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Disconnect in Rural America - Rural Research Brief

Disconnect in Rural America

Disconnect in Rural America - Rural Research NoteDespite mass adoption, greater functionality, and more access points, the internet remains out of reach for many Americans, especially those in rural communities. One of the primary reasons for this disconnect is geography, where long distances between homes raise the cost of installing the infrastructure for broadband in rural areas, leaving rural homes with less access to fast, reliable internet.

As broadband becomes less a luxury and more a daily necessity, this technology gap can leave segments of the rural population technologically behind, causing slow economic growth, and limited access to advancements in areas, such as telemedicine.

More Than One-Quarter of Rural Homes Do Not Have Internet Subscriptions

Overall, 27 percent of all rural households lack any type of broadband subscription, compared to 17.1 percent of metropolitan households. This amounts to more than 4.7 million rural households without a broadband internet subscription – cellular data plan, cable/DSL/fiber optic, or satellite.

In addition, 129,963 rural households with an internet subscription are still using dial-up. This is 1 percent of all rural households with internet subscriptions, while only .04 percent of subscribers in metro areas have dial-up subscriptions.

The digital gap applies to most types of internet access, as measured by subscription data from the U.S. Census Bureau. Broadband subscription rates, at least in part, reflect access to the internet based on existing infrastructure and affordability. For example, rural households are less likely to have a cellular data plan than metropolitan area households, 57 percent to 70 percent. The one exception to this gap is satellite-based service. Nine percent of rural Disparities in Rural Broadband Subscriptions Across Income Levelshouseholds, compared to 6 percent of metropolitan area households use satellite internet services. Greater isolation and more sparse populations in rural areas likely explain the more common use of satellite technology, where cable or fiber optic services are not available.

The broadband gap between rural and metropolitan area households exists at all income levels. For households with incomes less than $20,000 a year, rural broadband subscriptions are 10 percentage points lower than in metropolitan areas. For households with incomes from $20,000 to $75,000 the gap persists albeit slightly smaller at 7 percentage points. Even at higher income levels – $75,000 and above – rural households have lower broadband subscription rates, 91 percent to 95 percent.

The same disparity in connectivity exists at all age ranges as well. Rural residents under 18 years old are less likely to have a broadband subscription compared to their metropolitan counterparts, 84 percent to 89 percent. The trend follows for residents between 18 and 64 years old, 81 percent to 88 percent, and for those 65 years and older, 62 percent to 73 percent.

So, while income and age may exacerbate the disparity in broadband subscriptions, subscription rates in rural areas continue to trail metropolitan areas across the board.

Rural Homes Lack Device Diversity

Rural households also have fewer computing devices than their metropolitan area counterparts. About 83 percent of rural households have at least one computing devices (smartphone, tablet, laptop, etc.), while 90 percent of metropolitan area households do. Furthermore, less than 67 percent of rural households have at least two devices, compared to almost 75 percent of metropolitan households.

Rural households with access to some type of computing device are more often limited, with access to either a smartphone or a desktop computer, rather than having the capability and benefits of both forms of technology. While seemingly a small issue, fewer devices directly impacts rural households’ ability to take advantage of ever increasing technologies. This means that a rural home buyer with only a smartphone may not be able to obtain detailed information on mortgage products, and a veteran without a smartphone cannot get on the road directions to a VA healthcare facility for an appointment.

What the Disconnect Means

While it may not be surprising that rural households have less broadband access and fewer devices, it can be consequential. Less dense areas where there are large physical gaps in infrastructure is where the internet can be the best utilized. Households without broadband subscriptions are unable to access services effectively, such as online banking and shopping, telemedicine, and more reliable communication.

Investing in broadband infrastructure in rural areas can help diminish the disparities in access between rural and metropolitan households. While initial infrastructure investments may not be deemed profitable by traditional providers currently, small and local municipalities may need to consider creative methods of bringing broadband to their rural communities.

“Rural” in this Note refers to population and territory outside of a Metropolitan Area, as designated by the Office of Management and Budget.

HAC News: November 17, 2017

HAC News Formats. pdf

November 17, 2017
Vol. 46, No. 23

November is Native American Heritage Month • Fannie Mae and Freddie Mac approved for LIHTC equity investments • House and Senate tax bills advance • House passes flood insurance bill • USDA announces Rural Development state directors • CFPB director Cordray resigns • VA offers per diem assistance • Input requested on free access to credit scores • Section 504 handbook revised • Annual Adjustment Factors released for FY18 • Fannie and Freddie met most affordable housing goals in 2016 • 40,000-120,000 HUD Housing Choice Vouchers could be unfunded in FY18 • Research shows federal housing assistance widespread but insufficient — NEED CAPITAL FOR YOUR AFFORDABLE HOUSING PROJECT? —

HAC News Formats. pdf

November 17, 2017
Vol. 46, No. 23

November is Native American Heritage Month.

Fannie Mae and Freddie Mac approved for LIHTC equity investments. FHFA, which regulates Fannie Mae and Freddie Mac, has announced that, effective immediately, it will permit their limited re-entry into the LIHTC market as equity investors. The announcement said most of their investments will be used to facilitate transactions that support underserved markets and complement their Duty to Serve rural housing, affordable housing preservation, and manufactured housing.

