Can you believe that 2018 is almost over? We have been incredibly busy traveling around the state this year and we wouldn’t have it any other way. We want to thank all of our members, partners, and sponsors that helped make this year incredible and possible. This year we focused on growing our membership, increasing resources on our website, and expanding programs like our Urban Renewal trainings and Emerging Leader events. We are excited to continue all of this work in 2019 and some of our plans include developing Urban Renewal Case Studies, growing our VISTA program to encapsulate more of our membership base, and expanding on our Challenge Studio Program.
We were lucky to have some great partner events this year including: two events with Happy City in Idaho Springs in January considering development impacts and best practices, a DDAs in Action Mobile tour with CML in Fort Collins and Windsor in August, and Community Building Colorado-Style Conference with many partners in Boulder in October. You can read the Happy City report here and the recap of the DDA tour here. We are always inspired by what communities and our partners are doing for community development. We also expanded our Emerging Leaders program this summer with a few events that featured speakers that are emerging leaders in their own right including topics on Millennial Transportation Habits and the revitalization of Colfax. Here are a few Testimonials from these events:
“We have loved working with DCI to help us engage the community, sharing ideas from other communities and providing resources that we can use to further our efforts in Downtown.” -Madeline VanDenHoek, Town of Monument
“The tools/ideas presented in the workshop to bring together city/county government officials, local business owners, and local residents help open the dialogue when discussing redevelopment within a community. When each party can provide a different approach to an issue within a community, a more solid & positive solution can be found.” - Idaho Springs Happy City Workshop Participant
As mentioned above, our Urban Renewal Program was enhanced this year to better provide for our Urban Renewal Partners and members. We brought board training to Northern Colorado in Fort Collins and Central Colorado in Lakewood culminating in our Southern Colorado Urban Renewal Summit in Pueblo. We also developed a resource page to house all of the training and educational materials specifically for URA’s and Districts. Through the Summit we were proud to present the idea of the Entrepreneurial URA especially for rural URAs. See what our URA members have to say:
“The session helped me to get a "big picture" view of URAs as they relate to communities, municipalities, developers and special districts”
“[My biggest takeaway from the event was] Understanding this new environment for URA creation and the cooperation and timeline necessary.”
2018 IN THE GAME was such an inspirational, educational, and fun event. The event was full of changemakers, big thinkers, and downtown champions. This year, we showed off one of the most vibrant downtowns in the state, Boulder, through our speakers, lunches, and tours. We continued to defy the traditional "talking heads" conference with our discussions of Tourism and Entrepreneurship through different lenses, our lightning ideas from brilliant Colorado thinkers, and of course our Challenge Studio Workshops. You can see the entire recap here. We hope to continue these themes of resiliency and collaboration and we can't wait to see you all IN THE GAME in Aspen in 2019! Registration is now open here! Here what attendees had to say:
“This conference was refreshingly energetic. Most conferences I go to consist of people talking about things they've already done, but here you can be inspired by people who are doing things now - who are in the midst of a challenge.”
“I love how interactive the DCI In The Game Conference is. It's a whirlwind week of learning and strategic planning but also celebrates community, art and culture of the host city. I will definitely go again.”
This year was an exciting year of progress as we developed our Challenge Studio program to increase the amount of support the Challenge Studio communities get before and after the conference. We started a partnership with the CU Denver School of Public Affairs to have a class of Master’s in Public Affairs students take on a Challenge Studio Community as their main project focus for the semester. We got the opportunity to visit the communities before the conference and establish background and create a report for these communities. You can read the reports here. We have also been following up with our CS Communities throughout the year with workshops relating to their challenge area including Monument and Longmont. We had an inspiring event tackling tactical urbanism in Monument in July as a follow-up to Monument’s challenge around Civic Pride. Through the CS process, DCI realized the next steps for Monument were in Tactical Urbanism to engage people, reshape space for the use of people over cars, and to just have fun telling the Monument story! You can read the recap blog here.
We are so excited for 2019 and for many more informative, innovative, and fun events. We continue to strive to serve our Colorado communities with everything we do and we hope you will be a part of the future of vibrant downtowns in Colorado. We are able to accomplish all this work through our members, partners and sponsors but we are NOT a nationally funded organization. We work FOR Colorado and to make the whole state more connected and vibrant. Which why we hope you will be able to support us on Colorado Gives Day. The day is on December 4th. You can schedule your donation now at https://coloradogives.org/downtowncoloradoinc/overview
Estes Park, Colorado - October 25, 2018 -- The Economic Development Council of Colorado (EDCC) announced the 2018 EDIE award recipients, recognizing economic development excellence during its annual Drive|Lead|Succeed Conference at The Ridgeline Hotel. “Many aspects of Colorado’s economic success can be attributed to the hard work, dedication, and contributions of communities, institutions and individuals that our awardees represent,” said Jeremy Riemann, EDCC Board Chair.
