‘Why are you saying ‘Don’t worry about it’?’ Grand Forks scrambles as federal metro downgrade looms

Federal regulators are reviewing an update to the definition of a “metropolitan statistical area,” a key term that helps the government organize and classify American communities. Right now, one requirement is that its “urban area” has a population of at least 50,000. But the rule change could double that amount to 100,000, downgrading scores of communities around the U.S. to “micropolitan” areas.

By itself, the change might not mean much. But city leaders worry it could be the first step in a wider reordering of federal priorities — a cascade of changes in funding formulas and regulations, and one that could cause smaller communities to get left behind.

“Our concern is not about today, but it’s about what this might mean into the future,” Grand Forks City Administrator Todd Feland said. “When the federal government tells us ‘Don’t worry about it,’ we start to worry about it. Because why are you saying ‘Don’t worry about it’?”

The total Grand Forks “metro area” population, which includes both Grand Forks and Polk counties, is about 101,000 — 1,000 over the magic number. But that’s not how the rule works, UND economist David Flynn said. The qualification is based on population in that core “urban area,” which Flynn said appears to be just the city of Grand Forks, at a population of about 56,000.

Federal documents list Grand Forks as one of the metro areas at risk for a downgrade. And City Hall is worried that regardless of that “urban area” definition, Grand Forks may drop off the metro map.

“We are burnt toast under the new rule,” Flynn said.

The federal Office of Management and Budget asked for public input on those changes in January, with a deadline set for this weekend and a decision to come later. That’s kicked off a flurry of concern for nearly 150 communities around the country that could be affected by the changes, including Grand Forks, Bismarck and Minot — the latter of which has been on the cusp of qualifying as a metro area for years.

Shaun Sipma, the mayor of Minot, pleaded with congressional leaders in a Feb. 4 letter to oppose the new rule. He predicted that Minot could graduate to a full metropolitan area as soon as the 2020 census is tabulated, giving the city more funding and local control over transportation projects.

These rule changes, if finalized, could take it away, keeping all three North Dakota cities in the lower “micropolitan” federal tier, often competing for state-allocated federal money that must be divvied up among a wide range of small communities.

In coming years, that could mean a multi-million-dollar difference in funding. In Grand Forks, city leaders point out big sums upon which the city currently counts, like more than $480,000 in block grants that historically have supported housing for the homeless, the local social detox center and more — plus seven figures for local public transit.

Feland uses the city’s vaccination drive to sketch out the impact of federal funds — specifically, the federally subsidized public bus system that takes patients out to the Alerus Center, on federally subsidized thoroughfares, to get to the city’s public events center. He also mentions the millions of dollars in COVID stimulus money flowing into city coffers.

City leaders say that might not disappear, but it could be chipped away, or filtered through state bureaucrats with a long list of small communities to supply.

“Even if (funding is) grandfathered in, certainly things can change as new laws get changed, and new federal requirements change,” Feland said.

But just as pressing are the implications for the city’s prestige. Grand Forks enjoys a certain kind of cachet on lists of metro areas, sitting alongside big peer communities around the country. That goes away with a downgrade, and with it a lever that helps bring business attention to the area.

“It would eliminate Grand Forks on a lot of business recruitment lists,” said Barry Wilfahrt, who leads the local Chamber. “A lot of companies will hire a firm that will narrow communities down based on different size parameters. And if you’re (a metro area), that puts you in a different category than a smaller community. This would put us in that smaller community pool.”

Wilfahrt, speaking on Thursday, said he would be speaking that afternoon with the office of Rep. Kelly Armstrong, R-N.D., on the matter. And Sens. John Hoeven and Kevin Cramer, both North Dakota Republicans, signed a letter with six colleagues asking federal statisticians to reconsider.

“We strongly encourage you to reject any increase in the minimum urbanized area population needed to qualify as an MSA,” the senators wrote. “Adhering to this recommendation has the potential to harm communities across the nation, which we hope you take into account.”

RELATED: Read the senators’ letter here

Other signatories include South Dakota Sens. John Thune and Mike Rounds, both Republicans. South Dakota’s Rapid City appears to be one of the cities that could be downgraded.

Kevin Iverson, a demographer with the North Dakota Department of Commerce, points out that a decades-long change in living patterns means more and more Americans have moved to bigger, urbanized areas, slowly watering down the metro designation’s usefulness. Nowadays, federally defined metro areas include about 86% of the country’s population.

“The population of the country has doubled since 1950, when the MSAs were first created,” Iverson said. “And because of that, we’ve lost the intent over a period of time.”

For Grand Forks, though, size concerns are part of a long-simmering problem that goes back at least to the Flood of 1997. Federal data shows that workforce levels are more or less flat since then, despite growth in Bismarck and Fargo. Population has been flat, too — Fargo and Bismarck metro areas grew 17.52% and 16.02%, respectively, between 2010 and 2019. Grand Forks’ metro population, which includes Grand Forks and Polk counties, grew by just 2.21%.

RELATED: Grand Forks ‘running to stand still’ in jobs market and labor force, economist says

There are plenty of reasons that’s happened, experts say. The flood disaster cascaded into the 2008 housing crisis, which bled into the oil boom, which shifted state attention — and incoming residents — out west. Plus, there’s a dense knot of wage levels, housing market moves and job availability in the mix, all conspiring to send Grand Forks and other cities in different directions.

And then there’s Fargo.

“Fargo has become an 800-pound gorilla in the eastern part of the state,” Iverson said, pointing out that it’s grown so quickly as to economically overshadow places like Grand Forks. “Because it’s become so large, I almost compare it to a planet, or magnetic pull.”

That means that, no matter what happens to Grand Forks’ metro area designation, there are still thorny problems for community leaders to solve. How can Grand Forks manage to grow its economy amid so many headwinds — including a diminished Air Force presence at the local base?

“This highlights the need for a well-defined and articulated strategy with periodic benchmarking,” said Flynn, the UND economist.

More bluntly: whatever it is, Grand Forks needs a good plan.

Mayor Brandon Bochenski, who delivered his State of the City speech on Wednesday, outlined a long list of development projects now underway. And he said he’s optimistic about a pending state law that could let the city use more tax breaks to boost new parts of the community. He’s also written to federal leaders asking them to put a stop to the metro area rule change.

RELATED: Grand Forks Mayor Brandon Bochenski gives first State of the City speech

Wilfahrt said he’s pleased about recent manufacturing growth. And he made the argument that the metro designation is critically important not just in Grand Forks, but around the country — where scores of regional economies are depending on federal funding.

And although Wilfahrt acknowledged “headwinds” — like changes at the Air Force base and a transition at UND toward more online learning — he said he’s still optimistic for Grand Forks’ future.

“Grand Forks’ future is very bright,” he said. “You look at everything that’s on the drawing board, the amount of housing, the number of new projects — I’m very bullish in terms of the future of Grand Forks.”