the rest of the city leaders and staff members in the Southwest Kansas Coalition were concerned of pushback from the smaller communities that fell within the farm bill's definition. If the cutoff for "rural" was 20,000, why would those cities and town support legislation that would ultimately put more hands in a bucket that would keep the same volume?

Bob Raposa, the executive secretary of the National Rural Housing Coalition, a Washington-based advocacy group, said ultimately the change to the legislation will add fewer than 100 communities to the definition of rural.

The definition of rural is a small part of a big document, Raposa said.

His group, and legislative aides of the elected officials, helped shift the language of the proposed bill amendment away from the original goal of the southwest Kansans. Under that definition, rural would be defined as communities under 50,000 that fall 100 miles outside of a metropolitan statistical area.

However, about half the residents living in rural communities live inside metropolitan areas, Raposa said. Sprawl is to blame, but farmland is farmland.

"We thought this would be tough enough to do without coming up with a whole new way to categorize rural communities," Raposa said.

Shifting the numbers is comparatively easy. Changing the entire language used to define "rural" was a fight nobody wanted if they wanted to see the legislation survive.

Raposa is happy with the victory. He thinks it'll help the kinds of modern rural communities that Dodge City, Garden City and Liberal have become by shrinking the gap between HUD programs, which mostly helps cities above 50,000 residents, and the USDA programs, which topped out at 25,000 residents.

"We think these programs are quite successful with very little cost to the tax payer put people in decent housing," Raposa said.

Now to see if it works

Some caveats:

First, President Barrack Obama must sign the bill into law, though he is expected to do so.

Second, the fears of too much demand on a program that has stayed the same size could do bizarre things to the housing market as buyers time purchases to twice-annual re-funding of programs.

Third, the passage of the bill was a defeat for five-sixths of the Kansas delegation. The rural development portion of the bill is miniscule when compared to the federal supplemental nutrition program, farm insurance, direct payments (which were repealed), a host of niche giveaways, and every other facet the national all-things-food-and-farmland law encompasses.

Roberts championed the inclusion of the new definition of rural in the final language of the bill, he ultimately did not vote for it.

“As I said when the conference report was considered by the full Senate, the negatives of this bill outweigh the positives,” Roberts said. “This Rural Development provision was one of the positives. It will help rural communities like Dodge City qualify for USDA Rural Housing loans and grants that provide affordable housing for those in need. I regret that in the end I was not able to support the overall Farm Bill.”

But city leaders, elected and hired to advocate for their cities' needs, are excited for the passage.

"Housing is extremely important and having a full complement of tools to help facilitate development is important to our rural population centers," Garden City Manager Matt Allen said. "Nobody questions the fact that Garden city, Dodge City and Liberal are rural, but for decades we've been on the outside looking in with some of the incentives used to develop rural housing.

The implications of the rural development change have not been fully explored by Ponca City's Stephenson, but until now, "it's been a challenge" as bank regulations have changed and housing growth has slowed in his city, which has an available inventory of 100 homes.

"We're happy that our residents will now be able to participate in these programs," Stephenson said. "We think it'll be good for vitality and growth … and help raise the living standard of our community."