Small Community of the Year – City of Wheat Ridge, Colorado
The award for ‘Small Community of the Year’ was presented to the City of Wheat Ridge, Colorado – a city that has been extremely active in economic development over the past 36 months with much activity culminating in 2018. The City has nearly 100,000 sq. ft. of new retail space, 400 residential apartments, and 9,000 sq. ft. of maker space all under construction or planned for the community and supported by funding through the Urban Renewal Authority. Another 85+ acre development on the City’s west side, Clear Creek Crossing, will break ground this month bringing to fruition more than 3 years of work on this important economic development project for Wheat Ridge.
On Oct. 18, 2018, the Department of the Treasury (“Treasury”) and the Internal Revenue Service (“IRS”) issued proposed regulations under Section 1400Z-2 of the Internal Revenue Code (the “Code”) regarding qualified opportunity zones and gains that may be deferred as a result of a taxpayer’s investment in a qualified opportunity fund (“QOF”).
Section 1400Z-2 was created by the Tax Cuts and Jobs Act, (P.L. 115-97) (“TCJA”) and due to the breadth of the new statute, Treasury has elected to release multiple sets of proposed regulations. This guidance will have a significant impact on the taxation of individuals, corporations, partnerships, S corporations, trusts and estates engaged in qualified opportunity zone investments.
Contemporaneously with the issuance of the proposed regulations, the IRS released Rev. Rul. 2018-29 addressing the application to real property of the “original use” and “substantial improvement” requirements of Section 1400Z-2 and clarifying that when a QOF acquires an existing structure, the substantial improvement test can be satisfied by reference to the adjusted basis of the structure, without taking into account the cost allocated to the land.
Congress enacted Section 1400Z-2, in conjunction with Section 1400Z-1, as a temporary provision to encourage private sector investment in certain lower-income communities designated as qualified opportunity zones for years beginning after 2017 and before 2027. Under this provision, taxpayers may elect to defer the recognition of capital gain to the extent of amounts invested in a QOF, provided that the amounts are invested during the 180-day period beginning on the date such capital gain would otherwise have been recognized. The inclusion of the deferred gain in income occurs on the date the investment in the QOF is sold or exchanged, or on Dec. 31, 2026, whichever comes first.
For investments in a QOF held longer than (i) five years, taxpayers may exclude 10 percent of the deferred gain from income; (ii) seven years, taxpayers may exclude 15 percent of the deferred gain from income; and (iii) 10 years, taxpayers may exclude the entire post-acquisition gain on the qualifying investment in the QOF from income. In turn, a QOF must hold at least 90 percent of its assets in qualified opportunity zone property.
The Proposed Regulations
The proposed regulations address the type of gains that may be deferred by investors, the time by which such gains must be invested in QOFs, and the manner in which investors may elect to defer specified gains. The proposed regulations also include rules for self-certification of QOFs, valuation of QOF assets, and guidance on qualified opportunity zones businesses.
The proposed regulations are organized into seven substantive areas:
Treasury and the IRS are working on additional guidance, including the meaning of “substantially all” as it is used throughout section 1400Z-2(d), transactions that may trigger inclusion of deferred gain, the “reasonable period” for a QOF to reinvest proceeds from a sale of qualifying assets, and information-reporting requirements. Treasury has asked for written comments on the published guidance within 60 days of the date the proposed regulations are published in the Federal Register. We anticipate comments will be due in late December as a public hearing is scheduled for Jan. 10, 2019, at 10:00 a.m.
Given that these rules will significantly impact the taxation for investors in designated distressed communities, we believe it is important for such investors to engage in the rulemaking process. By doing so, policymakers will have a better understanding of the impact these rules will have on businesses and the challenges businesses will face during the implementation process.
The Brownstein Federal Tax Policy team can assist you in assessing the impact that these rules will have on your business. In addition, we can help you determine whether to submit written comments to the proposed guidance. Our team has significant experience with the rulemaking process. To the extent questions are unanswered or the rules are not clear, our team can facilitate a dialogue with policymakers to help resolve your issues.
If you want to learn more about Opportunity Zones from BHFS, join us for our Southern Colorado URA Summit on November 8th
Written by Jeremy Cristensen
Help Extend this critical program and expand the available credits from $3 million to $7 million per year
Whether or not you’ve ever purchased or used Colorado brownfields tax credits, chances are you have benefited from them! Over the past 17 years, this program has helped Colorado become a healthier, more prosperous place to live and work by cleaning up polluted properties in our communities, spurring on economic development, and helping to address the housing needs of our growing population.
In 2014, the Colorado General Assembly reinstated the Colorado Brownfields Tax Credit Program with the passage of SB 073. The legislation authorized $3 million in tax credits to be issued annually with a cap of $525,000 for individual projects. Since 2015 (when the program was reinstated after a 4-year hiatus):
• CDPHE has issued approximately $8 million in tax credits, spurring on nearly $3 billion in infrastructure development and private investment in Brownfield cleanup and redevelopment.
