While Nevada is one of the hardest hit states and still battling its way back from the recent great recession, the Nevada economy is made up of micro-economies. The state as a whole saw 13.2 percent unemployment in March, but the rate varies by county. At first glance, it might be assumed that Nevada’s rural communities are struggling harder than the metro areas, that’s not true in every instance. Nevada’s rural communities have their own personalities and economies, and some of those economies are doing quite well.
Where they’re not doing well is in perception. For a state that spans 109,826-square-miles, there’s plenty of room for outside interests to make erroneous assumptions. A bank headquartered in Rhode Island, where the state’s land mass is just under 1,045-square-miles, isn’t going to understand that while one Nevada county, Nye, the third largest county in the continental U.S. at 18,147-square-miles, is dealing with 16.4 percent unemployment first quarter 2011, the fourth largest county in the continental U.S. at 17,182-square-miles, Elko, is thriving.
Nevada was hard hit. Unemployment dropped to 13.2 percent in March and foreclosures rose to 16 percent in January, making it the 49th straight month Nevada has led the country in foreclosures. As a result, traditional lenders looking at startup and expanding businesses in rural Nevada have developed a rubber stamp “No Thanks,” lumping all counties and all communities into one Nevada macro-economy. And that’s just not true.
How Nevada’s rural communities differ from Nevada metro areas
Located at the junction of Highway 50 and US 95, 26 miles from Sand Mountain Recreation Area, Fallon’s a small community where neighbors meet each other at the grocery store.
“It’s great to still see kids on bikes and skateboards outside,” said Natalie Parrish, executive director, Fallon Chamber of Commerce. “That’s pretty rare in a lot of places. And what some people see as a disadvantage, but I don’t, is that networking is tighter. You know people. You can’t go to the grocery store without seeing somebody you know. You’re looking at generations here, people who haven’t left or who left and came back.”
“Carson Valley as a community is remarkably cohesive for an area with 40,000 residents,” said Bill Chernock, executive director, Carson Valley Chamber of Commerce & Visitors Authority. “There’s a real palpable desire to support local business and people go out of their way to do that.”
Those local businesses are many, and diverse. Many of Nevada’s rural communities have economies based on mining, which is doing just fine in Nevada.
Elko is a good example and is unique, according to Elko County Economic Diversification Authority (ECEDA) Executive Director Pam Borda, because it’s the fourth largest producer of gold in the world.
“Gold has really kept us from feeling the pain most have felt through the recession,” said Borda.
Closer to the metro areas the rural communities often have economies based on agriculture, said Mike Skaggs, executive director, Nevada Commission on Economic Development. Food companies continue to prosper even in a recession. “Food’s not a discretionary item, so agricultural communities have held up well.”
Some agricultural economies outgrow themselves. In Nye County, Pahrump started as an agricultural community, growing alfalfa and cotton, according to Al Parker, business consultant, Rural Nevada Development Corporation. But as Las Vegas grew, land became more and more valuable. Rather than agriculture, land was sold for residential and commercial development.
Fallon, located in Churchill County, has a three-part economy that’s fluctuated with the recession. Fallon is home to Hearts O’ Gold cantaloupes and has a thriving agricultural sector for an area its size, said Parrish; there are approximately half a dozen local organic farms.
Also home grown in Fallon is CC.Communications, which has remained steady throughout the recession.
Third, there’s Fallon Naval Air Station, a huge training facility which frequently brings in thousands of people for training, adding to the local economy (and subtracting from it when training is sparse).
Fallon’s felt the recession more in 2010 than previously. “We’ve had 79 businesses go out of business in the last year,” said Parrish. “We’ve definitely been hit. That effects everybody, the city the county. But I’m also very optimistic that we’ve hit bottom and have started back up.”
There may be yet another industry in Fallon’s future. According to Mike Skaggs, Churchill County is right in the middle of the geothermal activity for the state, and renewable energy is taking off in Nevada.
