Government help is sometimes a mixed blessing

FEDERAL dollars used to help Midwestern farm communities, but Spencer, Iowa, isn't so sure anymore. At issue: whether a new federally subsidized housing project for the elderly would help or hurt the city. The city council, eager to bring federal money and construction jobs into this farm-dependent community, has approved the $1 million, 36-unit project by Sunset Retirement Home. But some landlords and real estate agents are protesting.

``It isn't right,'' says Lavon DeLoss, a Spencer landlord with four of her 11 units empty. ``When there's a surplus, you don't add to it.''

Half of her son's 100-plus apartments are also vacant, and the DeLosses are threatening to sue. Building more units with attractive subsidized rents would simply draw away people who could afford to own or rent housing in the private sector. If the federal government really wanted to help the elderly, they add, it could help twice as many by issuing more rent-subsidy certificates for the elderly to live in existing buildings.

But according to the Department of Housing and Urban Development, which has conditionally approved the project, the $3 million it expects to spend there in the next 20 years can't be shifted to other programs. The agency has documented a need, says John Alphson, chief attorney of the agency's Des Moines office. ``We have followed the rule of the law.''

In any case, rural conditions are so changed that federal help for troubled rural areas will have to be carefully considered and directed, state officials and economists suggest. ``Someone once said that for every problem there is a solution that is simple -- and wrong,'' says Montana Gov. Ted Schwinden.

One example is farmer-lender contracts, says Tam Ormiston, Iowa assistant attorney general, here in Des Moines.

In several instances where the contract was followed to the letter, both farmer and lender ended up losing more money than if they had mediated the situation, he says. Iowa now has an active farmer-lender mediation program.

The Spencer controversy, meanwhile, has left some area residents scratching their heads.

``It's a close call,'' says Greg Anliker, head of the Iowa Lakes Area Agency on Aging. ``The system needs to be looked at. [But] I hate to see that thing put on hold. What I'm afraid of is that this project would stop and the system would keep going on.''