According to the U.S. Census, places with populations greater than 2,500 and less than 50,000 are deemed rural. Based on information from the last Census, in 2010 Nevada ranked third in states that had the largest rural populations. Nevada’s rural population made up 5.8 percent of the whole.
Rural Nevada often doesn’t get as much media attention as metro counties Clark and Washoe. During booms and busts, the focus is more often on Reno/Sparks and Las Vegas. But Nevada’s rural economies are based on industries that usually continue to perform through economic downturns, like drive-through and drive-to tourism, mining and agriculture.
“Rural Nevada has generally fared better than Las Vegas or Reno in regard to economic recovery, especially over the summer months, and just in the period of reopening,” said Brenda Scolari, director, Tourism and Cultural Affairs, State of Nevada. “For example, the room tax in July in Clark County was down 70 percent from the prior year, while outside Clark and Washoe, the metro counties, [room taxes] were down only 24 percent. Our latest figures for gaming are more current. They’re for August and show Clark County down 25 percent year over year and Washoe down 12 percent. Everywhere else in the rural counties is down only 2 percent.”
In the face of the coronavirus pandemic and resultant economic crisis, rural Nevada is doing better than its metro counterparts. When COVID-19 hit Nevada and Governor Sisolak ordered the shutdown of all nonessential businesses, a variety of industries stayed open in rural counties. Agriculture, mining and tourism are all economic drivers for rural communities. The first two were named essential and remained open. The latter became a draw for restless visitors fed up with quarantining at home. Great Basin National Park, for example, has broken visitor records in 2020.
It’s not just visitors hitting the open roads. Travel Nevada is promoting in-state travel for residents with its “Discover Your Nevada” campaign, encouraging residents to explore their own communities and beyond. The program even offers road trip itineraries. “Our intent is to capture travel spending within our borders,” said Scolari.
Rural communities like Tonopah are working with Travel Nevada to boost their local economies. Tonopah relies heavily on tourism, both visitors driving to the town as a destination and those driving through it on their way somewhere else and stopping to fill up on fuel and lunch. Tonopah has applied for COVID-19 recovery grants from Travel Nevada to reimburse marketing expenses on their safe and open campaign which promotes area businesses as open to business again and safe to visit, said Chris Mulkerns, administrative manager, Town of Tonopah.
“The greatest impact [of COVID-19] related to tourism has been the inability to hold events,” said Scolari. “The future of rural tourism will really benefit from lifted restrictions on the size of gatherings allowed. Every tourism destination depends on events, but smaller communities hold outdoor seasonal events that draw both locals and tourists, and those events really define the character of those places.” Concerts, rodeos and cultural festivals enhance quality of life for visitors and residents, and draw income from room nights and incremental spending related to the events.
“The economic climate seems somewhat steady at the moment, which is good news,” said Mulkerns. “Some businesses have closed and that’s heartbreaking. Others have rebounded well since the shutdown.” Others remained shuttered because they couldn’t meet pandemic safety requirements.
Mining is a mainstay in Nevada. Communities like Elko, Winnemucca, Battle Mountain, Lander and Eureka counties and Ely, mining is an obvious economic driver. The industry is in 15 of Nevada’s 17 counties, and has a presence of some sort in all 17, even if it’s just the headquarters of a mining firm. Even Clark County has a mine, near the Apex area.
“Gold is a countercyclical commodity,” said Tyre Gray, president, Nevada Mining Association. “Generally speaking, when we see the economy go down, the value and/or price of gold goes up.” It’s also a commodity, and the industry doesn’t dictate price, but the counter cyclical nature of gold is one reason Nevada’s mining communities made it through the 2008 recession more easily than the metro areas.
But the 2020 economic downturn has the additional challenge of a pandemic, and even the mining industry has seen disruptions. Supply chain disruptions slow production, and transporting workers is challenging. Most companies bus workers to sites, with 45 to 70 people to a bus. With social distancing requirements, only 15 can ride at a time. Shaft lifts, used to take workers underground in mines, can only take four to six at a time, instead of 20, which means load in and load out times expand from one hour to three.
“There are some communities that are experiencing difficulty, especially around hospitality, gaming and the tourism industry, due to the shutdown and social distancing requirements. That impacted all businesses across the country,” said Patty Herzog, director, Rural Economic and Community Development, State of Nevada. “In general, rural Nevada is holding its own.”