House and Senate tax bills advance. On November 16, before adjourning for Thanksgiving, the full House approved its Tax Cuts and Jobs Act, H.R. 1 (see HAC News, 11/6/17), and the Senate Finance Committee approved its version of the bill. The Senate bill would keep the mortgage interest deduction and, unlike the House bill, would preserve the New Markets Tax Credit through 2019. Both bills retain the LIHTC, and the Senate – but not the House – also protects the use of private activity bonds that make 4% tax credits possible. Neither bill makes adjustments to prevent a negative impact on affordable housing investments that would be created by their substantial decrease in the corporate tax rate. In addition, aside from direct programmatic changes to housing-related programs, because the tax bills reduce revenue to the federal government they are expected to result in later funding cuts for domestic discretionary programs including housing.

House passes flood insurance bill. Passed by the full House on November 14, H.R. 2874 would reauthorize the National Flood Insurance Program, which expires December 8, for five years. It would also make changes, including alterations intended to introduce private market competition. Senators are still negotiating terms of their own NFIP bill.

USDA announces Rural Development state directors. A complete list of state directors for RD (and for the Farm Service Agency) was announced by Secretary of Agriculture Sonny Perdue.

CFPB director Cordray resigns. Richard Cordray, director of the Consumer Financial Protection Bureau since its inception, plans to leave his post by the end of the month. It is not clear yet what this will mean for the agency, created by the Dodd-Frank Act and repeatedly attacked in efforts to repeal or revise that law.

VA offers per diem assistance. Nonprofits, state and local governments, tribal governments, and faith-based and community-based organizations are eligible for Per Diem Only funds under the Homeless Providers Grant and Per Diem Program. Applicants can apply by February 21, 2018 to continue providing Transition in Place grants or to begin a TIP housing model to facilitate housing stabilization. For more information, contact Jeffery Quarles, VA, 877-332-0334.

Input requested on free access to credit scores. To learn more about the experiences of consumers, counseling providers, and others regarding access to free credit scores, the Consumer Financial Protection Bureau requests comments by February 12. For more information, contact Irene Skricki, CFPB, 202-435-7181.

Section 504 handbook revised. Several changes to USDA RD’s single-family program handbook impact Section 504 home repair loans and grants for homeowners. For more information, contact an RD state office.

Annual Adjustment Factors released for FY18. HUD’s AAFs are used to adjust Section 8 contract rents on their anniversaries. Contact people vary by program and are listed in the notice.

Fannie and Freddie met most affordable housing goals in 2016. The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, reported recently that Freddie Mac met its single-family and multifamily goals in 2016, while Fannie Mae met its multifamily goals and some of its single-family goals. (The affordable housing goals are separate from the entities’ Duty to Serve requirements.)

40,000-120,000 HUD Housing Choice Vouchers could be unfunded in FY18. The Center on Budget and Policy Priorities has calculated that, due to rising rents and other factors, neither the House nor Senate appropriations bills for FY18 provides enough funding to renew all HUD vouchers currently in use or lost due to shortfalls in FY17. Both bills would add vouchers for specific populations, but not enough to offset the losses.

Research shows federal housing assistance widespread but insufficient. “Federal Rental Assistance Provides Affordable Homes for Vulnerable People in All Types of Communities,” published by the Center on Budget and Policy Priorities in partnership with HAC, covers the scope and limitations of federal rental assistance programs. The analysis uses HAC’s definition of “rural” places, which is based on Census tracts rather than on entire counties, as metropolitan and nonmetro designations are. Due primarily to funding levels for federal housing programs, the research found that, for every assisted household in the U.S., roughly three renter households pay half or more of their income for housing. Assistance is distributed proportionally, relative to need, across rural, suburban, and urban places. In rural areas, 70% of federal rental assistance is from project-based programs, while in urban and suburban places, use is evenly split between tenant-based and project-based.

NEED CAPITAL FOR YOUR AFFORDABLE HOUSING PROJECT?

HAC’s loan funds provide low interest rate loans to support single- and multifamily affordable housing projects for low-income rural residents throughout the U.S. and territories. Capital is available for all types of affordable and mixed-income housing projects, including preservation, farmworker, senior, and veteran housing. HAC loan funds can be used for pre-development, site acquisition, site development, and construction/rehabilitation. Contact HAC’s loan fund staff at hacloanfund@ruralhome.org, 202-842-8600.

Please note: HAC is not able to offer loans to individuals or families. Borrowers must be nonprofit or for-profit organizations or government entities (including tribes).

Reports

From Service to Shelter: Housing Veterans in Rural America

No veteran who has risked his or her life to protect our homes should return to find that they are not able have their own. For their sacrifice, it is imperative that we ensure our veterans have access to safe, affordable, and secure housing. This can be particularly challenging in rural America due to vast geographies, limited resources, and less social service infrastructure. The overall demographic picture of veterans will undergo major shifts in the coming years. As two wars overseas wind down, more veterans will be coming home. Returning to all corners of our nation, they will have housing needs to be addressed. The demographic changes associated with the baby boom generation and the overall graying of America will also shape veterans housing needs. The aging veteran population will have its own unique challenges. Ensuring that their housing needs are met is the least we can do to thank them for their service to this country.