• Nearly 300 acres of property have been cleaned up
• Approximately 2,100 new jobs were created
• Over 4,000 new infill housing units were built to serve the needs of our growing population.
• By having these redevelopment projects done through the Voluntary Cleanup Program, CDPHE indicates it was able to facilitate better cleanup outcomes, resulting in a cleaner environment. (Statistics were provided by CDPHE and are current as of Aug, 2018).
The program has been a resounding success, however demand for these credits far outpaces their availability. A coalition of interested stakeholders are working reauthorize, refine and expand the Colorado Brownfields Tax Credit Program. Together we are organizing support for new legislation in the upcoming session of the Colorado General Assembly that would reauthorize the program beyond 2022 when it is currently set to expire, and expand the yearly cap of available credits from $3 million to $7 million so that more projects in more areas can utilize them to clean up our communities and accelerate our economic growth.
Join our coalition! We are also seeking businesses, local governments, and other stakeholders to sign on to a letter of support to the Colorado General Assembly, encouraging the legislature to pass the reauthorization and expansion bill when it is introduced. Read the letter here.
For more information, and to add your name to the list of supporters, visit www.taxcreditconnection.com or call (970) 532-9865.
Downtown Colorado, Inc. is partnered with the Corporation for National and Community Service which is the federal agency that runs AmeriCorps VISTA among other services. The VISTA program specifically has AmeriCorps members go to either non-profit organizations or public entities to build organizational capacity in order to allow those organizations to execute poverty reducing measures.
DCI currently has 7 VISTA members across the state including Steamboat, Montrose, Durango, Manitou Springs, Trinidad, and Denver, working in those communities to reduce poverty through economic and community development.
Recently, the team had their third quarterly training to learn more from experts and speakers about grant writing, fundraising, BIDS, state tourism, and opportunities for small business loans through the Colorado Housing and Finance Authority.
Kim Grant of Colorado Preservation Inc. talked about the basics of grant writing and fundraising, explained common mistakes, and tips for success. One of the most important aspects to recognize is to have a diverse revenue stream and not to rely on one source, even if it’s lucrative.
Tara Tubb, the Energy Impact Assistance Fund Program Manager at State of Colorado, talked about how her program, “assists political subdivisions that are socially and/or economically impacted by the development, processing, or energy conversion of minerals and mineral fuels” which effects many of the smaller rural communities that our VISTA members are often placed in. Some of the funds and grants available through this program are the administrative grants (up to $25,000 and require a 50/50 match), tier I grants (up to $200,000 and require a 50/50 match, and finally tier II grants which are $200,001-$1,000,000 and require a 50/50 match.
Elizabeth O’Rear of the Colorado Tourism office (CTO) informed the VISTAs of the Colorado Rural Academy for Tourism (CRAFT) program where the tourism office will come to your community to conduct participatory studios or workshops that give entrepreneurship and professional support, conference sponsorships, or implementation funding. Two of our current VISTAs, Andrew Wallace of the City of Trinidad, and Carl Young under the Huerfano County Economic Development office, both are collaborating with the CTO to bring to light the rich heritage and tourism opportunities that Southern Colorado has to offer. Look into the “Highway of Legends” coming soon to Walsenburg and Trinidad!
The VISTAs also got some 101 information regarding Business Improvement Districts (BID) from Erin Lyng and Amanda Kannard of Progressive Urban Management Associates (PUMA) which could serve to benfiti our other VISTA host site communities of Manitou Springs and Montrose, the latter of which is looking to adopt some of the services geared toward those experiencing homelessness which the Colfax BID in Denver currently conducts.
VISTA members attend Historic Denver’s Colfax tour after the training to learn about Denver’s history, BIDs, and how policy shapes a streetscape.
Our next VISTA training will be during the fall at one of DCI’s events, hopefully in a location other than Denver so the VISTA team can experience a diversity of Colorado communities.
In August, the Colorado Municipal League conducted its first ever economic development mobile tour in partnership with Downtown Colorado Inc. (DCI). The day-long outing offered an opportunity for CML’s members to learn more about Downtown Development Authorities (DDA) and the potential economic benefits they can provide for a city or town’s central business district.
The tour bus departed from CML headquarters for Ft. Collins and Windsor, Colorado whose DDAs have revitalized the downtown areas of both communities. Participants met with the DDA directors from both municipalities as well as elected officials, business owners and developers who have all played a role in the success of these areas. Even Windsor Mayor, Kristie Melendez and Ft. Collins City Councilman, Ray Martinez were present to offer their perspectives on how local governments and DDAs can support each other for the long-term benefit of their communities. The tour also included two panel discussions the first over lunch at a Ft. Collins brewery and the second included desert at a coffee house that recently opened its’ doors inside the Windsor DDA. Brinkman Developer Todd Park, discusses a brand new development in Ft. Collins that serves a business incubator for new business owners in the city. The development worked collaboratively with the Ft. Collins DDA to get off the ground.
