Economic Development Journal of Canada | Economic Development Journal of Canada, 2013
Originally published August 27, 2013
N. David Milder
DANTH, Inc.
Andrew Dane
Short Elliott Hendrickson Inc.
Discussions about the traits of strong downtowns and what makes them succeed usually focus on larger cities such as Vancouver, BC, Portland, OR, New York, NY or Charleston, SC. However, a lot can also be learned by looking at things on a smaller scale. This happened to the authors, when we recently looked at downtowns in two small Wisconsin communities. What we learned from them is applicable to many other communities of comparable size.
Our experiences in these two communities certainly confirmed that two basic and broadly held revitalization tenets are just as applicable to small communities as they are to large ones: the need for a comprehensive approach to downtown revitalization and the need to focus on leveraging existing assets. The focus here will be on three other topics that evidence these tenets anddeserve our attention:
For the Village of Sherwood, WI, a fast growing community on the fringe of the Appleton MSA, DANTH, Inc. joined a Short Elliott Hendrickson Inc. (SEH) team to produce a comprehensive downtown market analysis and strategy. (1) Village X is a small rural community with a population of about 1,000 in northwestern WI. Here SEH and DANTH teamed up to prepare a project proposal to submit to this village. Since Village X is still seeking funding for the project, it will remain anonymous in this article.
Surprisingly Complex Economies and Analytical Needs. Sherwood is basically a bedroom community with a population of only 2,700. Still we had to analyze the markets for many economic functions, even if their current strength and potential growth were relatively small. Given Sherwood's recent population growth, the housing market was a very important potential growth engine. The impact of the Great Recession meant that we had to look closely at such factors as vacancies, new construction, foreclosures, underwater mortgages and the affordability of mortgages on both the local and regional levels. We also had to assess various forecasts of housing construction on the local and regional levels. Our analysis of regional housing trends showed a significant shift toward multi-unit structures, and we used that finding to underpin one of our most important recommendations for revitalizing the downtown.Because of its close connection to housing, we also had to take a close look at regional employment trends.
A concern about retail, especially the feasibility of a new grocery store, had motivated the Village to conduct the study. While our market analysis covered the entire retail sector, we did a de facto market feasibility study for a new grocery store. Defining Sherwood's trade area was a challenge, given its weak retail and lack of retailer customer information. We defined the trade area based on a number of factors, the most important being where people lived, the size and location of competing retailers, commuting patterns and the locations of entertainment, government and medical functions. A lot of time was spent on identifying the competition, because the relevant data available from private market research data firms was inadequate. We also spent a good deal of time finding comparable communities that would inform our analysis. While the idea is simple, the process of establishing the dimensions on which the comparability is to be based and then filtering communities to find those that match is not. Our analysis also paid a good deal of attention to demonstrating which types of retailing a town with a trade area of Sherwood's size could reasonably expect to attract. Because Sherwood abuts High Cliff State Park, we also had to estimate the retail market potentials that its visitors brought into the area.
We also took a close look at office growth potential because so much of the new retail seemed destined for a growing highway corridor node and the downtown badly needed other economic functions it could capture to build its revival on. Encouragement for this effort came from a focus group meeting where it was reported that a local resident was considering moving his office based company to Sherwood. Further complicating the analysis, a business prospect interested in opening a daycare center in the Village led us to do a market feasibility analysis for it as well.
When we turned to the really rural Village X, we again found an economy with numerous economic components and related markets that would have to be analyzed:
These two communities may have relatively small economies, but they are neither simple in operation nor in the tools needed to analyze them.
Complex Land Use and Transportation Issues. Even more surprising than the number of markets we had to investigate in Sherwood and the depth of the analyses they required were the complex land use and transportation issues that were hurting the downtown:
Similarly in Village X, our team found a number of complex land use and transportation issues to address. However, unlike Sherwood, which faces growing pains associated with exurban growth, Village X is facing strong, complex and seemingly intractable challenges, characteristic of other small, often more rural communities and their downtowns:
Many smaller communities across the U.S. are facing challenges similar to Sherwood, WI, and Village X. Our take aways from working on these two small communities: their economic issues are neither simple to analyze nor of little impact and finding viable solutions to them can not be expected to be easy. On the contrary, effective economic development strategies for smaller downtowns require holistic approaches informed by customized market analysis and an understanding of how land use, transportation, regional forces and demographics influence downtown development potential. Given their available resources, they may consequently need to enter into cooperative agreements with other nearby communities where they can aggregate and share resources, personnel and/or organizations.
