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Community Engagement

Are small towns the next big thing?

Public power utilities serve communities of all kinds and sizes — from vast rural counties to tribal nations, islands, and major metropolitan areas. When asked to envision the quintessential public power utility, though, people are likely to describe a utility that serves a small but vibrant community, one where people feel like they know each other well. Where utility management can be found chatting with customers about the latest storm while they are both shopping for groceries.

This vision has some basis in reality: About half of public power entities serve communities of 5,000-50,000 people, which aligns with the definition of small city or big town put forth by the U.S. Census Bureau.

It would be fair to say that when small cities and towns thrive, so does public power.

Migration

Over the past year, there has been ample talk about people moving away from big cities and showing increased interest in less crowded settings.

In the spring and early summer of 2020, more rural and suburban areas started to see booms in their real estate markets, while major cities, such as New York and San Francisco, saw their market decline. Articles in outlets including the New York Times and The Hill detailed to where people were moving from major cities because of the COVID-19 pandemic, and theorized on how long the trends would hold or how permanent the moves would be.

Even before the coronavirus pandemic, smaller cities and towns were growing at a faster pace than larger cities and suburbs in several regions.

According to the U.S. Census Bureau, from 2010-2019, small towns in the West saw a bigger population growth than large Western cities, with 13.3% population growth in small towns compared to 9.1% for large cities in the region. The South also saw population growth during this time, but small towns grew at a slightly slower pace, 6.7%, than big cities, which grew by 11.8%. The Census defines small towns as incorporated areas with 5,000 residents or fewer, and big cities as having populations of 50,000 or more. Midsize cities, which the Census defines as between 5,000-10,000 people, also grew from 2010-2019 in every region except the Northeast.

Some of the fastest growing cities and towns in each state, as estimated by the Census, are those that are served by public power, including Bentonville, Arkansas; Fairhope, Alabama; Lincoln, Nebraska; Sioux Falls, South Dakota; and Queen Creek, Arizona.

Immediate migration away from larger areas was possible among people with the means and money to make the move, and for those who could continue working remotely. While those who could move to smaller, less dense areas during the pandemic tended to be people with higher incomes, shifts before 2020 largely came from people with more moderate and lower incomes moving to areas to take advantage of lower housing costs and gain a higher quality of living.

Changing preferences

A Gallup poll conducted near the end of 2020 found that nearly half of respondents would prefer to live in a small town or rural area, representing a nine percent jump in this preference compared to 2018.

The number of respondents showing a preference for living in a small city remained flat, at about 16%, and the biggest jump came from people desiring to live in a “town” – which jumped from 12 to 17%. The type of community that saw the biggest dip in preference were suburbs of big cities – which dipped to 16% preference from 21% in 2018.

Gallup left the definition of these community types up to the respondents, so there might be a wide range in how people perceive what constitutes a small city or a town or rural area.  

The poll touched on preferences across various demographics and based on what type of environment people currently live in. Every demographic group saw an increase in preference for living in a town or rural area compared to 2018, with the largest increased preference among people living in the South, non-white adults, and those who identify politically as Republicans. The increases did not necessarily push all demographic groups to a majority preference toward small town life – for example, despite a 12-point jump from 2018, only 39% of non-white adults expressed a preference for living in a town or rural area. And people currently living in a small town or rural area showed a clear preference for staying in such a community – with about three-fourths of respondents selecting the lifestyle.

Success factors

Even among these statistics, not all communities fare the same. There are several reasons for why some small communities stand out as more appealing for inbound migration than others.

A major driver of growth is economic opportunity and jobs. A 2018 story in Forbes looked into small cities and towns that were thriving economically, with many of the featured areas having a connection to the energy industry – whether natural gas, oil, or wind – or benefitting from a resurgence in manufacturing and industrial jobs. The article points out how small cities attract companies to set up shop due to their relative affordability – including having lower electricity costs. Communities served by public power on this list included La Grange, Georgia and McPherson, Kansas, which have both seen a boom in manufacturing over the past decade.

Aside from attracting people and businesses with lower costs and job, the Forbes article rattled off a few factors that help smaller cities continue to expand, including having access to technology, quality education, and work-life balance. Such factors aren’t just simple amenities to add, but “only those small cities able to assemble the right mix of talent, market focus, and civic cooperation will succeed,” the authors wrote. For that last point, communities with a public power utility could be at an advantage, as they already have a legacy of civic duty and collaboration across various municipal entities.

A 2019 Walton Family Foundation analysis of the “Most Dynamic Micropolitans” echoed similar themes. The foundation defines a micropolitan statistical area as a location that comprises of “one or more counties with at least one city with more than 10,000 but less than 50,000 in population.” Census estimates from 2017 expected about 27.2 million people (8.4% of the U.S. population) lived in such areas. A small town is considered more dynamic if it shows growth in jobs, income and wages, and employment within new businesses.

Areas that were thriving in the metrics reviewed were those that “capitalized on location advantages” – whether that was in the form of recreation and tourism or by tapping the expertise and resources of its citizens. Public power towns in the top 10 of the rankings include Heber, Utah and Fredericksburg, Texas.

The report noted that Heber was thriving thanks to its proximity to outdoor recreation and an economic diversification plan that targets software devel­opment and information tech­nology, professional services, healthcare, and advanced manu­facturing. “Further, Heber’s Small Business Development Center Utah Valley University campus and Business Resource Center provide entrepreneurial support and mentoring,” said the report.

Fredericksburg was noted for growing due to booming wine production in the area, and the report mentioned that the town is looking at ways to diversify and strengthen other local industries.  

Replicating success

Every community’s path to success will be unique to them, but there are still some lessons to be learned from the communities who have developed meaningfully.

Site Selection magazine interviewed Ross DeVol, an author of the report, who called out seven actions that small cities and towns take that make a difference in supporting economic development that lasts.

The actions he noted are:

  1. Being aware and supportive of local entrepreneurship
  2. Working with local community colleges and high schools to encourage entrepreneurship.
  3. Training young people in the skills that major employers demand.
  4. Focusing on their niche industries.
  5. Refining their central value proposition.
  6. Recognizing that arts and museums attract people and firms.
  7. Continually evaluating the total portfolio of offerings as a business destination.

DeVol stressed that attention to recruiting and retaining small businesses, including newer startup initiatives, is a defining factor between successful micropolitans and those that are less so.

These success factors align with the Environmental Protection Agency’s smart growth program. The EPA released a Framework for Creating a Smart Growth Economic Development Strategy in 2016 that outlines tips, examples, and metrics for small towns – including those that want to diversify their economies and those that want to alleviate rapid development pressures that might be disrupting their small community atmosphere.

The framework’s guidance focuses on how small cities and towns can highlight their unique assets to support the local workforce, businesses, and quality of life. The EPA cites infrastructure projects as a potential catalyst for smart growth – which suggests that utilities planning major upgrades or changes to assets could be in a position to be key players in a town’s economic development plans. The framework also lays out a few infrastructure financing possibilities to support and encourage improvements to items such as outdated utility assets.

As the spotlight continues to shine on smaller communities, public power utilities that serve smaller areas continue to play an important part in making the communities shine – keeping costs low for businesses, employing local workers, and underpinning the overall quality of life.