History

BRIEF HISTORY OF TEXAS RURAL COMMUNITIES, INC.

Texas Rural Communities, Inc. (TRC) was one of about 40 rural rehabilitation programs established by the Roosevelt Administration in 1934 and 1935 to provide welfare and assistance to families displaced by the Great Depression. In the first year, this effort was focused almost exclusively on creating and operating temporary housing camps. The second year, the corporation was authorized to assist in the establishment of model farming communities across the state.

TRC actually acted as the developer in the creation of these communities by purchasing large tracts of farmland, subdividing them into 60 and 40-acre tracts, and mortgaging them to displaced families. The mortgage loans included land, equipment, operating capital and family living expenses. Through cooperative efforts, TRC supported financial training for these borrowers to build strong financial skills for the new marketplace and ensured that every farm had access to electricity and training in using electricity safely and profitably. One of the most successful communities was Ropesville (Ropes), which did not have a single foreclosure during its first 50 years.

TRC was created by the Governor of Texas to accept the New Deal grants, because the state of Texas did not have constitutional authority to accept the money at the time—a practice that was repeated in many states in similar situations. Economist Rexford Tugwell, who in addition to the Rural Rehabilitation Programs also created the Greenbelt Program that used New Deal funds to create model suburban communities, created the model community programs initiated by TRC. A number of these suburban communities still exist.

However, the initial life of TRC was fairly short. When the federal government created the Resettlement Administration, they requested that the funds be returned for use by the new federal agency. Texas resisted returning the funds, but did so on the order of U.S. District Judge Ralph W. Yarborough in 1938. The funds were used in a variety of insured federal loan programs as the administering agency changed to the Farm Security Administration, then to the Farmers Home Administration (FmHA), but were accounted for separately as the assets of the Rural Rehabilitation Corporations.

In the late 1940s, Congress directed the USDA to return the assets to the original corporations, and by the early 1950s most corporations had signed trust agreements with the USDA to allow the funds to continue to be used in the FmHA.

TRC chose not to renew its administration agreement with the USDA and asked that its funds be returned in 1961. The USDA chose not to return the funds as requested, arguing that TRC was not organized to efficiently administer the funds. TRC returned to federal court, this time winning a summary judgment (TRC vs. Freeman) that the USDA must return management responsibility for the fund to TRC upon its request. TRC received its funds in the mid-60s as the FmHA liquidated loans involving TRC funds. Most other corporations received their funds by the mid-70s.

From the 1960s until the mid-80s, the business of TRC was to participate in farm ownership loans made by the FmHA, to make federally insured higher education loans to qualified rural residents, including the children of FmHA borrowers. Based in Fredericksberg, the corporation also purchased a ranch in Dimmitt County and proposed that it be used to create a model community like those originally created by TRC.

In 1984, after the death of longtime TRC General Manager Walter McKay and conflict between McKay’s estate, the TRC board, and the Texas Attorney General—the TRC Board agreed to reconstitute itself over the course of five years by expanding the number of members to 9 and by limiting members to a single term, and to update the governing practices of the organization—including adopting a more open meeting structure and locating in or near Austin.

Today TRC is located in Buda and is governed by a nine-member Board of Directors that serve 9 year staggered terms. Board members are located in Amarillo, Sherman, Oakwood, Cotulla, Clyde, Nacogdoches, Midland, San Marcos and Mission. TRC’s assets total almost $8 million, including a loan portfolio worth more than $4.6 million of farm, ranch and small business loans. In addition, TRC awards approximately $36,000 annually for small projects in rural communities throughout the state.