A Small-Town Governments Role in Business Development and Recruitment

The city of Alamogordo, New Mexico is very similar to other rural small towns that have the disadvantage of not being located near a major interstate, not having depth in public transportation and having a school system with sliding results in literacy and math.  

The city of Alamogordo does have the advantage of being situated with White Sands National Park on one end of the city, the Lincoln National Forest just 15 minutes up the mountain from the city and located near Holloman Air Force Base and White Sand Missile and Testing Range.

Challenges facing the city is a solid tax base to fund roads and infrastructure improvements thus the city is heavily reliant on stand and federal grants to maintain the systems critical to business and residency.

For hotels and chain restaurants having the military nearby is helpful to business. 

However, having the military nearby plus two national parks plus a significant amount of BLM land makes the city very reliant upon government contracts and funding to sustain the infrastructure. The city has an opportunity to benefit from taxing tourism related activities but has chosen to limit that taxing. The city tax base also suffers from significant rebates in property taxes and discounting due to the large number of retired military veterans that qualify for lower property taxes as well as a significant number of church properties and non-profit properties classified as tax exempt. The city shares of the property tax itself, is minimal with the county grabbing the lions share.

How does a small town diversify its economy? How does a small-town government recruit business?

Tom Barkin delivered a speech at the Investing in Rural America Conference April 12, 2023, in Roanoke, Virginia that can provide some insight....

Over the last few decades, we’ve seen small towns struggle, particularly those that lost manufacturers who had historically helped build communities, employ residents, and forge local identities. As a natural reaction, economic development in small-town America has often focused on replacing those big employers in order to rebuild the tax base and reemploy those displaced. These efforts attracted heavy investment in time and money, but success wasn’t easy.

In the last few years, the focus of recruiting efforts has shifted. We saw it nationally with Amazon’s HQ2 decision a few years ago. When northern Virginia won this very competitive contest, the determining factor didn’t seem to be the direct economic incentives but instead the state’s workforce and commitment to develop an even stronger employee pipeline.

The same criteria are coming to smaller towns. As I talk to employers considering expansions and as I talk to community leaders trying to recruit firms, there’s an increasing focus on talent. You hear it most clearly in reshoring conversations; businesses question how they could relocate when they don’t have confidence they will find the necessary workers.

A missing link for many small towns is they just do not have the depth of talent locally from within to recruit business. Thus, the government and business development and recruitment officials and partners must also recruit talent to grow the city and to build a base for employers to want to locate there.

First, just as prospective employers need to hear a compelling pitch, so do prospective employees.

Small towns need to tell their stories. The last few years opened a door. Workers seem to increasingly value what small towns offer — space, affordability, the outdoors. And of course, remote work frees workers to live anywhere. But open doors don’t guarantee new workers will walk in. Each town is now competing with every other small town. That’s where the story comes in.

These stories almost always start with a sense of place, and there are a lot of options. In Lake City, South Carolina, for example, a nine-day art festival and competition has expanded the creative economy and brought crowds to town. With displays in a wide array of local venues, the town isn’t just showcasing art, it’s showcasing what Lake City has to offer.

Other towns create a sense of place by rehabilitating their downtowns and bringing in local shopping not chains, bars with entertainment and local restaurants.

If a town can’t tell a story on its own, in some areas of the country regions work together to bundle a story. In Northern California the collaboration of Napa County and Sonoma County reimagined what wine country tourism could and should look like. The two counties collaborate, and each have a unique wine country offering. Since this collaboration these two counties now have the second most visitor count in California excepting for Disneyland. 

In order for that level of collaboration to work and become a success government officials must learn to collaborate and work together and spin a unified public image of what is right about their community, from the achievements of their schools and their extracurricular activities and merging those school successes into the fabric of the city with events and showcases and partnerships.

In Napa and Sonoma from High School, vocational school and via the colleges; all are a part of the messaging, and all offer an education pathway that feeds the labor pool needs for skilled cooks, artisans, winery workers and skills staff for the emerging economy that is focus on arts, food, culture and wine. 

The cities of Sonoma and Napa message to business as a part of recruitment the skilled workforce that is passionate about the dominate industry that just 3 decades prior was an emerging industry. With high tech the industry has changed and so too has the education and the collaborations to keep that pipeline of skilled labor coming forward.

It’s not always about starting something new to create a sense of place but about successfully selling what you already are. These stories bring in new talent. But they also help keep kids from moving away.

Second, just as recruiters make a move easy for businesses, small towns need to make moving easy for workers.

In today’s world, the ultimate barrier to moving is housing. Every town seeing success is experiencing this challenge. Simply put, the math isn’t working to put new residents into affordable homes. We don’t have enough supply. And building is getting ever more expensive with construction, interest, and labor costs up.

Small towns face their own issues. Their housing stock is often less contemporary. Rough terrain and absentee landlords often inhibit construction. Developers often have better options elsewhere.

But I ask myself: Why can’t we change the math? If we can find the funding to create buildable sites for businesses, why can’t we develop buildable homesites for developers? If cities can transform office space into apartments, why can’t small towns repurpose their old commercial or municipal spaces into residences?