While agriculture and mining-based rural economies in Nevada may be holding up well for now, NCED wants to move to protect them in the future. “We know eventually history will repeat itself and there will be some sluggishness that occurs in the mining industry and there will be lesser employment opportunities available,” said Skaggs.
Assisting rural communities, NCED spearheads scenario planning, leading rural community leaders through an exercise that explores structural changes to rural economies and allows leaders to put in place actions to prevent lasting negative economic impacts, then play the strategy out to see what happens.
“I feel better than I’ve ever felt about the Commission being able to do its job in helping those communities prepare for changes in their economies, because they’re doing rather well and also being mindful about the need to shore up for the future,” said Skaggs.
Some of those communities are already dealing with structural changes to their economies. Mineral County has been hit a bit harder by the recession than some, said Skaggs, because they’re not closely connected with mining and a little removed from the Reno/Carson area. Lovelock, in Pershing County, was having a hard time before the recession ever hit.
Rural economic realities
Some non-mining communities are struggling, such as Nye, Lincoln and Mineral. Mineral has some Department of Defense work, while Lincoln has manufacturing and is looking hard in the direction of renewable energy on public land. Nye County has the test site. But all of them are struggling.
“They were challenged before the recession, and it just hasn’t gotten any better,” said Sarah Adler, USDA Rural Development state director. “But they have leaders learning to operate in the 21st century, and they’re not giving up.”
Suburban Lyon and Douglas counties, and rural and Southern Nye are suffering with housing markets, and people who lived briefly in Fernley and Dayton when housing was affordable there can now afford homes in metro areas and are tired of the commute. Lyon County, overbuilt during the housing bubble, has a lot of short sales and foreclosures and a lot of businesses feeling the pinch as residents move out.
Pahrump, located in Nye County, saw 16.4 percent unemployment in the first quarter of 2011 and Nye County itself has been listed as the fourth most economically distressed county out of 3,150 counties nationwide, according to Parker. The community, which has a largely tourism-based economy with visitors passing through (it’s a gateway to Death Valley and Las Vegas) is working with the USDA Rural Authority to create a Rural Microenterprise Assistance Program to make loans of $50,000 and less to new and expanding businesses.
Douglas County lost services during the recession, according to Chernock. The school district lost staff and at the county level, unfilled positions remain vacant, there have been cutbacks in personnel and depending on the Legislative session, there could be more.
“From a service level, however, I think all entities, the towns, the county, the improvement district, the fire and police and emergency response seem to have been able to keep service levels at what we expect historically,” said Chernock. “It’s to Douglas County’s credit that they began to run lean several cycles ago in anticipation of a slowing down and may have been better prepared for what ultimately hit in 2008.”
Not all non-mining communities are struggling. In the Carson Valley, the communities of Genoa, Topaz Lake, Gardner-ville and Minden are holding their own.
“I think our businesses that have been the best run have found it easiest to tighten things down and maintain some sort of bottom line,” said Chernock.
The area is known for its special events, from the Genoa Candy Dance Arts & Crafts Faire to the Cowboy Poetry & Music Festival held in Minden and Genoa, and attendance has been down in the last couple years. At the same time, the communities are making improvements. Genoa is improving infrastructure, hoping to become a destination, Minden is leveraging historic buildings in its downtown, and Gardner-ville is putting together a main street economic vitality program.
“What we were referring to a year ago when we were all trotting out cliches as the ‘new normal’ has truly become that and the business community here has gotten very good at working longer and harder at what they do,” said Chernock, characterizing the local mood as one of cautious confidence.
Guarded optimism is the outlook in Mesquite, a community of 20,000 that built a hospital and convalescent home six years ago as a selling point for visitors who decided to come and stay. Job creation followed closely when the community partnered with the community college to create training programs in healthcare, which in turn worked to keep high school graduates in the area with employment available.
