Quality of Life (QofL) Retail Recruitment Update

Posted on July 16, 2019 by DANTH

My Article

Back in 2017, I published “Quality-of-Life Based Retail Recruitment” in the IEDC’s Economic Development Journal (1). Among its main arguments were that:

Many of the new retail shops in our smaller and medium-sized downtowns are being opened by new or returning residents (boomerangers).
These new and returning residents are most strongly drawn by the town’s quality of life.
There are a lot of talented people who prefer the lifestyles offered in our small and rural communities, many of whom are now residing in other locations.
Many will not need new jobs, or they can bring their current jobs with them, or they will create their own new jobs.
They represent a substantial market segment that should be targeted by downtown EDOs in our smaller and medium sized communities. Such a program might be the most cost effective way to attract high quality independent retail operators to these downtowns.

New Data

Over the past year, I have had consulting assignments in a number of communities that are relatively rural and have populations under 35,000: Auburn, Cortland, and Oneida in Central NY, and Vinalhaven in ME. In the last few months, I also came across some research done in Minnesota, Nebraska and nationally that, I am embarrassed to admit, I should have found years ago, but that somehow eluded my earlier internet searches. These studies were done back between 2007 and 2015. They and my consulting assignments both provided new data and arguments that support the analysis I presented in my QofL retail recruitment article and expanded my understanding of many of the points I had made.

Rural Areas Have People in Creative Class Occupations, But Fewer of Them. a study published in 2007 of the creative class in the nation’s rural counties by David McGranahan and Timothy Wojan found that: “While in metropolitan counties about 30.9% of the workforce were in creative class occupations, in rural counties it was just 19.4%” (2).

People Being Drawn to Small and Rural Communities by Their QofL Assets Is Not a New Trend. The Buffalo Commons survey of the Panhandle Region of Nebraska as well as research led by Ben Winchester in northwestern Minnesota found that these rural areas had “brain gains” as well as “brain drains,” and that the incoming migrants were overwhelmingly attracted by a town’s QofL assets. For example, the Buffalo Commons survey found that migrants into the Panhandle’ counties were motivated by the desire for:

A simpler life, 53%
A less congested place to live, 50%
Being closer to relatives, 50%
Lower housing costs, 48%
Lower cost of living, 45%
A higher paying job, 39%
Living in a desirable natural environment, 37% (3)

Winchester’s study found that “There were a number of factors that were important in the newcomer decisions to move:

To find a less congested place to live , 77%
A better environment for raising children, 75%
To find better quality local schools, 69%
To find a safer place to live, 69%
To lower the cost of housing, 66%
To find a simpler pace of life, (66%
To find more outdoor recreational activities, 63%
To be closer to relatives, 62%
To live in a desirable natural environment, 60%
To lower the cost of living, 53% (4)

Additionally, the study by McGranahan and Wojan found that:

” The present analysis of recent rural development in rural US counties, which focuses on natural amenities as quality of life indicators, supports the creative class thesis”.
In the rural counties of metropolitan areas, “ The creative class moves into less dense metropolitan counties in search of a higher (more rural) quality of life; the building of a creative class (then) creates an environment for job growth; and this leads to further in-migration” (5).

The In-Migrants Are Often Quite Skilled. Both the Minnesota and Nebraska studies found that these migrants “have significant education, skills, connections, (and) spending power” (6). The Buffalo Commons survey found, for example, 45% of them had skills in the management, business, financial and professional fields. Many of them would be considered members of the “creative class”.

However, findings of the McGranahan and Wojan study suggest that the skill sets of rural and metropolitan creatives might differ in important ways. For example: more metropolitan creatives had college degrees, 56.2% than the rural creatives, 36.8%. while 21.4% of the rural creatives were self-employed compared to 17.1% of the metropolitan creatives (7).

Rural Innovation. A topic one might hypothesize is strongly related to workforce skill sets is innovation. One useful definition of innovation is: the introduction of “new goods, services, or ways of doing business that are valued by consumers” (8). A research report written in 2017 by Tim Wojan and Timothy Parker, of USDA’s Economic Research Service found that:

Urban establishments in nonfarm tradable industries were more likely than rural establishments to be innovators.
Innovation rates in urban and rural manufacturing industries are very similar.
In the service industries, the innovation rates of rural establishments are lower than those of the urban firms in the same service sector.
The manufacturing industries with the highest rate of innovators in rural areas were pharmaceuticals, chemicals, computers, plastics and textile mills.
The only tradable service-providing industries with a high share of substantive innovators in rural areas were telecommunications and wholesale electronic markets.
About 30% of metro establishments could be classified as substantive innovators, while only about 20% of the nonmetro establishments fell into this group. Importantly: “The metro-nonmetro differences in innovation are considerable but less than commonly assumed” (9).

Artists Havens. Another study published in 2007 by Wojan, Lambert, and McGranahan, “The Emergence of Rural Artistic Havens: A First Look” focused squarely on the issue of the ability of rural counties to attract the artist subset of the creative class in 1990 and 2000. Counties meeting some minimum employment levels and with more than 40 people in artistic occupations were deemed to be artistic havens. Functionally, the existence of an artistic haven occurs when “a minimum critical mass of artists or performers” has been established so that “members of the community benefit from substantial interaction among themselves and the group is large enough to affect culture of the wider community” (10).

The authors identified two kinds of artistic havens. “Existing havens” were those identified using 1990 census data, while the “emerging havens” were identified with 2000 census data. Altogether, only about nine percent of our rural counties then had such havens.

However, what was noteworthy in their findings was that the number of havens had doubled over a decade. (See table above).

The table below is based on the pooled responses for the American Community Surveys for the years 2007-2011. It was constructed by USDA researchers. Their results should be viewed as describing the situation during that time period. However, the ACS’s investigation of the number of “artists” is problematical because the average standard error on its estimates of the number of artists in each non-metropolitan county is about 45%. Nevertheless, the data may still be useful if we try to make some adjustments for that strong margin of error and treat the results as ‘directional” rather than definitive. To that end, instead of looking at the number of non-metro counties having more than 40 artists, I bumped the magic number up to 60. There are 668 non- metro counties that the ACS found having more than 60 artists, or about 35% of all non-metro counties. That suggests that there was probably a very substantial increase between 2000 and 2011 from the number of artistic havens, 199, Wojan et al identified in their 2007 paper. Prudence suggests refraining from claiming an exact number, such as 489 (668-199=489), but very substantial growth seems very likely.

Wojan et al explain that the strong relationship they found between the emergence of new artistic havens and the presence of large numbers of 25-44 year olds with college degrees is based on the highly educated workers being viewed as a very powerful proxy for quality of life” (11). They go on to state that: “The implications of these findings are that counties that have been unable to retain highly educated workers are less likely to attract artists in sufficient numbers to constitute an arts community”(12). That all sounds very Floridian, but the unstated implication is that a lot of these highly educated workers is necessary. There are several problems with that. Richard Florida is quite adamant in his argument that it is the type of work people perform, not their education levels, that is the defining factor of creative class members.

More importantly, there are small towns and cities like Auburn in NY where the percentages of college graduates, 20.7% , are quite lower than the nation’s, 30.9%, yet they are attracting between 50 and 100 artists who represent less than 0.5% of their town’s population. Nevertheless, they are able to build a sense of there being a recognizable artistic community, or “haven” in their communities.

Also, McGranahan et al reported that about 63% of rural creatives lack college degrees. Does that mean they lack the magnetism of other creatives? That seems highly unlikely.

