Small cities fret over feds redefining metro areas

More than 140 small cities across America are worried that the federal Office of Management and Budget is about to hand them a demotion.

Their anxiety stems from a group of technical advisers who proposed the office change the standard by which it measures what qualifies as a Metropolitan Statistical Area.

The panel has recommended raising the threshold for a metropolitan designation from 50,000 residents to 100,000 residents, the first major change in the statistical measure since 1950. The advisers say the current marker is outdated in a country where the population has doubled since the definition was adopted.

Their proposal has mayors, chamber of commerce executives and business development officials in the 144 cities across 45 states that fall between the current and proposed thresholds worried that they’ll be dubbed a micropolitan area.

“Our chamber of commerce, the CEO is very concerned,” said John Haila, mayor of Ames, Iowa, population 66,023. “This couldn’t come at a worse time as we’re starting to recover from the pandemic.”

There are 384 Metropolitan Statistical Areas in the United States under the current definition, ranging from New York City-Newark-Jersey City, population 19.2 million, to Carson City, population 55,916, the capital of Nevada.

Among the cities that qualify as metropolitan areas now but would not under the proposed rules: Santa Fe, N.M.; Flagstaff and Prescott, Ariz.; Bend, Ore.; Sheboygan, Janesville and Oshkosh, Wis.; Charlottesville, Blacksburg and Winchester, Va.; and the state capitals of Missouri, North Dakota and Wyoming.

Only Colorado, Vermont, New Hampshire, Connecticut and Rhode Island do not have a metro area that falls between 50,000 and 100,000 residents.

“To the people who do care, this is a big deal,” said William Frey, a senior demographer at the Brookings Institution who has written to the Office of Management and Budget (OMB) opposing the change. “There are policies that are tied to these definitions.”

An OMB spokesperson declined to comment ahead of the end of a public comment period, which ended Friday, and the subsequent review.

A new OMB definition would not have much of an immediate impact on any newly downgraded cities. Funding for most federally subsidized programs depend on population size rather than the category an area falls into.

But city leaders say other federal departments treat the metropolitan versus micropolitan categories very differently, and that changing the definition can ripple across government-funded programs in unforeseen ways, from the Department of Housing and Urban Development’s (HUD) Community Development Block Grants (CDBG) to the Transportation Department’s highway funding.

“It’s going to be a significant amount of funding on the federal side, particularly in HUD funding and CDBG,” said Sandy Roberson, the mayor of Rocky Mount, N.C., population 54,548. “The programs that we’re able to afford because we are deemed a Metropolitan Statistical Area are very significant.”

Shawn Hershberger, the development services director in Winchester, Va., population 69,644, said the funding streams that would be put at risk would fall disproportionately on those who need it the most.

“The biggest impacts that this would have on a community level are primarily on people who have low to moderate income,” Hershberger said. “They’re obviously the most vulnerable in our community and others.”

There is pride, too, and the fear that newly dubbed micropolitan cities might be overlooked by companies searching for a new community to locate a factory or an office.

“While companies using a more sophisticated site selection process will not be persuaded by a community’s OMB or Census status, many location decisions are determined by senior leadership of small and medium-sized firms,” said Katie Culp, president and chief executive of KSM Location Advisors, a site selection consulting firm. “In addition, some streams of federal funding are only available to certain categories of communities.”

Site selection consultants often parse Census Bureau data, which is updated for metropolitan areas more regularly than for micropolitan areas.

“Without having accurate, up to date data on your community, you’re really at a disadvantage,” Hershberger said.

For communities like Ames, Rocky Mount and Winchester, dropping off the list of metropolitan areas carries the risk of being forgotten.

“We’re apprehensive that it would reduce our ability to attract new business to our community, whether it’s retail, commercial or industrial. We become just not on the site selection consultant’s radar anymore,” Haila said. “If they use as criteria [the MSA designation], all of a sudden you just erase 140-some communities off of that, that’s going to have a profound impact not only on Ames but on these other communities to even have a shot at being considered.”

Changing the definition of what constitutes a Metropolitan Statistical Area would have one immediate impact: It would alter the population balance between urban America and rural America. Frey calculated that under the current definition, 13.8 percent of Americans live in non-metropolitan areas. Under the proposed definition, that number would jump to 19.7 percent.

In a letter to Rob Fairweather, OMB’s acting director, a bipartisan group of legislators urged the Biden administration to keep the current threshold.

“We strongly encourage you to reject any increase in the minimum urbanized area population needed to qualify as an MSA,” wrote Sens. John Thune (R-S.D.), Mike Rounds (R-S.D.), Kevin Cramer (R-N.D.), John Hoeven (R-N.D.), Cynthia Lummis (R-Wyo.), Mark Kelly (D-Ariz.), Kyrsten Sinema (D-Ariz.) and Deb Fischer (R-Neb.) and Reps. Dusty Johnson (R-S.D.) and Adrian Smith (R-Neb.).

“Adhering to this recommendation has the potential to harm communities across the nation.”

Roberson, the mayor of Rocky Mount, said he expected the North Carolina delegation would oppose the proposed change, which would also send New Bern and Goldsboro to the micropolitan list.

“We tend to be an area that values smallish cities and rural areas,” he said in an interview. “We have a lot of opportunities to grow and a lot of wind in our sails.”