The Challenge. The economic problem with rural America is not that people no longer want to live in small towns and rural areas. For example, a survey done in 2011 for the National Association of Realtors found that among respondents from the Midwest, 19% preferred living in small towns and 23% in rural areas. (2) The problem is that rural areas are losing jobs and cannot attract new companies that will bring in new jobs. It is the lack of employment opportunities that underlies the depopulation of our rural areas. Since labor force size and skills are often key variables in business locational decisions, the situation seems to be one of a perpetual downward spiral. The challenge in Village X is how to keep it from falling into this downward spiral.
Getting Around the Jobs Problem. Strategically, many experts have advocated the importance of leveraging existing local assets to bootstrap or pump prime growth. Following this broad strategic thrust, our assessment of the situation in Village X suggested that if attracting job-producing firms is the problem, then perhaps significant population growth might occur by attracting people who like living in small rural towns, but who do not need jobs to be provided for them. They would include those who:
Indeed, a recent report found that self-employment already is more prevalent in rural Wisconsin than in urban areas and growing:
"In the period from 2000 to 2010, rural wage and salary jobs decreased by over 22,000 (-2.6%). Conversely, there was a significant jump in self-employment jobs, well over 45,000 (+ 18.7%)…." (3)
Boomers provide a number of different possibilities. The 50+ age segment is 100 million strong and will expand 34% by 2030. They control 70% of the nation's disposable income. (4) Superior, NE, for example, lured back former residents who were retiring, an effort that was strengthened by the town's cluster of available and attractive Victorian homes. Many other retirees who now live in urban areas may want to spend the last part of their lives in rural areas similar to those where they grew up.
Many of these Boomers either will not want to retire completely or cannot afford to do so, and they consequently "reboot" into new careers. (5) The Internet means that many of them can engage in new careers that are not tied to a specific geographic location. For example, one study of people engaged in crafts and art businesses in Northwestern Wisconsin found that:
There are also some non-boomer market segments that small rural towns might try to tap. For example, Phil Burgess and Joel Kotkin have independently described business operators of all ages who can take such strong advantage of the Internet and telecommunications that they are free to locate their firms in communities that maximize the quality of life attributes they most prize.(7) Burgess calls them Lone Eagles and Kotkin sees them dwelling in scenic Valhalla communities. Some years ago a field to the Rutland /Killington, VT area found several residents who were managing investment funds in NYC or building websites or providing graphic services for clients mainly based in that city.
Second homeowners are another market segment some small rural communities might target.
To tap into all of these potential markets small rural towns will benefit from leveraging such assets as:
This approach to getting around the rural jobs problem is an unlikely cure all, but it may be an effective pump-priming strategy in some towns and even more potent in communities blessed with many of the above described assets.
Unlike many larger communities, smaller communities often lack the resources and full range of professionals to address the complex challenges they face, including downtown revitalization. It is not an exaggeration to say that, in many of the smaller communities the authors have worked with, the Village Administrator literally does serve as the town dog catcher, in addition to providing administrative duties, planning, zoning, permitting and many other services.
Consequently, even professionally managed communities have little resources or attention to sufficiently address complex economic development, land use and transportation challenges.
In response, smaller communities across the U.S. turn to a variety of approaches to identify and pursue downtown development strategies. Successful programs are put in place by either a single organization focused on the downtown or multiple organizations working together (8). A brief discussion of possible approaches follows below.