If the highly educated workers are a strong proxy for QofL, then it would appear that more precisely investigating what the components of that QofL are is essential. The Buffalo Commons and the northwestern Minnesota studies give some strong indications about what some of them are. My own discussions over the years with creative types living in smaller towns and cities suggests that, while they certainly like having other creatives nearby, and appreciated the beauty of their area, also very important are such factors as being closer to family, a slower pace of life, having a stronger sense of community, affordable housing costs, having active social places such as eateries, bars, public spaces and arts and cultural venues . In other words, they appreciated central social district type venues and the activities associated with them.

Getting back to the table, some of the data in it are presented in ranges determined by + and – 45% of the original estimates. For example, the mean number of artists per non-metro is between 41 and 107. When the error factor was 8% or less, just the estimates are reported in the table. This mostly occurred with the data on creative class occupations. As night be expected, these data show that the non-metro counties will have far fewer creatives and they will represent a lower proportion of those employed than in the metro counties. However, these levels are not negligible.

While Young Adults May Be Leaving, 30-49 Year Olds May Be Returning. In both NE and MN, in-migration appears to have resulted in a surge in the populations of residents in the 30-49 years old age group in some rural locations (13). Of course, their populations in the young adult cohort show a consistent loss. This suggests that a significant amount of boomeranging may be occurring. The youths leave for better job prospects and a more urban life style, and many then return to small and rural towns later in life with more skills and resources that strengthen their new communities. For example, the Buffalo Commons survey found that 38% of the respondents and 32% of their spouses had lived in their current community prior to returning to it. Winchester found, though with a much smaller sample of 53, that 43% of the “new” residents has previously lived in or near their current community.

Boomerangs Are Important. One analyst has argued that boomerangers are not that important because they only account for 30% to 40% of the new migrants. To the contrary, it might more convincingly be argued that they are very important because no other prior residential location has anywhere near those numbers. Additionally, from the perspective of developing a business recruitment program that targets QofL prospects, there are several obvious possible networking opportunities with potential boomerangers that are completely absent with other prospects. Moreover, there have been several successful “Return Home” campaigns launched in communities such as Ann Arbor, MI, Scranton, PA, and Superior, NE from which much can be learned (14).

QofL In-Migrants Can Have Impacts Larger Than Their Numbers Might Indicate. My assignments in the Central NY communities was on a project led by the Lakota Group to assess the feasibility of establishing arts/creative districts in their downtowns. In each community, well-attended focus groups were held for local artists, arts leaders and business people. In each town, a strong majority of the creatives were either not natives of the town or boomerangs. When asked, most explained their reasons for moving to that town In terms of the QofL assets it offered.

Auburn. The situations in Auburn and Oneida are very revealing about the impacts these QofL migrants can have on the local business community. In Auburn, in recent years they have opened a number of shops that are very highly regarded by local leaders and shoppers. They are certainly viewed as much better operators than those who previously occupied their storefronts. Their current number is below 10, but their presence suggests that the downtown is now in a much more upbeat place on its revitalization arc. It can be reasonably argued that their positive impacts on the downtown far exceed what their small number might suggest. Moreover, even If they keep coming at a rate of only one or two a year, in a few years there will be a substantial bolus of them with more than ample customer magnetism and image making power. They are successful because they are bringing in strong skill sets that are even relevant if they do a career reboot, as well as significant financial resources.

It is interesting that when interviewed, these QofL migrant entrepreneurs say that the presence of a significant arts community in the Auburn was an important factor in their decisions to live and work in their new communities. Since the Finger Lakes area is filled with numerous scenic places, outdoor recreational opportunities, vineyards, charming restaurants and inns, and historic sites, Auburn’s arts assets probably helped it compete successfully with other towns in the region to attract these new merchants.

The leader of a local artists organization estimated that there are about 75 to 100 local residents who are artists of one form or another. That means that the city of Auburn, with a population around 26,000, today seems to be an artistic haven: it has besides its resident artists, nine major arts and cultural attractions that have a combined annual attendance of about 199,000 that brings about $6,273,356 in spending power to the city that local merchants can capture (see table above).

Auburn is now on the path of creating an arts/cultural district to help provide a support structure for its arts community and to help it have stronger marketing and promotional capabilities. According the Americans for the Arts, there are now over 300 culture districts in the US (see the map below). They are proliferating, though only a small proportion our 19,000+ villages, towns and cities have them. The number in smaller and rural communities is unknown, but they are not scarce: e.g., Peekskill, NY; Paducah, KY; Ridgeway (900 residents), Salida and Crested Butte in CO. As a point of comparison, BIDs started to appear in serious numbers in the early 1980s and today there are over 1,000 of them across the nation. The culture/arts districts have not yet had 39 years to grow in.

**The 300+ Cultural Districts in the US (Source: Americans for the Arts)**

Oneida. Downtown Oneida is now in the initial stages of its revitalization arc. Consequently, I was happily surprised to find in its struggling downtown a small group of independent merchants who are among the most marketing and internet savvy retailers I encountered in the overall project. While the old downtown retailers were dead or dying, these merchants were internet savvy and knew they had to tap consumers well beyond the town’s borders. One operates a vendor mart that brings a considerable variety of merchandise into town and provides some business incubation functions. Together, this group of operators formed a marketing campaign that targeted the visitors to a gambling casino located about an eight minute drive from the downtown. Two of these operators are boomerangs, and the spouse of one telecommutes on his job with a Fortune 500 corporation. Though the group is now small in number, it is modeling business behaviors for other merchants in the community, be they new or old, while bringing a badly needed perspective into the town’s decision-making about economic policies and programs. They are, consequently, helping to change the business culture in Oneida along several important dimensions as well as the way the downtown business community should be seen within the whole city. Moreover, I’ll bet their presence will attract more businesspeople who are like them.

Vinalhaven. This beautiful island is located about a 75 minute ferry ride off the coast of Maine. It’s roughly the size of Manhattan. It has a year round population of about 1,400 that bulges to about 5,000 in the peak tourist summer months. Lobster fishing and tourism are it major economic engines. Home-owners who are part-time residents and relatively longer stay home rentals are the most important components of its tourism. These renters are often annual visitors. The thing that binds the year round residents, the part-time residents, the long-stay renters and the fisherman is the island’s highly venerated quality of life. They are quite overt in their awareness of this. The community is also united in its concern that any growth in tourism should be balances so as not to endanger their strongly appealing QofL.

The island’s downtown is relatively small, with relatively few storefronts, yet it is still the community’s economic and social hub. On a recent visit, I found that several of its merchants were QofL migrants with impressive previous careers elsewhere in the nation. They opened their shops on Vinalhaven to provide themselves with some income and/or to keep busy. This often meant career reboots. Some of the more recent arrivals wanted to live and work on Vinalhaven so much that, because the of very high costs of flood insurance, they had to pay cash for their new business locations. On Vinalhaven, if you subtract the QofL migrants who opened businesses there, the downtown would be deader than a doornail!

Vinalhaven is also an artists haven. A local gallery reported that about 70 artists are associated with it who spend at least some part of the year in Vinalhaven. These artists have displayed an attraction to Vinalhaven’s QofL. The gallery not only provides the artist with a marketing channel, but also serves as the artists main local social venue. Robert Indiana was a longtime resident. His estate may be opening some kind of museum in the downtown.

