Letter from Langdon: Will 'Stimulus' Starve Small Towns?

Missouri Beef Packers plant, once a prosperous business in Atchison County, Missouri, sold to Cargill and closed
Photo: Richard Oswald

Rural areas in America are oases of agricultural productivity but deserts of economic development. Unfortunately it looks like there are forces aligned against our participation in President Obama's proposed economic stimulus package as many underestimate our importance.

Some are arguing that economic aid should be spent to benefit large municipalities. Bruce Katz, vice president of the Brookings Institute, proposes redesigning urban areas to make them more attractive to middle-income workers. Using tools like school vouchers and federal housing projects to attract middle-income earners back to the inner city, Katz plans to draw the workforce to where it could be used more effectively.

But focusing on city economies is often done at the expense of rural awareness and economic development.

For instance, urban sprawl has never been more apparent in the Midwest than now, in some of the largest Midwestern cities. Strip malls seem to be popping out of the prairie almost over night.

When a new strip mall on the north edge of St Joseph [1], Missouri, threatened an existing mall closer to downtown, taxpayers approved a special one-cent sales tax dedicated to renovating the older shopping center. That tax along with TIF (Tax Increment Financing [2]) incentives was expected to provide developers with over $46 million in capital -- very nearly the total cost of the project.

Developers got a free ride.

In Council Bluffs, Iowa, another mall [3] was threatened with bankruptcy when the REIT owner announced that it was having trouble refinancing about $4 billion in debt. Council Bluffs has been banking on tourists coming to the area for conventions, gambling, and shopping at many of the new stores that have sprung up. New roads and bridges were constructed to make the area more accessible from both the east, in Iowa, and the west, Omaha, Nebraska.

Thanks to obstruction by the Missouri River, Omaha's sprawl runs in only three directions. Outgoing mayor Mike Fahey initiated a renovation in part of the old downtown, directly across the river from Council Bluffs, by proposing a new sports complex. However some citizens are unhappy [4] that retail outlets aren't a bigger part of that plan.

Meanwhile, in Kansas City, taxing entities, mainly Kansas City area schools, are beginning to question [5] the value of TIF. Like the other towns mentioned, Kansas City has seen an expansion of TIF'ed shopping malls on its fringes.

Over the last decade, cities have spent a large share of their wealth on sprawl. So maybe Katz has a point about rebuilding inner-city infrastructure. But it is doubtful that projects that renovate and improve rundown neighborhoods would supplant ongoing efforts at the edges of towns where developers have been taking advantage of less costly real estate and tax incentives, unburdened by the heavy cost of demolishing decrepit buildings and streets.

Now, all the emphasis placed on retailing over the last few years seems questionable in light of a record-large recession, when many consumers will be tightening their belts.

Deteriorating bridge on Missouri Hwy 46 between Fairfax and Maryville
Photo: Richard Oswald

Uncontrolled urban shopping mall sprawl has created congestion, intensified the need for new roads and bridges and expanded construction around cities, driving up the costs of tax payer funded TIF. Funding for restoring rural roads and bridges often suffers as a result. Meanwhile, there's added retailer competition for limited consumer dollars. More farmland disappears under new concrete parking lots each year while inner cities are abandoned to blighted gangland neighborhoods and crime rates climb.

There's no doubt that Katz of Brookings and others will gain traction with the incoming administration when it comes to urban reclamation. Their call will be heard. But ignoring the needs of rural America in the bargain would be a mistake. The need for rural food and energy production has continued to increase even as our farm fields have been swallowed by spreading REIT development, and inner cities have been allowed to fade,

Thanks to short sighted rural policies, we've been fading too.

Big rural towns may have even better luck than large cities when it comes to attracting and keeping manufacturing jobs. (It seems the formula for success includes being a home to higher education situated at the crossroads of major highways.) Big towns usually boast health care facilities located inside the city limits, or at least nearby. Having an industrial park within an economic enterprise zone doesn't hurt either. Where big towns fall short is population; they need to draw labor from rather broad areas of the surrounding countryside, perhaps as many as four or five counties large. Mostly due to a willingness to grant tax credits and better political support, big towns are better at attracting TIF aided business opportunity than are their smaller counterparts.

High transportation costs last year drove many workers to seek housing closer to their jobs in big towns. But big towns still need to extract laborers from rural areas and the small communities surrounding them in order to meet their own demand. Even a relatively small town like Auburn, Nebraska (about 60 miles south of Omaha), with manufacturing, a hospital, a state university, and the NPPD Cooper Nuclear Power Station nearby, can't meet its own job demand without drawing workers from outside the immediate area.

Big towns in Missouri like Maryville or Moberly [6] advertise a workforce from four or five surrounding counties [7] to help attract new business and industry. Both towns boast of broad industrial assets, higher education, and health care. They are situated at the crossroads of major highways. Missouri has helped facilitate their expansion with four-lane highways linking them to other parts of the state as well as the interstate highway system. But the cost of job-commuting remains a disadvantage for big towns and their small town workers as the price of gasoline has risen along with the expense and frequency of maintaining infrastructure.