Clarksville, Tennessee, is a military town located with Ft Campbell Army Base within its edge. A city not that different from Alamogordo several years ago. The city grew from 60,000 residents in the 1980's to 160,000 residents. The growth has been spurred from a diversified economy, a University (Austin Peay) that is fully immersed in collaborations with the local school system and a school system that is adaptive to the changes in business recruitment and development by the city. The city was once the boot making capital and tobacco capital of the Southeast. It transitioned, reimagined and diversified. Many of the huge tobacco warehouses and old schools were retrofitted and converted into lofts and unique apartments and housing. Downtown was revitalized, parks were enhanced, and the city has a reimagined identity, and a sense of self and Clarksville is prospering.

It’s not always about starting something new to create a sense of place but about successfully selling what you already are. These stories bring in new talent. But they also help keep kids from moving away.

Second, just as recruiters make a move easy for businesses, small towns need to make moving easy for workers.

In today’s world, the ultimate barrier to moving is housing. Every town seeing success is experiencing this challenge. Simply put, the math isn’t working to put new residents into affordable homes. We don’t have enough supply. And building is getting ever more expensive with construction, interest, and labor costs up.

Small towns face their own issues. Their housing stock is often less contemporary. Rough terrain and absentee landlords often inhibit construction. Developers often have better options elsewhere.

But I ask myself: Why can’t we change the math? If we can find the funding to create buildable sites for businesses, why can’t we develop buildable homesites for developers? If cities can transform office space into apartments, why can’t small towns repurpose their old commercial or municipal spaces into residences?

Transportation is also a motivator to connect people to places of employment. It has attracted some controversy, but beach communities have transported workers into their markets for years. The city of Wilson, North Carolina, is trying a more tailored approach; it has partnered with Via Transportation to replace its traditional bus system with an on-demand micro transit service. This allows riders to get curb-to-curb rides for a low price, saving time and expanding access to those who did not previously live near a bus route. Approximately half the rides are to or from work.

Communities are also tackling more personal barriers to entry, like health or criminal records.

Re-entry matters as millions of American adults are incarcerated in local jails and state and federal prisons. Another several million are under criminal justice supervision in the community. As individuals serve their sentences and are released from custody, one thing is certain: The majority of them — approximately 95% — will return to their communities, families, and friends. As they leave custody and become our neighbors, it is important that we invest in these individuals and help them succeed and contribute positively to their families and their communities. Many will leave the institutional setting with the skills necessary to become contributing members of our local neighborhoods. But, unfortunately, many will not. As an example, many individuals will return to custody.

Research has identified common barriers to successful re-entry, including but not limited to the difficulty of obtaining gainful employment, stable housing, and education and strengthening prosocial support networks. These factors represent barriers because they can inhibit treatment and the ability to overcome criminogenic needs (the triggers or situational factors that may lead someone at risk to commit a new crime). Communities that have a solid program of outreach to those seeking re-entry and ensure those individuals are housed and have employment available to them are the communities with lower crime and also are key to new business development.

When recruiting new business things to consider...

Small companies are better for a small town than big ones.

Researcher Charles Tolbert of Baylor University found small firms are associated with positive factors like:

• Higher average incomes
• Lower poverty levels
• Lower income inequality
• Better health outcomes such as lower death rates from chronic disease.

Focusing on your existing businesses is more productive than recruiting.

That’s research from the Federal Reserve Bank of Kansas City.

“Focusing on the growth of existing small businesses and entrepreneurs can be a more productive and cost-effective strategy than recruitment of new businesses.”

Regions and towns with “more entrepreneurships have a higher gross domestic product.”

“Entrepreneurship helps raise incomes and improve the quality of life of citizens. Research has demonstrated that regions and local economies with strong entrepreneurship bases achieve faster and more sustainable economic growth.”

“Entrepreneurs serve a critical role in the social development of communities, especially in rural areas and the urban core of inner cities. Entrepreneurs are committed to their community’s long-term growth and viability. Local entrepreneurs are likely to remain in their community and be committed to philanthropy and community service.”

The KC Fed believes in this so much, they made a Grow Your Own Guide (PDF) for you to download.

Politicians enjoy announcing a big company’s arrival or an expansion at the military base or via a government contract because people tend to think that will mean lots of job openings. But in a rapidly evolving economy, politicians are all too likely to guess wrong about which industries are worth attracting and how long that government contract or the military move will be funded. What’s more, large corporations often generate little employment growth even if they are doing well in rural communities.

The answers for how to build a successful locally economy for Alamogordo and other similar small communities is one of focus every day. Of collaborations, of listening to local small business leaders outside of the traditional forums. The small towns that prosper are those small towns where leadership steps outside of the box, outside of the reliance upon the Chamber of Commerce and locals collaborate in new and unique forums to create growth.

Media, entertainment, the arts, history and fitness focused businesses are all areas of unquestionable opportunity for growth for the city of Alamogordo, and other cities within New Mexico for leaders willing to listen and take the leap to attract those ventures.

Source: City of Clarksville, City of Napa, City of Sonoma, Kansas Federal Reserve, Federal Reserve of Virginia, Baylor University

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