BOTTOM LINES

The ability of small and medium sized communities in rural areas to attract talented new and returning residents because of their QofL assets is not a new phenomenon, but it has not been significantly strategically leveraged.
Rural QofL assets have traditionally been mostly as natural amenities. However, more recently, a high quality of life” is seen as being more broadly defined . That means that newcomers being able to perceive the presence of an ample number of people like themselves, strong central social districts humming with some vibrant restaurants and watering holes, and strong public spaces are increasingly the assets smaller communities will need to pull in talented new residents and boomerangs.
“Brain Gain” and “Brain Drain” can happen in the same towns, with the young adults leaving and mid-life adults, many of whom are boomerangers, moving in from larger, more urbanized communities.
Simply stated, the underlying challenge for small and rural communities is to have the brain gain be larger than the brain loss.
Some of these new and returning residents will open downtown businesses. Though early on their absolute numbers may be small, say just two to five, their influence on the downtown’s revitalization can be exponentially greater. The ability to even recruit 1 or 2 of such QofL entrepreneurs annually could have very profound positive impacts on a downtown. Smaller and rural communities do not have win hordes of new residents to see meaningful positive changes.
Potential boomerangers are an obvious market segment that a recruitment program should make a high priority target.
However, anyone visiting the town, especially on a recurring basis, should also be targeted – e.g., visitors to local hotels/motels, restaurants, parks, museums, theaters, etc.
Smaller communities are, well, small, so you do not need to attract hordes of creative class members — or their artist subset — to spark significant economic development.

ENDNOTES

1) See: https://www.iedconline.org/clientuploads/directory/docs/EDJ_17_Summer_Milder.pdf

2) David A. McGranahan and Timothy R. Wojan, “Recasting the Creative Class to Examine Growth Processes in Rural and Urban Counties”. https://naldc.nal.usda.gov/download/41989/PDF

3) See: https://unlcms.unl.edu/center-for-applied-rural-innovation/community-marketing/buffalo-commons-survey

4) See: Ben Winchester: https://extension.umn.edu/economic-development/rural-brain-gain-migration

5) See endnote 2

6) See endnote 3

7) See endnote 2

8) Tim Wojan and Timothy Parker. “Innovation in the Rural Nonfarm Economy: Its Effect on Job and Earnings Growth, 2010-2014.” USDA Economic Research Service. Economic Research Report Number 238, September 2017. https://www.ers.usda.gov/webdocs/publications/85191/err-238.pdf?v=0

9) Ibid.

10) Timothy R. Wojan, Dayton M. Lambert, and David A. McGranahan, “The Emergence of Rural Artistic Havens: A First Look.” Agricultural and Resource Economics Review, April 2007. https://pdfs.semanticscholar.org/fe36/86db666b2f5e0890e1898a80c844132aba1a.pdf

11) Ibid.

12) Ibid

13) See: Randy Cantrell, “Nebraska’s Rural Population: Growth and Decline by Age”. Rural Futures Institute at the University of Nebraska https://www.unomaha.edu/college-of-public-affairs-and-community-service/center-for-public-affairs-research/documents/policy-briefs/pb2015-nebraskas-rural-population.pdf and https://extension.umn.edu/economic-development/rural-brain-gain-migration

14) See for example: Dana Crater, “The talent competition, part 2: “Return Home” campaigns”. Posted to IEDC website on July 24, 2014.

Is Your Downtown in an Arts Archipelago? If So, Here’s How to Benefit From It?

Posted on March 8, 2019 by DANTH

By N. David Milder

Introduction

Across the nation over the past decade or so, the idea of using the arts as an engine for downtown and Main Street economic growth has attracted a growing number of adherents. One outcome of this advocacy is that arts districts, a.k.a. creative districts, are appearing across the nation. Colorado, for example has at least 26 of them, all formed under a state statute. These districts either cover a designated part of a downtown district or all of it.

However, very often, arts event venues and/or artisan work spaces in a small town or big city are mostly dispersed beyond the downtown’s borders. The town’s arts/creative assets then are much like an archipelago where the arts islands may have some smaller clusters, but overall there is a good deal of separation among them — as well as from the downtown’s businesses. Some of these arts assets can be 3+ miles from the downtown. In these communities, the downtown district only occupies a portion of the islands in the complete arts archipelago.

The notion of a geographically bounded arts district that only includes the downtown, or just a portion of it, consequently may not appear to make much sense in communities with arts archipelagoes. The objectives of this article are to:1) provide examples of such archipelagoes and 2) try to stretch the arts district concept to fit arts archipelago situations. The keys to achieving the needed conceptual stretch will be the presence of mutual interests and complementary assets among downtown arts and business stakeholders and the arts venues in the rest of the archipelago.

Reasons for the Dispersion

Since about 2010, our field observations in many smaller communities revealed that the dispersion of their economic and arts assets into numerous commercial nodes and individual locations started when they were even smaller and much younger. Consequently, it should not have been surprising that when we started working on a project in some of these archipelago communities, we found a high degree of long standing dispersion of economic and arts assets. In many small towns, for example, the former homes of illustrious people that were located in the residential part of town have been turned into museums. Many art and entertainment venues, such as museums, concert halls, PACs, casinos, stadiums, arenas, etc. did not locate in downtowns because they were so large and required so much parking that they did not easily fit into available downtown development sites. Downtown sites were also often much more expensive to develop because of land acquisition and demolition costs. Sometimes, too, community leaders wanted their prestige arts venues placed in park-like settings that could only be provided away from the downtown.

Individual creatives often find that downtown rents for residential and work spaces are too expensive or soon became so after they have pioneered improvements in the district. As a result, they frequently take cheaper places beyond the district, and in smaller towns, even in rural settings. Often, too, these creatives simply prefer working and living in a rustic rural setting.

Some Examples of Arts Archipelagoes

1. Manhattan, in NYC. Downtowns are one contiguous area, without any separations. For example, the Midtown CBD in Manhattan runs east -west from the East River to the Hudson River, and north south from about 30^th Street to 59^th Street. In contrast, Manhattan’s arts, cultural and entertainment institutions are more like an archipelago running from the Battery at the southern tip of Manhattan to the Cloisters near its northern edge. Yes, Midtown has the theater district, MoMA, the Morgan Museum, Radio City Music Hall, City Center, Town Hall and lots of movie theaters. But:

The large and powerful Lincoln Center is just north of the Midtown CBD
The Museum Mile – the Met, Guggenheim, Neue, Jewish Museum, Museum of the City of NY, Cooper Hewitt, and El Museo Del Barrio — runs along Fifth Avenue from about 82^nd street to 104^th street. The Breuer annex of the Met is on Madison at 75^th St.
Chelsea to the south of the Midtown CBD has tons of art galleries, the Joyce Theater (a favored venue for dance companies), the DIA Museum and the Rubin Museum.
Further south are the new Whitney Museum, the New Museum of Contemporary Art, the Museum of Jewish Heritage, the National Museum of the American Indian. There are several smaller museums in this area, too.
There reportedly are a total of 32 Museums in Manhattan and vying counts of 83 and 100 for all five boroughs.

Many, if not most, of Manhattan’s strongest and most important arts and cultural venues are not located in either the Midtown CBD or the Downtown Financial District CBD. Some of them are in clusters that might merit the term arts district being used to describe them (like the theater district).

2. . Cleveland, OH. Downtown Cleveland has some venerable and wonderful cultural institutions. Save for The Rock and Roll Hall of Fame, the most important ones are in two clusters about one-mile from the downtown core (Playhouse Square) and about three miles away (Severance Hall. the Cleveland Museum of Art, and the Cleveland Arboretum) near University Circle.

3. Auburn, NY (population around 26,704). This town in Central New York has an impressive number of arts-cultural-entertainment venues. The table above shows their annual attendance. They are sorted into three groups. At the bottom are those located in the downtown: the 16 restaurants and bars that have live music, the Auburn Public Theater, the new NYS Equal Rights Heritage Center and the Seward House Museum. Together, they have an estimate annual audience of 110,484. Above it is a cluster of venues that are about 0.5 miles from the downtown, containing the Schweinfurth Arts Center, The Pitch Theater and the Cayuga Museum. It has a total annual attendance of around 23,688.

