While the past year created multiple challenges for government agencies and institutions, it also brought growth. The officials interviewed by Springfield Business Journal say they will be using key data points to determine the way forward.
During SBJ’s final Economic Growth Survey Forum of 2020, on Dec. 16, leaders at the city, Springfield Area Chamber of Commerce, and Ozarks Technical Community College spoke with Editorial Director Eric Olson about what’s on their data dashboard.
Data paves the way
Hal Higdon, chancellor of OTC, says while the pandemic caused many people in the Ozarks to lose jobs, it helped his institution’s enrollment numbers. He says he looks at employment figures within the city to see what strategies the institution should implement to attract students.
“Back when unemployment was really high, we were growing 12%-13% a year. As unemployment has reached before COVID – a record low – our average age of student went from 28 in 2011 to 20 in 2020,” Higdon says. “That means we are not getting the nontraditional student because they are gainfully employed.”
According to an October report by the U.S. Bureau of Labor Statistics, the unemployment rate in Springfield is 3%. He says with such a low number, it has caused a tight labor market and enrollment numbers. Higdon says summer enrollment was up 14%, at about 4,000 students, but the fall numbers were down 3% compared with last year.
“When you look at that 3% number, most people would consider that a very good thing and generally it is,” says Springfield chamber President Matt Morrow, in the forum panel discussion.
However, Morrow points out the city has 11,000 fewer jobs than this time last year.
Higdon suggests getting individuals displaced from the hospitality and service industry interested in training for advanced manufacturing, welding and electronic media production.
“If we can’t grow workers because our unemployment rate is low, we can train up workers that are maybe in underperforming sectors,” Higdon says.
Morrow points to some promising projects to help workforce development. For example, Amazon.com Inc. (Nasdaq: AMZN) is building a distribution and fulfillment center in Republic scheduled for completion in 2021, according to past SBJ reporting. The distribution center is expected to provide 500 jobs. In addition, Morrow says the chamber this year has announced seven projects with other companies, such as expansions by American Airlines Inc., Kraft Heinz Food Co. and Red Monkey Foods Inc.
“You’re looking at about 400 new jobs – an average wage that is above the average for the area, about $30 million in new payroll, nearly $100 million in capital investment,” Morrow says. “Those are metrics that are really important.”
Jason Gage, city manager for Springfield, says now is a good time for people to reflect on the community, pull resources and collaborate with others.
“The strength of our educational institutions is key, it is absolutely key, and the ability for people to take advantage of that and get trained up. Then for that, we need to have wages that are sustainable long term,” Gage says. “We can do a lot of great things coming out of COVID.”
Future better than expected
Tracy Kimberlin, president and CEO of the Springfield Convention & Visitors Bureau, says while the coronavirus has devastated the tourism industry, it is slowly making a comeback. Just two months ago, Kimberlin says the city’s hotel occupancy rate was at 55%, which is up from a rock-bottom rate of 21% in April, according to past SBJ reporting.
“I hope we never see that number again because if we do, we will see a lot of businesses that will go out of business,” says Kimberlin.
He says the CVB’s budget relies on the city hotel tax, but it was wiped away due to the virus.
In fiscal 2019, Kimberlin says the city brought in $5.8 million from the hotel tax. He says the CVB receives 47% of that number which left the bureau with $2.7 million. For this fiscal year, he estimates $2 million from the hotel tax which equals more than a $700,000 loss, he says.
“It’s a very big hit; we also have other revenue,” Kimberlin says. “Our total budget for the fiscal 2019 year was $3.6 million.”
But he says he is optimistic about the future of the tourism industry in Springfield, especially with the community’s response to engaging in outdoor activities.
“Bass Pro camping equipment is flying off the shelves over there,” Kimberlin says. “We are also a drive market and when this is over most people are going to be driving on their vacations, as opposed to flying. They will be staying close to home. And that looks very good for us and Branson.”
Kimberlin says he is also excited about two multimillion-dollar sports complexes proposed to Springfield City Council. He says CVB’s sales efforts have shifted away from conventions and meetings to sporting events.
At the Nov. 30 council meeting, members unanimously approved the city’s intent to financially assist and fully support a $10 million upgrade to the Lake Country Soccer Inc. complex at Cooper Park. Council also voted on a declaration of intent to provide $4.4 million in funding for a privately developed multisport complex estimated at $12 million-$16 million in northwest Springfield near the Springfield-Branson National Airport and Chestnut Expressway corridor.
Gage says the complexes also will help with sales tax revenue with people dining and shopping in relation to the athletic activities.
“The private athletic complex was brought to us as an opportunity that not every community gets,” Gage says.
While Gage says city officials prepared for sales tax collections to take a financial hit during the pandemic, he says the numbers are better than expected. This came as a surprise since according to SBJ’s 2020 Economic Growth Survey, confidence levels in the local economy decreased significantly after COVID-19 hit. The SBJ Business Confidence Index fell 43% in April from a pre-COVID index of 143 in February.
Gage says the city budgeted to lose up to 20% over the past few months, but that didn’t happen.
According to Springfield sales tax revenue reports, the city recorded a 7% increase January-November 2020 compared with the same 11-month period last year. Additionally, sales tax receipts beat budget by 2.9% for the past 12 months ending in November.
“The overall spending economy stayed pretty strong, which is a good thing,” Gage says. “Now, will it stay that strong from this point moving forward? We don’t know, we think and hope it will sort of go back to normal.”
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