Editor’s Note: This story originally appeared in the summer issue of Business Leader, a quarterly magazine produced by the Leader-Telegram. To see digital copies of that and other special publications, go online to LeaderTelegram.com/magazines.
Turning to outside expertise is pretty typical when a city faces a challenge that requires some specific know-how.
Hiring consultants usually means forking over thousands of taxpayer dollars to ultimately be handed a report or study that officials will use to help make their decisions.
But last year Eau Claire got some advice on how to boost its economy and it came for free.
Thomas Kemp, a former city councilman and chairman of UW-Eau Claire’s Economics Department, assigned one of his classes the duty of studying weaknesses and opportunities in the local economy and suggesting ways to improve upon them.
“Cities Eau Claire’s size face pretty significant challenges,” Kemp said.
Chief among them is the demographic issue of being home to a population that is gradually growing older.
While retirees still contribute to the economy as consumers, they no longer fill the role of producers by participating in the workforce. While the research noted Eau Claire’s population isn’t trending older as dramatically as other communities, it still is trending in that direction.
“Eau Claire needs to become more attractive to the younger population and should be considered when growing the city from this point on,” the student researchers wrote in their final report.
To deal with the demographic conundrum and other ways Eau Claire’s economy could improve, the team of 17 student researchers looked to other mid-sized U.S. cities that are thriving.
But first they had to make a list, a long one.
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The students researchers began by using Census data to make a list of all American cities with populations between 60,000 and 100,000. (Eau Claire’s population was estimated at 68,800 last summer, but that range also accounts for people living in neighboring communities who go to work in the city.)
There are 371 communities in the U.S. with that many residents, but the students wanted to not just look at population.
Further filtering that list, the researchers added other criteria commonly associated with economic growth. That included a rising population – especially in the 18 and younger demographic – along with low crime and poverty. Higher median income than Eau Claire’s also was a factor used to narrow the results. High school graduation rates on par with Eau Claire or higher also were required for a community to warrant consideration.
After some outliers — “boom towns” experiencing extraordinary growth usually due to unique circumstances — were eliminated, only a couple dozen cities remained on the list. Students then divided those up, researching the economics of each city and then picking those they felt Eau Claire could learn from.
Their final report featured five cities:
While smaller than Eau Claire, the city of Sammamish, Wash. Was growing faster and was attracting a younger, more diverse population. Similar trends put Shawnee, Kan. on the short list as well.
Higher household income plus a proportionally larger young population gained Layton City, Utah a spot.
Population density indicative of compact development and less sprawl made Bend, Ore. notable to the researchers.
And closer to home, the Twin Cities suburb of Lakeville, Minn., gained recognition because its overall population is growing faster than Eau Claire.
As the students looked at the mid-sized cities that rose to the top of their list, they noticed they had one thing in common.
“Indeed, of the remaining cities, we found that virtually all of them were either suburbs or exurbs of larger cities,” the researchers stated in their report.
Mid-sized cities that stand on their own like Eau Claire haven’t seen the same degree of growth as those that are tied closely to a big metropolis.
“There’s very, very, very few communities that are growing among those metrics that didn’t have strong connections to a larger metro area,” Kemp said.
And how Eau Claire could benefit from the economy of the nearest big metro area, the Twin Cities, is the “million dollar question,” he said.
Aaron White, who has been Eau Claire’s economic development manager since late 2018, noted that part of the city’s sales pitch to potential residents is that it isn’t far from the Minneapolis-St. Paul area.
Downtown Eau Claire Inc. and the city’s economic development materials often point out that Eau Claire is about a 90-minute drive on Interstate 94 to the Twin Cities.
“Close proximity to the Twin Cities is a valuable piece,” White said.
Those promotional materials point out the convenience of being able to drive to and from that bigger metro area within a day, but then return to a smaller, less costly community to reside.
“Our residents here can enjoy it without having to live there,” White said. “It is a message we are going to start driving home more through our various media platforms.”
The economics students noted in their report that there is an ongoing campaign to bring passenger train service that links Eau Claire to the Twin Cities. While that transportation link has not yet become a reality, the researchers suggest the city do what it can to illustrate other ways Eau Claire is connected to the big cities that often attract young workers.
“Eau Claire has just about reached its potential as an isolated city. Growing by promoting the interaction and exchange of talented professionals and the workforce of Western Wisconsin and the Twin Cities is probably the surest bet to continue Eau Claire’s positive economic growth.” the report stated.
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When comparing Eau Claire to other cities in its same weight class, the researchers noted that the local median income level remains behind its peers.
“Eau Claire exceeds in many categories, but this is one it still lags, and raising wages is its best bet at internally increasing population growth, labor force participation rate, and standards of living,” the report stated.
Kemp, who currently leads the city’s Redevelopment Authority, said Eau Claire needs policies to encourage jobs that sustain a reasonable standard of living, while de-incentivizing those that don’t.
The city has limited ways to do that, but he suggests that it target its development funds at higher-wage industries and build infrastructure that would appeal to those companies.