At the top are three venues that are farther away from the downtown. The Harriet Tubman National Historic Park is about 1.3 miles away. On a different road, the Merry-Go-Round Playhouse and the nearby Ward O’Hara Museum are about 3 miles from the downtown. These three venues account for about 47% of the arts-cultural-entrainment audience in Auburn. It’s downtown business operators, especially those in the hospitality and entertainment industries, would be foolish to not try to capture the expenditures of the audiences of those three “distant” arts-cultural venues.

4. Cortland, NY (population 18,698). In Cortland, a relatively small college town, a very interesting, if complicated situation exists. First, the downtown lacks a strong formal arts/cultural/entertainments venue as can be seen in the above table. The Cortland Repertory Theater has a branch there, but only attracts 2,000 to 4,000 patrons annually, mainly in non-summer months. Its main theater is in Preble, a 17 minute drive away, and it attracts 18,000 to 20,000 annually. The venues that draw the largest audience are the cluster of six restaurants/bars that have live music, though the Courthouse Park with events there run through the Youth Bureau may have an unreported significant audience. Other downtown arts entertainment venues report annual attendances of 3,500 or less.

The town’s movie theater has the largest audience and it’s a 5 minute drive from the downtown. The other venues with relatively large audiences are not even in the city – they are in nearby Homer, a 7 minute drive, or a more distant Preble, a 17 minute drive.

The Importance of Nearby Areas

It is critical to recognize that the downtown arts district concept ignores the fact that the people and firms who are most likely to visit and use the downtown and companies who are likely to have business transactions with downtown firms are usually located not only in the downtown, but also nearby. They are the real core of the downtown’s traditional trade area.

How Near is Near? In dense urban areas, “near” usually means within about one mile of a downtown. But in less urbanized areas, where walking is less important, and autos are a necessity, the area within about a five-minute drive can be considered “near” – but what is considered an easy drive varies considerably geographically. In parts of Wyoming and Montana, for example, residents will drive for two hours to get to a major retail center.

Create an Organized Arts/Entertainment Community Instead of a Downtown Arts District

Basically, it is an arts district with flexible geographic boundaries that are defined by local economic, and sometimes political, realities. It is focused on and around a downtown district and combines in a formal organization:

The downtown’s EDO
Major downtown non-arts/entertainment stakeholders.
Representation from the local government.
Major arts/entertainment venues within an area that includes the downtown, but extends beyond it, much as the downtown’s residential trade area does (but the two will not be congruent). That extended territory might be called the Area of Mutual Interest (AMI). The extent of the AMI will vary by community and be determined by the existing and/or potential relationships between the downtown and the arts venues in the AMI. The AMI in most instances probably will extend one to two miles from the downtown, but in other, rarer, instances it could extend five miles, or even more.
Broadly defined creative micro and small businesses within the AMI: e.g., visual artists, crafters, tattoo artists, entertainers, chefs, brewers, makers, etc.

The objectives of the Organized Arts Entertainment Community are:

For the arts and downtown business communities, aware of how each can help the well-being of the other, the prime directive is to formally work together in planned endeavors for their mutual benefits. These benefits for the downtown might include: more downtown residents; more people employed downtown; more people visiting the downtown; higher property values and rents, and higher sales revenues for downtown businesses. For the arts organizations the benefits may be: better marketing; increased revenues, higher attendance; greater availability of technical assistance, and stronger cooperative advocacy programs.
For the creatives, the Community would aim to help increase their incomes by facilitating the more effective marketing of their products and helping their business operation become more productive. It would help these businesses grow to the level of the owners aspirations. The downtown would provide for the creatives physical places where their wares can be marketed or where they can perform, as well as places for social interaction like a White Horse Tavern or Cedar Tavern. It also would be the place where they are connected to technical and financial assistance providers. It also can be the place where their creative supplies are purchased, and their wares are fabricated.

What such an Organized Arts Entertainment Community might do:

Create a very place-centered marketing campaign focused on attracting more visitors to the AMI. It would feature multi-faceted opportunities to have rewarding and entertaining experiences not only in arts and entertainment establishments, but also in dining, drinking and pampering establishments.
For arts organizations, it would, for example, also provide:
- A marketing campaign that “tells the stories” of the arts at the overall AMI area level as well as at the level of the individual art organizations.
- Links for arts organizations to funders and assistance to improve grant proposal development
- Information about best practices, especially re marketing and how to increase earned incomes.
For the creatives, it would, for example, also develop and maintain a downtown entrepreneurial environment that will:
- Enable them to have their products more effectively marketed
- Help their business operations become more efficiently executed
- Provide social spaces that can stimulate social and business networking.

Why Members of an Arts Archipelago May Want to Work Together

Shared Common Interests. All benefit from:

Attracting more people to live and work in the AMI.
Attracting more people to visit the AMI, including trade area residents, day trippers, and overnight tourists.

Complementary Assets. Working together they become stronger attractions:

Every downtown and non-downtown organization that can offer enjoyable experiences adds to making the area of mutual concern more magnetic to residents, workers and visitors.
Non-downtown arts venues often lack nearby hospitality establishments for their audiences who travel significant distances, while the downtown may have a relatively large cluster of hospitality venues. Conversely, the non-downtown arts venues might bring in large audiences from distant places that the downtown hospitality venues could not by themselves attract.

The Downtown Benefits as It Meets Arts Community Needs. By doing the things that downtowns have long done, but with notable focus on the arts, downtown businesses can become more prosperous:

Assets of the community’s entrepreneurial environment that are located in the downtown
- Social meeting places for artists and artisans – e.g., bars, restaurants, libraries, co-working spaces. This can create magnets drawing non-artists.
- Offices and meeting rooms for arts organizations
- Technical assistance providers officed in downtown
- Financial services and assistance providers officed in downtown
- Affordable workspaces for artists and artisans – studios, rehearsal spaces
- Affordable downtown living spaces for artist and artisans
- Retail channels for artists and artisans; retailers have unique ,local products to sell, some new arts businesses may be started.
- Incubation spaces for arts related start-ups and micro businesses.
- Marketing and promotional opportunities
  - Arts presented/exhibited in public spaces such as parks and gov’t office buildings; this helps activate those spaces.
  - Arts presented/exhibited in private sector spaces such as restaurants, retail shops, office building lobbies; this makes them more physically attractive with more magnetic pull on potential users.
  - Arts presented /exhibited at arts shows, crafts shows, festivals; this increases their magnetism

Some More Specifics About Small Town Entrepreneurial Environments (STEEs)

Posted on December 17, 2018 by DANTH

By N. David Milder

Introduction

Back in October of 2017, DANTH, Inc posted my white paper “Toward an Effective Economic Development Strategy for Smaller Communities (under 35,000)”(1). A central concept in that strategic approach was the STEEs (Small Town Entrepreneurial Environments). I then stated that: “Though I strongly suspect that such environments exist today somewhere in the USA, to date, I have not encountered one.” I then proceeded to outline what I then thought the major components of s viable and effective STEE might be. Since then, I have done additional research and visited and worked in a number of smaller communities and learned a good deal more about possible STEE components. The objective of this article is to detail those recent findings.

Viewing STEEs as Informal Business Incubators.

For a number of years now, I have been arguing that small town downtowns could be informal business incubators. My recent work made me realize that STEEs function much like informal business incubators. They are informal in the sense that all the elements of a business incubator are not in one building operated by an organization tasked to do incubation. Instead, they are dispersed within a downtown in different locations, and each may have a separate management organization. An interesting blog post by Jim Metcalf on the SCORE blog argues that incubator functions may be spread beyond the downtown and be found in the whole small town (2).

