Errin Welty, Senior Downtown Development Director for the Wisconsin Economic Development Corporation.

May 25, 2023

Good morning. My name is Errin Welty, and I am the Senior Downtown Development Director for the Wisconsin Economic Development Corporation. I would like to thank Representative Armstrong and the Rural Development Committee for inviting me here today to talk about WEDC’s downtown development programs and their role in rural economic development.

Before I get into a deeper discussion of the Main Street and Connect Communities programs, I want to emphasize how critical thriving rural communities are to WEDC and to our state’s economic future. Creating communities where people want to live, work, and grow is essential to attracting and retaining both businesses and talent. At WEDC, we are investing in our rural communities through programs like the Main Street Bounceback Grants, Workforce Innovation Grants, Community Development Investment Grants, and the activities of the Office of Rural Prosperity. Since you have already heard Deputy Secretary Sam Rikkers speak about many of these efforts, I would like to remind you that the projects I’m highlighting here today are just one aspect of WEDC’s overall strategy on rural development.

The Main Street Program was established in Wisconsin in 1987 via Act 109 and welcomed its first five communities in 1988, three of which are still active members of the program. The Connect Communities program was created in 2013 to provide a mechanism for communities to build capacity for future Main Street status and to provide a broader platform for networking and collaboration among individuals interested in revitalization statewide. Over the life of the combined programs, we have served 164 communities with an average population size of 5,500 residents.

Both programs use the Main Street Four Point Approach to thinking about revitalization, which recommends that communities take a comprehensive approach to creating a vibrant downtown. This structure starts with a strong local organization to coordinate, oversee and track progress; focuses efforts on promoting high-quality public and private design to create places where people enjoy spending time, supports real estate and business investment to grow the local economy and markets the district as a place for the community to come together and make memories.

Both the Main Street and Connect Communities programs require communities to apply before they can participate. Through the application process, the communities must demonstrate they have a baseline knowledge of their districts and can engage with the program and have capacity to carry out projects locally. Main Street communities commit to hiring an executive director and maintaining a minimum budget, in addition to monthly reporting and attendance at professional development workshops, while Connect Communities participants pay a small annual fee, commit to attending at least two educational sessions, and completing an annual progress report. In return, participants in both programs receive access to a wide variety of resources such as toolkits, templates, case studies and an online chat group along with numerous training and networking opportunities. Main Street communities receive additional dedicated assistance in the form of direct staff outreach, market analysis, design assistance and consultant visits on a variety of topics based on local needs.

Downtowns are a critical part of the local economy and investing in revitalization has significant direct returns. As an example, we consider the market share of downtown economic activity relative to that of their municipality. Despite representing only, on average, 2% of a community’s geographic land area, the average downtown district is home to:

• 16% of all business establishments,
• 27% of all hotel rooms,
• 21% of all restaurant spending and
• 14% of retail spending.

Clearly, downtowns are an economic driver in their own right. But when downtown properties are fully occupied and include a mix of uses – including housing – they can also be part of a community’s talent attraction and retention strategy.

Our research shows that 12% of the average community’s residential units are located within a quarter-mile of their downtown. This figure is critical as we look to add housing capacity in our communities. We know that in many communities, housing is critical to attracting and retaining workers, and walkable neighborhoods and properties with historic character are among the most desirable for residents. There is also an economic benefit to increased downtown housing because these residents are twice as likely to spend money at local walkable businesses as they are if they have to drive to access similar goods and services. So infill and multi-family downtown development is not only good for attracting and retaining talent – it benefits the businesses within the community as well.

I would like to update you on some recent trends among our downtown members. The good news is that recent geofencing data shows that two-thirds of our downtown districts have more than rebounded over the past three years, with overall foot traffic up by 9% in 2022 over 2019. However, in the five downtown districts with the largest concentrations of office workers, changing work habits appear to have resulted in a 21% decrease in total foot traffic over the same period, although some of these areas simultaneously saw an increase in weekend and visitor traffic.

WEDC’s Main Street Bounceback Grants have also had a positive impact on both member and non-member communities throughout Wisconsin. As you know, nearly 9,500 businesses in all 72 counties received these $10,000 grants to help them move into previously vacant commercial spaces, encouraging would-be entrepreneurs to explore new opportunities and filling long-empty storefronts. As you may be aware, the Bounceback program was funded with federal recovery dollars and ended last December 31. Governor Evers included $50 million in his proposed 2023-25 state budget to continue the program with state funding.