Unlike the more common Urban Renewal Areas (URAs), DDAs are an economic development tool that has only been employed by 16 municipalities across the state. While each municipality is limited to jus one DDA, it can leverage a number of financing tools like Tax Increment Financing (TIF), mill levy increases and sales tax to make sizeable investments within the district. And the revenue generated can be used for many different purposes such as building renovation, infrastructure improvements, marketing, holiday decorations and landscaping. (If you would like learn more about the differences between the types of special districts, visit our partner PUMA's wonderful resource page)
Following the tour, a number of CML and DCI participants commented about the tangible benefits that a DDA can provide and are seriously considering implementing one in their hometown.
If you would like to tour an active DDA please join us on our Longmont DDA tour which will focused on activating plazas along with a progressive happy hour and a dìa de los muertos altar tour.
DCI was recently in Monument, CO holding a Downtown Institute that discussed unconventional and low-cost ways of implementing pop-up projects such as a painted crosswalk, a roll-out bike lane, and temporary signage to promote walkability as jumping-off points to bring interest and participation into the community.
Downtown Colorado, Inc. (DCI) has been working with the Downtown Monument Stakeholders groups since November 2017 to craft and implement objectives and action steps around Branding, Organizational Development, Placemaking and Wayfinding. To achieve these goals, DCI works with the locals to understand assets and needs to further downtown initiatives. DCI has helped to develop and facilitate meeting agendas to engage the community in downtown.
In April 2018, Monument served as a DCI Challenge Studio Community. DCI shaped the content of a workshop based on the Monument challenge around Civic Pride. The workshop was designed to transform the difficult challenges and problems into promising opportunities. Participants worked side-by-side with leading industry experts and local peer networks to craft problem-solving plans that result in improved futures for all. In the process, the participating communities are connected into supporting networks and resources; helping them to get the job done. Through this process, DCI realized the next steps for Monument were in Tactical Urbanism to engage people, reshape space for the use of people over cars, and to just have fun telling the Monument story!
DCI worked to engage facilitators from C+B Design, Radian | Placematters, and Yes Plan Do! To come to Monument for a fun day to showcase the importance of engagement through test projects through education and actually doing!
<span id="docs-internal-guid-4d0ffc89-d7ad-892a-cf5d-8f4bc263deb9"></span> <p><span id="docs-internal-guid-4d0ffc89-d7ad-892a-cf5d-8f4bc263deb9"></span></p> <p><span id="docs-internal-guid-4d0ffc89-d7ad-892a-cf5d-8f4bc263deb9"><a href="https://vimeo.com/281716954">Monument Downtown Workshop on Tactical Urbanism - July 2018</a> from <a href="https://vimeo.com/placematters">PlaceMatters' Videos</a> on <a href="https://vimeo.com">Vimeo</a>.</span></p><span id="docs-internal-guid-4d0ffc89-d7ad-892a-cf5d-8f4bc263deb9"><br></span> <p dir="ltr" style="line-height:1.2;margin-top:0pt;margin-bottom:0pt;"><span id="docs-internal-guid-4d0ffc89-d7ad-892a-cf5d-8f4bc263deb9"><span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;">The community oriented design firm, <a href="https://www.radianinc.org/" target="_blank">Radian, Inc.</a> presented on the critical nature of civic participation as being a core tenant of smart urban design. Communities often hold the view that impactful design is necessarily expensive and a large commitment. However, Ken Snyder from Radian, Inc. discussed how experimentation and pop-ups street amenities – known as tactical urbanism – can have a huge impact with low cost while allowing the community to gauge what is right for them.</span></span></p><br> <p dir="ltr" style="line-height:1.2;margin-top:0pt;margin-bottom:0pt;"><span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;">Promoting complete streets, often encompassing bike lanes, parklets, urban forestry, public art, etc., activates corridors such as your community’s Main Street and enables a “go-to-them” approach with your residents and stakeholders. Mr. Snyder was keen to note that this approach can be more effective than digital outreach and uses community connections and networks to do the talking for you.</span></p><img src="/resources/Pictures/IMG_20180719_155153.jpg" alt="" title="" border="0"><br> <p dir="ltr" style="line-height:1.2;margin-top:0pt;margin-bottom:0pt;"><span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;"><em>Radian and DCI set up a demonstration pop-up bike lane while Rachel Hultin of Yes Plan Do! invited passer-byers to help paint a crosswalk</em></span></p><br> <p dir="ltr" style="line-height:1.2;margin-top:0pt;margin-bottom:0pt;"><span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;">Rachel Hultin of Yes Plan Do! discussed an incremental approach to urbanism and described some of the common pitfalls of efforts to beautify downtown or to change a streetscape. One such pitfall is what she calls “Fuzzy Visioning” where a project is considered a problem to be solved instead of something that the community can create. This runs into the danger of relegating your vision to the background.</span> <span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break"></span><span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break"></span><span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;">Another issue that Ms. Hultin highlighted was the importance of incrementalism. There is a risk in committing to projects that are battles you are unlikely to win and to trying to tackle them all at once is a mistake. In tandem with demonstration and pop-up experimentation, taking small battles one at a time is a recipe for success.