Formal business incubators have long been a fairly widely adopted economic development tool. I would argue that they will always have a vital role to play for firms that have substantial growth aspirations, that yearn to be big in terms of revenues, profits and employees, that want to be the next Apple, Facebook or Amazon. However, that usually means that the formal incubator will nurture a relatively small percentage of the businesses in a smaller community. For example, the well regarded Wyoming Technology Business Center operates incubators in the cities of Laramie,Sheridan and Casper and:

In Laramie ,the incubator has 8 clients and there are 657 residents who are self-employed, but have unincorporated businesses in the city (see Table 1).
In Sheridan, the incubator also has 8 client sand there are 340 people who are self-employed, but have unincorporated businesses in the city.
In Casper, the incubator has 12 clients and there are 1,567 people who are self-employed, but have unincorporated businesses in the city.

Informal incubation functions can help the micro and very small businesses that are usually fairly numerous even in smaller towns, as is evidenced in Table1. Their operators very often have more modest aspirations, mainly focused on how to have more stable and/or higher annual personal incomes and the steps that might help them to achieve those goals.

Many of these micro business operators work from their homes. Back in the 1990s, these home-based operators were not deemed of interest by many economic development experts, because it was thought that their numbers were few and that they seldom if ever hired any employees. More recent research, however, suggests that their numbers are far from insignificant and, at least in some instances, can be very significant (3). As Dave Carlson, the administrator of Lancaster. WI, has noted, these micro businesses, in aggregate, can equal the number of jobs provided by his town’s largest employer. Also, recent research indicates that these home-based entrepreneurs may indeed hire some employees (4).

My recent work in a few smaller communities in Upstate NY confirms Metcalf’s view – the towns had many incubator components, and many were frequently being performed in the town, but not in the downtown. The downtown obviously will be stronger if it’s the location where the vast majority of these functions are performed.

STEEs Do More Than Micro and Very Small Business Incubation

STEEs are very much related to the nurturing of creative endeavors within our smaller communities. However, they can also be a huge asset in the retention of a town’s current creatives and the attraction of more of them from other towns and cities. Those in large central cities within a 2.5to 3.0 hour drive are where the best prospects now live and work.

As I have demonstrated in several other articles and as noted in a recent article in the New York Times, a significant number of big city creatives are being drawn to rural local communities either as second homeowners or in complete, year round relocations (5). These relocations are being motivated primarily by quality of life considerations. While many create new jobs in their new towns, others bring their old jobs with them or create new jobs because the local broadband pipe allows them to telecommute. More affordable housing , a lower cost of living, family, great scenery, and a stronger sense of community are other Q of L lures.

Table 2, below, presents 12 STEE functions that are in bold and underlined type. The more of them that are present in a town, the stronger will be the town’s ability to attract and retain creative enterprises. The more of them that are in the downtown, the stronger it will be economically. Under each function are “tools” that can be used to perform that function. Here, the question is not how many can be used, but the strength with which they perform. Better to have one thing that really works than several of marginal utility. Yes, it’s better still to have several that really work well.

Many town and downtown STEE assets are not recognized or properly appreciated by local leaders. This matrix can be used by downtown leaders to assess their STEE assets. This should help them to then determine:

The elements they may want to think seriously about adding.
How the existing elements can be organized so that they are better known and more easily utilized.
How these STEE assets can be marketed to attract more creatives to move and do business in the community and the downtown.

The matrix includes such typical incubator functions as providing a work space, technical assistance for business operations (e.g., marketing, bookkeeping, human resource management, etc.), networking opportunities, and help with financing. It also includes such things as affordable housing, accessible broadband, and an existing cluster of creatives – important factors in recruiting creatives. Additional elements listed are the presence of an organization tasked to maintain and grow the STEE and someone to manage the provision of technical assistance. Downtown EDOs have typically avoided like the plague the latter two types of endeavors, but one may reasonably argue that, under the new normal, cultivating a strong, vibrant STEE will need to be a growing part of their missions.

Some Observations About Specific Types of STEE Components

While in the past few years I have come across some co-worker spaces and a few incubators that are located in in small towns, they were not the STEE components that impressed me the most. Here are some that impressed me as being far more important.

Libraries. In more and more small towns, the public library has become – or is becoming – an anchor component for its STEE.Libraries are changing big time. As one blog has described it, many libraries are now “in the process of transitioning from a content collection-only facility to a content creation-inspired makerspace” (6). Not only do they provide spaces where “makers,” a term that is often broadly defined, can meet, learn from each other, and network, but they also provide a wide range of equipment the makers can use in the library. A few are even assembling an inventory of maker “kits” that are loaned out to makers for their use off site. Some librarians are arguing that libraries need to become “creative spaces.”

The Phillips Free Library in Homer, NY (pop 6,200) is a good example. It has two writers clubs, a film making club and a significant Makerspace, filled with a lot of equipment (see Table 3).

Arts Coops. In many of these small towns there are a fair number of artists and artisans. Few are likely to get all their incomes from their artistic endeavors, so many will need additional employment. As one artist in Small Town X told me, and several of his artist friends then concurred: “Small Town X is a great place for artists – except for those who want to earn a living.”

Most lack business related skills and want help in marketing and getting exposure. Unfortunately, it is often difficult to get these small town artists and artisans the technical assistance they need and often want because the assistance simply does not exist and/or the artists’ great need for independence, that they share with other small businesspeople, makes them resistant consumers.

In these small towns, getting say 20 artists and artisans the technical assistance they need may be a daunting and resource burning task.For that reason, coops are an appealing concept. When they are functional, they substantially diminish the needs of the participating artists for technical assistance. The coop can handle a lot of an artist/artisan’s marketing and bookkeeping needs, while creating a social network among the coop members.

However, coops are often unstable and short-lived. In recent months I have found one that closed, another that was reorganized and a third that appears to have some long-term stability. Even the venerable Torpedo Factory in Alexandria, VA, had a recent organizational and financial crisis. Someone, who was involved there on the management side, noted that managing artists was like trying to herd cats. Coop leaders very likely to face a similar challenge.

The questions that comes to my mind are:

Can the management of a coop be improved more easily, efficiently and effectively than improving the business-related skills of their 15 to 30 artist/artisan members? Getting them to individually attend an eight-to-ten month course comprised of four 10-hour workshops and up to six two-hour interim sessions, as a highly regarded program in Montana does, requires a significant amount of commitment from the artists/artisans.
The Montana program is indeed interesting and useful, as well as a model for similar efforts in other states. In Montana, it has improved the entrepreneurial skills of 400+ artists over 5 years, resulting in impressive increased net sales of 397% with a 44% increase in out-of-state sales, on average, since participating in the program. Nevertheless, I still find myself asking: could the development of a program aimed at making coops more successful be a cheaper and more productive way of meeting the technical assistance needs of artists and artisans (7)?

I do not know of anyone who has addressed the question of how to make arts coops more stable and successful. Someone perhaps should take a stab at it.

Vendor Marts. I have long been familiar with antiques malls, but somehow vendor malls, their kin, had not been on my radar until I recently came across one in a smaller community in Upstate NY. However, I had seen one in a downtown in NJ a few years ago that was being pitched as a retail incubator in the owners attempt to win support from the downtown’s EDO and city officials.