Located 87 miles from Las Vegas and 36 miles outside St. George, Utah, it’s a snowbird destination that’s saw its second best month for visitor volume in 26 months this March, according to Anne Miranda, executive director, Mesquite Chamber of Commerce. In addition, 19 new business permits were issued between January and the end of April this year, as compared to zero in 2010.
And some rural counties are doing just fine. Esmeralda County, population 1,200 total, has been very aggressive about going after grants from agencies and controlling their resources and now are starting lithium mining, said Skaggs: “They have money in the bank.”
Helping Rural Nevada Thrive
Rural Nevada doesn’t have to go it alone. NCED’s Community Development Block Grant program works with funding for rural communities. Procurement Outreach teaches businesses to apply for government contracts.
USDA Rural Development partners with state agencies and works with traditional banking lenders to ensure rural counties have access to affordable housing, services and business programs.
Adler has watched different rural communities develop different needs over the last two years. Larger rural communities needing affordable housing assistance include near-urban communities of Fernley and Dayton, some rural Washoe County sites, Mesquite and in the south, Boulder City, Pahrump and Mesquite. Other rural communities have utilized USDA Rural Development business programs. One of those programs includes loan guarantees, bridging the gap between hesitant traditional lenders and Nevada business.
“We’ve done loan guarantees for businesses in Elko, Winnemuca, Boulder City, rural Washoe County, several places in the state,” said Adler. “We partner with organizations like Rural Nevada Development Corporation, which get funds from us to re-lend to smaller and startup businesses.”
One of the frustrations Adler’s office faces is the one-size-fits-all Nevada economy theory held by banks.
“It’s hard to get banks to make loans in [rural] communities because they’re underwriting out of San Francisco or North Carolina and think Nevada is Nevada is Nevada and one of the most hard hit states in the recession and they’re not being strategic in understanding mining-based counties are a different economy,” said Adler.
For example: Adler met with the Rotary Club of Winnemucca in May, trying to arrange a loan guarantee for a much needed apartment complex. But the bank USDA was working with was taken over by the FDIC and didn’t continue the process. The next bank insisted on a new appraisal because its loan officer didn’t believe the value stated in the existing appraisal. After some spirited discussion with the loan officer, Adler said, the deal is going to a loan committee with a minor update to the existing appraisal, but the better news is the loan officers from the Reno and Chico branches of Umpqua Bank are planning a field trip to Winnemucca to meet the business owner, look at the community and see for themselves just what’s going on in one of Nevada’s rural economies.
Several other misconceptions about Nevada’s rural economies persist. Many business owners looking to locate in Elko assume there’s a glut of empty buildings available cheap. There aren’t. Businesses aren’t failing in Elko County. The expectation and reality make Elko slightly less competitive.
Elko actually needs buildings. Families need multi-family housing. Mining companies need extended stay hotels for teams visiting the area. So the opening of a new Marriott’s extended stay hotel is very welcome. It’s also the result of a USDA loan guarantee because the municipality had trouble securing financing. After all, the project was in a Nevada rural community.
One industry sector helping pull Nevada rural communities through the recession is renewable energy.
“There’s been sincere interest in generating renewable energy in the state because whether it’s geothermal, biomass, wind or solar, those activities are taking place normally in rural areas,” said Skaggs. Average installation of a renewable energy project will put 40 to 60 people to work, but doesn’t keep them there. The construction project hires workers, but once the project is up and running, maintenance only requires only one or two people.
Ultimately renewable energy projects are meant to accomplish two things (in addition to the renewable energy project itself): to create jobs and to create a tax base, making the community desirable to businesses coming in that will contribute to the tax base that supports core services, education, fire, police and county operations.
One other industry holding fast in Nevada is transportation. As the transportation hub for the 11 western states, rural communities like Battle Mountain located at I-80 and Highway 50 and Caliente with its Meadow Valley and Alamo industrial parks are set for manufacturing and distribution. ECEDA opened the 400-acre Nevada Regional Railport Industrial Park in 2010.
Despite the one-size-fits-all theory, Nevada’s rural communities remain as unique as Nevada itself.