Thursday, November 20, 2014

Ord, Nebraska, and the 1% Miracle

10/18/2011

ord sporting Ord Sunshine Pumpers Jennifer and Clay Ramsey have taken over Ord, Nebraska's oldest business, Misko Sporting Goods. Clay had a big job with Cabelas but with a low-interest loan from Valley County Economic Development, he and Jennifer moved back to Ord and have revitalized this 130-year old local establishment. With job creation the Holy Grail of today’s public policy, crusaders for employment should set their sights on Valley County, Nebraska. Between 2000 and 2008, according to the U.S. Census, non-farm employment in this rural county rose a staggering 42%. (During the same time period, non-farm employment increased just 7% across Nebraska and 6% nationwide).

Caleb Pollard, director of Valley County Economic Development, reports that the current unemployment rate in Valley County is 2.9%, less than a third the national average. What happened?

“We weren’t going to stand for decline any longer,” writes Pollard. In 2001 the city of Ord, the county seat, voted in a 1% sales tax to be used for economic development projects countywide. The impacts have been dramatic, not just for local employment and business but for the arts, for housing development, for health care facilities, and for architectural preservation, too. And maybe more far reaching than all these successes, Pollard describes “an epic shift in attitude.”

ord housing Ord Sunshine Pumpers There's a housing shortage in Ord, Nebraska. With $900,000 leveraged from its 1% sales tax, the city helped pay infrastructure and engineering fees for a mixed-use, mixed-income housing development. Local, county, state and federal officials joined Valley County Economic Development staff to break ground in October 2010.

Having experienced outmigration and business closures for 90 years, the same withering away that’s taking place in many rural communities, people in Valley County decided that, in Pollard’s words, “drastic measures” were necessary.

The City of Ord (pop. 2100), its Chamber of Commerce, Valley County, and the non-profit Greater Loup Valleys Activities, Inc. created Valley County Economic Development in 2000 through an “interlocal agreement.” But agreements alone don’t create jobs.

ord hot rods Ord Sunshine Pumpers Valley County Economic Development made its first sales tax loan in 2003: $40,000 to Valley Rods. The loan created three local jobs and brought three young men back to Ord -- from left, Trent Proskocil, Robert Goldfish and Branden Proskocil. A year later, the City of Ord voted in the 1% sales tax increase “by a wide margin,” writes Pollard. All proceeds have gone toward local economic development projects: expanding existing businesses, starting new businesses, developing sites, even building new housing.

“We made our first loan in 2003 and have been on a roll ever since,” Pollard reports. Over eight years Valley County Economic Development has capitalized over $4.4 million in investment and funded 38 business development projects “to the tune of $2.2 million,” Pollard writes.

The ambitious development effort has created waves. Since 2000, more than 105 new businesses have opened in Valley County. Pollard also points to “over $125 million in public-private investment (notable large investments include an ethanol distillery, new $23 million hospital, new $9.8 million high school, $1.3 million fire hall and a downtown revitalization project).”

Ord’s additional 1% tax on city sales has brought in an average of $400,000 per year in receipts; Pollard explains that “resuse, or loan repayment, adds an additional $180,000/year to the fund to give us approximately $580,000/year to work with.”

ord automotive Ord Sunshine Pumpers Skye and Doug Griess (center) were able to buy Paider Riverside Automotive with a $75,000 loan from Valley County Economic Development's sales tax fund. They renovated an old facility and instigated others improvements in the central business district of downtown Arcadia, NE, pop. 350. Skye is a native of Arcadia.

And all those revenues have not been spent in the city of Ord alone. Pollard is proud to report that the economic development fund has supported projects in all four of Valley County’s towns. “We were the first Nebraska community to collect sales tax funds in the city proper for use in the county as a whole,” he says. “A rising tide raises all ships.”

ord theater Ord Sunshine Pumpers Valley County Economic Development helped Brian and Kelly Magiera get a $106,000 community development block grant renovate a local theater for films, plays, and comedy performances. With the current anti-tax fever running high, is Pollard concerned that local voters will rescind Ord’s 1% for economic development? Not at all.  “The program is set to sunset in 2016,” he explains. Then the issue will go back for reauthorization. "We can point to hard capital investments (which everyone loves) as evidence of success," says Pollard. He knows there's work ahead for any tax measure, even one with as many visible benefits as Ord's sales tax has produced, but feels confident.