In big cities the cost of commuting makes good justification for light rail. If people can't afford the commute they'll look for employment closer to home, which makes it tougher for big business to shift jobs across broad spectrums of industry.

Some business leaders see cheap labor as an important asset [7] in itself. By cheapening the cost of transportation, we also cheapen the cost of labor. And by limiting rural development in lower population areas we accomplish the same feat for big towns at the cost of small towns, thus giving big business concentration a boost.

Our people have no choice but to drive, or move, to where the work is.

Along with shifting employment, low wages, and uncertainty, there can be other drawbacks for those who work for large corporations.

A worker I met at one big city business spent his entire working life at the same job. But while he had never worked at a different physical location, he'd had three different employers when the business was sold. Each time his workplace changed hands, all the workers there lost their accumulated company retirement. As the fellow described the situation to me, he had decided to retire after 40 years of service -- at age 58 -- before the company went on the auction block and he lost his retirement yet again. "I'm getting too old to start over a fourth time," he said.

The county where I live near Langdon, Atchison County [8], is also home to the town of Rock Port. Rock Port, population 1300, and neighboring Tarkio sit at crossroads of US 136, the same highway that passes through Auburn, Nebraska, and Maryville, Missouri. Rock Port has both rail and the Missouri River nearby, and a resource many towns struggle with; an ample water supply. Rock Port is served by a progressive cooperative telephone company and data center, its largest employer. Tarkio, once the home of Tarkio College, is desperate to find a use for the college campus which has been vacant for nearly 10 years. Another community in Atchison County, Fairfax, boasts a hospital. In fact, Atchison and Holt County residents combined with the Community Hospital Assn [9] (the county's single largest employer) are building a new hospital near Fairfax at a cost of about $20 million.

Residents of Atchison and Holt counties (MO) look at the plans for the new Fairfax hospital.
Photo: Richard Oswald

One would think that with state of the art communications, health care, and three strong public schools that Atchison County's workers would be in demand within Atchison County itself. Other than those employed in restaurants and truck stops serving Interstate 29, the telephone company, the hospital, schools, and the usual banks and other small businesses found in most towns, many residents must drive east, west, north, or south to their jobs. Others simply move away.

It has been proven time and again that rural people are willing to invest in their own communities for the creation of jobs and wealth. One such example in Atchison County was a business startup originally known as Missouri Beef Packers. Built almost entirely with local investment, MBP was a successful business injecting millions of dollars worth of jobs and profits into the local economy. Original investors, made up of local farmers and businessmen, enjoyed strong returns on their original investment. After a nearly unprecedented 10 year period of growth, greatly expanded MBPXL was sold to Cargill Incorporated, which named it simply, Excel. Today Excel is one of the three largest meatpackers in America.

But when hometown investors gave up control of their creation by selling it, we lost it all together when Cargill closed the original plant in Atchison County.

We were wiser, richer, and right back where we started.

Sadly, a second community effort to create local wealth and jobs almost 40 years later was stifled in part by the recent banking meltdown when the proposed renewable fuel refiner, Heartland Biodiesel, was unable to secure borrowed capital to begin construction even after Missouri residents, most of them in Atchison County, put up nearly 20 million dollars of their own money.

That was a huge amount of cash for so small a community.

If the new administration's economic stimulus package is to benefit rural America, it must be spent where it will create more than just jobs. The nation doesn't need more shopping malls. We need to do more things for ourselves, make more of the things and deliver more of the services that we have come to rely on foreign nations and corporations to provide. We need to build more of our own machines, and we need to fuel our machines not with imported energy but our own domestic supplies of energy. We can create fuel with local bio-refineries. We can generate electricity with wind. With the Internet we can process data for business or the health care industry, and store the data where it is safest. We can trap climate-changing carbon in our fields even as we produce real food, food that is free of illicit drugs and chemicals, food that Americans can trust.

As a result, our nation can be a better, healthier, safer place.

Economic recovery should apply as much to the rural America that has been in neglect and decline for decades, as to overdeveloped metropolitan counterparts. More than just stimulus payments are at stake here.

Rural areas of America don't hold all the answers to renewed prosperity, but we offer diversity and high quality workers. We possess a wealth of land and natural resources. We don't require access to the billions of dollars that private sector businesses hope to tap. We need the aid and understanding of state and national leadership that defends our rights to develop our own communities for hometown jobs "¦ to build up our prairie islands of hope. We must be allowed to realize those dreams for our own good and for the good of the nation.

We aren't just job-holders, we're stake-holders. What we gain still, for the most part, enriches people instead of corporations. We embody the American Dream.

The attitude of big business seems to be "give me the money and I'll do it myself, for myself." (We've already seen how that works.) That stands in contrast to "Hope" and a "Yes we can" attitude that has been a part of the rural mind-set for generations. Working together is nothing new for us when both nature and the machinations of man pose significant challenges.

We're still here, we're still waiting, and for rural America today, "Yes we can" has a whole new meaning.