While we continue to see growth and optimism in downtowns across our state, there are also some common challenges – most notably in the areas of access to financing and public perception.

Access to capital remains a challenge for entrepreneurs, especially for those in our smaller communities. With most new business openings coming from first-time entrepreneurs, these fledgling businesses have trouble raising funds, and often don’t have the reserves needed to survive unexpected setbacks. This is especially true for critical businesses in communities – restaurants, grocers, health care and childcare facilities which have high buildout and inventory costs. Some businesses are fortunate to have friends and family with capital, and others benefit from the presence of small local lenders, but many are unable to access loans from larger lower-cost capital providers.

Similarly, property owners acquiring historic buildings which may have decades of deferred maintenance needs struggle to make the necessary investments as a sole proprietor. Certainly tools like the historic tax credits and tax increment finance districts provide options for some projects, but many property owners are reliant on a local loan or grant program to assist with these improvements. Fully two-thirds of the property renovations that our team works on utilize some form of public assistance to happen. When such assistance is available, even small formerly vacant properties converted to productive spaces generate twice as much in property assessments and generate on average more than $75,000 annually in local economic activity following occupancy.

Challenges also exist for properties transitioning to meet modern needs. . Many historic buildings were built for a particular use and transitioning to a new use or mixed-uses requires adapting systems and structures accordingly. While life safety concerns are paramount, the cost to completely sprinkler and improve accessibility within a historic footprint can be exponentially higher than the property value, leading to chronically underutilized or vacant properties in many districts. The existing building code provides for some allowances to avoid or minimize these impacts, but these allowances are not widely known among architects, building inspectors and local officials, resulting in many projects which are simply rejected out of hand as too costly or deemed infeasible based on limited knowledge. Our team is part of a national task force working on creating educational materials and case studies that can be used to illustrate these strategies at the state and local level, together with effective strategies and solutions.

The final challenge facing our districts at present is the continued need to convince residents and local leaders that investing in our downtowns is an investment in a community’s future.  In the last few years, housing has emerged as a major workforce issue in nearly every community, and downtowns have a key role to play in providing both workforce and multi-family development. Not only can vacant upper floors and infill projects accommodate the demand for new units, but locating these units adjacent to local businesses provides a built-in customer base. It is critical that residents and community leaders continue to recognize that housing development is economic development.

I would like to close my remarks with some examples of Main Street and Connect Communities in our state are finding innovative ways to create attractive, thriving downtowns.

Orfordville, a community of under 1,500 residents in rural Rock County, joined the Connect Communities program in 2017. Local leaders had identified the largely vacant and unattractive downtown as a detriment to attracting the new family households needed to support community vibrancy and sustain its school district. The community formed a municipal economic development committee to support downtown revitalization projects, and using information gained through the Connect Communities program, undertook several strategic initiatives to revitalize their downtown, including:

• Engaging the UW Milwaukee School of Planning to update their downtown plan;
• Investing in streetscape improvements to make downtown inviting;
• Launching a façade improvement loan fund which has so far resulted in improvements to 16 properties;
• Securing two CDI grants through WEDC for catalytic projects; including converting a former gas station into a local food grocery and café and supporting a downtown infill development on the site of a former fire which added 10 residential units and accommodated two expanding local retailers.
• Additionally, the city wrote grants for city-wide broadband expansion, moved forward with planning and fundraising for a splash pad and park upgrades at their central park and partnered with a developer to co-develop a new subdivision to add new affordable family housing options in the community which opened this year.

Secondly, Mayville, a community of 5,000 in Dodge County, joined Main Street in 2018. WEDC worked with the community to create a branding plan, downtown waterfront and public space plan and facilitated organizational planning.

Since then, the community has made many improvements to public spaces including bridge lighting, kayak and bike rental stations, art installations and the creation of a public square which hosted 22 events in its first year. The city also formed a redevelopment authority and launched a façade program, which supported the renovation of 15 properties. A total of six net new businesses opened in previously vacant spaces, some supported by Bounceback grants and others through Kiva crowdfunding campaigns. Today, their historic schoolhouse, vacant for 20 years, is under renovation into apartments, and property values downtown are up 20%.

Mayville recently was awarded a Community Placemaking Award by the Midwest Economic Development Council, and WEDC recently produced a video on how this small community on the edge of Horicon Marsh became a popular destination for entrepreneurs and investment.

Before I take your questions, I’d like to share a video WEDC produced about Mayville and its community spirit.

Thank you so much for inviting me to address the committee. I welcome your questions.