Which may be something of a letdown. Before March, the rural counties were doing more than just holding their own.
Maybe Don’t Call it a Boom
Before COVID-19 shut down the economy, Nevada was leading the nation in job creation. Overnight the shutdown made rural areas like Tonopah into temporary ghost towns.
“I don’t want to say we were having a boom, but we were getting there,” said Mulkerns. “We have a lot of drillers in town with the price of gold going the way it’s going – upwards. There’s a lot of exploration companies which brings residents to town in temporary residences.” Local RV parks are filling up.
Tonopah’s tourism stuttered when the pandemic hit, but then recovered.
“It dropped a little, but not like other places,” said Mulkerns. While the community felt the impact of COVID, they’re a natural stop between Las Vegas and Reno. Business travelers and road trippers stop for necessities.
There aren’t any new industries moving into Tonopah, but there are some next door that are promising an economic boost. In Esmeralda County, the Rhyolite Ridge Lithium-Boron Project owned by Ioneer is preparing to start up, and while it’s not in Tonopah, it’s workers will be housing there. Just south of Tonopah, the Gemfield Mine Project in Goldfield will be opening and staffing up in less than a year, with its workers also staying in Tonopah.
There are a number of organizations, private and all levels of government, that work together to fund rural businesses and communities. The number of organizations and opportunities has increased since the COVID shutdowns, getting financial aid to rural areas.
Nevada’s United States Department of Agriculture, Rural Development (USDA RD) operates in communities statewide with populations of fewer than 50,000. Which means pretty much everything outside of Reno/Sparks, Carson City and Las Vegas.
“Everything else we can service,” said Philip Cowee, Nevada State director, USDA RD, which has over 40 programs. With programs covering everything from housing loans to multifamily properties, business and cooperative program loans and infrastructure, the agency has everything necessary to build a community from the ground up. “So we can handle any type of project a rural community might have,” said Cowee.
USDA RD works with other rural community agencies like Rural Nevada Development Corporation (RNDC) which functions as an intermediary for them and over the course of that program has loaned out more than $6.75 million from USDA RD.
“The last year was definitely the biggest year I’ve ever seen,” said Cowee. “I’ve been here three years and the last was definitely the biggest volume year. I think we’re seeing that throughout the United States, there’s a huge need for our programs and the house programs basically went off the charts. I don’t know if it’s the fact that banks are coming to us more for the [loan] guarantees to basically take out some of the risk for them, but we’re seeing a huge uptick in business throughout Nevada.”
Rural Nevada Development Corporation (RNDC) has also seen an increase in funding requests from local businesses, from disaster relief to startups. “It’s amazing how resilient small business owners can be,” said Mary Kerner, CEO, RNDC. “We take higher risk deals than traditional financiers typically do, and we do loans in every industry imaginable, from the small handyman who needed $2,500 to the $300,000 manufacturing plant.” And everything in between.
The most recent startup RNDC funded was a welder who was laid off and rather than collecting unemployment, took his tools and certification and opened his own business, doing smaller jobs than his previous employer did.
Most financing requests are currently for disaster recovery and relief rather than startups. “From a lending dollars perspective we loan about $2 million a year with funding that comes in and people we help who have loans they’re paying off,” said Kerner. This year RNDC doubled what it loaned out in its last fiscal year in only three months.
Despite the funding programs and grants available in rural Nevada communities, and despite their essential businesses that remained open during the shutdown, there’s still a feeling of uncertainty in rural businesses and communities.
“Especially right now with COVID and what the governor is doing with some closures, it affects a lot more businesses than sometimes you would think. Some businesses [people may think] wouldn’t necessarily be affected are, because of who they supply their product to,” said Cowee.
The Finances of COVID-19
Throughout the pandemic shutdowns and reopening, existing programs in rural communities have been supplemented at all levels, from federal to private companies reaching out to help each other.
“Economic development professionals have gone above and beyond to make sure rural businesses receive their fair share of programs,” said Herzog.
Coronavirus Aid, Relief, and Economic Security Act – CARES – brought programs into rural Nevada including the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). Another was the Commercial Rental Assistance Grant Program, which provided $19 million worth of CARES funds statewide. In October the Pandemic Emergency Technical Support grant came online to assist small business owners in addressing operating needs, including buying provisions and stocking shelves, obtaining sanitizer, and masks for employees.