</span></p> <p dir="ltr" style="line-height:1.2;margin-top:0pt;margin-bottom:0pt;"><span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;"><img src="/resources/Pictures/IMG_0169.jpg" alt="" title="" border="0"><br></span></p> <p dir="ltr" style="line-height:1.2;margin-top:0pt;margin-bottom:0pt;"><span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;"><em>Rachel Hultin of Yes Plan Do! interacts with residents to engage them in the crosswalk painting</em></span></p><br> <p dir="ltr" style="line-height:1.2;margin-top:0pt;margin-bottom:0pt;"><span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;">Kristin Cypher of <a href="http://www.cplusbdesign.com/" target="_blank">C+B Design</a> gave presentation on branding, signage, and how this can improve connectivity in the community. Signage is not merely to find directions, but also is involved in place making, it communicates an image, and it can also reflect the heritage of the community. Similarly to the previous speakers, Kristin made the point that signage does not have to be an in-depth and expensive project. Demonstration and temporary signage can do a long way to improve your streetscape and many of these temporary signs can last for a general time frame of one year.</span></p><img src="/resources/Pictures/IMG_2549.jpg" alt="" title="" border="0"><br> <p dir="ltr" style="line-height:1.2;margin-top:0pt;margin-bottom:0pt;"><span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;"><em>A group of participants making signage to direct people to businesses around Monument during the Art Hop</em></span></p> <p dir="ltr" style="line-height:1.2;margin-top:0pt;margin-bottom:0pt;"><span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;"><em><br></em></span></p> <p dir="ltr" style="line-height:1.2;margin-top:0pt;margin-bottom:0pt;"><span style="color: rgb(0, 0, 0); font-variant-numeric: normal; font-variant-east-asian: normal; vertical-align: baseline; white-space: pre-wrap;"><em><br></em></span></p>
The community oriented design firm, Radian, Inc. presented on the critical nature of civic participation as being a core tenant of smart urban design. Communities often hold the view that impactful design is necessarily expensive and a large commitment. However, Ken Snyder from Radian, Inc. discussed how experimentation and pop-ups street amenities – known as tactical urbanism – can have a huge impact with low cost while allowing the community to gauge what is right for them.
Promoting complete streets, often encompassing bike lanes, parklets, urban forestry, public art, etc., activates corridors such as your community’s Main Street and enables a “go-to-them” approach with your residents and stakeholders. Mr. Snyder was keen to note that this approach can be more effective than digital outreach and uses community connections and networks to do the talking for you.
Radian and DCI set up a demonstration pop-up bike lane in less than 5 minutes!
Rachel Hultin of Yes Plan Do! discussed an incremental approach to urbanism and described some of the common pitfalls of efforts to beautify downtown or to change a streetscape. One such pitfall is what she calls “Fuzzy Visioning” where a project is considered a problem to be solved instead of something that the community can create. This runs into the danger of relegating your vision to the background.
Another issue that Ms. Hultin highlighted was the importance of incrementalism. There is a risk in committing to projects that are battles you are unlikely to win and to trying to tackle them all at once is a mistake. In tandem with demonstration and pop-up experimentation, taking small battles one at a time is a recipe for success.
Residents are engaged to participate in the crosswalk painting as they make their way to the Art Hop
Kristin Cypher of C+B Design gave a presentation on branding, signage, and how this can improve connectivity in the community. Signage is not merely to find directions, but also is involved in place making, it communicates an image, and it can also reflect the heritage of the community. Similarly to the previous speakers, Kristin made the point that signage does not have to be an in-depth and expensive project. Demonstration and temporary signage can do a long way to improve your streetscape and many of these temporary signs can last for a general time frame of one year.
Written by David Milder of Danth, Inc.
The White Paper
“Toward an Effective Economic Development Strategy for Smaller Communities (under 35,000).” By David Milder
In October of 2017, I posted the above referenced White Paper that outlined my thoughts about how the construction of economic development strategies for smaller communities, especially those in rural areas, should be approached (1). Since then, two data-related findings have come to my attention that have caused me to review some of the arguments I presented in that paper:
County Unemployment Rates: A Look at Wisconsin, New York, and South Dakota
Low county unemployment rates came to my attention as I was going over some data about a rural small town in WI. Looking at five distinct years of unemployment data for its county (Grant County, see table), except for the time around the Great Recession in 2010, its unemployment rate was 4.3% or lower, and its rate in April of 2018 was just 2.4%. That was even lower than its 2.9% rate back in 2000. Economists have generally accepted unemployment rates around 5% as normal (2). According to that benchmark, Grant County’s unemployment rates have usually been normal or even lower than normal.