“We're not afraid of the anti-tax crowd,” Pollard writes. “We've completed over $33 million in public bond levies in three years for a new hospital, high school improvements and a new fire hall. We're used to fighting, and winning, this conversation.”

Comments

new businesses in Ord

I'm curious about what kind of new businesses succeeded in this town.  

Business Types

Greetings!

Thanks to the Yonder for this story on our community - we are both blessed and honored to see such a great narrative on our hard work.

Sheloregon asks: "What kind of new businesses succeeded in this town?"

We've funded business development projects in:
- Light, export-oriented manufacturing
- Retail
- Professional services
- Agribusiness and agri-service based
- Food service
- Greenhouse/local foods
- Technology
- Arts and Culture
- Health Care

We've hit quite a few different sectors, but this is our typical archetype of funding requests that come in. While we have funded both successful and unsuccessful projects, we've found that supportive measures are essential for new business start-up after the initial funding push. The national success rate for businesses after 5 years in the US is approx. 50%, we've tracked our success rate at around 78% last we made calculations.

Point is: yes, our primary efforts have funded business development but we've also invested for 11 years in bringing the technical assistance forward to help these business owners be successful beyond initial start-up. We also have a wonderful professional services sector here that is hands-on and very integral in making sure that our businesses have the financing, bookkeeping and financial planning assistance to be successful.

really?

Tax themselves into properity! Right.

Loan-Loss Ratio

Anybody with knowledge of the situation know the ratio of loan losses?

Really

Jack Veggie: Really - yes, we levied a TAX to fund economic growth. And the data is irrefutable, we have experienced growth from a hands-on perspective. Part of that has been tax-supported. I know its a crazy idea that government can have a positive role in economic growth but as we have showcased, it can be done.

BoogerCounty: The loan-loss ratio? We have had 2 loans enter default; 1 delinquent but it was taken care of before default. All the rest are in good standing.

- Caleb from Ord

The way things have gone,

The way things have gone, rural areas are dependent upon Social Security and other federals spending, Medicare and Medicaid, the smallest hospitals, the smallest education systems, primary care, and shortage area health funding. Ord changed this formula.

Social Security is relatively flat in growth - all things considered.

Medicare pays the least for services in rural areas and rural areas are Medicare dependent. Primary care is also 40 - 100% of rural workforce and come Jan 1, 2012, the cuts in Medicare or even a freeze (still 12% loss a year due to cost increases) will defeat the major source of workforce. Rural areas that are underserved are having to pay much more each year for workforce. Medicaid proportions are often high and Medicaid reimbursement is going down in 40 states - but the reimbursement was insufficient already.

Special funding such as CHC funding should be 40% rural not 20% based on poverty and need for workforce, but the grant based designs go to those politically and socially organized, including 200 zip codes that have the top workforce in the land. Grants are far more helpful to cities and cities also have additional workforce due to training sites, schools, programs, faculty, jobs, and economics from health care in cities.

Disaster funding also goes through block grant designs and these fail for rural areas in addition to less press coverage and needs easily forgotten or drowned out by urban needs (Katrina - New Orleans vs rural areas in 4 states).

The smallest education systems have not done well with federal designs that fail to compensate for lack of taxable property (federal lands) and federal funding that rewards concentrations of children in poverty (urban focused) rather than proportions in poverty (relatively higher in rural areas). Consolidations have also cost rural jobs in health and education and government employment as "centralization" is the focus when really the focus is cost cutting rather than needed services.

Ord chose to collect money to invest in its people and those who could be its people. Since there is little such investment in rural areas, Ord got a huge lead. Urban areas have had advantages for decades in this type of investment. The better Ord does in health care, the more stay around for health care, the more dollars from health care, the fewer dollars leave the community...

Ord was always one of the best sites to visit during 15 years of working with rural Nebraska communities and substantially changed the health situation. I was also impressed with the Rural Comprehensive Care Network in the southeast - dedicated docs and hospitals working together to develop health care and their communities.

Robert C. Bowman, M.D.