Indeed, my recently aroused interest in vender malls is precisely because of their incubation and STEE capabilities:

They provide small, maybe about 150 SF, and comparatively affordable spaces, maybe about $2,700/yr, for aspiring retailers, artists and artisans.
The vendors must “mind the store” and be behind the cash register for at least a few days a month, so they can get some retail experience. For many artists and artisans, whose primary concern is creating, not selling, this can be a very attractive feature.
Vendors that do well then can “graduate” and lease a regular storefront elsewhere in the downtown or town. The vendor mall I recently visited in Upstate NY had just had such a graduate.

Any competent downtown EDO should be able to set up a vendor mart in an empty storefront. It could increase the incubation capabilities of the vendor mart by helping the vendors learn about available technical assistance providers and then helping the vendors to connect with the TA providers. Of course, if the downtown already has a vendor mall, it could similarly increase their incubation capabilities.

Project Generated Local Investment Groups. A few years ago, in the twin cities of Scottsbluff and Gering in Nebraska, I came across informal investment groups that were formed within the local business community. One such group, for example, has helped the development of a new hotel in downtown Gering. I recently heard of similar type group being formedt o help fund the significant expansion of a local craft brewery in a smaller community also located in Upstate NY. The town may well have lost the craft brewery had not the local investment group emerged and taken action.

These groups usually are formed in response to a public need that has been identified by local officials or by well-known private sector needs.

Opportunity Zones (OZs). Recent congressional action has significantly increased the capital investment incentives that can be offered in OZs. While many in the economic development community are waiting to see how those incentives are used and the positive impacts they produce, there now is a hopeful optimism that those incentives can be powerful.

I have come across a number of downtowns that are entirely or partially covered by OZs, but do not tout them very much. Perhaps their new incentives are just too new for local leaders to figure out how they can be used. It also may be that the incentives go to Qualified Opportunity Zone Funds:

“A Qualified Opportunity Zone Fund is any investment vehicle which is organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property (other than another qualified opportunity fund) that holds at least 90 percent of its assets in qualified opportunity zone property (8).”

Many REITs and other commercial real estate investment funds are making OZ investments. For smaller towns to attract these big time investors, they will have to market the opportunities offered in the OZs and compete for the available investment dollars.

Might it be better to have the local residents and businesspeople who participate in the informal investment groups form their own QualifiedOpportunity Zone Fund?

Some Final Comments

Since I published the white paper I have been repeatedly impressed by what I have found in the smaller towns I have visited and read about. (See especially: “Our Towns: A 100,000-Mile Journey Into the Heart ofAmerica” by Deborah Fallows and James Fallows). I certainly recognized that they have significant challenges, but I also found a large number of capable and inventive people and capable organizations. Together, they are often building communities rich in their quality of life, if so far not in household incomes and corporate profits. There are often substantial human, organizational and economic resources in these communities that go unnoticed by outsiders and locals alike. Rather than disappearing, I expect that within the next 10 years or so our smaller communities, especially those within a three-hour drive of a major city, will become “hot” and attract many new residents and jobs. And that’s the view of a dyed in the wool New Yorker, who may like to visit smaller towns, but would never live fulltime in one – unless he has to.

Endnotes

1) See: https://www.dropbox.com/s/tnwdomfzwrkv5i1/White-Paper-Toward-an-Effective-Economic-Development-Strategy-for-Smaller-Communities-1.pdf?dl=0

2) Jim Metcalf. “Small Towns as Business Incubators.” SCORE Blog, March 29, 2018. https://www.score.org/blog/small-towns-business-incubators

3) “According to the 2012 GlobalEntrepreneurship Monitor (GEM) Report, 69 percent of all businesses are started from home and 59 percent are still operating from their homes three years later. Additionally, ‘only one-fourth of the entrepreneurs surveyed stated they had no employees working for their businesses. Given the high prevalence of entrepreneurs operating at home (two-thirds of Total Entrepreneurial Activity),this finding suggests that many actually had employees in their home-based businesses.’” Melissa Davidson. “FOCUSING ON HOME-BASED BUSINESSES: The Forgotten Sector. IEDC EconomicDevelopment Journal, Volume 17 / Number 1/ Winter 2018, pp.11-18, p 11.

4) Ibid.

5). N, David Milder, “Quality-of-Life Based Retail Recruitment: CommunitiesWith Populations Under 35,000,” IEDC Economic Development Journal, Volume 16 / Number 3 / Summer 2017. Seealso: Brooke Lea Foster. “Forget theSuburbs, It’s Country or Bust “ New York Times, Dec. 14, 2018 https://www.nytimes.com/2018/12/14/realestate/forget-the-suburbs-its-country-or-bust.html

6) There’s even a librarian guide to makerspaces. See: https://oedb.org/ilibrarian/a-librarians-guide-to-makerspaces/

7) For the Montana program see: https://art.mt.gov/map. “Artists in the program (2009-2014) report increased net sales of 397% with a44% increase in out-of-state sales on average since participating in the program, proving that the program works. The Montana Artrepreneur Program has earned national acclaim and has impacted nearly 400 artists across Montana.” “FY2019Activities

8) See: https://www.wellsfargo.com/the-private-bank/insights/planning/wpu-qualified-opportunity-zones/

Downtown Tourism: Boon or Bane?

Posted on December 8, 2018 by DANTH

By N. David Milder

Introduction

As my years spent in the downtown revitalization field increased, I gradually realized that I unconsciously had been working with the view that bigger and better defined a successful downtown. With time, I also realized –perhaps in an embarrassingly late fashion — that making a downtown better was much more important than making it bigger. Indeed, for many communities, a bigger downtown would essentially change the whole character of the town.

As I came to realize that better was more important than bigger, I also began to think more critically about tourism. Downtowns large and small are often lured into economic growth strategies with large tourist attraction components. NYC’s mayors and economic development agencies, for example, for decades have targeted tourist growth and lauded how many millions are attracted annually, how much money they spend, and how many jobs they generate. Smaller communities, especially those in rural areas, often see tourism as a major way to overcome the small populations and low consumer spending power in their market areas. It is often seen as a way to strengthen a Main Street’s retail shops. Well regarded organizations that work to support Main Street and downtown revitalization often suggest increasing tourism as a viable component of an economic growth strategy – as do many economic development consultants. Unfortunately, tourism can be a two edged strategic sword, a boon or a bane – or even a boon and a bane. In my experience, too may downtown andMain Street leaders leap at a tourist growth strategy without properly thinking through its possible drawbacks as well as its advantages

Some Boons and Banes

The Character of the Community. Over the past year, several articles have appeared that indicate that I am far from the only one who is concerned about what is, for me, the worst possible drawback about tourism: that too many tourists can change the character of a downtown and/or the community in which it is located. For example, the November 18, 2018 edition of the Washington Post had an article headlined:

“DETOURING. Top world destinations are overrun. Take our suggestions for roads not taken.”

Earlier in the year, the German newspaper Der Spiegel noted that European tourism officials were reporting frequent problems of “overtourism,”where too many tourists and/or unacceptable tourist behavior threaten to severely diminish the very attractions that lure the tourists. In response, local officials:

“…want to redirect the streams of tourists, as officials in Rome are trying to do, or even to limit them, as Dubrovnik is doing. Barcelona is no longer approving new hotels, Paris has strictly regulated Airbnb and other apartment?rental platforms….(1)

Nicole Gelinas, in a very thoughtful article in the City Journal, has argued that:

“While much of this change ( increased global travel) is positive in economic terms, the ongoing invasion of global cities by people who stay for a few days or a few weeks can fundamentally transform the character of places whose unique charms are what attracted tourists in the first place.” (2)

Gelinas goes on to argue that in the West’s central cities, tourist pedestrian behavior has changed their character:

“Central city sidewalks designed decades or centuries ago can’t handle today’s foot traffic, particularly when people don’t walk like the local commuters and residents of decades ago did.Today’s pedestrians walk slowly, several abreast, stop frequently to take photos or look at maps on their ever available phones, and wheel bulky luggage behind them, ensuring that fast walkers can’t pass. Tourists to a large extent have become the central cities.” (3)

Unhappily, Yogi Berra’s quip that “nobody goes there anymore, it’s too crowded” is increasingly applicable to many of our most attractive city centers, public spaces and arts venues. Can you really appreciate the Mona Lisa at the Louvre if you are standing 50 feet away in a dense crowd (while few are looking at the marvelous Raphael’s and Titians nearby?) Or appreciate an exhibition at NYC’s MoMA in rooms packed like a sardine can, but with people and no olive oil? Most visitors to both museums are tourists – 75% at MoMA, 70% at the Louvre.