This question then arose: is Grant County an outlier or are rural counties in WI generally experiencing relatively low unemployment rates?
Using a list of WI’s rural and urban counties, I looked at their unemployment rates in April of 2018 (see above table). Yes, the average 3.6% rate among the 46 rural counties is higher than the 3.3% average for all 72 counties and the average 2.7% rate for the 26 urban counties, but the really important point is that the rate for the rural counties was just 3.6%. Moreover, the median unemployment rate for the rural counties was 3.25%, which means that 50% of these counties had rates lower than 3.25%.
Then the question for me became: Is the situation in Wisconsin an outlier? Given time and resource constraints, I decided to look at the counties in New York and South Dakota, two states quite different in character from WI and from each other. NY has an economy dominated by a huge metropolitan area around NYC. Its upstate manufacturing and agricultural industries (e.g., milk) were facing problems long before the advent of the Great Recession. The state also has many sizeable cities besides NYC such as Buffalo, Rochester, Syracuse, Albany, Schenectady, Utica, Troy and Binghamton. Many are doing poorly. For instance, Syracuse has the 13th highest poverty rate among cities in the US. South Dakota is more sparsely populated, less industrialized and more rural that NY or WI.
The average unemployment rate for NY’s 27 rural counties, 5.9%, is higher than the average for all of the state’s counties, 4.6%, and for its urban counties, 3.6%. It also is 63% higher than the rate for WI’s rural counties. However, it is just 0.9% above the 5% benchmark for normalcy. The unemployment rate for SD’s rural counties was 4.2%, below the 5% benchmark and not that much above the 3.9% rate of the state’s urban districts.
The results from these three states suggest that the lack of jobs is not currently a major economic problem for rural areas in many states.
What, then, are the major economic problems in these counties? One is nominal population growth. As a recent study from the Pew Research Center stated: “…rural counties have made only minimal (population) gains since 2000 as the number of people leaving for urban or suburban areas has outpaced the number moving in.” Also, its survey found that rural residents were less likely to want to move to a new community and more likely to live near a family member.(3).
Another can be seen by looking, again at Grant County. Although Pew found its population had grown about 1% between 2000 and 2016, a recent study by the National Low Income Housing Coalition reported that an hourly wage of about $13.25 is required in that county to afford renting a 2-bedroom apartment at a Fair Market Rate, while the estimated average hourly wage of renters is only about $9.68 (4). That means that 26.9% of the Fair Market Rent is unaffordable for the average renters. In turn, that underscores another important point that is part of the conventional wisdom among economic development experts: rural areas need more than just jobs, they need well-paying jobs, one that provide at least living wages. A factor that adds to the issue’s complexity is that that living wages are not defined just by market forces, but also by the characteristics of the households involved. The table below shows what a living wage would be for various types of households in Grant County (5). What also pops out from that table is just how much more income households with children require.
This table is From the Out of Reach 2018 report
It seems that rural residents are willing to cope with a high degree of financial stress to stay in a rural area and close to their families. For some, that stress or perhaps the fear of that stress, reaches the point where they decide to leave.
My White Paper addressed the adequately paying jobs issue in a number of ways. It saw the creation of Small Town Entrepreneurial Environments (STEEs) as a way to:
STEEs can still usefully perform these needed functions even when local county unemployment rates are relatively low, both historically or compared to urban counties. Though more people may be employed, many of those with jobs may need and want help to find better paying employment.
The strategy of recruiting firms that will bring lots of jobs to small rural towns does not mean either that a) substantial numbers of those jobs will go to local residents or b) that those jobs will be well-paying, as many small towns have learned from the Walmart and Amazon distribution centers that opened in them. Indeed, many of the firms that seek rural locations do so because they are looking for lower labor costs.
So far, nationally, our resurgent economy has substantially reduced unemployment, but to date it has not significantly increased the incomes of many of our households, especially those with wage earners in non-supervisory positions or in rural areas. Until that does happen, STEEs can be of considerable value.
It seems to me, then, that relatively low to normal unemployment rates in rural counties do not diminish the relevancy or the need for the kind of strategic approach I outlined in my White Paper.
Also, in many states, such as WI, their rural economies are tied to both agriculture and manufacturing. Manufacturing, which tends to be cyclical, has been doing well in recent years. An eventual cyclical downturn or increased robotization may again increase rural unemployment, again worsening rural economic conditions.
