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SOUTHEAST MINNESOTA REGIONAL ECONOMIC STUDY Final Report OCTOBER 2018

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SOUTHEAST MINNESOTA REGIONAL ECONOMIC STUDY Final Report OCTOBER 2018 This document is made available electronically by the Minnesota Legislative Reference Library as part of an ongoing digital archiving project. http://www.leg.state.mn.us/lrl/lrl.asp SOUTHEAST MINNESOTA REGIONAL ECONOMIC STUDY Final Report OCTOBER 2018 Image: Tim Alms Photography Submitted by: TABLE OF CONTENTS 1. Report Findings .......................................................................................................................................................... 3 Project introduction ........................................................................................................................................... 3 Recent Trends & Forecasts .............................................................................................................................. 4 Baseline Forecast .............................................................................................................................................. 7 Impacts of Trends and Key Initiatives .......................................................................................................... 9 Aggregate Impact of All Initiatives ........................................................................................................... 20 Implications of Study Results ....................................................................................................................... 20 2. Introduction .............................................................................................................................................................. 22 Report Overview ........................................................................................................................................... 22 Overview of Key Regional Trends and Issues: ........................................................................................ 22 Key Economic Drivers .................................................................................................................................... 31 3. Baseline Model and Forecast ............................................................................................................................... 33 Introduction ..................................................................................................................................................... 33 REMI Software ............................................................................................................................................... 33 Review of Existing Forecasts ....................................................................................................................... 34 SDC Forecast .................................................................................................................................................. 34 Baseline Forecast Incorporating Regional Intiatives ............................................................................... 37 Baseline Forecast ........................................................................................................................................... 38 4. Regional Initiatives ................................................................................................................................................. 40 Growing Need for Housing ......................................................................................................................... 41 Labor Supply .................................................................................................................................................. 46 Demand for Regional Transportation ........................................................................................................ 49 International Migration ................................................................................................................................. 56 Growth of Tourism and Recreation ............................................................................................................ 60 Healthcare Insurance Costs .......................................................................................................................... 65 Other Initiatives: Agriculture and Manufacturing .................................................................................... 67 5. Aggregate Impact of All Initiatives .................................................................................................................... 69 6. Implications of Study Results................................................................................................................................. 71 Federal ............................................................................................................................................................ 71 State ................................................................................................................................................................. 71 Counties and Municipalities ......................................................................................................................... 72 Regional Groups and Non-Profits .............................................................................................................. 73 7. Appendix: Findings by County ............................................................................................................................. 74 Dodge County ................................................................................................................................................ 74 Fillmore County .............................................................................................................................................. 78 HR&A Advisors, Inc. Southeast Minnesota Regional Economic Study | 1 Goodhue County ........................................................................................................................................... 82 Houston County .............................................................................................................................................. 88 Mower County ................................................................................................................................................ 92 Olmsted County ............................................................................................................................................. 96 Wabasha County ........................................................................................................................................ 100 Winona County ............................................................................................................................................ 105 HR&A Advisors, Inc. Southeast Minnesota Regional Economic Study | 2 1. REPORT FINDINGS PROJECT INTRODUCTION The eight-county region of Southeast Minnesota (“Southeast Minnesota” or the “Region”), composed of Dodge, Fillmore, Goodhue, Houston, Mower, Olmsted, Wabasha, and Winona counties, encompasses 77 municipalities, with more than 368,000 residents and 190,000 employees. A State of Minnesota grant appropriation through the Department of Employment and Economic Development (“DEED”) provided funding for the Southeast Minnesota League of Municipalities (“SEMLM”) to conduct a study with the aim of understanding economic impacts facing cities in the Region, with procedural support from Community and Economic Development Associates (“CEDA”). SEMLM sought to better understand the demographic and economic future of the Region. SEMLM engaged HR&A Advisors, Inc. (“HR&A”) to conduct this study, providing stakeholder engagement, analysis, and overall project direction. The Southeast Minnesota Regional Figure 1: The Southeast Region Economic Study (the “Study”) aims to provide communities in the Region with long-range population, employment, and economic forecasts at the county- and region-wide scales.1 These forecasts will equip municipalities, counties, and the Region with quality data that can inform long-range planning, guiding important municipal and county decision making for things like investment in new infrastructure and public works, municipal services and schools, land use planning, and strategic downtown planning, in addition to regional considerations about transportation investment and housing growth. With a clearer understanding of the future population and economy of Southeast Minnesota, the Region can work to ensure that this growth is equitable and sustainable, serving all residents and workers. Southeast Minnesota is a major economic driver for the State of Minnesota. Today, 6.5% of the State of Minnesota’s jobs and 6.8% of the population are located within the Region, while the Region makes up less than 6% of the state’s landmass.2,3 Communities will need to consider key challenges and trends as the Region and its municipalities plan for and invest in their futures, including: • Historically, the Region’s population grew faster than the State and US as a whole, driven primarily by greater than 25% growth in Dodge, Goodhue, and Olmsted counties between 1970 and 2000.4 • Since 2000, population growth within the Region has not been evenly distributed, with positive growth occurring in Dodge, Goodhue, Mower, Olmsted, and Winona counties. 1 This Study relies upon data provided by municipalities, counties, and regional groups in Southeast Minnesota, as well as publicly available data such as Census, ACS, and BLS
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