Main Street Associations. Many smaller downtowns in the U.S. are affiliated with the National Trust for Historic Preservation's National Main Street Center. Local Main Street programs focus on downtowns following a four-point approach: 1) Organization; 2) Design; 3) Economic Restructuring and 4) Promotion. Main Street programs emphasize historic preservation and often receive some level of technical expertise and organizational development assistance through their affiliation with statewide Main Street programs. Main Street programs typically involve a broad range of stakeholders to accomplish their mission.
Business Networks. They can take a variety of shapes. Some are structured independently and some are affiliated with larger networks, such as BALLE, the Business Alliance for Local Living Economies. Business networks may arise to address specific issues and then disappear. For example, many business networks have formed over the past decade to put into place "Buy Local" programs across the United States (9).
Circuit Rider Programs and Consortiums. Smaller communities may turn to circuit rider programs to staff local development initiatives, research opportunities, write grants and recruit developers and businesses. Such programs provide a shared resource for multiple communities at a lower cost when compared to hiring a full time staff person for a single community. In Sherwood, WI, for example, there may be a logical opportunity for similarly situated communities on the eastern shore of Lake Winnebago to support a circuit rider program.
In other instances, small communities have formed "consortiums" to handle joint projects that none of them could afford to undertake by themselves. For example, such a consortium in northwestern Connecticut produced a retail market research study that all of its members could use.
Economic Development Organizations. As a result of economic decline, many smaller communities have formed development organizations specifically focused on promoting economic development. Historically, many of these focused on luring branch plants or attracting other forms of outside development to increase the local tax base. More recently, focus has turned toward more endogenous growth strategies including supporting local entrepreneurs and home grown businesses. While most EDCs focus the bulk of their attention outside the "downtown" areas within their communities, many of these organizations have a committee in place focused specifically on downtown issues often including parades or other larger events.
Like EDCs, Chambers of Commerce are often not explicitly focused on downtown development. They may support downtown development efforts through a variety of activities and programs, however most Chambers are set up to serve their members' interests primarily, and often these interests include businesses located well outside the downtown area within the City or Village.
There are a number of organizational options for smaller communities to revitalize their downtowns. Each has its own strengths and weaknesses, and smaller communities should tailor an approach that fits their unique situation.
In communities large and small, downtown revitalization is always difficult. However, it may be most difficult in small downtowns. Smaller communities have fewer resources available to adequately assess their current conditions and develop appropriate strategies. Far too often, they lack a real strategy and pin their hopes for revitalizing their downtowns on just beautification projects, events, and "wishful thinking." Developing a strong understanding of the local economy is a necessary step toward formulating a successful downtown revitalization strategy.
Beyond resources, smaller towns face a number of additional challenges. They are typically much less dense than larger cities, have poor destination accessibility (aren't located near other frequently visited destinations), lack a sufficiently diverse business mix to leverage or develop niches around and often suffer from state highway decision making that routes traffic out of their downtowns.
Faster growing exurban communities face additional downtown challenges including poor street design and connectivity, lack of civic gathering spaces and weak community identity.
In exurban and more rural downtowns, jobs creation remains a critical issue, although the Internet, the behaviors of the baby boomers and a number of other trends may provide new paths for stimulating rural population and job growth.
Dealing with all of these issues requires a comprehensive approach to planning and adequate financial, skilled personnel and organizational resources for plan/strategy implementation. To develop a sound strategy as well as for effective implementation, smaller communities will need to seek out external resources. One promising path is to leverage their limited resources by working with other nearby communities and sharing resources.
N. David Milder is the president and founder of DANTH Inc., a downtown revitalization specialist. David can be reached at danthinc@me.com.
Andrew Dane is a community development specialist with Short Elliott Hendrickson, an employee-owned engineering, architecture, and planning firm. He provides planning, feasibility analysis, and plan implementation services to municipalities, private businesses, and tribes.
Andrew's downtown experience includesneighborhood planning, market analysis,strategy development,grant writing,and funding.
As the director of community economic development for the City of South Tucson AZ, Andrew led neighborhood planning and housing revitalization efforts, including a successful Empowerment Zone designation, which brought 100 million in tax credits to support business development.
He can be reached at920.585.3593