The Number of Contingent Entrepreneurs and Their Importance.
At the heart of the strategic approach I argued for in my White Paper were the residents of smaller towns who were, in the BLS’s vocabulary, engaged in contingent and alternative employment arrangements and whom I labeled contingent entrepreneurs. The bullet points below present the reasons why I thought they were so strategically important:
My reporting that these contingent entrepreneurs may account for 30% to 40% of the local workforce was based on these numbers being presented in numerous reputable publications since 2010. For example:
As can be seen in the above table, the recently published BLS study results indicate that those engaged in contingent and alternative employment arrangements only account for between 11.4% to 11.9% of our national workforce. The difference between 11% and 30% to 40% is obviously very significant numerically. But, is it significant analytically or from a strategic viewpoint?
First, let me acknowledge my respect and admiration for the BLS’s surveys as I have stated publicly on several previous occasions. However, the GAO’s 2015 report made a very critical point that must be kept in mind when considering the BLS’s findings: estimates of contingent workers and those in alternative employment arrangements differ because of differences in how those workers are defined and the data sets that are used to study them. It may be claimed that the BLS’s definitions are particularly stringent and therefore limiting. For example, one of the analyses in the GAO report estimates that 16.2% of the workforce are “standard part-time workers” and part of the contingent workforce. These workers are not included in the BLS estimates. Moreover, the BLS only looked at primary jobs, so its sample does not include second jobs, be they fulltime or part-time. The latter would exclude, for example:
Lastly, BLS excluded jobs associated with the gig economy e.g., those with Uber, Lyft, Taskrabbit, AirBNB, etc. from their survey.
In my judgement the BLS estimates should be taken as a very solid minimum estimate of the contingent and alternative arrangements workforce, with the exact number being treated as not knowable at this point in time because of a lack of consensus about how the subject group should be defined. Moreover, I would argue that the minimal BLS numbers are sufficiently large to merit considerable strategic consideration – and that, not the “true” number of contingents, is the critical question. My White Paper needs to be amended to include these points and to somewhat deemphasize the estimates of 30% to 40%. Nevertheless, the critiques of the BLS’s definitions of contingent and alternative work arrangements that followed its recent report combined with the prior research findings produced by very reputable investigators strongly hint that their true number of these workers may well be as high as 30% or so.
The recent BLS report also sparked a debate about the so-called gig economy and the impacts of firms like Uber and Lyft. However, the argument in my White Paper was quite independent of any analysis of, or advocacy for, a gig economy. My concern was: rather than chasing corporations that supposedly will provide lots of jobs, what assets can small towns best leverage to increase the earnings power of local residents? The folks that fell into my “contingent entrepreneur” category had two attributes that might be leveraged:
The table below presents data for a town in the Midwest with population of about 3,900 that is located in a designated rural county. Let’s see how these data can help answer two questions:
To help answer the first question, let’s also consider the fact, mentioned in my White Paper, that relatively large firms moving into this community are most likely to average about 50 new job opportunities and the vast majority of them will not go to local residents. The table below shows how many residents of Town X would get jobs at various capture rates. Which is more likely to serve the needs of Town X’s residents a) a program to help its contingent entrepreneurs become more successful or b) a recruitment program aimed at bringing in more employers who can provide on average 50 jobs?
Extrapolating from the BLS data, in the above table on Town X, I conservatively estimate that its contingent entrepreneurs number between 235 to 245 of its residents. Using On-the -Map and other data from the Census Bureau, the table presents an estimate of 80 people with fulltime jobs who work at home and 74 residents who are fulltime self-employed but not incorporated. About seven of those working at home may have remote jobs. Most of these folks are likely to quickly learn about a STEE creation program. How many would then use it now cannot be estimated. Nor can how many will benefit from it. However, activities such as social networking events at local bars or restaurants and distributing information about online freelancer job marts and remote job marts can be done with relative ease and at relatively low-cost.
The chasing companies with jobs strategy has the following advantages:
The disadvantages are far more numerous:
There is no certainty of success for either of these programs. Local leaders will have to decide and take a chance based on “the best available information. However, one might argue that communities such as Town X should first try the STEE program because it has the potential for benefiting many more residents and then, if that program fails to meet its goals, to switch to a program aimed at helping the existing employers in town to grow. If local employers are few and/or weak, then the recruitment of outside companies that bring in some more jobs for residents may make sense.
The 80 people in Town X who work at home are enough to help develop a quality of life recruitment program aimed at skilled people who will either bring their jobs with them or create their jobs or create new companies that will have employees. There are enough to populate meeting places and events so that a STEE would have a real tangible presence. Their public endorsements of the quality of life in Town X as well as the benefits of the STEE can be strong marketing tools. Their meetings with prospects and becoming “buddies” with those newly arrived also can be very powerful recruitment tools.