Many NYC residents stay away from Times Square because it is too crowded, filled overwhelmingly with tourists and passé attractions – we no longer feel it is one of “our” places. It is this ability of overtourism to make local residents feel dispossessed that is most troubling.

Sadly, too, problems being caused by tourism are not confined to large central cities. In smaller towns, it is tourism’s insidious ability to make local residents feel dispossessed that is perhaps even more troubling, because a strong sense of community is what so many residents cherish about living in them. I have run into small town residents who feel that way in a number of communities such as Montauk, NY, Chatham, MA, and Lambertville, NJ. Montauk used to be known as the Hampton’s blue collar community, a great, affordable place that middle income folks could go for terrific fishing, attractive beaches, and some good, if funky, eateries. Today, it is the pricey summer recreational town for affluent hipsters. The whole tone of the town has changed.

In a very useful article, Tomoko Tsundoda and Samuel Mendlinger looked at the economic and social impacts of tourism on the small and very attractive town of Peterborough, NH( 4). They showed that there long has been an awareness of a number of wide ranging impacts, both good and bad, that tourism can have. On the positive side are:

Increased jobs
More business opportunities
More interesting shops and entertainments
Heightened demand for local housing and commercial properties
More tax revenues

On the negative side are:

Loss of the community’s character
Higher retail and restaurant prices
Higher housing prices
Businesses favoring tourist patrons over local resident patrons
Low-paying or unsustainable new jobs
Increased traffic and poorer air quality
More quality of life crimes

One of their most concerning findings was that wealthy families and working families may view the benefits of tourism quite differently.

Much can be said about each of the above impacts, but that would take a far longer article than this one. My key point here is that downtown leaders who are thinking about avidly pursing a tourist growth strategy should carefully assess these potential impacts on their communities.

Tourism as a Strategy to Improve a Downtown’s Retail

I do want to do a bit of a deep dive here because in recent years I have so often heard this argument offered by downtown leaders to explain why a tourist growth strategy should be developed.

I would say that, in my experience, almost invariably when clients and client prospects have suggested pursing tourist growth, their primary reason for doing so is to improve the downtown’s retail. To put the potential benefits in some perspective, it is useful to look at how much of tourist spending goes to retail, see the table above. It shows that, for example, tourists in NY spent about $64 billion in 2016, but only about 9.9% of this hefty amount went for retail. Expenditures for recreation and entertainment were slightly larger 10.0%,while expenditures for food and beverages was much higher, 23.7%. All of these expenditures can help the types of merchants that downtown can attract – if there are those types of shops already present or if the tourist spending potential is large enough to spark their development. In many instances, these types of operations do not exist, and the tourist spending potential is not sufficient to stimulate their creation. Retail in MS accounts for a seemingly impressive 26% of tourist expenditures, but this is partially due mathematically to the extremely low expenditures for recreation and entertainment. In NC, on the other hand, tourist spending for retail rivals, in absolute dollars, those expenditures in NY, and surpasses it on a percentage basis, 20.2% to 9.9%. In NC, the percentages of tourist spending that go for both recreation-entertainment and food and beverages are relatively low, but the level of absolute dollars spent does suggest that retail merchants in that state are rather good at capturing tourist dollars.

The above table shows the percentages of tourist spending that went for food services, retail and recreation in 11 multi-county regions in PA in 2016.Retail accounted for a lower percentage of tourist spending than food services or recreation. The highest percentage for retail expenditures among the 11 regions was 18% and the lowest was 12%.

My observations over many years suggests that towns with strong tourist sales all have strong retail offerings: outlet centers (e.g., Manchester, VT), major urban retail streets like Fifth Ave, Rodeo Drive, Michigan Ave, or ritzy tourist havens where lots of rich people have 2nd, 3rd or 4th homes (e.g.,East Hampton, Bal Harbor, Palm Beach).

Unique offerings in the other towns can indeed sell, but I hear more about how they can sell than I see merchants actually doing it.

In the towns most downtown leaders would want to emulate, quality merchandise is offered to tourists in attractive and often charming shops. Unfortunately, there are also towns that are tourist nightmares. I shall refrain from mentioning any of them, but they are usually busy, gaudy, and filled with a lot of shlock merchandise. As with obscenities, you know them when you see them.

Suggested Take Aways

The above leads me to make the following observations:

Most downtowns should not expect tourism to be the savior of their retailing. Retail expenditures will probably typically account for only 10% to 20% of local tourist spending. Tourism can provide local retailers with the equivalent of the whipped cream and cherry on top of a sundae, but not the two scoops of its ice cream.
Attractive local hotels and restaurants are likely to capture most local tourist expenditure dollars. Is a tourism growth effort worth it if those types of enterprises are by far the primary beneficiaries?
Crappy retail shops selling crappy merchandise will usually not capture many tourist dollars.But the real danger is that, if there is a lot of such shops, they just will attract a lot of crappy tourists. This can create town – tourist problems.
The major retail needs in many smaller communities are grocery stores, pharmacies, a hardware store, etc., the types of neighborhood retail that tourist expenditures are unlikely to support. If tourist focused retail is dominant, and these needs are not met, then some hairy town –retailer/tourist problems can emerge.
To attract lots of tourists, your town needs to be well-located and accessible. If you do not have significant levels of auto traffic now, or strong nearby scenic magnets, assume that you probably cannot quickly build a base of local tourist attractions that will significantly increase the flow of tourist customers.
To succeed you probably need enough local attractions to keep tourists in your downtown for four times the length of time it took them to travel there. Your downtown needs some real there, there.
If there are significant tourist flows nearby and your downtown is not capturing significant traffic from them, correcting that should be the first order of business of any tourism development program.
Tourism that endangers the community’s character is never worth it. Why kill the goose that’s laying golden eggs?
Yet, tourism certainly can be beneficial for a downtown. Programs to attract more tourists should be thoughtfully designed, with an eye on possible emerging problems, not just a look at potential financial gains for local businesses and residents.

ENDNOTES

1. Der Spiegel staff. “Paradise Lost: How Tourists Are Destroying the Places They Love.” Spiegel Online. http://www.spiegel.de/international/paradise-lost-tourists-are-destroying-the-places-they-love-a-1223502.html . Posted: 08/21/2018 01:20 PM

2. Nicole Gelinas. “Planet Travel. Globalization has created a tourist boom in world cities—but masses of tourists create new challenges.” City Journal. August 31, 2018. https://www.city-journal.org/html/global-tourism-16143.html

3.Ibid.

