Missoula County needs to tackle its relatively high crime rates, high cost of living and a dearth of office space and industrial property if it wants to significantly boost its attractiveness to new and growing businesses, according to a recent report commissioned by the Missoula Economic Partnership.
This past spring, the MEP and other partners hired a private consulting company called Garner Economics to develop a Competitive Realities Report and Targeted Industry Strategy for Missoula in order to identify ways to strengthen the organization’s economic development service delivery efforts.
The report made several recommendations, including implementing a local option sales tax, reducing duplicative efforts by consolidating economic development agencies and business assistance organizations, changing the target industry strategy to focus more in the experiential economy, and striving to increase workforce development.
The report found that in 2016, Missoula County had a comparatively high property crime rate of 3,526.4 crimes reported per 100,000 residents and a violent crime rate of 420.7 reports per 100,000 residents. Both of those are significantly higher than the state and national average, and higher than the 2011 rates.
The data come from the FBI's Uniform Crime Report for 2016, and include stats from the Missoula County Sheriff’s Office, city of Missoula Police Department and the University of Montana Police Department.
Missoula also has a high cost of living index of 103, with the national average at 100 and Montana at 97. The index measures the price for a set basket of goods and services. The high cost of the housing index, at 116, is the primary factor that inflates the overall cost of living in Missoula.
Missoula County’s poverty rate for children under age 18 is 18.9 percent, which is higher than the statewide average but lower than the national rate of 19.5 percent. However, the report found that Missoula ranks high on recreational opportunities, cultural activities, the general appearance of the community and almost no retail "leakage" (in which local residents travel to neighboring communities to buy goods).
One of Garner's key recommendations is that tourism development efforts and various other economic development organizations need to cooperate, coordinate and communicate more.
To achieve that goal, the study’s authors encouraged consolidating and reorganizing the MEP as a holding company, led by a president/CEO. That person would have authority over the Convention and Visitors Bureau as well as the Tourism Business Improvement District.
Also, a newly created City of Missoula Director of Redevelopment, Housing and Community Development would have authority over the Missoula Redevelopment Agency and that agency’s current underling, the Office of Housing and Community Development.
Ginny Merriam, the city’s public information officer and spokesperson for Mayor John Engen, said it’s too soon to say whether those recommendations will be acted upon. She said it would be a “long and thoughtful” process in which the TBID, Destination Missoula and other entities would be willing partners before any decisions are made.
Garner Economics suggested creating a “Business Solutions Center” as a one-stop location for various economic development organizations.
“MEP should advocate for the development of 25,000-30,000 sq. ft. office space,” the study’s authors wrote. “Ideally, 20 percent of the resulting development should be set aside for the City and MEP to house their respective economic development offices and to provide rental opportunities for technology companies."
They said the development should be targeted toward downtown.
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"This would continue Missoula’s role as a key player and factor in the redevelopment of downtown," the report continued. "This would provide startups and second stage companies opportunities to grow in the attractive Class A space and to attract and retain talent and grow their businesses. The development could be structured to encourage companies to find larger space as their operations expand and thrive.”
The report also noted that when Missoula competes with other cities when attracting new or relocating businesses, it is hurt by a lack of shovel-ready office space.
“Missoula’s Achilles’ heel is the limited availability of sites prepared for high-end office construction—Class A or B office space—and suitable industrial or distribution space (spec or available existing buildings),” the report said. “With speed to market being of extreme importance, the lack of these space options will cause Missoula County to be passed over by many of the recommended targets for a community that has these product options.”
The report also recommended implementing a local option sales tax, saying a ¼-cent tax on Missoula County’s estimated 2017 retail sales of $2.36 billion would generate almost $6 million a year.
Sales tax proposals are often met with contempt from voters in Montana, one of four states without a statewide sales tax, but the report said that the money could be used for industrial and office site development, municipal water and sewer in more areas of the county, broadband connectivity in the rural areas, subsidized air service and more.
“This type of initiative is transformational and would truly set the region apart from many communities in both Montana and the United States,” the report said. “This single effort would do more to transform the region economically and help to diversify its economy than any other recommendation noted.”
The report noted that Texas has benefited economically by allowing each city and county to vote on local option sales taxes as an investment to better sell themselves as a location for businesses by creating entrepreneurial development, venture capital, or early-stage investment funding.
“One example of the return and impact of such foresight is the State of Texas’ economic development funding model,” the report said. “In 1979, the Texas Legislature decentralized economic development by giving cities and counties more control over their destinies. As a result, site selection industry leaders consistently rank Texas as having one of the strongest economic development programs and as a best practice example of sustainable funding for economic development on the local level, with 680 local economic development corporations (EDCs) using some form of this funding mechanism. Texas has also ranked as the highest performing state in net new job growth for the last 18 years.”
The report also noted that MEP’s promotional budget and overall budget is low compared to peer organizations. The MEP’s total budget is approximately $700,000 a year, including $100,000 from the city’s general fund. Of that, $46,000 goes to marketing and promotional outreach. In comparison, the Economic Development Organization of Great Falls has an operating budget of $1.5 million and a marketing budget of over $200,000.
“This report is a valuable tool for the community as we consider the future of economic development for Missoula,” said MEP Board Member and Missoula Mayor John Engen. “I look forward, as a Missoula Economic Partnership board member and as mayor, to working with stakeholders to implement recommendations at a pace and scope that make sense for the organizations who work every day to make lives better for our friends and neighbors. We have opportunity aplenty and don’t want to waste it. It’s time for us to work together strategically and thoughtfully to put the report’s recommendations to work.”
MEP Board chair Scott Burke said that the MEP will look to community partners for “dialogue, feedback and collaboration” in the next few months as the organization works to address and implement these recommendations.
County Commissioner Jean Curtiss, who also sits on the MEP Board, said she and her colleagues look forward to working with community partners to identify the best way to move forward.
“Missoula County agrees with the Garner Report’s conclusion,” she said. “To remain competitive in economic development will require a focus on being more deliberate in how we communicate, collaborate and coordinate our efforts.”
The full report can be found online at http://www.missoulapartnership.com/wp-content/uploads/2018/06/Missoula_Final-Report__v7.pdf.