“RNDC has been very successful lending dollars to small businesses during the pandemic,” said Kerner. “Nevada Gold Mines made a charitable contribution of $5 million in July and together we established the I-80 fund.” Mining employs 17,000 to 18,000 people directly and is responsible for creating about 37,000 jobs from ancillary induced economic activities. While there’s mining in every county, the majority of production is along the I-80 corridor.
The first phase of the I-80 Fund covered disaster relief and recovery. The second is for economic sustainability of businesses located in Humboldt, Lander, Eureka and Elko Counties.
Other mining companies are creating similar funds in rural counties, supporting local businesses within their regions. “I think it’s smart,” said Cowee. “They realize once COVID is over and they go back to mining they don’t want communities to have dried up and businesses disappeared.”
Round Mountain Gold Corporation and Gemfield in Goldfield both came out with grant opportunities for businesses specifically to help pay rent and utilities. The Tonopah Main Street Program and Town of Tonopah worked together to make certain business owners knew about grant opportunities.
“We’re seeing private sector help, government support, and non-profit support, all working together to really provide as much support as possible to keep rural businesses open,” said Herzog.
“During the last economic recession Northeastern Nevada came through fairly well just based on the heavy gold mining industry,” said Cowee. “With the price of gold being up, Elko, Winnemucca and Battle Mountain, a lot of those communities along the I-80 corridor are still faring fairly well. There is some uncertainty with the gold companies, though, and the fact that the Legislature is planning to change the ways they tax mining companies.”
Mining is the 12th largest industry in Nevada and it represents a significant amount of taxes paid relative to its size. At 1 to 2 percent GDP, it makes up 5 percent of the Nevada General Fund. “We’re about two and a half times our weight in tax payments,” said Gray.
Changes proposed by the Legislature would change the net proceeds tax to a gross tax, and change the rate from 5 percent to 7.75. “That would create a 385 percent increase on the mining industry’s tax burden,” said Gray.
It would also remove the net proceeds payments that currently go directly to Nevada counties. “That would have devasting impacts on counties like Lander, Elko, Eureka, Ely, and Esmeralda, where their budgets are in many cases 40 to 70 percent based on net proceeds payments,” said Gray.
The impact of the tax increase could cause at minimum a 30 percent contraction in the industry, according to Gray. “In real numbers, that’s almost 12,000 jobs that would go away from rural communities.”
So in counties that continue functioning through the pandemic, are new industries looking to locate there?
“I think it’s a little early for that,” said Cowee. “When I get on regional development calls it sounds like there’s a tremendous amount of activity in northern Nevada, everything from manufacturing and warehousing. There’s a lot of talk – we’ll see how much turns into action – about getting some manufacturing back from China to the United States. Northern Nevada is set up well for those types of businesses to locate there.”
Things are happening in Nevada’s rural counties. The lithium-boron project outside Tonopah is new for the mining industry, probably a direct result of having Tesla in northern Nevada, suggested Herzog, and due to Nevada becoming a leader in the electric vehicle supply chain.
The real estate market remains strong in areas like Ely. “Folks from California looking to not only relocate their businesses, but also those who have the ability to work remotely and are looking for a rural lifestyle,” said Herzog. “Community members in Ely said folks are buying houses and bare land and speculating about building later. It’s interesting to see people taking another look at rural communities and lifestyles.”
The new Nevada Division of Outdoor Recreation should make it easier to utilize public lands for outdoor recreation, bringing more visitors into rural communities.
Travel Nevada tracks reasons visitors come to Nevada, and Scolari hopes the ability to travel and to have disposable income to do so will improve over the coming year.
“Our role continues to be that of marketing support to our rural tourism partners. We’re also the megaphone that spreads the word about Nevada and destinations beyond Vegas and Reno to domestic and international markets.”
That role is changing slightly as Travel Nevada will begin going into smaller communities to help them identify long range plans to develop their tourism and tourism-related products.
“[Rural communities should look] at all the possibilities, like industrial or agritourism, pop-up opportunities or what historic or cultural assets they might be able to develop within the arts community,” said Scolari. “There’s just so many possibilities.”