The city and the Eau Claire Area Economic Development Corp. are both beginning to give a new look at industries that already have a home here and see if there are businesses in those fields that may want to relocate here.
Higher-end manufacturing and health care are two industries with a strong presence in the Chippewa Valley and good-paying jobs that the strategy is being applied, White said.
But that doesn’t necessarily mean public incentives to attract those businesses, he added, because communities who use that as bait often find themselves continuing to shell out more money to keep them.
Instead, the idea is to point out the area’s virtues including available land, existing buildings, transportation infrastructure and other amenities that would help their businesses succeed, White said.
Along those lines, the city government is working on plans to add more industrial park space as its existing ones are filling up.
While ready-to-build land and highway access are important to bringing in new businesses, Kemp said that’s not all that high-end companies look for.
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Using a broader definition of the term “infrastructure,” Kemp and his researchers stated that boosting the local economy also requires things like attractive parkland and other public spaces.
The rationale is that companies in need of a skilled workforce know that the employees they hunger for have the ability to choose where they live.
White has seen a shift in the workforce in the last few years with people willing to move to an area that appeals to them, even if they don’t already have work lined up.
“The new generation that’s coming out are looking for a great place to live and the job will follow when they get there,” he said.
The city’s current thinking is that having a community where people want to live, work and play is attractive not only to workers, but also high-quality employers.
Dale Peters, who will soon be retiring as city manager after a long career in the municipal government, said that has long been part of Eau Claire’s strategy.
“The economic development focus for the city of Eau Claire for past 25 years has been on quality of life,” he said.
The city government has played a role in arts and culture through its support for building a downtown arts center, participating in Creative Economy Week and playing a role in activities that boost the music and literary communities.
Leading efforts for a more environmentally sustainable community has also been a role the city has taken. In 2018, the City Council set a goal to have Eau Claire run on clean energy by 2050 and has since developed plans on how to reach that aim.
“People want to live in a community that cares about the environment they live in,” Peters said.
Eau Claire has more than 1,000 acres of city-owned public parkland, which Peters said is a large amount for a mid-sized city. And aside from a place for groups to play or have a picnic, those parks also host hundreds of events in a typical year, including outdoor concerts, festivals, farmers markets and foot races.
Building and gradually expanding a network of 35 miles of recreational trails within city limits is another accomplishment the city manager pointed to.
“The only other city in the state of Wisconsin that has more miles of trail is the city of Madison,” Peters noted.
Those paved trails are also seen as a public transportation amenity, allowing people to walk, run or ride their bicycles for recreation, to attend events, patronize businesses or even for their commutes to work.
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Ways people spend their wages also is a concern by the researchers, as Kemp noted that Americans spend more on transportation and health care than people in other developed nations.
Lowering costs in those areas would free up money so they could afford more for housing or other ways to live a higher-quality lifestyle, he said.
“That will be absolutely critical going forward,” Kemp said. “We need to raise wages, but also find ways to shift budget share.”
While health care is an issue larger than the city can tackle itself, it is providing transportation alternatives so residents don’t necessarily need to rely on driving a vehicle.
The city bus system and Eau Claire’s network of recreational trails are two examples of that.
A shortcoming of the city’s current public transit system that the researchers noted is the lack of late night and Sunday bus service. However, the students determined that adding more bus service would put a big pinch on the city’s budget and suggested different models to enhance public transit.
One suggestion is micro transit, a concept where a passenger vehicle smaller than a city bus with better fuel economy handles routes that people need on nights and Sundays. The researchers stated that this model, often done through a partnership with a private company, has been used with mixed success in other communities.
Another public transit solution proposed by the researchers is that some large employers help address transportation for their workers. They noted that Ashley Furniture Industries has done this with shuttle service to get workers from the region to its Trempealeau County factories. The report suggests that retailers could make a similar arrangement for workers that cover night and Sunday shifts in the Oakwood Mall area and other Eau Claire commercial hotspots.
A shortage of affordable housing, which has become a rising issue in recent years in Eau Claire and elsewhere, was also touched upon by the report.
It came to the conclusion that the city’s Redevelopment Authority should play a role in encouraging builders to make more housing for those making below the area’s median household income.
“If the RDA started the process by identifying the right locations to redevelop a few lower-income houses, the private market might see value in the redevelopment of more low-income houses,” the report stated. “Essentially, the public sector needs to spark the flame so that the private sector can keep it going.”
Some of that is already happening in Eau Claire with an apartment building under construction in the Cannery District, an area that the RDA is redeveloping.
The privately-funded project is getting incentives from the city for meeting certain construction benchmarks, but also tied to holding down rents for many of its apartments so they’re affordable to lower-income residents.
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The immediate concern for local economic development officials is recovering from the nearly two-month shutdown of many businesses due to the coronavirus pandemic. But White says that doesn’t mean the city should not have a strategy that also addresses challenges that existed before COVID-19.
“For the long-term it has not really changed anything,” White said. “We will eventually get back to a normal business cycle.”
Kemp agreed that in the midst of an economic crisis, it is important to pause, consider what is important and decide how the community could change moving forward.
“I think that every crisis presents an opportunity,” he said.