Greg Ballard, the Republican mayor of Indianapolis, presides over the nation’s 13th-largest city, one with a diversified economy and an ever-shrinking reliance on manufacturing.
On the other hand, Greg Goodnight, Kokomo’s Democratic mayor, leads a city with a mere 58,000 residents. It’s still an auto industry town. And thanks to hundreds of millions of dollars in investments and plant upgrades in recent years, it likely will stay that way for decades to come.
But the two mayors from opposing parties share a common challenge—the proximity of amenity-rich Carmel, which sits between them and is a favored spot for wealthy business executives to call home.
The two mayors in late February gave remarkably similar state-of-the-city addresses, both focusing on the need to make their communities more desirable as places to live, not just do business.
The new residents don’t have to come at Carmel’s expense, of course, but current state tax policy puts a premium on cities’ swaying well-paid professionals to ditch their commute and embrace a more urban lifestyle.
That’s because constitutionally mandated property tax caps have increased cities’ reliance on local income taxes, which Hoosiers pay to their county of residence, not to the county where they work. It’s a huge distinction, leaving cities with the burden of providing roads and other services to commuters without tapping their wallets.
Someday, the Indiana General Assembly might provide relief to the state’s urban centers, perhaps in the form of a commuter tax, though such a measure would have to overcome plenty of obstacles. The Indy Chamber plans to champion that concept statewide “as a basic issue of fairness,” said Mark Fisher, the organization’s vice president of government relations and policy development.
Neither city is waiting around for outside help.
“Having high-quality jobs and a diverse economy is a good start,” Goodnight said in his Feb. 24 address, “but it’s not enough. For Kokomo to thrive, we must be seen as a desirable place to live, not just because of our job market, but because of the community itself.”
Three days later, Ballard chimed in that “the future of our city will be determined by our ability to attract and retain residents. It is only through expanding our tax base that we will be able to maintain and add to city services like police, fire, infrastructure, parks and neighborhood improvements.”
Fortunately for Indianapolis and Kokomo and other urban areas across the state, demographic shifts are working in their favor.
A report issued by the research firm Nielsen last month found that millennials (those age 18 to 36) and empty-nester baby boomers are flocking to cities. As a result, for the first time since the 1920s, growth in U.S. cities is outpacing growth outside them.
The report said millennials—77 million people, or 24 percent of the U.S. population—“like having the world at their fingertips,” with 62 percent preferring “to live in urban centers, where they can be close to shops, restaurants and offices.”
Kokomo historically hasn’t had the most progressive reputation. But under Goodnight, who took office in 2008, the city launched a quest to be one of the winners in the new age. His state-of-the-city speech focused on the services and amenities millennials value—from Kokomo’s new international school and investments in trails and parks to new mixed-use housing developments downtown.
Goodnight told IBJ that it isn’t all about luring high-earners. It’s also about attracting young, creative people, even if their disposable income is meager.
That describes a wide swath of millennials. The segment has been hard hit by economic turbulence, and as a result one-third were still living with their parents as of 2010, up from 25 percent in 2005, the Nielsen study found. Thirty-six percent still rely on their parents for financial support.
Still, Nielsen said millennials are well-positioned to eventually pack an economic punch. They’re the most-educated generation in the nation’s history, investing in college and in enhancing their job skills as they wait out lean economic times.
“Their high education levels and optimism as consumers foreshadow their potential success,” Nielsen’s report said.
Like Indianapolis, which is adding thousands of apartment units downtown, Kokomo is racing to provide the housing stock, including downtown apartments, that empty-nesters and the new generation favor.
Those groups are turning away from the suburban lifestyle, Nielsen found. Millennials in particular “prefer to live in dense, diverse urban villages where social interaction is just outside their front doors,” the report said.
“We are talking to developers—this is our priority,” Goodnight said. “We have been successful at business attraction and business investment, perhaps more successful than any community in the state. But we really need to focus on the residential.”•