4.Tomoko Tsundoda and Samuel Mendlinger, “Economic and Social Impact of Tourism on a Small Town: Peterborough New Hampshire.” J. Service Science & Management, 2009, 2: 61-70
Published Online June 2009 in SciRes (www.SciRP.org/journal/jssm)

About the Dynamics Within the New Normal for Our Downtowns — in about 1,525 words

Posted on August 5, 2018 by DANTH

By N. David Milder

Introduction

I have been working in the field of downtown and urban revitalization since 1974. Back then, the riots of 1968 had brought considerable attention to our urban distress. Many civic and business leaders became much more aware of the cascading erosion their downtowns were facing. The white flight of shoppers and residents living in the downtown and close-in neighborhoods, disinvestment by landlords and businesses, spreading physical decay, soaring fear of crime, badly tarnished public images, and widespread frustration about not knowing how to reverse this situation were common problems in downtowns across the nation. Today, many of our downtowns have been thoroughly revitalized and become very popular places for people to live, play and work. Scads of other downtowns are in the process of doing so. These days, the expectation that downtowns can and will be revitalized has replaced the fears of the 60s, 70s, 80s and early 90s that downtowns were doomed to be places of failure, despair and decay. Downtown leaders now can tap a large and growing knowledge base that includes an array of tools and techniques they can use to solve the problems that had previously plagued our downtowns. Among them are: place-making, improving walkability, transit-oriented development, mixed-use residential development, niche marketing, BIDs, TIF, PILOTs, community policing, etc. This success — both actual and expected — and the knowledge base and leadership pool that support it, are some of the defining characteristics of the New Normal for Our Downtowns.

The Downtown Residents – CSD Connection

Successful downtowns, however, are not stagnant socio/economic/geographic organisms. Indeed, some of the factors that explain their success have also both changed the way they operate and generated a new set of problems that now need attention and solutions. For example, though it is generally agreed among downtown revitalization experts that the significant growth of housing in and near our downtowns has been a primary engine for their recent rejuvenations, questions recently have emerged about downtowns being turned into ghettos for the affluent. Still, the significant presence of these residential units are themselves an important and new phenomenon. Moreover, these new residents have created a significant new demand for services, amenities and merchandise that are not typically associated with the Central Business District (CBD) functions and venues that dominated our downtowns in decades past. These CBD functions and venues also have long dominated our understanding of how successful downtowns should operate and been the focus of most downtown revitalization strategies (e.g., retail growth, office development, job creation, transportation improvements). While many of these new downtown residents may also work in the district, their demand for and consumption of opportunities to socialize, relax and be entertained has driven the development and/or use of strong restaurant and bar niches, public spaces and parks, libraries and community centers, movie theaters, museums, PACs, churches, senior centers, etc. These venues are associated with a downtown’s Central Social District (CSD) functions.

Another defining characteristic of the New Normal is that successful downtowns have very strong CSD venues and, with increasing frequency, they are as important or even outshine those associated with its CBD functions. Some types of CSD venues have long been present in some downtowns, but the appearance of a bolus of downtown residents has generally sparked their significant growth while broadening the kinds of venues present. In turn, by strengthening these venues, the downtown residents have helped them be stronger magnets for people working in the district as well as daytime visitors from the district’s largest trade areas and for tourists from even more distant places.

The presence of these residents and the strength of these CSD venues also has changed the way a downtown operates. Most importantly, they widen the range of a downtown’s multi-functionality, increasing the reasons why people will use the downtown. By doing so, they also provide a steady and significant flow of pedestrians and customers that helps assure the district does not close down on weekends or weekdays after 6:00 pm. Strong CSD venues also make the downtown “stickier,” keeping visitors in the district for longer periods of time.

Strong CSD venues also make working in a downtown more appealing. In a labor market where many job offers now find no takers, firms located in strong CSDs are likely to find it easier to recruit quality employees. Moreover, many of the quality of life needs of creatives/knowledge workers are met by strong CSD assets. In smaller towns, strong CSDs can help attract quality independent retailers and Lone Eagle business operators.

But CSD Development Can Be Very Bumpy

Nevertheless, CSD development and growth does not always have clear sailing. Many communities may opt for CSD development projects that are ill-suited for their demographics, geographic locations, or industry trends, while they could have instead undertaken projects that were cheaper to build and operate and capable of attracting many more users. For example, advocates for new arts events venues such as PACs, theaters, and museums as well as for arenas and stadiums often badly over-estimate their potential economic impacts on the downtown, while underestimating construction and operating costs. In larger cities, major organizations in the opera, ballet, symphony orchestra and nonprofit theater fields are badly stressed having to cope with significant declines in paid attendance and financial contributions. In smaller communities, the impacts of new arts events venues on their downtowns are too often grossly exaggerated, and operating costs badly underestimated. Consistently, between 40% and 50% of arts nonprofits are financially in the red.

The most effective strategic path is to first focus on the strengthening and/or development of well-activated parks and public spaces, restaurants and watering holes, and movie theaters. They are usually the easiest to create and operate and have the fewest user frictions or are asset treasures that need to be improved and saved.

Though a lot of strategic planning is done for CBD functions and venues, strategic plans for CSDs are rare, but equally needed. While attention may be given to individual CSD projects, too many of such studies are marred by advocacy induced puffery. Very unfortunately, little attention is being paid to the CSD as whole entity.

Technology Is Creating a New Set of Problems

The impacts of technology are also strongly defining the New Normal. This is most apparent in the way the Internet is forcing the whole retail industry to search for a new operating paradigm and electronic consumption has reduced the brick and mortar consumption of the arts. How and when people shop is consequently changing in significant ways. They first research online and then shop the store for the targeted item(s). Strolling and browsing shoppers subsequently are on the decline. Many Americans are time-stressed, so many shoppers want quick, convenient retail transactions. Yet, many others want more interesting, more meaningful and more socially appealing shopping experiences. Shoppers have also become much more careful and deliberate when making purchases. While this is most strongly apparent among middle-income consumers, affluent shoppers are also showing signs of greater caution.

Changed consumer behavior, combined with growing online sales, have reduced the demand for downtown store locations and the amount of space retailers want for their new stores.

While downtown retail shops will not disappear, they almost certainly will change in the way they operate, the amounts of space they each need, as well as the types of locations they will want.

Yet, as my discussions with potential clients demonstrate, many downtown organizations still see retail as a key element in their downtown’s future, while largely disregarding improvements to their CSDs.

The appearance of app-driven car services such as Uber and Lyft have already impacted on traffic congestion and the use of public transportation in several large downtowns. The imminent use of automated vehicles – e.g., by Waymo soon in Phoenix – will likely have important impacts on traffic congestion in a host of additional downtowns. What these impacts will be remains uncertain- as do the possible remedies to those that are harmful. The transition to automated vehicles will probably take 20 to 40 years, with different issues dominating downtowners’ concerns at each stage of its progression.

Success Can Create Problems

The very success of our downtowns also has created its own set of problems. For example:

High housing demand has created a very serious affordability problem for many downtowns and their nearby neighborhoods.
Downtown success usually means more pedestrian traffic. For example, from 2009 to 2015, pedestrian growth in Manhattan’s economically healthy central business district grew by about 18 to 24 percent. At what point does the density of downtown pedestrian traffic become uncomfortable and unappealing for pedestrians and detrimental to an area’s image and popularity? The uncomfortable density of users is already occasionally being felt in such famed public spaces in NYC as Times Square, Bryant Park and Central Park. Will those instances of pedestrian congestion increase? Some of the managers of these public spaces seem unconcerned about pedestrian congestion. Indeed, they seem to be committed to having the largest number of visitors possible.
As a recent study of Center City in Philadelphia has shown, greater downtown development density increases traffic congestion.

Postscript.

This is part of book proposal I am writing. I’d appreciate hearing if you would be interested in a book that expanded upon the above content. Please let me know at [email protected] .

N. David Milder at DANTH, Inc.

Downtown Revitalization Specialist

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