There is broad consensus among economic development professionals that retention and expansion is the most cost effective meta strategy. The strategic approach outlined in my White Paper essentially applies it to the micro businesses of a small town’s contingent entrepreneurs. David Carlson, the administrator of the city of Lancaster, WI, argues that, viewed as a collective group, they are analogous to being the town’s largest employer. He then asks: “How much time would you spend working with them to keep them a growing business?”
I think that is point, game set and match.
1) N. David Milder. “Toward an Effective Economic Development Strategy for Smaller Communities (under 35,000).” https://www.dropbox.com/s/tnwdomfzwrkv5i1/White-Paper-Toward-an-Effective-Economic-Development-Strategy-for-Smaller-Communities-1.pdf?dl=0
2) See: Justin Weidner and John C. Williams. “What Is the New Normal Unemployment Rate?” FRBSF ECONOMIC LETTER, 2011-05 February 14, 2011
3) Kim Parker, Juliana Horowitz, Anna Brown, Richard Fry, D’Vera Cohn and Ruth Igielnik. “What Unites and Divides Urban, Suburban and Rural Communities.” Pew Research Center. May 22, 2018. http://www.pewsocialtrends.org/2018/05/22/what-unites-and-divides-urban-suburban-and-rural-communities/ pp 89, p.1 and 59.
4) National Low Income Housing Coalition. “Out of Reach 2018,” p.265. http://nlihc.org/oor
5) Ibid. p. 265
6) “Intuit 2020 Report: Twenty Trends That Will Shape the Next Decade.” P.20. October 2010. https://http-download.intuit.com/http.intuit/CMO/intuit/futureofsmallbusiness/intuit_2020_report.pdf
7) GAO. “Contingent Workforce: Size, Characteristics, Earnings, and Benefits.” GAO-15-168R Contingent Workforce. P.3 https://www.gao.gov/products/GAO-15-168R
8) The survey had 5,052 adult respondents and was conducted by Edelman Berland for the Freelancers Union. https://www.slideshare.net/oDesk/global-freelancer-surveyresearch-38467323/1
For more information about DCI's services for smaller communities, visit our Services pages.
In January 2018, Happy City led Idaho Springs along with Downtown Colorado, Inc. and the Mountain Metro Association of Realtors in a Happy Mapping Audit for the Clear Creek School District site in Idaho Springs. We are excited to share the toolkit that came from the process.
This work builds on Urban3’s economic modeling analysis, which is intended to offer solutions to strengthen tax and job density in the county. Through thoughtful planning and development of priority sites identified in previous efforts, the municipality has a unique opportunity to nurture an even healthier, happier place, which is better equipped to handle the challenges of this century.
Happy City offers a set of practical tools and recommendations to:
1. Strengthen the social and economic vitality of Idaho Springs residents through happy urban design interventions.
2. Emphasize solutions to enhance connectivity for priority mixed use housing developments.
3. Assess how the Clear Creek School Site Development strengthens the case for a multimodal hub adjacent to the highway interchange.
Read the full report here
We look forward to working with Idaho Springs as they further all of the exciting projects in the town. Take a look at their Challenge Studio Report to learn more about the formation of an Urban Renewal Authority.
If you are interested in becoming a Challenge Studio Community, we are now accepting applications. Complete this brief application and give your community access to specialized resources to overcome your challenges. Deadline extended until June 20th!
This week I attended a conference that is all about local government. And no, it’s not your typical local gov conference and it may not be an acronym you have heard of before. It is #ELGL18 and this year it is in Golden, CO. This conference brings together local government leaders from all around the country to nerd out on data, budgeting, and water rights. It sounds dry, but ELGL has a way of making it one of the most engaging conferences. Just take a look at the #ELGL18 Twitter feed. Full of quotes, questions, and gifs!
I am extremely happy to be at this conference representing DCI and learning more about the local governments and local government processes we work with all the time. Engaging Local Government Leaders is a big tent professional association full of innovative local government leaders with a passion for connecting, communicating and educating. I am here to connect with young leaders like myself. As a part of my work for DCI, I am actively trying to partner and empower Emerging Leaders in all types of fields connected to making our communities vibrant. (See my Emerging Leaders blog post from a few weeks ago).
My favorite session was from Jay Anderson from Colorado Springs called “Talking to Strangers”. Jay talked about building trust and asked “What’s the point of engaging? To build their trust. Trust is the secret sauce that allows our government to work”. Well, to build trust we have to communicate but “Citizen Engagement is not a communications thing, it’s a process thing”.
We have to integrate the engagement throughout our entire process and with every way we share information. I met a man yesterday who works for a local city and is part of the marketing/outreach team for the utilities department with a lot of information to communicate about their process.
I am looking forward to the last day here at #ELGL18 and I hope I can engage with all of you at our next Emerging Leader event on June 6th called Millennial Transportation Trends in the Sharing Economy.